Small Pharma Ltd. and Unilock Capital Corp. announce closing of fully subscribed brokered private placement financing
March 10, 2021 – Vancouver, British Columbia – Small Pharma Ltd (“Small Pharma”) and Unilock Capital Corp. (“Unilock”) are pleased to announce the closing of the brokered private placement (the “Financing”) of subscription receipts (the “Subscription Receipts”) of Small Pharma Financing Inc. (“Finco”), a special purpose British Columbia company incorporated solely for the purpose of the Financing, at a price of CAD$0.96 per Subscription Receipt for aggregate gross proceeds of CAD$58,000,000, with substantial U.S., UK and Canadian institutional investor support, including significant participation from leading biotech funds.
Canaccord Genuity Corp. and Eight Capital (together, the “Co-Lead Agents”) acted as co-lead agents in connection with the Financing, together with Haywood Securities Inc. also acting as an agent (collectively, the “Agents”).
Peter Rands, Chief Executive Officer of Small Pharma said:
“We are delighted to close this financing – one of the largest subscription receipt financings in Canada to-date in the psychedelics space – which, upon the closing of the qualifying transaction with Unilock, will allow Small Pharma to join the new ranks of well-funded, successful London-based psychedelic-focused biotechs.”
Carol Routledge, Chief Medical and Scientific Officer of Small Pharma said:
“London has become a hub for mental health innovation just as Silicon Valley is for tech innovation. With this financing, upon the closing of the qualifying transaction with Unilock, we can progress our DMT-based portfolio of therapeutic candidates helping to expedite the development of important treatments for mental health disorders, while gaining access to the depth of the North American capital markets.”
SUMMARY OF THE FINANCING
The Financing was completed in connection with a series of transactions that will result in the reverse takeover of Unilock by the shareholders of Small Pharma (the “Transaction”). The Transaction will constitute Unilock’s “Qualifying Transaction” as such term is defined in Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the “TSXV” or the “Exchange”). Further details of the Transaction were previously announced by Unilock in December 2020 and January 2021. References herein to the “Resulting Issuer” refer to Unilock following the completion of the Transaction.
An aggregate of 60,416,667 Subscription Receipts were issued in connection with the Financing. Each Subscription Receipt entitles the holder thereof to receive, upon the satisfaction or waiver (to the extent such waiver is permitted) of certain escrow release conditions (the “Escrow Release Conditions”) prior to the Escrow Release Deadline (as defined below), including all conditions precedent to the Transaction being satisfied, and without payment of additional consideration therefor, one common share in the capital of Finco (each, a “Finco Share”). On completion of the Transaction, each Finco Share underlying the Subscription Receipts will be exchanged for one common share in the capital of the Resulting Issuer (each, a “Common Share”), all in accordance with the terms of the business combination agreement among Unilock, Small Pharma and certain shareholders of Unilock dated November 30, 2020, as amended on February 23, 2021 (the “Definitive Agreement”) governing the terms of the Transaction.
In connection with the Financing, the Agents are entitled to receive a cash commission of CAD$3,567,484 (the “Agents’ Commission”) and 3,716,129 compensation warrants (the “Compensation Warrants”). Each Compensation Warrant is exercisable to acquire one Finco Share at the Issue Price for a period of 24 months from the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Conditions (the “Exercise Period”). Upon completion of the Transaction, each holder of Compensation Warrants will receive Common Shares in lieu of Finco Shares upon exercise of the Compensation Warrants, including the payment therefor. The Agents are also entitled to receive, in connection with certain advisory services provided by the Agents pursuant to the terms of an advisory agreement among the Agents and Finco, cash advisory fees of CAD$222,161 (the “Advisory Fee”) and 231,418 advisor warrants (each, an “Advisor Warrant”), with each Advisor Warrant having the same characteristics as the Compensation Warrants. On closing of the Financing, the Agents received payment of 50% of the Agents’ Commission, 50% of the Advisory Fee and were issued all of the Compensation Warrants and Advisor Warrants. The remaining 50% of the Agents’ Commission and 50% of the Advisory Fee will be paid to the Agents upon satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Conditions.
The gross proceeds of the Financing (less an amount equal to 50% of the Agents’ Commission, 50% of the Advisory Fee, and all of the reasonable costs and expenses of the Agents in connection with the Financing) (the “Escrowed Funds”) have been deposited in escrow with the subscription receipt agent until the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Conditions, including all conditions precedent to the Transaction.
In the event that the Escrow Release Conditions have not been satisfied or waived (to the extent such waiver is permitted) by July 7, 2021, or such other date as Finco and the Co-Lead Agents may determine pursuant to the subscription receipt agreement (the “Escrow Release Deadline”), or Finco advises the Co-Lead Agents or announces to the public that it does not intend to satisfy the Escrow Release Conditions, or that the Transaction has been terminated in accordance with the terms of the Definitive Agreement, the aggregate issue price of the Subscription Receipts together with any earned interest shall be returned to the applicable holders of the Subscription Receipts (net of any applicable withholding taxes), and such Subscription Receipts shall be automatically cancelled and be of no further force and effect.
All Subscription Receipts issued in connection with the Financing are subject to a statutory hold period in accordance with Canadian securities laws. Following completion of the Transaction, the Common Shares received upon the exchange of Finco Shares underlying the Subscription Receipts will not be subject to a statutory hold period in Canada.
Certain of the directors of Unilock and their related parties purchased an aggregate of 200,000 Subscription Receipts for $192,000.
Upon completion of the Transaction, the proceeds of the Financing are anticipated to be used principally to fund the Transaction, and for research and development, manufacturing, corporate and general working capital purposes of the Resulting Issuer.
ABOUT SMALL PHARMA
Small Pharma was incorporated on February 4, 2015 in the United Kingdom pursuant to the provisions of the Companies Act 2006. Small Pharma’s head office is located at 6-8 Bonhill Street, London, United Kingdom.
Small Pharma is a neuropharmaceutical company specialised in IP led development of novel treatments for mental health conditions, in particular depression. Small Pharma initiated a clinical program into DMT-assisted therapy in February 2021. This program includes a Phase I/IIa trial on their lead candidate alongside development of a robust pipeline of proprietary preclinical assets.
ABOUT UNILOCK CAPITAL CORP.
Unilock is a capital pool company created pursuant to the policies of the TSXV. It does not own any assets, other than cash or cash equivalents and its rights under the Definitive Agreement. The principal business of Unilock is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the TSXV so as to complete a qualifying transaction in accordance with the policies of the TSXV.
For more information, please contact:
UNILOCK CAPITAL CORP.
Sonny Chew Director
Email: firstname.lastname@example.org Tel: (604) 689-2646
SMALL PHARMA LTD
Chief Executive Officer
Email: email@example.com Tel: +44 020 8740 9084
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains statements that constitute “forward-looking information” (“forward-looking information”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking information and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information.
Forward-looking statements in this document include, among others, statements relating to expectations regarding the completion of the Transaction (including all required approvals), the expected use of proceeds of the Financing or any other financing, the business plans of the Resulting Issuer and other statements that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors and risks include, among others: (a) there is no assurance that the parties hereto will obtain the requisite director, shareholder and regulatory approvals for the Transaction; (b) there is no assurance that the Transaction will be completed; (c) following completion of the Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations which may not be available when needed or on acceptable terms and conditions acceptable; (d) compliance with extensive government regulation; (e) domestic and foreign laws and regulations could adversely affect the Resulting Issuer’s business and results of operations; (f) the stock markets have experienced volatility that often has been unrelated to the performance of companies and these fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating peers; (g) adverse changes in the public perception of tryptamine-based treatments and psychedelic-based therapies; (h) the impact of COVID-19; and (i) general business, economic, competitive, political and social uncertainties. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release.
The forward-looking information contained in this news release represents the expectations of Unilock and Small Pharma as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Unilock and Small Pharma undertake no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.
Small Pharma makes no medical, treatment or health benefit claims about its proposed products. The Medicines and Healthcare products Regulatory Agency (“MHRA”) or other similar regulatory authorities have not evaluated claims regarding DMT-assisted therapies and other next generation psychoactive compounds. The efficacy of such therapies have not been confirmed by MHRA-approved research. There is no assurance that such DMT-assisted therapies and other psychoactive compounds can diagnose, treat, cure or prevent any disease or condition. Vigorous scientific research and clinical trials are needed. Any references to quality, consistency, efficacy and safety of potential therapies do not imply that Small Pharma verified such in clinical trials or that Small Pharma will complete such trials. If Small Pharma cannot obtain the approvals or research necessary to commercialize its business, it may have a material adverse effect on Small Pharma’s performance and operations.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
The Common Shares will remain halted until such time as permission to resume trading has been obtained from the TSXV. Unilock is a reporting issuer in Alberta and British Columbia.
Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release. Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
All information contained in this news release with respect to Unilock and Small Pharma was supplied by the parties respectively, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.