Item
1.01 Entry into a Material Definitive Agreement.
On
November 22, 2019, effective as of November 15, 2019, Generex Biotechnology Corporation (“Generex”) entered
into a definitive Stock Purchase Agreement (the “SPA”) for the purchase of 51% of the outstanding capital stock (the
“ALTuCELL Stock”) of GH Care, Inc. DBA ALTuCELL, Inc.(“ALTuCELL”). The ALTuCELL Stock consists
of newly issued shares of ALTuCELL.
ALTuCELL
has a broad patent portfolio for cell encapsulation technology and cellular therapy The ALTuCELL patent portfolio includes global
patents for the AltuCapsÒ cell encapsulation platform, together with patents for the chemistry, manufacturing, and ultra-purification
of capsules. ALTuCELL has also been granted a wide-ranging patent, Microencapsulation of Myofibroblasts (Stem cells) Isolated
from Wharton Jelly for Prevention and Treatment of Autoimmune and Inflammatory Diseases.
Gary
Harlem is ALTuCELL’s President & Chief Executive Officer.
Under
the SPA, in exchange for the ALTuCELL Stock, Generex will
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Issue
to ALTuCELL 1,600,000 shares of Generex common stock with an initial attributed value
of $2.50 per share. If the market price per share of the Generex common stock is below
$2.50 on the 6-month anniversary of the closing date, the attributed price of the Generex
shares will be repriced to market with a floor of $1.25 per share, and Generex will deliver
the number of GNBT shares required to make up the difference in total value.
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Pay
$2.5 million in cash ($112,000 of which has already been paid).
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In
addition to stock and cash at closing, Generex has agreed to pay up to an aggregate of $3,500,000 to ALTuCell upon ALTuCell’s
attainment of certain milestones, as follows:
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$500,000 upon initiating a first-in-human
clinical trial of Altsulin, microencapsulated Sertoli Cells.
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$2,000,000 upon initiating a human
clinical trial of a cell therapy product using ALTuCAPS microencapsulation technology in the United States.
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$1,000,000 upon completing a business
development deal with a biopharmaceutical company partner.
The
milestone payment shall be made in cash or Generex stock at ALTuCELL’s option. Generex stock will have an attributed value
of the lower or $2.50 per share or the market price at time of milestone attainment, but no lower than $1.25
If
Generex fails to make a milestone payment within 60 days of ALTuCELL achieving a milestone, Generex will be required to return
ALTuCELL Stock commensurate with the failed milestone payment.
Closing
of the transaction, anticipated to occur before the end of December, 2019, is subject to customary conditions, including each
party’s satisfaction with its due diligence and board of directors’ approval.
Following
closing, for so long as Generex owns not less than fifty-one percent (51%) of the issued and outstanding equity securities of
ALTuCELL, the size of ALTuCELL’s Board of Directors shall be set at five (5) composed of (i) the CEO of ALTuCELL, (ii) one
officer of ALTuCELL, (iii) the CEO of Generex, (iv) one appointee of the Generex, and (v) one independent director, mutually agreed
upon by Generex and ALTuCELL.
ALTuCELL
is required to deliver certain audited financial statements at Closing. In the event that the financial statements are not delivered
Generex is entitled, in its sole discretion, to rescind the transaction.
This
Current Report contains summaries of the material terms of the SPA. The summary of this document is subject to, and is qualified
in its entirety by, reference to the SPA, which is filed as an exhibit hereto and incorporated herein by reference.
The
filing of this Current Report does not constitute an admission by Generex that the SPA is material for any specific purpose.
Forward-Looking
Statements
Statements
in this report may contain certain forward-looking statements. All statements included concerning activities, events or developments
that the Generex expects, believes or anticipates will or may occur in the future are forward-looking statements. Actual results
could differ materially from the results discussed in the forward-looking statements. Forward-looking statements are based on
current expectations and projections about future events and involve known and unknown risks, uncertainties and other factors
that may cause actual results and performance to be materially different from any future results or performance expressed or implied
by forward-looking statements. Known risks and uncertainties also include those identified from time to time in the reports filed
by Generex with the Securities and Exchange Commission, which should be considered together with any forward-looking statement.
No forward-looking statement is a guarantee of future results or events, and one should avoid placing undue reliance on such statements.
Generex undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future
events or otherwise. Generex cannot be sure when or if it will be permitted by regulatory agencies to undertake additional clinical
trials or to commence any particular phase of clinical trials. Because of this, statements regarding the expected timing of clinical
trials or ultimate regulatory approval cannot be regarded as actual predictions of when Generex will obtain regulatory approval
for any “phase” of clinical trials or when it will obtain ultimate regulatory approval by a particular regulatory
agency. Generex claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities
Litigation Reform Act. Additional information on these and other risks, uncertainties and factors is included in the Company’s
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed
with the SEC.