DiaMedica Inc. (TSX VENTURE: DMA) ("DiaMedica" or the "Company"),
is pleased to announce the completion today of its $2.26 million
short form prospectus offering of units (the "Offering") and its
previously announced acquisition (the "Acquisition") of Sanomune
Inc., a privately held biopharmaceutical company focused on
neurological disorders ("Sanomune").
The Offering
Pursuant to the completion of the Offering, DiaMedica has issued
a total of 5,650,000 units (each a "Unit") at a price of $0.40 per
Unit for aggregate gross proceeds of $2.26 million. Each Unit is
comprised of one common share in the capital of the Company (each a
"Common Share") and one Common Share purchase warrant (each a
"Warrant"), with each Warrant entitling the holder thereof to
acquire a further Common Share until the second anniversary of the
closing of the Offering. The expiry date of the Warrants is subject
to acceleration if the volume-weighted average trading price of the
Common Shares on the TSX Venture Exchange (the "TSX-V") exceeds
$0.75 per share for a period of 10 consecutive trading days.
The Offering was led by Bolder Investment Partners, Ltd., as
agent ("Bolder"). In connection with the completion of the
Offering, Bolder exercised its agent's option to increase the size
of the Offering by 13%, or 650,000 Units.
The net proceeds of the Offering will be used to fund
DiaMedica's ongoing research and development programs, including
planned pre-clinical trials for our lead products, and for general
working capital purposes.
As compensation for its services as agent, Bolder received a
cash commission of $226,000, and received broker warrants to
acquire up to 565,000 Common Shares exercisable at the price of
$0.40 per share at any time on or prior to June 30, 2011.
The Acquisition
Pursuant to the completion of the Sanomune Acquisition,
DiaMedica has issued a total of 12,807,377 Common Shares to
Sanomune shareholders as consideration for all of the issued and
outstanding shares of Sanomune.
"With the completion of this financing and the strategic
acquisition of Sanomune, we have brought together two of Canada's
Top 10™ Life Sciences Companies," stated Mr. Rick Pauls, President
and Chief Executive Officer of DiaMedica. "This acquisition allows
us to take advantage of a unique opportunity to strengthen our
patent portfolio and expand into neurological and autoimmune
disorders targeted by our lead program, DM-99/199, which has
demonstrated neural protection (protects brain cells) and neural
cell proliferation (creates brain cells)".
As a result of the Acquisition, in addition to Sanomune's lead
compound, SAN-61, DiaMedica also acquires a panel of monoclonal
antibodies that trigger the inhibition of glycogen synthase kinase
3 beta (GSK-3ss). GSK-3ss plays an important role as a regulatory
switch for numerous cell-signaling pathways and has been linked to
diabetes, cancer, infectious diseases and a variety of neurological
disorders. It is anticipated that the monoclonal antibody program
will compliment DiaMedica's DM-99/199 program, which has also been
shown to have GSK-3ss inhibiting properties.
As announced in its April 20, 2010 press release, DiaMedica
obtained the required minority shareholder approval (the "Minority
Approval") for the Acquisition under Multilateral Instrument 61-101
- Protection of Minority Security Holders in Special Transactions
("MI 61-101"), by securing written consents to the transaction from
shareholders representing approximately 65% of the Common Shares
held by parties eligible to vote for approval of the transaction
under Part 8 of MI 61-101. This is in excess of the simple majority
requirement (i.e., 50%+1) set out in MI 61-101 for such Minority
Approval.
In addition to the related parties described in DiaMedica's
February 18, 2010 press release regarding the Acquisition (each a
"Related Party" and collectively, the "Related Parties"), Common
Shares held by two investment funds, Manitoba Science &
Technology Fund ("MST") and Crocus Investment Fund ("CIF") were
also excluded for the purposes of obtaining Minority Approval for
the Acquisition. MST and CIF each hold approximately 24.75% of the
voting common shares of Genesys Ventures Inc., a Related Party, and
are therefore each "a related party of an interested party" as
described in MI 61-101. Immediately prior to the completion of the
Acquisition and the Offering, the Related Parties, in the
aggregate, beneficially owned, or exercised control or direction
over, a total of 5,493,523 Common Shares, or 28.60% of the total
issued and outstanding Common Shares. To the knowledge of the
Company, based on public filings by each of MST and CIF,
immediately prior to the completion of the Acquisition and the
Offering, MST and CIF held, in the aggregate, a total of 3,065,764
Common Shares, or 15.96% of the total issued and outstanding Common
Shares.
Management Changes
DiaMedica further announces the appointment of Mr. Pauls to the
full-time position of President and Chief Executive Officer and the
appointment of Dr. Mark Williams to Vice-President, Research. Dr.
Stephen Waters has resigned from his interim role as Executive
Vice-President and Interim Chief Scientific Officer.
Mr. Pauls, who has been an active board member since 2005, and
is currently the Chairman of the Board of DiaMedica, has served as
the acting President and Chief Executive Officer of the Company
since July 2009. Mr. Pauls was previously the Managing Director of
CentreStone Ventures Inc., a life sciences venture capital fund
which he was involved with from inception. While with CentreStone,
Mr. Pauls led investments in Orasi Medical Inc., winner of the Red
Herring Global 100; LED Medical Inc., winner of Red Herring Canada
50 award in the Health category; as well as DiaMedica and Sanomune,
both named among Canada's Top 10™ Life Sciences Companies. Prior to
his role with CentreStone, Mr. Pauls was employed by Centara
Corporation, another early stage venture capital fund.
"We would like to express our gratitude to Dr. Stephen Waters
for his valuable contributions to our strategic planning efforts
and we look forward to working with him as a consultant," continued
Mr. Pauls. "The Board of Directors of DiaMedica joins me in
thanking Dr. Waters for his efforts, and we wish him continued
success in his future endeavors".
In conjunction with these management changes, the Board of
Directors has approved a grant of 457,500 stock options to certain
directors, executives and employees under the terms of the
Company's stock option plan. The options have an exercise price of
$0.42 per share and are exercisable for a period of 5 years. This
grant of such options is subject to acceptance by the TSX-V.
Please visit DiaMedica's new company website at
www.diamedica.com.
About DiaMedica and Sanomune
DiaMedica is a biopharmaceutical company, focused on developing
novel treatments for diabetes and neurological disorders. The
Company's diabetes program is based on a critical liver nerve
signaling mechanism involved in enhancing insulin sensitivity after
meal consumption. Two of DiaMedica's products have demonstrated
human efficacy in lowering blood sugar levels in diabetics based on
this novel nerve signaling mechanism.
As a result of the Sanomune Acquisition, DiaMedica plans to
expand its DM-199 program into neurological and autoimmune
disorders. Sanomune has demonstrated that its lead compound,
SAN-61, a naturally occurring protein, confers neural protection
(protects brain cells) and triggers neural stem cell proliferation
(creates brain cells) for the treatment of numerous neurological
disorders including Alzheimer's disease. DiaMedica has also
acquired from Sanomune a panel of monoclonal antibodies targeting
diabetes, neurological disorders and cancers through the inhibition
of GSK-3ss.
Both DiaMedica and Sanomune were recognized as one of Canada's
Top 10™ Life Sciences Companies in 2008/2009. DiaMedica is listed
on the TSX Venture Exchange under the trading symbol "DMA".
For further information please visit www.diamedica.com.
Caution Regarding Forward-Looking Information
Certain statements contained in this press release constitute
forward-looking information within the meaning of applicable
Canadian provincial securities legislation (collectively, the
"forward-looking statements"). These forward-looking statements
relate to, among other things, DiaMedica's objectives, goals,
targets, strategies, intentions, plans, beliefs, estimates and
outlook, and can, in some cases, be identified by the use of words
such as "believe," "anticipate," "expect," "intend," "plan,"
"will," "may" and other similar expressions. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements. Specifically, this press release
contains forward-looking statements regarding matters such as, but
not limited to, the anticipated use of proceeds from the Offering,
management's assessment of DiaMedica's future plans, information
with respect to the advancement of DiaMedica's research and
development programs, and DiaMedica's other estimates and
expectations.
These statements reflect management's current beliefs and are
based on information currently available to management. Certain
material factors or assumptions are applied in making
forward-looking statements, and actual results may differ
materially from those expressed or implied in such statements.
Important factors that could cause actual results to differ
materially from these expectations include, among other things:
uncertainties and risks related to our research and development
programs, the availability of additional financing, risks and
uncertainties relating to the anticipated use of proceeds, changes
in debt and equity markets, uncertainties related to clinical
trials and product development, rapid technological change,
uncertainties related to forecasts, competition, potential product
liability, additional financing requirements and access to capital,
unproven markets, the cost and supply of raw materials, management
of growth, effects of insurers' willingness to pay for products,
risks related to regulatory matters and risks related to
intellectual property matters. Additional information about these
factors and about the material factors or assumptions underlying
such forward-looking statements may be found in the body of this
news release, as well as under the heading "Risk Factors" contained
in DiaMedica's 2009 annual information form. DiaMedica cautions
that the foregoing list of important factors that may affect future
results is not exhaustive. When relying on DiaMedica's
forward-looking statements to make decisions with respect to
DiaMedica, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events.
Such forward-looking statements are based on a number of estimates
and assumptions which may prove to be incorrect, including, but not
limited to, assumptions regarding the availability of additional
financing for research and development companies, and general
business and economic conditions. These risks and uncertainties
should be considered carefully and investors and others should not
place undue reliance on the forward-looking statements. Although
the forward-looking statements contained in this press release are
based upon what management believes to be reasonable assumptions,
DiaMedica cannot provide assurance that actual results will be
consistent with these forward-looking statements. DiaMedica
undertakes no obligation to update or revise any forward-looking
statement. Additional risk factors, factors which could cause
actual results to differ materially from expectations, and
assumptions relating specifically to our acquisition of Sanomune
may be found in our press releases dated February 18, 2010 and
April 20, 2010.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: DiaMedica Inc. Kevin Richardson, Ph.D 204.478.5605
204.453.3745 (FAX) krichardson@diamedica.com
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