August 13, 2015 – Lattice Biologics Inc. (“Lattice”) is pleased to announce that it has entered into a letter of intent (the “LOI”) with Blackstone Ventures Inc. (“Blackstone”) (TSX‐V: BLV), a company listed on the TSX Venture Exchange. Pursuant to the LOI, Blackstone is proposing to acquire all of the issued and outstanding securities of Lattice (the “Transaction”). The Transaction will constitute a reverse takeover of Blackstone by Lattice with the resulting combined company being publicly listed on the TSX Venture Exchange.
The Transaction
On closing of the Transaction, the stockholders of Lattice will receive 35,764,184 shares of Blackstone in exchange for all of the issued common stock of Lattice. As a result, former stockholders of Lattice will own approximately between 77% and 82% of Blackstone. These shares of Blackstone will be comprised of both shares and/or unlisted convertible, restricted voting shares.
Under the terms of the LOI and prior to closing of the Transaction, Blackstone will have completed two share consolidations (effectively being a combined 60:1 consolidation of Blackstone) and settled outstanding debt through the issuance of common shares.
Additionally, Lattice has convertible notes having an aggregate principal amount of USD $1,050,000 and is in the process of granting rights to acquire an aggregate of 1,500,000 common shares of Blackstone over a period of three years in consideration of services to be rendered up to and including January 1, 2018, to members of Lattice’s Scientific Advisory Board. These commitments will be assumed by Blackstone and remain outstanding. It is anticipated that upon completion of the Transaction, Blackstone will have an aggregate of between 43,455,064 and 46,455,064 shares (inclusive of restricted shares) outstanding, and share purchase warrants to acquire up to an additional 3,333,333 shares outstanding.
Closing of the Transaction is subject to a number of conditions including Blackstone raising funds of up to $2,000,0000 (subject to a $1,100,000 minimum), both parties completing satisfactory due diligence, the entering into a definitive agreement in respect of the Transaction, receipt of all required shareholder, regulatory and third party approvals, including stock exchange approval, and satisfaction of other customary closing conditions. The Transaction cannot close until the required approvals are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Grenville Royalty Financing
Lattice anticipates that, prior to the closing of the Transaction, Grenville Strategic Royalty Corp. (“Grenville”) will advance USD $700,000 (the “Loan”) to Lattice pursuant to a secured convertible promissory note (the “Note”). Amounts owing to Grenville under the Note will bear interest at a rate of 12.5% per annum, which interest rate will increase to 18% per annum upon the occurrence of an event of default under the Note. The Note will be secured pursuant to a general security agreement, and will mature and become payable by Lattice on July 31, 2016 (the “Maturity Date”). Under the terms of the Note, the entire outstanding amount of the Loan and any accrued and unpaid interest thereon may, at Lattice’s election, be repaid in part or in full prior to the Maturity Date, without penalty. At Grenville’s election, on or after the Maturity Date, the Loan, and interest due and payable thereon may be converted into a gross sales royalty (the “Royalty”) pursuant to an Amended and Restated Royalty Purchase Agreement (the “Royalty Agreement”) between Lattice and Grenville. Upon conversion, the Loan will form part of an aggregate US $3,700,000 advance (inclusive of the Loan) from Grenville under the Royalty Agreement. Subject to closing of the Transaction, Grenville will also receive 500,000 non-transferable share purchase warrants of Blackstone. Each warrant may be exercised to acquire one common share at a price of CAD $0.60 per share for a period of 12 months which may be reduced in certain circumstances.
About Lattice
Lattice is an emerging personalized/precision medicine leader in the field of cellular therapies and tissue engineering, with a focus on bone, skin, and cartilage regeneration. Lattice develops and manufactures biologic products to domestic and international markets.
Lattice’s products are used in a variety of applications, including:
- Enhancing fusion in spine surgery
- Enhancing breast reconstruction post mastectomy for breast cancer patients
- Sports medicine indications, including ACL repair
- Promotion of bone regeneration in foot and ankle surgery
- Promotion of skull healing following neurosurgery
- Enhancing wound repair in burn victims
- Subchondral bone defect repair in knee and other joint surgeries
Lattice is partnered in developing new precision medicine technologies to address widespread unmet clinical needs in cancer treatment. These technologies will provide an invaluable diagnostic service by utilizing patients’ own breast cancer or solid tumor cells, amplifying them within a human Extracellular Cellular Matrix (ECM) and utilizing proprietary viability markers to test the efficacy of anti-cancer agents.
Lattice’s principal goal is to develop diagnostic treatments capable of assisting physicians in identifying the most effective treatment plans for individuals on a completely personalized basis.
Lattice’s headquarters, laboratory and manufacturing facilities are located in Scottsdale, Arizona. The facility includes ISO Class 1000 and ISO Class 100 clean rooms, and specialized equipment capable of crafting traditional allografts and precision specialty allografts for various clinical applications. The Lattice team includes highly trained tissue bank specialists, surgical technicians, certified sterile processing and distribution technicians, and CNC operators who maintain the highest standards of aseptic technique throughout each step of the manufacturing process. From donor acceptance to the final packaging and distribution of finished allografts, Lattice is committed to maintaining the highest standards of allograft quality, innovation, and customer satisfaction.
Lattice maintains all necessary licensures to process and sell its tissue engineered products within the U.S. and internationally. This includes Certificates to Foreign Governments from the U.S. Food and Drug Administration (FDA) for 29 countries, which allow the export of bone, tendon, meniscus, ligament, soft tissue, and cartilage products outside of the U.S.
Further information on Lattice, including current financial statements, will be filed and posted on SEDAR upon the completion of disclosure document that will be prepared in accordance with stock exchange requirements in connection with the Transaction.
