Rhino Resources Inc.
TSX VENTURE : RHI.P

August 19, 2009 09:06 ET

Rhino and IVT Update Qualifying Transaction

HALIFAX, NOVA SCOTIA--(Marketwire - Aug. 19, 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 definitive Arrangement Agreement (the "Agreement") reflecting the terms of a binding term sheet dated effective June 1, 2009 for Rhino's non-arm's length acquisition (the "Transaction") of IVT. The details of the Transaction were included in a press release dated June 8, 2009 and certain information is updated or reported herein. The Transaction represents an agreement, 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.

Rhino has provided the Exchange with satisfactory documentation in connection with the Transaction and trading of the common shares of Rhino will resume on August 21, 2009. Trading of the common shares of Rhino was halted on June 1, 2009, at Rhino's request.

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, "The initial reaction to the Transaction has been extremely positive. 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 Agreement provides 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 have entered into a plan of arrangement (the "Plan of Arrangement") and will 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 30,601,110 IVT common shares issued and outstanding which will be exchanged for 30,601,110 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 $21,420,777.

Upon closing of the Transaction, 2,715,437 outstanding IVT options entitling the holders to purchase a total of 2,715,437 common shares of IVT at an average price of $0.59 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. Effective August 26, 2009, 52,000 of the IVT warrants entitling holders to purchase 78,000 common shares of IVT at an exercise price of $1.17 per share will expire.

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 related party qualifying transaction, pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, and will be subject to Rhino shareholder approval including approval by a "majority of the minority" of Rhino shareholders.

As previously disclosed the directors of the resulting issuer will be comprised of five existing directors of IVT, plus two additional directors to be nominated by the unanimous recommendation of Denis Ryan, Michael Kirby and William Cochrane, each of whom will continue as independent directors of the resulting issuer following completion of the Transaction. The two additional directors will be subject to Exchange approval and are expected to be appointed following the Transaction and in accordance with the Company's by-laws. The Chief Financial Officer of the resulting issuer has not been determined as of this date.

IVT currently has a total of 279 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 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.

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, 2009:



--------------------------------------------
Assets $2,026,230
--------------------------------------------
Current Liabilities $ 591,454
--------------------------------------------
Long-term debt $4,716,521
--------------------------------------------
Shareholders' Deficiency $3,281,745
--------------------------------------------
Net loss $3,732,244
--------------------------------------------


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 2,857,143 IVT shares will be issued pursuant to a brokered private placement and 4,285,714 IVT shares will be issued through subscription by existing IVT shareholders. Blackmont Capital Inc. has been appointed the lead agent of the brokered private placement and SP Angel Corporate Finance LLP and Beacon Securities Limited have been appointed as Co-agents. The agents will earn an 8% cash commission equal on the brokered private placement and will receive agents' warrants entitling the agents to acquire IVT common shares, equal to 8% of the shares issued pursuant to the brokered private placement, at a price per share of $0.70 and expiring 12 months following the closing of the Transaction. The maximum concurrent financing is limited to 12,857,143 IVT common shares priced at $0.70 per share for maximum aggregate gross proceeds of $9,000,000.

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 remains subject to a number of terms and conditions including:

a) 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;

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

c) Completion of the Concurrent Financings described herein;

d) Court approval of the plan of arrangement;

e) approval by the Exchange;

f) 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;

g) 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; and

h) receipt of all necessary waivers or consents.

The transaction is expected to close before September 30, 2009.

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 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 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.

(1) GMP - Good Manufacturing Practices

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
    ImmunoVaccine Technologies Inc.
    Brian Lowe
    Vice President
    (902) 492-1819