Santa Maria Petroleum Inc.
TSX VENTURE : SMQ.H
NEX BOARD : SMQ.H

Santa Maria Petroleum Inc.

October 06, 2016 19:35 ET

Santa Maria Announces Letter of Intent for Proposed Merger With Kalytera Therapeutics

TORONTO, ONTARIO--(Marketwired - Oct. 6, 2016) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Santa Maria Petroleum Inc. (the "Company") (NEX:SMQ.H) is pleased to announce that it has entered into a non-binding letter of intent dated October 6, 2016 (the "Letter of Intent") in respect of a proposed arm's length merger transaction with Kalytera Therapeutics, Inc. ("Kalytera") that would result in a reverse takeover of the Company by Kalytera (the "Proposed Transaction"), subject to approval of the TSX Venture Exchange ("TSXV") to list the shares of the resulting entity (the "Resulting Issuer") on the TSXV, among other conditions. The Resulting Issuer will operate as a life sciences issuer continuing the business of Kalytera.

About Kalytera Therapeutics

Kalytera is advancing a portfolio of non-psychoactive cannabinoid and endocannabinoid-like medicines. Preclinical studies support the continued investigation of Kalytera drug candidates in a range of important unmet market needs, including bone fracture healing, osteogenesis imperfecta, osteoporosis, and osteoporosis in Prader-Willi syndrome.

Kalytera drug candidates include cannabidiol ("CBD"), a natural non-psychoactive cannabis constituent which Kalytera plans to deliver using novel methods; KAL436/439, proprietary synthetic derivatives of CBD that have been structurally modified to improve potency; and KAL671, a proprietary form of the free fatty acid oleoyl-alphamethyl-serine.

Kalytera is advancing its drug candidates through a research partnership with Yissum Research Development Company of the Hebrew University of Jerusalem Ltd. ("Yissum") and with Ramot at Tel Aviv University ("Ramot"), with multiple preclinical studies underway or planned. Kalytera believes that the research being undertaken by Yissum and Ramot may enable it to file Investigational New Drug applications with the U.S. Food and Drug Administration.

Kalytera's leadership includes Dr. Raphael Mechoulam, a pioneer in the field of cannabis research and the discoverer of the endocannabinoid system, and Dr. Robert S. Langer, a prolific biotechnologist, engineer, and inventor who is widely recognized in biotechnology, especially in the field of drug delivery systems. Kalytera is a corporation organized under the laws of the State of Delaware, U.S. with its headquarters in Manhattan Beach, California. For additional information, visit: http://kalytera.co.

Proposed Transaction

The Letter of Intent provides that the Company and Kalytera will negotiate and enter into a definitive agreement in respect of the Proposed Transaction on or before October 24, 2016 (the "Definitive Agreement").

Pursuant to the terms of the Letter of Intent, completion of the Proposed Transaction will be subject to a number of conditions, including completion of an Offering (described below), shareholder approval, if required, completion or waiver of sponsorship, receipt of all required regulatory approvals, including the approval of the TSXV, completion of satisfactory due diligence reviews, satisfaction of the initial listing requirements of the TSXV and all requirements under the policies of the TSXV relating to the completion of the Proposed Transaction, and execution of the Definitive Agreement.

The Company and Kalytera will complete the Proposed Transaction by way of a share exchange, amalgamation, arrangement, share purchase, or other form of transaction which would result in Kalytera becoming a wholly-owned subsidiary of the Company or otherwise combine its corporate existence with a wholly-owned subsidiary of the Company. Once the Proposed Transaction structure is determined, the Letter of Intent will be superseded by the Definitive Agreement. Following completion of the Proposed Transaction, the combined company will hold all of Kalytera's assets and conduct the business of Kalytera.

In connection with the Proposed Transaction and for a period ending 12 months following the completion of the Proposed Transaction, each of the shareholders of Kalytera, including current directors, officers and insiders of Kalytera, will enter into lockup agreements restricting trading of their shares of the Resulting Issuer. The anticipated completion date for the Proposed Transaction is December 15, 2016.

A filing statement or management information circular, as applicable, will be prepared and filed in accordance with the policies of the TSXV.

Financing

As a condition to the completion of the Proposed Transaction, it is anticipated that Kalytera will complete a brokered subscription receipt financing, through a syndicate of agents led by Clarus Securities Inc. ("Clarus"), for aggregate gross proceeds of up to $6,000,000 through the issuance of subscription receipts ("Subscription Receipts") at a price of $0.40 per Subscription Receipt (the "Offering"), subject to the rules of, and approval by, the TSXV. Upon satisfaction of the escrow release conditions, including all conditions precedent to the Proposed Transaction being satisfied, each Subscription Receipt will automatically convert without any further action on the part of the holder into one (1) common share of the Resulting Issuer ("Resulting Issuer Shares"). Should the escrow release conditions not be satisfied, the Subscription Receipts will be cancelled and all proceeds from the sale of Subscription Receipts will be returned to subscribers without interest.

As compensation for the services provided in connection with the Offering, Clarus will receive a cash commission equal to 7% of the gross proceeds raised in connection with the Offering and broker warrants equal to 7% of the Resulting Issuer Shares.

Upon completion of the Proposed Transaction, the proceeds of the Offering will be used to further develop the business of the Resulting Issuer and for general working capital purposes.

Sponsorship

Sponsorship of the Proposed Transaction may be required by the TSXV unless an exemption or waiver from this requirement can be obtained in accordance with the policies of the TSXV. The Company intends to apply for a waiver of the sponsorship requirement. There is no assurance that a waiver from this requirement can or will be obtained.

Additional Information

The common shares of the Company are currently halted from trading pending completion of the Proposed Transaction.

A comprehensive press release with further particulars relating to the Proposed Transaction, financial particulars and descriptions of the proposed board of directors and management of the Resulting Issuer will follow in accordance with the policies of the TSXV.

All information contained in this press release with respect to the Company and Kalytera was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

The common shares of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Cautionary Note

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 Offering, execution of the Definitive Agreement in respect of the Proposed Transaction, TSXV acceptance and, if applicable, pursuant to policies of the TSXV, majority of the minority shareholder approval. 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 to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) has in any way passed upon the merits of the Proposed Transaction and associated transactions and neither of the foregoing entities has in any way approved or disapproved of the contents of this press release.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

Forward-Looking Statements

This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the Proposed Transaction including statements regarding the terms and conditions of the Proposed Transaction and the Letter of Intent, as well as information relating to Kalytera. The information about Kalytera contained in the press release has not been independently verified by the Company. Although the Company believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Transaction and the Letter of Intent; that the ultimate terms of the Proposed Transaction and the Letter of Intent will differ from those that currently are contemplated; and that the Proposed Transaction and the Letter of Intent will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The terms and conditions of the Proposed Transaction may change based on the Company's due diligence and the receipt of tax, corporate and securities law advice for both the Company and Kalytera. The statements in this press release are made as of the date of this release. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, Kalytera, their securities, or their respective financial or operating results (as applicable).

Contact Information

  • Santa Maria Petroleum Inc.
    Lisa-Marie Iannitelli
    Investor Relations
    (416) 362-4441