A revised binding term sheet reflects improved
terms, and positions the parties for closing the
transaction
VANCOUVER and NINGBO, Zhejiang
Province, China, May
2, 2018 /CNW/ - RepliCel Life Sciences Inc. (OTCQB:
REPCF) (TSXV: RP) (FRA:P6P2) ("RepliCel" or the "Company"), a
company developing next-generation technologies in aesthetics and
orthopedics, is pleased to announce it now has a new Binding Term
Sheet (the "Term Sheet") with YOFOTO (China) Health Industry Co. Ltd. ("YOFOTO")
which both parties believe represents a stronger deal for both
sides and positions them to finalize the transaction in the very
near-term.
In January, RepliCel and YOFOTO announced their intent to form a
strategic partnership (the "Transaction") in Greater China (Mainland China, Hong Kong, Macau, and Taiwan) (the "Territory"). This was
reflected in the announcement of a binding term sheet and the
payment of a deposit of USD $650,000
(the "Deposit"). The Parties then began negotiating the definitive
agreements encompassing the terms of the transaction and ongoing
partnership.
"During the course of negotiating the full agreements," stated
RepliCel President & CEO, R. Lee
Buckler, "both parties learned a great deal about what was
critical to each side as well as what would be beneficial in terms
of setting up the relationship for long-term success. We are close
to definitive agreements on these new terms, excited to close this
transaction and proceed immediately to implementation in what is
one of the largest and most exciting markets in the world."
The deal structure in the revised and original binding term
sheets remains the same - an exclusive license to three RepliCel
products for the Territory in exchange for payment by way of
investment, milestones, program funding and sales royalties.
The original term sheet involved an up-front investment of USD
$6,500,000 by way of the purchase of
common shares (each, a "Share") at CDN $0.54 per Share (plus 10% warrant coverage
exercisable at CDN$0.54 per Share for
a period of two years), pre-and post-commercial milestone payments,
dedicated program funding in Greater
China over the next five years, and future royalty payments
calculated on gross product sales in the Territory.
The revised term sheet, similarly structured, involves a smaller
up-front investment of CDN $5,090,000
at CDN $0.95 per Share plus 20%
warrant coverage exercisable at CDN $0.95 per Share for a period of two years. The
deal structure continues to include milestone payments (of up to
CDN $4,750,000), sales royalties, and
a commitment by YOFOTO to spend a minimum of CDN $7,000,000 on the RepliCel programs over the next
five years in Greater China.
The Deposit already paid by YOFOTO pursuant to the original term
sheet, remains in escrow to be applied to the investment upon
execution of the final agreements which the parties currently
anticipate will be complete within the next several weeks.
As part of the Transaction, YOFOTO will receive an exclusive
license for RepliCel's tendon regeneration cell therapy (RCT-01) in
development, skin rejuvenation cell therapy (RCS-01) in
development, and its injection technology in development for dermal
applications (RCI-02) (excluding hair-related treatments) for the
Territory. Under certain conditions, relevant Chinese patents, once
issued in China, will be assigned
to a YOFOTO-owned Canadian subsidiary, with detailed assignment
reversion rights upon failure to meet defined targets.
As part of the Transaction, the
Company has agreed to grant YOFOTO certain financing
participation rights along with a board seat nomination.
Closing of the Transaction is
subject to execution of definitive
agreements for the Transaction, receipt of
approval of the TSX Venture
Exchange, and other applicable regulatory
authorities including but not limited to the reviews and approvals
by State Administration of Foreign Exchange of China and other Chinese foreign investment
regulatory authorities.
For more background to the Transaction, see RepliCel's
16 January 2018 press release.
About YOFOTO
YOFOTO (China) Health Industry Co., Ltd was
established in 2004 as a company engaged in the health and consumer
products industry. For example, YOFOTO has registered 31 different
nutraceuticals with the State Food and Drug Administration
(China). With a wide range of
successful commercial products in the food, personal health care,
and household categories, YOFOTO is now diversifying into
higher-value health-related products and services such as genetic
and blood testing, regenerative medicine, and destination
health-treatment clinics. As part of its strategy, YOFOTO has made
several investments outside of China. Its current expansion includes a global
R&D production base, organic food base, natural cosmetic
R&D center, a conference center, yacht club and health spa
resort.
YOFOTO employs a winner of Nobel Prize in physiology and
medicine, Professor Richard Roberts,
who heads the YOFOTO Global Products Advisory Committee, and also
leads collaborations with several leading scientific research
institutions. At present, YOFOTO has registered over 700 trademarks
and attained over 60 patents. YOFOTO has 32 provincial branches in
China and, in 2009, began
international expansion into Russia, Vietnam, Thailand and Cameroon. At the same time,
YOFOTO began active participation in the Asia-Pacific Economic
Cooperation (APEC) forum. YOFOTO Chairman of YOFOTO, Mr.
Huang Jin Bao, was elected to be the
member of the first APEC Chinese Industry and Commerce
Council.
About RepliCel Life Sciences
RepliCel is a
regenerative medicine company focused on developing cell therapies
for aesthetic and orthopedic conditions affecting what the Company
believes is approximately one in three people in industrialized
nations, including aging/sun-damaged skin, pattern baldness, and
chronic tendon degeneration. These conditions, often
associated with aging, are caused by a deficit of healthy cells
required for normal tissue healing and function. The Company's
product pipeline is comprised of RCT-01 for tendon repair, RCS-01
for skin rejuvenation, and RCH-01 for hair restoration. RCH-01 is
currently being co-developed with, and under exclusive license by,
Shiseido for certain Asian countries. All product candidates are
based on RepliCel's innovative technology, utilizing cell
populations isolated from a patient's healthy hair follicles.
RepliCel has also developed a proprietary injection device, RCI-02,
optimized for the administration of its products and licensable for
use with other dermatology applications. Please
visit www.replicel.com for additional information.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Disclaimer for Forward-Looking Statements
This press release contains forward-looking statements and
information that involve various risks and uncertainties regarding
future events, including, but not limited to, statements regarding:
(i) the completion of the Transaction with YOFOTO; (ii) the
terms of the Transaction and the milestone, program funding and
royalty payments to be made in connection with the Transaction; and
(iii) the closing of the Transaction.
These statements are only predictions and involve known and
unknown risks which may cause actual results and the Company's
plans and objectives to differ materially from those expressed in
the forward-looking statements, including: risks related to the
Company and YOFOTO being able to negotiate and enter
into the definitive agreements required for the
Transaction, risks related to the Company obtaining the approval of
the TSX-V and its shareholders, risks related to YOFOTO obtaining
consent for the Transaction from the required parties and
applicable regulatory authorities; risks that the
Company's products may not perform as, or have the
benefits, expected; risks that the Company's
products may not be accepted and
adopted by the public; the risk that the Company will not
obtain CE mark clearance for its injector device; the
risk that there will be delays enrolling clinical trial
participants; the risk that the Company will receive negative
results from the Company's clinical trials; the effects of
government regulation on the Company's business; risks associated
with the Company obtaining all necessary regulatory approvals for
its various programs; risks associated with the Company's ability
to obtain and protect rights to its intellectual property; risks
and uncertainties associated with the Company's ability to raise
additional capital; and other factors beyond the Company's control.
Although the Company believes that the expectations reflected in
the forward-looking statements are reasonable, it cannot guarantee
future results, levels of activity or performance. Further, any
forward-looking statement speaks only as of the date on which such
statement is made and, except as required by applicable law, the
Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it
is not possible for management to predict all of such factors and
to assess in advance the impact of such factors on the Company's
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statement. Readers should consult
all of the information set forth herein and should also refer to
the risk factor disclosure outlined in the Company's annual report
on Form 20-F for the fiscal year ended December 31, 2016 and other periodic reports
filed from time-to-time with the Securities and Exchange Commission
on Edgar at www.sec.gov and with the British Columbia Securities
Commission on SEDAR at www.sedar.com.
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SOURCE RepliCel Life Sciences Inc.