December 27, 2016
By Alex Keown, BioSpace.com Breaking News Staff
TORONTO – Clinical stage biotech company Hemostemix Inc. has undertaken a drastic corporate restructuring plan that will include the selection of a new management team as well as a new board of directors.
New management and directors have not yet been named.
The reorganization announced Dec. 22 comes on the heels of a months-long shareholder proxy war. Dissident shareholders claimed the company was virtually insolvent and accused leadership of poor management and reckless financial practices. The war stemmed in part due to the company’s halting of a Phase II stem cell therapy trial for patients with critical limb ischemia (CLI), a severe form of peripheral artery disease (PAD) caused by reduced blood flow to the legs. The phase II trial targets a participant’s diseased tissue with proprietary cells grown from his or her blood that can support the formation of new blood vessels, according to company information. In June, contract research organization Criterium Inc., terminated the two-year-old master services agreement it signed with Hemostemix. As a result, Hemostemix announced at the time it would place a temporary hold on enrollment for its phase II clinical trials in Canada and South Africa. Hemostemix said it has plans, as well as permission from the U.S. Food and Drug Administration, to initiate a trial in the United States.
The war caused company shares to plunge to 15 cents per share, down from 65 cents per share this time last year. In August, the company issued a letter to shareholders encouraging them to support current management and “stay the course.”
With the reorganization announced before Christmas, it would seem the dissident shareholders have won the proxy war. On Dec. 16, Hemostemix said it has entered into a two-year agreement with Drive Capital Inc. to oversee the turnaround efforts. The Drive team will report to the new board of directors, which have yet to be named. According to the announcement, Drive will “assist with the implementation of all corporate actions deemed necessary to ensure the financial sustainability of Hemostemix.” Drive will be compensated based on 15 percent of the total operating expenses over the term of the agreement and options to acquire common shares.
Hemostemix said it will issue a subsequent press release containing the details of the backgrounds of the incoming board of directors and management team, status of the phase II clinical trial, future financing plans, new strategic partners and any “additional information with respect to the conversion of the debts and sale of the debenture.”
