BTI BiOasis Technologies Inc

BIOASIS TECHNOLOGIES INC. (OTCQB:BIOAF; TSX.V:BTI) (the “Company” or “Bioasis”), a multi-asset rare and orphan disease biopharmaceutical company developing clinical stage programs based on epidermal growth factors and a differentiated, proprietary xB3™ platform for delivering therapeutics across the blood-brain barrier (“BBB”) and the treatment of central nervous system (“CNS”) disorders in areas of high unmet medical need, today announced that it has entered into a definitive agreement dated December 13, 2022 with Midatech Pharma plc (NASDAQ:MTP; AIM:MTPH) (“Midatech”), a company focused on the research and development of medicines that would benefit from improved bio-delivery or bio-distributions using proprietary drug delivery technologies, pursuant to which Midatech will acquire 100% of the issued and outstanding common shares in the capital of Bioasis from Bioasis’ shareholders in exchange for ordinary shares of Midatech in the form of American depositary shares (“ADSs”).

Midatech has also entered into securities purchase agreement with an institutional investor for (i) a registered direct offering of ADSs for gross proceeds of approximately US$400,000 (the “Registered Direct Offering”) that is expected to be completed on or about December 15, 2022 and (ii) a private placement equity financing for gross proceeds of approximately US$9.6M that will be completed concurrently with Midatech’s acquisition of Bioasis (the “PIPE”, and together with the Registered Direct Offering, the “Midatech Financing”).

The combination of Bioasis and Midatech will create a multi-asset rare and orphan disease company that will be renamed Biodexa Pharmaceuticals PLC (“Biodexa”). Bioasis and its shareholders are expected to benefit from Biodexa’s capital markets profile in the United States as a NASDAQ-listed company, as well as increased trading liquidity and broadened appeal to global index and generalist investors relative to Bioasis’ status as a TSXV-listed company. Biodexa is expected to have strengthened balance sheet with pro forma cash of approximately C$17.9 million as at June 30, 2022. Biodexa is also expected to benefit from the collective scientific, technical, and operational expertise of both Midatech and Bioasis as well as cost synergies as a result of the elimination of duplicative salaries, administrative and regulatory costs and other public company expenses. Through their ownership of ADSs, current Bioasis securityholders will maintain exposure to the value that is expected to be unlocked as Bioasis and Midatech’s pipeline programs progress through clinical development and the drug delivery technologies secure additional partnerships.

Bioasis’ Executive Chair, Deborah Rathjen PhD, commented “As shareholders are aware, in December 2021 we indicated that Bioasis would seek value accretive strategic alternatives and pursue opportunities that have the potential to unlock value and liquidity for shareholders. With this transaction and through the formation of Biodexa, it is anticipated that Bioasis’ pipeline will achieve value accretive milestones whilst continuing to monetize the xB3 platform through additional partnerships. Once the transaction is closed, Bioasis shareholders will have access to the benefits of a NASDAQ listing through their ownership of Biodexa. We are very excited by the prospects for this transaction given the evident synergies between Bioasis and Midatech”.

Mr Stephen Stamp, Midatech CEO and incoming Biodexa CEO added “By combining the two groups to create Biodexa Pharmaceuticals, we have the opportunity to reposition the enlarged group as an emerging biotech company focused on the development of therapeutics for rare diseases, supported by Midatech and Bioasis’s enabling drug delivery platforms. We continue to believe there is substantial value to be unlocked from Midatech’s MTX110, particularly in glioblastoma, and to leverage our Q-Sphera technology. In combination with Bioasis’s promising development pipeline we have the opportunity to create a much stronger group.”

Transaction Details

Bioasis and Midatech have entered into an arrangement agreement (the “Arrangement Agreement”) pursuant to which Midatech will acquire all of the issued and outstanding common shares in the capital of Bioasis from Bioasis’ shareholders by way of a statutory plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia) in exchange for ordinary shares of Midatech (in the form of ADSs) on the basis of 0.9556 Midatech ordinary shares (or approximately 0.0382 ADSs) for each Bioasis share.

Upon completion of the Arrangement and the Midatech Financing, it is expected that the current Midatech securityholders, the current Bioasis securityholders and the Midatech Financing investor will own approximately 39.8%, 30.7% and 9.9%, respectively, of the issued and outstanding Biodexa shares on a non-diluted diluted basis and 10.5%, 9.3% and, subject to the ownership limitations described below, 66.1%, respectively, of the issued and outstanding Biodexa shares on a fully-diluted diluted basis, with the balance held by Lind (as defined below) and Ladenburg (as defined below) or reserved for issuance to the vendors pursuant to Bioasis’ contingent payment obligations under the terms of the asset purchase agreement dated June 15, 2022 among Bioasis and the owners of Cresence AS (see Bioasis press release dated June 16, 2022 for further details).

Pursuant to the terms of the Midatech Financing, the investor in the Midatech Financing may not (i) exercise any of the warrants to be issued to it in the Midatech Financing to the extent that, after giving effect to such exercise, it (together with its affiliates or any person with whom it is acting in concert under the UK Takeover Code) would own more than 9.99% of the outstanding ordinary shares or (ii) at any time (together with its affiliates or any person with whom it is acting in concert under the UK Takeover Code), directly or indirectly own more than 29.9% of the outstanding ordinary shares.

Completion of the Arrangement is subject to the completion of the Midatech Financing and Midatech shareholder approval along with other closing conditions customary for transaction of this nature including, among other things, approval of the Arrangement by the Supreme Court of British Columbia and the approval of at least two-thirds of the votes cast by (i) all Bioasis shareholders, and (ii) Bioasis shareholders together with Bioasis warrantholders and optionholders, voting together as a single class, determined on an as-converted to Bioasis share basis, in each case, present in person or by proxy at the annual and special meeting called for purposes of reviewing and approving the Arrangement (the “Bioasis Meeting”). The Arrangement Agreement includes customary deal protection provisions pursuant to which each party (i) has agreed not to solicit any other acquisition proposal (subject to customary fiduciary out rights and, in the case of Midatech, exceptions required under UK law) and (ii) will pay a termination fee of US$330,000 to the other party (subject, in the case of Midatech, to certain exceptions required under UK law) if the Arrangement Agreement is terminated in certain circumstances. The directors and officers of Bioasis, together with certain other shareholders, who collectively own approximately 8.2% of Bioasis’ issued and outstanding common shares, have entered into transaction support agreements with Midatech pursuant to which they have agreed to vote their Bioasis shares in favour of the Arrangement at the Bioasis Meeting.

Under the Arrangement Agreement, Midatech has agreed to advance a bridge loan in the amount of US$750,000 to Bioasis following the completion of the Registered Direct Offering (the “Midatech Bridge Loan”). The Midatech Bridge Loan will bear interest at the rate of 2.0% per month and is repayable on the earlier to occur of (i) completion of the Arrangement, (ii) the occurrence of an event of default and (iii) June 30, 2023. Bioasis’ obligations under the Midatech Bridge Loan are secured by a second-ranking pledge of all of its assets. Bioasis will use the proceeds of the Midatech Bridge Loan for working capital purposes.

After the completion of the Arrangement and subject to the receipt of any Midatech shareholder approvals required by AIM, Midatech will use its commercially reasonable efforts delist its shares from AIM, change its name to Biodexa Pharmaceuticals PLC and restructure its board of directors and officers with Stephen Parker serving as non-executive chairman, Deborah Rathjen (currently Bioasis’ executive chair and Chief Executive Officer), Mario Saltarelli (currently a Bioasis director) and Simon Turton serving as non-executive directors and Stephen Stamp serving as Chief Executive Officer and director.

The board of directors of Bioasis (the “Board”) has unanimously approved the Arrangement Agreement and resolved to recommend that Bioasis securityholders vote in favour of the Arrangement at the Bioasis Meeting. The Board has obtained an opinion from Evans & Evans Inc. that, subject to the assumptions, limitations and qualifications on which such opinion is based, the consideration to be received by Bioasis shareholders in connection with the Arrangement is fair, from a financial point of view, to such shareholders.

Subject to all conditions precedent to completion of the Arrangement being met, the Arrangement is expected to close in the first quarter of 2023. In connection with the closing of the Arrangement, Bioasis will apply to have its shares delisted from the TSX Venture Exchange.

Amendments to Lind Convertible Security Funding Agreement and Bridge Loan

In connection with the execution of the Arrangement Agreement, Bioasis and Lind Global Macro Fund, LP (“Lind”) entered into a waiver and amending agreement (the “Lind Amending Agreement”) in respect of the convertible security funding agreement between Bioasis and Lind dated June 21, 2021 (the “CSFA”).

Pursuant to the Lind Amending Agreement, among other things, Lind agreed to (i) waive Bioasis’ repayment obligations under the CSFA until December 31, 2022, (ii) consent to the completion of the Arrangement and (iii) advance a C$350,000 bridge loan to Bioasis (the “Lind Bridge Loan”), net of amounts payable to Lind in respect of its legal fees and expenses. In consideration of the foregoing, Bioasis agreed to issue a promissory note to Lind in the amount of C$510,000 (the “Holiday Note”) along with a promissory note in the principal amount of the Lind Bridge Loan. The Holiday Note and the Lind Bridge Loan bear interest at the rate of 2.0% per month and are repayable on the earlier to occur of (i) completion of the Arrangement, (ii) the occurrence of an event of default and (iii) June 30, 2023. Bioasis’ obligations under the Holiday Note and the Lind Bridge Loan are secured by a first-ranking pledge of all of its assets. Bioasis will use the proceeds of the Lind Bridge Loan to fund transaction expenses related to the Arrangement.

Concurrently with the execution of the Lind Amending Agreement, Bioasis, Midatech and Lind entered into a tripartite agreement (the “Tripartite Agreement”) pursuant to which, among other things, Midatech agreed to (i) assume Bioasis’ obligations under the CSFA concurrently with the completion of the Arrangement, (ii) repay to Lind, upon completion of the Arrangement, 50% of the outstanding principal and 100% of the accrued pre-paid interest under the CSFA and all amounts owing under the Lind Bridge Loan and the Holiday Note. Lind agreed that the remaining 50% of the principal owing under the CSFA will be satisfied by way of the issuance to Lind by Midatech of the securities issuable under the PIPE at the same price at which such securities are issued in the PIPE.

Additional Information

Full details of the Arrangement are set out in the Arrangement Agreement, which will be filed by Bioasis, along with copies of the Lind Amending Agreement and the Tripartite Agreement, under its profile on SEDAR at www.sedar.com. In addition, further information regarding the Arrangement will be contained in a management information circular of the Company to be prepared in connection with the Meeting. All securityholders of Bioasis are urged to read the management information circular once it becomes available, as it will contain additional important information concerning the Arrangement.

Advisors

Goodmans LLP and Lawson Lundell LLP are Bioasis’ Canadian legal advisors. Ladenburg Thalmann & Co. Inc. (“Ladenburg”) is Bioasis’ financial advisor. Pursuant to the terms of Ladenburg’s engagement by Bioasis, Ladenburg is entitled to receive a fee upon the completion of the Arrangement in the form of Midatech securities.

On behalf of the Board of Directors of Bioasis Technologies Inc.

Deborah Rathjen, Ph.D., Executive Chair of the Board

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About Bioasis

Bioasis Technologies Inc. is a multi-asset rare and orphan disease biopharmaceutical company developing clinical stage programs based on epidermal growth factors and the xB3™ platform, a proprietary technology for the delivery of therapeutics across the blood brain barrier and the treatment of CNS disorders in areas of high unmet medical need. The delivery of therapeutics across the blood-brain barrier represents the final frontier in treating neurological disorders. The in-house development programs at Bioasis are designed to develop symptomatic and disease-modifying treatments for brain-related diseases and disorders. For more information about the Company, please visit www.bioasis.us.

About Midatech

Midatech is a drug delivery technology company focused on improving the bio-delivery and biodistribution of medicines. Midatech combines approved and development medications with its proprietary and innovative drug delivery technologies to provide compelling products that have the potential to powerfully impact the lives of patients. Midatech has developed three in-house technology platforms, each with its own unique mechanism to improve delivery of medications to sites of disease. All of Midatech’s technologies have successfully entered human use in the clinic, providing important validation of the potential for each platform: (i) Q-Sphera™ platform: a disruptive micro-technology used to prolong and control the release of injectable therapeutics over an extended period of time (from weeks to months), (ii) MidaSolve™ platform: an innovative nanotechnology used to solubilize inherently insoluble drugs so that they can be administered in liquid form directly and locally into tumors and (iii) MidaCore™ platform: a gold nanotechnology used for targeting medications to sites of disease. The platform nature of the technologies offers the potential to develop multiple drug assets rather than being reliant on a limited number of programs. Midatech’s technologies are supported by 36 patent families including 120 granted patents and an additional 70 patent applications. Midatech's headquarters and R&D facility is in Cardiff, UK. For more information please visit www.midatechpharma.com

Cautionary Statement on Forward-Looking Information

This press release may contain certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. In particular, this news release contains forward-looking information pertaining to the following: statements regarding the Arrangement, including with respect to the benefits of the Arrangement and expectations regarding the combined company (including its drug delivery technologies and their progress towards approval and commercialization, its market presence and financial condition); the timing of key Arrangement milestones and closing; the ability of Midatech and Bioasis to satisfy the conditions to and to complete the Arrangement; and expectations regarding the impact of the Arrangement on Midatech and Bioasis including in respect of anticipated financial and operating results, strategy and business, and on stakeholders in general. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Bioasis to control or predict, that may cause their actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: the satisfaction of the conditions precedent to the closing of the Arrangement (including the obtaining of all shareholder, court, and regulatory approvals and completion of the Midatech Financing); risks associated with the Arrangement and acquisitions generally; the Arrangement Agreement may be terminated in certain circumstances; Bioasis will incur costs even if the Arrangement is not completed; all necessary approvals and consents may not be obtained; uncertainty regarding the ability of the parties to complete all Arrangement milestones on the intended timing; and other related risks and uncertainties, including, but not limited to, risks and uncertainties relating to Bioasis and its business disclosed in Bioasis’ filings on SEDAR at www.sedar.com. Bioasis undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents Bioasis’ best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.

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

Contacts:

Deborah Rathjen, Ph.D., Executive Chair of the Board and CEOdeborah@bioasis.us203-533-7082

Investor Contact:

Graeme DickColwell Capital Corp.graeme@colwellcapital.com403-561-8989