Mercal Capital Corporation
TSX VENTURE : MUL.P

June 27, 2016 10:57 ET

Mercal Capital Corporation Announces Qualifying Transaction to Acquire Folia

OTTAWA, ONTARIO--(Marketwired - June 27, 2016) -

NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Mercal Capital Corporation ("Mercal" or the "Corporation") (TSX VENTURE:MUL.P), a Capital Pool Company ("CPC"), is pleased to provide particulars regarding a proposed qualifying transaction with Folia Biotech Inc. ("Folia"), a private company based in Quebec, QC (the "Proposed Transaction"). Folia carries on the business as a clinical stage biopharmaceutical company.

The parties intend to change the Corporation's name to Folia Pharma Corp. following completion of the Proposed Transaction.

Details of the Proposed Qualifying Transaction

On June 24, 2016, Mercal entered into an arm's length Agreement in Principle with Folia pursuant to which Mercal intends to acquire all of the issued and outstanding shares of Folia (the "Folia Shares"). Pursuant to the Proposed Transaction, Mercal intends to (i) acquire all of the issued and outstanding Folia Shares by way of a securities exchange of common shares of Mercal (the "Mercal Shares") at a price to be determined and (ii) complete a financing by way of a brokered private placement (the "Brokered Private Placement") for total aggregate proceeds of $5,000,000 (the "Financing"). The Proposed Transaction is expected to constitute Mercal's Qualifying Transaction as defined in Policy 2.4 of the Exchange Corporate Finance Manual (the "CPC Policy") and is subject to compliance with all necessary regulatory approvals and certain other terms and conditions.

The parties intend that the offer and sale of Mercal Shares in the Proposed Transaction shall be made in reliance on an exemption from the registration and prospectus requirements pursuant to section 2.12 of National Instrument 45-106 Prospectus and Registration Exemptions.

After completion of the Proposed Transaction and prior to the closing of the Financing, there will be 12,320,000 Mercal Shares issued and outstanding, of which current shareholders of Mercal will own 1,540,000 Mercal Shares (12.5%) and the former Folia shareholder will own 10,780,000 Mercal Shares (87.5%).

Following the Proposed Transaction, the Resulting Issuer will become a Tier 2 Issuer within the Industrial Industry Segment pursuant to Policy 2.1 Initial Listing Requirements of the Manual.

About Folia Biotech (www.foliabiotech.com)

Folia Biotech is a clinical stage biopharmaceutical company focused on exploiting its proprietary immuno-therapeutic platform to bring to market highly efficacious therapeutic products that fulfill large unmet needs principally in oncology and certain infectious diseases.

Folia's immuno-therapeutic platform consists of a novel Toll-Like Receptor (TLR7) agonist nanoparticle.

The company was founded in 2006 by Dr. Denis Leclerc, a researcher at the Centre Hospitalier Universitaire de Québec (CHU de Québec). The technology emerged from the Infectious Disease Research Center (CRI) of Laval University.

Board of Directors and Management Team of the Resulting Issuer

It is contemplated that after the closing of the Qualifying Transaction the directors of the Resulting Issuer will consist of Pierre Falardeau (Chairman of the Board), Louis Lamontagne, Denis Leclerc, Jacque Bernier, Calvin Stiller, Francis Gleeson, and Michael Mueller. Senior management will consist of Louis Lamontagne, Chief Executive Officer; Denis Leclerc, Vice President and Chief Scientific Officer; and Pierre Savard, Regulatory Affairs and Manufacturing. All of the directors and members of the senior management will be Insiders of the Resulting Issuer as defined in CPC Policy 1.1.

Pierre Falardeau - Proposed Chairman of the Board Westmount, QC

Pierre Falardeau is currently the Chairman of Folia and will be the Chairman of the Board of the resulting issuer. Dr. Falardeau was elected Chairman of the Board of Folia in 2014. From 1998 to 2002, Dr. Falardeau has been very active at Æterna-Zentaris, first as director of scientific affairs and then as Vice President of Scientific Affairs. From 2002 to 2007 he was President and CEO of Ecopia Biosciences inc. Since January 2010, he is President and CEO of Oncozyme Pharma (now Verlyx Pharma Inc.) and is also the founder and President of the consulting company Pharm-Asset Inc.

He holds a PhD in Pharmacology and physiology from Laval University in Quebec and pursued postdoctoral studies at the Howard Hughes Medical Institute at Duke University, in Durham, North Carolina.

Louis Lamontagne - Proposed Director, Chief Executive Officer, Quebec, QC

Louis Lamontagne has served as CEO of Folia since 2014. He has 25 years of experience in the management of biopharmaceutical organizations with companies such as Neurochem and PainCeptor. Dr. Lamontagne has completed several private and public financings (IPO).

Dr. Lamontagne holds a BSc. in Chemistry from Queen's University, a PhD in Immunology from McMaster University, and did post-graduate studies in Tropical Public Health at Harvard University.

Denis Leclerc - Proposed Director, Vice President and Chief Scientific Officer Fossambault-Sur-Lac, QC

Denis Leclerc is the founder of Folia and holds the position of Vice President and Chief Scientific Officer. Dr. Leclerc is a professor at Laval University Faculty of Medicine and researcher at the Infectious Disease Research Center (CRI) of the CHU de Québec.

He holds a PhD in Virology from University of Toronto and conducted postdoctoral studies at the Friedrich Miescher Institute for Biomedical Research in Switzerland. His research activities focus mainly on the development of new adjuvants and more effective vaccines. He is author or co-author of 59 scientific articles in the field of virology, immunology and vaccination. He is the principal inventor of 8 patents covering all aspects of Folia products portfolio.

Pierre Savard - Regulatory Affairs and Manufacturing Quebec, QC

Pierre Savard joined Folia in 2008, and he oversees regulatory affairs and manufacturing. Dr. Savard is a professor at Laval University Faculty of Medicine and researcher at the neuroscience axis of the Research Centre of the CHU de Québec.

He holds a PhD in Physiology from Laval University, and also pursued postdoctoral studies in Retrovirology at the Institut de recherches cliniques de Montréal and in Developmental Biology at the Ludwig Institute for Cancer Research in London.

Jacque Bernier - Proposed Director, Saint-Augustin-de-Desmaures, QC

Jacque Bernier has been part of Folia's team from its inception, and acted as its CEO from 2008 to 2014. Before his years as CEO, M. Bernier owned of a group of pharmacies and served on the board of directors of various pharmaceutical companies.

Mr. Bernier holds a Bachelor degree in pharmacy from Laval University. He also completed a MBA with a concentration in pharmaceutical management and a graduated program in pharmaceutical product development at Laval University.

Calvin Stiller - Proposed Director, Arva, ON

Calvin Stiller is a lifelong innovator whose work encompasses science, business and public service. As a scientist, Dr. Stiller was principal investigator on the Canadian multi- centre study that established the effectiveness of Cyclosporin in transplantation, which led to its worldwide use as first-line therapy for transplant rejection. He has published over 250 scientific and medical papers, co-edited five books and is the author of Lifegifts, a book about organ transplantation.

In 1985 Dr. Stiller established the Multi-Organ Transplant Service in London and served as its chief for over a decade. He has been president of the Canadian Society of Nephrology and co-founded the MaRS Discovery District, the Ontario Genomics Institute, the Ontario Institute for Cancer Research, which he currently chairs, the J. Allyn Taylor International Prize in Medicine and the Canadian Medical Hall of Fame. Dr. Stiller is also an entrepreneur and businessperson. He founded two firms that eventually employed 4,000 people in healthcare and technology services, which were later sold and taken public. He established four venture capital funds to invest in innovation, including the largest life sciences fund in Canada. He is the President of the Stilco Corporation, a life sciences & advanced health technologies company based in London, Ontario.

Dr. Stiller received his medical degree from the University of Saskatchewan in 1965 and his fellowship in the Royal College of Physicians and Surgeons of Canada (FRCPC) in 1972, following seven years of post-graduate studies in Edmonton and London, Ontario. He is a member of the Order of Ontario and officer of the Order of Canada. He is the recipient of four honorary degrees and numerous others, including the Medec Award and the Canada Gairdner Wightman Award.

Francis Gleeson - Proposed Director, Burlington, ON

Francis Gleeson is founder and President of Gleeson and Associates, a strategic advisory firm which specializes in building biotechnology companies. Frank has more than 20 years of leadership and hands-on experience as an operating executive and venture capitalist. During his career, he has completed more than $300 million in financing and partnering transactions. He is founding chair of GlycoNet, a National Centre of Excellence established in 2014 to further the study and treatment of diseases associated with glycans (i.e., sugars). Frank is also an Executive-in-Residence, Ontario Institute for Cancer Research Fight Against Cancer Trust and past chair of the board of the Stem Cell Network of Canada.

His previous business experience includes roles as CEO of a professional services firm, as founding CEO of MDS Proteomics Inc. and as a senior vice president at MDS Capital Corp. where he founded a dozen companies and sat on numerous boards. Frank is a board member of ARTMS Products Inc., a private Canadian company focused on developing novel cyclotron-based technologies for supplying medical imaging isotopes. In 2003, Frank was recognized as a Technology Pioneer by the World Economic Forum. He holds BBA and MBA degrees from York University in Toronto.

Michael Mueller - Proposed Director, Toronto, Ontario

Michael Mueller is chairman of the board of the Public Service Pension Investment Board (and former chair of its Human Resources and Compensation Committee). He is a member of the board of directors of: Magor Corporation, Pediapharm Inc., Emily's House, Annidis Corporation and Smarter Alloys Inc. From 2003 to 2005, he was President and Chief Executive Officer of MDS Capital Corporation. Mr. Mueller holds a Bachelor of Science from the University of Western Ontario, and a Master of Business Administration from York University.

Sponsorship and Proposed Private Placement

Sponsorship of a qualifying transaction of a CPC is required by the Exchange unless exempt in accordance with the Exchange's policies. Mercal intends to apply for exemption from Sponsorship pursuant to section 3.4 (a) (ii) of CPC Policy 2.2 on the basis of the Brokered Private Placement of $5,000,000 in connection with the Proposed Transaction. However, no assurance can be given that Mercal will obtain this exemption.

In conjunction with the Proposed Transaction, Mercal intends to raise capital through the Financing for aggregate total proceeds of $5,000,000 by way of a Brokered Private Placement.

Mercal will retain the services of an agent to assist it to complete the Brokered Private Placement on a commercially reasonable efforts basis (the "Agent").

Stock Options and other matters

The parties expect that no amendments will be made to Mercal's existing stock option plan and that no options under this plan are intended to be issued as part of the Proposed Transaction.

The Proposed Transaction will constitute an arm's length Qualifying Transaction, as no party to the transaction is a "Control Person" (as defined in CPC Policy 1.1) of both Mercal and Folia. There is no requirement to obtain shareholder approval of the Qualifying Transaction from the shareholders of Mercal, and no "Majority of the Minority" requirements are triggered under CPC Policy 5.9. A filing statement to be prepared and filed on SEDAR in conjunction with the Proposed Transaction will contain full particulars of the Proposed Transaction.

About Mercal

Mercal was incorporated under the Canada Business Corporations Act on August 31, 2015 and its fiscal year end is December 31. Mercal is classified as a CPC as defined in CPC Policy 2.4 and as such Mercal has not commenced commercial operations and

has no assets other than cash with which to identify and evaluate businesses or assets with a view to completing a Qualifying Transaction. As a result, Mercal's current business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction.

The common shares of Mercal have traded on the Exchange (under the symbol "MUL.P") since May 17, 2016. Trading in the common shares of Mercal was halted at the Corporation's request June 24, 2016 pending the announcement of the Proposed Transaction.

Further information about Mercal can be found in its prospectus dated March 31, 2016 and other filings of the Corporation with the Canadian securities regulators, which filings are available at www.sedar.com.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, completion of satisfactory due diligence, completion of the Financing, execution of a definitive agreement, receipt of all applicable consents to and approvals of the Proposed Transaction including approval of the Exchange, and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. The Proposed Transaction cannot close until the required approvals and exemptions are obtained. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement of Mercal to be prepared in connection with the Proposed 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 securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

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 press release.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. These and all subsequent written and oral statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice.

The Corporation assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Corporation. Readers are cautioned not to place undue reliance on any statements of forward-looking information that speak only as of the date of this release. Additional information identifying risks and uncertainties is contained in the Corporation's filings with the Canadian securities regulators, which filings are available at www.sedar.com.

This is not an offer for sale, or solicitation of an offer to buy, in the United States or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) of any equity shares or any other securities of the Corporation or Folia.

Contact Information

  • Timothy McCunn, President
    Mercal Capital Corporation
    (613) 238-2022
    (613) 238-8775 (FAX)
    TMcCunn@perlaw.ca