Mistral Pharma Inc.
TSX VENTURE : MIP

Mistral Pharma Inc.

February 27, 2008 16:05 ET

Mistral Pharma Announces Letter of Intent for a Merger and Financing Transaction

- Letter of intent signed to merge with a US-based Specialty Pharma company; - Engagement of Loewen, Ondaatje, McCutcheon Limited to lead Private Placement of equity securities; - Interim financing of $1 Million.

MONTREAL, QUEBEC--(Marketwire - Feb. 27, 2008) - THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES NOR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN.

Mistral Pharma Inc. (TSX VENTURE:MIP) ("Mistral") today announced that it has signed a non-binding letter of intent to complete a business combination (the "Transaction") with a private US-based specialty pharmaceutical company ("US Pharma Co.") to create a commercial-stage specialty pharmaceutical company with North American reach. Post-Transaction, Mistral will have a range of specialty pharmaceutical products in the United States market and a diverse portfolio of products in the pipeline.

The Transaction is contingent on several conditions including, but not limited to, a concurrent financing round in the form of a private placement of equity securities. Mistral also announces today that it has engaged Loewen, Ondaatje, McCutcheon Limited ("LOM") as lead agent for the private placement (the "Private Placement") and to act as co-advisor for the Transaction. Desjardins Securities Inc. ("Desjardins") will participate in the Private Placement syndicate and serve as lead financial advisor to Mistral for the Transaction.

In addition, Mistral announced that it has retained LOM to lead an interim financing of $1 million in the form of convertible debentures with an 8% coupon. The debentures will be converted at the closing of the Private Placement. On the Debenture closing, the net proceeds of the offering will be placed in escrow in accordance with an escrow arrangement between Mistral, debenture holders and the escrow agent. LOM will receive a 7% commission and 10% non-transferable one-year broker warrants for common shares of Mistral. LOM acted as sole agent for the convertible debentures.

"This transaction not only represents a quantum leap in our strategy to become a leading specialty pharmaceutical company, but it also positions Mistral as one of the few Canadian specialty pharmaceutical companies with a significant US presence" commented Bertrand Bolduc, Mistral's President & CEO. "This represents an incredible growth opportunity and the Private Placement will ensure that we have the financial resources to execute our plan to create an exciting new future for Mistral" he added.

Summary of the proposed transaction

Pursuant to the letter of intent, Mistral will issue common shares from treasury to the shareholders of US Pharma Co. in exchange for 100% of the equity securities of US Pharma Co.

The Transaction is expected to constitute a reverse take-over of Mistral as defined in the policies of the TSX Venture Exchange (the "TSX-V"). As a result, the Transaction will be subject to Mistral shareholder approval and a special meeting of shareholders will be convened shortly after a definitive agreement is entered into. Mistral will also consider a consolidation of its outstanding shares.

No Non-Arm's Length Party (as that term is defined in the TSX-V Policies) of Mistral has any direct or indirect beneficial interest in US Pharma Co. or is an insider thereof, and there is no relationship between any Non-Arm's Length Party of Mistral and any Non-Arm's Length Party of US Pharma Co.

In addition to the Private Placement, completion of the Transaction is subject to a number of other conditions, including but not limited to, satisfactory due diligence by both parties, negotiation of a definitive agreement, certain regulatory approvals, including TSX-V acceptance, and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained.

The Private Placement will consist in the issuance of units of Mistral made up of one common share and one-half of one common share purchase warrant, each whole warrant exercisable to acquire one additional common share at any time within 24 months from the Private Placement Closing date. Proceeds of the Private Placement will be placed in escrow pending completion of all conditions precedent to the Transaction, including approval by Mistral shareholders and securing a minimum amount of financing through the Private Placement. In the event the Transaction is not completed, the escrowed funds will be returned to the subscribers.

Investors are cautioned that, except as disclosed in the management information circular 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. There can be no assurance that the Transaction will be completed as proposed or at all.

As soon as the due diligence process is completed and the negotiations regarding the conclusion of a definitive agreement have been finalized, a more detailed press release will be issued describing the terms of the proposed transaction and its related conditions.

About Mistral Pharma Inc.

Mistral Pharma Inc. is an innovative pharmaceutical company that is active in the reformulation and the commercialization of already-marketed drugs. Its branded drug delivery products, MIST-B01, MIST-B02 & MIST-B04, showed positive results at their respective first pilot clinical trials. Mistral also markets INSTILLAGEL® in Canada, a local anesthetic and antiseptic combination product used for urology procedures. Mistral has also in-licensed TAMALIS™ (Rupatadine) a new antihistamine, INSTILLAQUILL®, a single use extension tube used in gynecology as well as 6 generic injectable products which should be filed with Health Canada in 2008. Mistral positions itself as a specialty pharmaceutical company with a focus on hospital products. More information is available on Mistral's website at www.mistralpharma.com.

Forward-Looking Statements

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of Mistral Pharma. These statements are based on assumptions and uncertainties as well as on Management's best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for Mistral Pharma's products, the impact of price pressures exerted by competitors, results from clinical studies and regulatory approval process as well as general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Mistral Pharma Inc.
    Bertrand F. Bolduc, B.Pharm., MBA
    President & Chief Executive Officer
    514-421-1717 # 2224
    bbolduc@mistralpharma.com
    or
    Mistral Pharma Inc.
    Alain Provencher
    Vice-president, Finances and Chief Financial Officer
    514-421-1717 # 2222
    aprovencher@mistralpharma.com