Rhino Resources Inc.
TSX VENTURE : RHI.P

June 08, 2009 09:40 ET

Rhino and IVT Announce Proposed Qualifying Transaction

HALIFAX, NOVA SCOTIA--(Marketwire - June 8, 2009) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

Rhino Resources Inc. (TSX VENTURE:RHI.P) (the "Company" or "Rhino"), a Capital Pool Company ("CPC"), and ImmunoVaccine Technologies Inc. ("IVT") are pleased to announce that they have entered into a binding term sheet dated effective June 1, 2009 (the "Term Sheet") for Rhino's non-arm's length acquisition (the "Transaction") of IVT. The Transaction represents an agreement in principle, subject to TSX-Venture Exchange (the "Exchange") approval, for the completion of Rhino's qualifying transaction. IVT is a private company, based in Halifax, Nova Scotia, incorporated under the Companies Act of Nova Scotia (the "Act") on March 28, 2000.

Trading of the common shares of Rhino has been halted at Rhino's request and will remain halted pending the Exchange's receipt of satisfactory documentation.

IVT, winner of Canada's Top 10 Life Sciences Companies, is a privately held, vaccine development company. Through its own biotech research, patented VacciMax® and DepoVax™ technologies, and collaborations with partners, IVT creates vaccines with the potential to help save and improve lives around the world.

Mr. Wade K. Dawe, Director of Rhino Resources commented, "As both a shareholder and director of Rhino and IVT, I am excited that Rhino shareholders will participate in the continued development of IVT's remarkable technology and that IVT shareholders will benefit from IVT's access to the public markets. I am confident that this transaction will unlock IVT's true value for the benefit of both Rhino and IVT shareholders."

Dr. Randal Chase, President and CEO of IVT remarked, "Our robust DepoVax™ technology is key to developing novel vaccines for cancer therapies and infection diseases. We look forward to taking the DepoVax™ technology into Phase 1 clinical trials and are thrilled to have Rhino's expertise leading us through a successful financing and qualifying transaction to make it happen."

The Transaction

The Term Sheet contemplates that, subject to the fulfillment of certain conditions, the Transaction will take the form of a share exchange whereby Rhino will acquire all of the issued and outstanding common shares of IVT in consideration for common shares of Rhino. In order to effect the Transaction, Rhino and IVT will enter into a plan of arrangement (the "Plan of Arrangement") and seek court approval thereof in accordance with the provisions of Section 130 of the Act.

Pursuant to the Transaction, Rhino shares will be consolidated on the basis of one new Rhino common share ("New Common Share") for each five existing Rhino common shares (the "Rhino Share Consolidation") and each one existing IVT common share will be exchanged for one New Common Share (the "IVT Acquisition"). There are currently 12,000,000 Rhino common shares issued and outstanding which will be consolidated into 2,400,000 New Common Shares and 30,534,420 IVT common shares issued and outstanding which will be exchanged for 30,534,420 New Common Shares in the capital of Rhino. Rhino's New Common Shares will be issued at a deemed Issue Price of $0.70 per share ($0.14 per share pre-consolidation) and the total consideration payable to IVT shareholders is $21,374,094.

Upon closing of the Transaction, 2,802,958 outstanding IVT options entitling the holders to purchase a total of 2,802,958 common shares of IVT at an average price of $0.58 per share will be converted into an equal number of Rhino options with no adjustment to the exercise price. Also upon closing of the Transaction, 145,143 IVT warrants entitling the holders to purchase 217,714 common shares of IVT at an average price of $1.17 per share (each warrant exercisable into 1.5 common shares at an exercise price of $1.75 per warrant) will be converted into 217,714 Rhino warrants exercisable into 217,714 common shares at an exercise price of $1.17 per share.

The Transaction, subject to Exchange approval, is intended to constitute Rhino's qualifying transaction pursuant to Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the "Qualifying Transaction"). Messrs. Wade K. Dawe and Brian MacEachen are currently directors of Rhino and are also shareholders of IVT holding or controlling, directly and indirectly, 5.8% and 0.9% of IVT, respectively. Mr. Dawe is also an officer of Rhino as well as a director of IVT. By virtue of Mr. Dawe's position as a director of both Rhino and IVT, the Transaction constitutes a non-arm's length qualifying transaction and will be subject to Rhino shareholder approval including approval by a "majority of the minority" of Rhino shareholders.

IVT currently has a total of 262 shareholders with no individual directly or indirectly beneficially holding a controlling interest in or otherwise controlling or directing the Company. Following completion of the Transaction, it is not expected that any one individual will hold more than 10% of the resulting issuer.

Following completion of the Transaction, the resulting issuer is expected to change its name to ImmunoVaccine Technologies Inc.

Assets of the Resulting Issuer

IVT, with facilities in Halifax, Nova Scotia, is a clinical-stage biotechnology firm which has patented vaccine delivery and enhancement technologies trade named VacciMax® and DepoVax™ with a strong early stage pipeline of infectious disease and cancer vaccine products.

IVT owns an intellectual property portfolio for its VacciMax® platform technology, including 18 granted patents and applications in Canada, US, Europe, Australia and Japan. US Patent 6,793,923 (issued in 2004) contains very broad claims to IVT's platform, covering "any antigen, any adjuvant in any liposome and any oil". The platform name is protected by trademark in the US and Europe. IVT has also filed additional patent applications to protect DepoVax™ formulations as well as delivery of oligonucleotides and others.

IVT's vaccine delivery and enhancement technology has achieved 100% tumor elimination in three independent pre-clinical models as well as reducing the number of doses required for efficacy of infectious disease vaccines from two or three to a single dose. IVT has developed a therapeutic vaccine against ovarian, breast and prostate cancer that, in conjunction with its vaccine delivery technology, is being readied to enter Phase I human clinical trials. IVT will pursue a fast-track regulatory strategy by taking the product through a short Phase I into a Phase II clinical trial. In addition, IVT is conducting pre-clinical studies for two infectious disease vaccines: single dose pandemic influenza and Hepatitis B. Both of these products could also enter Phase I clinical trials in the same timeframe as the therapeutic cancer product.

While IVT's technology is early stage, it has characteristics of a later stage entity. Use of IVT's delivery technology for human health applications has been evaluated in not just one, but a wide variety of preclinical therapeutic cancer and prophylactic infectious disease animal models. IVT has endeavoured to license the delivery technology to large health companies for use and has already licensed some uses to Pfizer Animal Health for livestock vaccines, generating its first revenues in Q1 2008.

IVT is committed to advancing an infectious disease and a therapeutic cancer vaccine into a Phase I clinical trial and plans to follow with Phase II trials, where justified with Phase I data to maximize value. At this date, IVT plans to do this sequentially, and will take only one product into a Phase I clinical trial in order to demonstrate safety and early efficacy of the DepoVax™ platform. The other products will follow at the appropriate time.

IVT has completed crucial scale-up and manufacturing method development for the DepoVax™ platform which is applicable to all of IVT's subsequent human health vaccines. The scale-up methods have been transferred to a reputable contract GMP(1) development and manufacturing facility. This site has an establishment license from Health Canada, which allows it to manufacture sterile products for clinical and commercial purposes. Dedicated, IVT-owned equipment has been purchased and installed at the site.

IVT has manufactured commercial scale vaccine batches, including the most recent 50 litres (200,000 doses) of a Hepatitis B vaccine. This accomplishment is particularly important because historically, large-scale production of liposomes has been a significant challenge. IVT has confirmed both the stability and that the biological activity of the batch is equivalent to IVT's laboratory batches.

The following is a summary of financial information from IVT's most recent audited financial statements at March 31, 2008:



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Assets $2,315,299
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Current Liabilities $358,741
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Long-term debt and obligation under capital lease $3,281,849
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Shareholders' Deficiency $1,325,291
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Net loss $2,563,677
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The audit for IVT's March 31, 2009 year-end is in progress and the results will be included in the Rhino's Filing Circular to be prepared in connection with the Transaction.



(1)GMP - Good Manufacturing Practices


IVT's Recent Accomplishments

September 30, 2008 - IVT was selected as one of the winners of Canada's Top 10 Life Sciences Companies (www.topcanadiancompanies.ca). Winners were chosen by an independent expert panel of Canadian and U.S. venture capitalists.

February 25, 2009 - IVT signed a collaborative agreement with the National Institute of Allergy and Infectious Diseases (NIAID) at the National Institutes of Health (NIH), in Maryland, USA. The research collaboration involves formulating NIAID antigens in DepoVax™, IVT's vaccine enhancement system, and exploring potential vaccines for HIV and malaria.

March 27, 2009 - IVT signed an agreement with the La Jolla Institute for Allergy & Immunology to test the application of its DepoVax™ vaccine delivery system to advance the development of vaccines against influenza and arenavirus.

April 14, 2009 - IVT announced the signing of a 3-year research agreement with Defence Research and Development Canada (DRDC). The research collaboration involves the preclinical application of IVT's DepoVax™ vaccine formulation to anthrax antigens to explore new methods to prevent, prepare for, and respond to biological threats.

May 20, 2009 - IVT announced a collaboration agreement with the National Research Council Institute for Biodiagnostics (NRC-IBD) Atlantic. This collaboration will develop new 3-D MRI technology to track the effect of IVT's DepoVax™ technology on reducing tumour growth.

May 26, 2009 - IVT announced a research partnership with FIT Biotech, a Finland-based, clinical stage company that develops DNA vaccines. This research will formulate FIT Biotech's GTU® MultiHIV DNA plasmid with IVT's DepoVax™ vaccine delivery system to advance a therapeutic HIV vaccine.

Directors and Management of the Resulting Issuer

As of this date, the following individuals are proposed to be insiders of the resulting issuer following completion of the Transaction:

Randal Chase, Ph.D., President, Chief Executive Officer and Director

Dr. Chase has a wealth of experience in vaccines and has spent his entire career, spanning more than 30 years, in the biotechnology and pharmaceutical sectors. Past positions include President of Shire Biologics, Senior Vice President Vaccines Operations of Biochem Pharma, President & CEO of North American Vaccine, President & CEO of Pasteur Merieux Connaught, Senior Vice President of Glaxo Canada Inc. Dr. Chase is active as a Board member with several companies and has many contacts in the biotechnology sector which will serve IVT well in the future through potential collaborations and networking opportunities.

William A. Cochrane, O.C., MD, Director

Dr. Cochrane is president of W.A. Cochrane and Associate Inc., a biotech products consulting company. Dr. Cochrane is well recognized as the founding Dean of Medicine for the Faculty of Medicine at the University of Calgary. He served as Deputy Minister of Health Services with the Government of Alberta, prior to his appointment as President and Vice Chancellor of the University of Calgary. In 1978, Dr. Cochrane assumed a business career as Chairman, President and CEO of Connaught Laboratories Ltd. Today Dr. Cochrane is a Director of several Canadian and American companies and is the Chairman of IVT's Compensation Committee.

Wade K. Dawe, Director

Wade K. Dawe is the President and Chief Executive Officer of Linear Gold Corp. Mr. Dawe has been an entrepreneur in Canadian mining and venture capital industries since 1994. With extensive contacts in the business and investment banking communities, he has worked and consulted for a number of publicly traded Canadian companies. Since 2004, he has raised over $100 million in equity financing. He is the Chairman of Linear Metals Corporation and also serves on the Boards of NWest Energy Inc. and East Energy Corp. Mr. Dawe has a Bachelor of Commerce degree from Memorial University.

The Hon. Michael Kirby, Ph.D., Director

The Hon. Michael Kirby is an international leader in advancing health care. His distinguished career spans academia, business, provincial and federal service. He was appointed the first Chair of the Mental Health Commission of Canada. He also serves on several boards including The Bank of Nova Scotia, Extendicare, Ontario Energy Savings Income Trust, MDC Partners and Indigo Books and Music. Former Senator Kirby was past chair of the Standing Senate Committee on Social Affairs, Science and Technology. He has been a member of the Trilateral Commission, the Council of the International Institute for Applied Systems Analysis, Luxemburg, Austria, and the Club of Rome. He was also a full-time professor in the School of Business Administration and the School of Public Administration at Dalhousie University.

Denis Ryan, Director

Mr. Ryan joined Wood Gundy as a stockbroker in Halifax from 1983 to 1990. From 1990 to 1998, he was Vice President Institutional Asset-Management with Altamira. Mr. Ryan is part-owner of Investment Counsel Morrison Williams Investment Management Ltd. He is involved with numerous community projects, most notable National Chairperson of the Fundraising Committee of the Darcy McGee Chair of Irish Studies at St. Mary's University in Halifax, former Member of the Board of Governors at St. Francis Xavier University. In 1994, he received an honorary degree, Doctor of Letters from St. Mary's University in Halifax, Nova Scotia. Mr. Ryan is a graduate from Memorial University.

Brian Lowe, Vice President & Corporate Secretary

As an accomplished entrepreneur and businessman with over thirty years experience, Mr. Lowe brings invaluable expertise to IVT, having been responsible for the incorporation and funding of several startup companies. Mr. Lowe, as co-founder of the company, is recognized for the incorporation and the initial funding of IVT. Mr. Lowe is a co-founder and a director of the First Angel Network Association, Atlantic Canada's Association for Private Investors and is a shareholder and Director of several operating companies throughout Atlantic Canada. He is chairperson of BioNova, Nova Scotia Life Sciences Association and a director of International Science and Technology Partnership Canada (ISTP Canada), a director of the National Angel Capital Association and a director of Springboard Atlantic.

Marc Mansour, Ph.D., Vice President R&D

Dr. Mansour's expertise lies in the fields of molecular biology, cellular biology and applied immunology. Dr Mansour has presented in numerous international conferences and has published in peer-reviewed journals in the areas of cell biology and cancer vaccines. Since he joined IVT, Dr. Mansour has advanced IVT's research by tailoring the VacciMax® platform for a variety of infectious disease and cancer vaccines. He worked extensively towards optimizing the VacciMax® platform for specific vaccine applications that are being developed in-house or in collaboration with commercial partners. He continues to lead the IVT science team in their efforts to optimize the platform for various applications and demonstrate manufacturability of VacciMax®-based vaccine products.

The Term Sheet also provides for two other independent directors to be nominated by the unanimous recommendation of Denis Ryan, Michael Kirby and William Cochrane. The two other directors will be subject to Exchange approval. The Chief Financial Officer of the resulting issuer has not been determined as of this date. Further disclosure regarding officer and director positions, subject to Exchange approval, may be made in subsequent news releases.

Concurrent Financings

As a condition to closing the Transaction, and subject to any necessary approvals, IVT will complete equity financings (the "Concurrent Financings") following or conditional on the Rhino Share Consolidation. The Concurrent Financings will consist of issuing a minimum of 7,142,857 IVT common shares priced at $0.70 per share for minimum aggregate gross proceeds of $5,000,000. It is expected that a minimum of 4,285,714 IVT shares will be issued pursuant to a private placement financing led by an agent to be retained by Rhino and IVT, and 2,857,143 IVT shares will be issued through subscription by existing IVT shareholders.

Rhino and IVT intend to use the proceeds of the financings to enter Phase I human clinical trials for IVT's therapeutic vaccine against ovarian, breast and prostate cancer, in conjunction with its vaccine delivery technology. Rhino and IVT plan to pursue a fast-track regulatory strategy by taking the product through a short Phase I and, if successful, into a Phase II clinical trial.

Following completion of the Transaction, including the Rhino Share Consolidation, the IVT Acquisition, and the Concurrent Financings, there are expected to be 40,077,277 common shares of Rhino outstanding (excluding the exercise of any options or warrants issued pursuant to the financing).

Conditions to the closing of the Qualifying Transaction

The closing of the Qualifying Transaction is subject to a number of terms and conditions including:

(a) completion, to the satisfaction of each party, in its sole discretion, of its due diligence review, including, without limitation, a review as to the operational, legal and accounting matters of the assets, liabilities, business, operations and prospects of the other party by June 15, 2009;

(b) the receipt by Rhino of a fairness opinion with respect to the transaction in a form and content satisfactory to the Rhino's Board of Directors;

(c) approval by the Boards of Directors of each of Rhino and IVT;

(d) the absence of: (i) any judgment, injunction, order or decree which restrains or enjoins or otherwise prohibits the Transaction; or (ii) a material adverse change in the business, affairs or results of operations of either party, which the other party determines will have a material adverse effect on the merged companies;

(e) compliance in all material respects by Rhino and IVT with their covenants and truth of representations and warranties provided for in the definitive agreement as at closing;

(f) to the extent required by securities and exchange regulations, approval by the shareholders of IVT including IVT shareholder approval of the Plan of Arrangement, with no more than 10% of IVT shareholders dissenting to the Plan of Arrangement;

(g) to the extent required by securities and exchange regulations, approval by the shareholders of Rhino including shareholder approval of the share consolidation and minority shareholder approval of the Transaction;

(h) Conditional listing of the Rhino shares required to complete the transaction;

(i) Completion of the Concurrent Financings described herein;

(j) approval by the Exchange;

(k) Court approval of the plan of arrangement; and

(l) receipt of all necessary waivers or consents.



Signed "Brian MacEachen" Signed "Brian Lowe
Brian MacEachen, Director - Rhino Brian Lowe, Vice President - IVT


Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, further due diligence, Exchange acceptance, and majority of the minority shareholder approval. 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 Rhino's Filing Circular to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Rhino should be considered highly speculative.

Certain information contained herein relating to but not limited to IVT and its vaccines contains forward-looking information under applicable securities law. All statements, other than statements of historical fact, which address activities, events or developments that we expect or anticipate may or will occur in the future are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. The within discussion is intended to identify certain factors, although not necessarily all factors, which could cause future outcomes to differ materially from those set forth in the forward-looking information. The risks and uncertainties that may affect the operations, performance, development and results of the business include, but are not limited to the following factors:

The major risk factors affecting the Rhino and IVT are completion of the Transaction, access to capital, the successful completion of the clinical trial phase I and receipt of all required regulatory approvals.

The reader is cautioned that these factors and risks are difficult to predict and that the assumptions used in the preparation of such information, although considered reasonably accurate by IVT at the time of preparation, may prove to be incorrect or may not occur. Accordingly, Rhino and IVT caution that actual results achieved may vary from the information provided herein and the variations may be material. There is no representation by Rhino or IVT that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof and Rhino and IVT do not undertake any obligation to update publicly or to revise any forward-looking information whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Rhino Resources Inc.
    Mr. Brian MacEachen
    Director
    902-422-1421
    or
    IVT
    Brian Lowe
    Vice President
    902-492-1819