DiaMedica Inc. (TSX VENTURE: DMA)("Diamedica"), a biopharmaceutical
company that has discovered and is developing a novel approach to
treating diabetes, announces it has entered into a non-binding
letter of intent to acquire all of the issued and outstanding
shares of Sanomune Inc. ("Sanomune"), a privately held
biopharmaceutical company developing treatments for neurological,
autoimmune and other indications.
Sanomune was named a Top 10(TM) Canadian Life Sciences Company
for 2008/2009 and its pipeline includes a promising neuroprotective
protein that also triggers neural stem cell proliferation and an
attractive monoclonal antibody program.
"The proposed Sanomune acquisition will allow us to take
advantage of a unique opportunity to strengthen our patent
portfolio and expand the indications targeted by our DM-199 program
by gaining access to Sanomune's complementary SAN-61. Furthermore,
we expect to capitalize on increased product development
opportunities while bringing together two of Canada's Top 10(TM)
life sciences companies," stated Rick Pauls, President and Chief
Executive Officer of DiaMedica.
Sanomune's lead compound, SAN-61, for the treatment of
Alzheimer's disease, has demonstrated neural protection (protects
brain cells) as well as the ability to trigger neural stem cell
proliferation (generates new brain cells). In Alzheimer's
transgenic mice treated with SAN-61, research indicates a
restoration of neurogenesis to near normal/wild-type levels. The
compound also exhibits potent protection against a variety of in
vitro challenges such as amyloid beta peptide, hydrogen peroxide
and oxygen/glucose deprivation including up to an 80% reduction of
neuronal cell death in an Alzheimer's amyloid toxic challenge.
Together, the data suggest SAN-61 could protect and regenerate
brain tissue and therefore may represent a promising agent for the
treatment of neurodegenerative diseases. Previous studies have
demonstrated that SAN-61 has a statistically significant and
measurable effect on EEG patterns (a marker of cognitive function)
in dementia patients. SAN-61 has received regulatory clearance to
enter a phase II clinical trial for Alzheimer's disease.
"We believe that the proposed acquisition will allow DiaMedica
to strategically connect the common base technologies of the two
companies while taking advantage of cost synergies in an effort to
expand into neurological and other indications. Following the
acquisition of Sanomune, the company's initial neurological focus
will be on Alzheimer's and Huntington's disease with the
possibility of expanding into autoimmune disorders such as
rheumatoid arthritis and type I diabetes. Concurrently, DiaMedica
will be advancing its small molecule, DM-71, for type 2 diabetes. "
continued Mr. Pauls.
As a result of the proposed acquisition, DiaMedica will also
acquire Sanomune's panel of monoclonal antibodies (mAbs) that
triggers the inhibition of glycogen synthetase kinase 3 beta
(GSK3B) in vitro. GSK3B has been linked to diabetes, cancer and a
variety of neurological disorders such as Alzheimer's and
Huntington's disease. The panel of mAbs is currently being tested
at leading institutions around the world for these and other
indications. The mAbs program will complement DiaMedica's core
DM-199 program, which has also been shown to have GSK3B inhibiting
activity as a potential follow-on product line.
"The proposed transaction will allow DiaMedica to focus on the
development of the DM-199 recombinant protein program for diabetes
while expanding into the neurological diseases such as Alzheimer's
and Huntington's. We expect that, following the acquisition,
DiaMedica will have access to broader financing markets, a strong
corporate image to raise capital, and increased business
development opportunities" concluded Mr. Pauls.
Pursuant to the letter of intent, entered into with Sanomune and
CentreStone Ventures Limited Partnership ("CentreStone"),
Sanomune's principal shareholder, DiaMedica is proposing to acquire
all of the issued and outstanding shares of Sanomune from Sanomune
shareholders in exchange for approximately 12.8 million common
shares of DiaMedica, representing 40% of the shares of DiaMedica
post acquisition. Completion of the acquisition is subject to
certain conditions, including receipt of necessary exchange and
regulatory approvals, DiaMedica board and shareholder approval
(including any required minority approval), completion of
satisfactory due diligence and completion of definitive legal
documentation with all Sanomune shareholders, among others. There
can be no assurance that all of these conditions will be satisfied.
As CentreStone is a "control person" of both DiaMedica and
Sanomune, currently holding approximately 22% of the issued and
outstanding common shares of DiaMedica and 59% of the issued and
outstanding shares of Sanomune, the acquisition will be considered
a "related party transaction", and will also be subject to certain
requirements of Multilateral Instrument 61-101 ("MI 61-101"). Among
these will be the requirement to obtain DiaMedica minority
shareholder approval. Post-acquisition, CentreStone is expected to
hold approximately 11.8 million (36.8%) shares of DiaMedica.
Pursuant to MI 61-101, each of Genesesys Venture Inc., a promoter
and Eric Johnstone DiaMedica's Vice President, Finance will be
considered "related parties" for the purpose of the proposed
transaction.
Bloom Burton & Co. acted as the advisor on the proposed
transaction.
About Sanomune
Sanomune is a private biotechnology company focused on
developing treatments for neurological diseases. The company's lead
compound, SAN-61, is a promising treatment for Alzheimer's disease,
and has demonstrated neural protection (protects brain cells)
properties as well as the ability to trigger neural stem cell
proliferation (creates new brain cells). SAN-61 has received
regulatory clearance for a phase II clinical trial and the compound
has demonstrated measurable effects on EEG patterns (a marker of
cognitive function) in dementia patients. Sanomune is also
developing treatments for Parkinson's disease, Huntington's disease
and other disease indications. In addition to its neurological
products, the company is also developing a product for radiation
exposure and a suite of mAbs for Alzheimer's disease, mixed lineage
leukemia and diabetes through the inhibition of GSK3B. The company
was named a "Top 10 Canadian Life Science Company" for 2008/9 by
the Ottawa Centre for Research and Innovation. For additional
information, please visit www.sanomune.com.
About DiaMedica
DiaMedica is developing novel treatments for type 2 diabetes
based on a newly discovered nerve signal mechanism. DiaMedica
completed a successful phase II trial with its first clinical stage
product, DM-71, which demonstrated the ability to reduce HbA1c
(blood sugar) levels and weight in humans. DiaMedica also completed
a successful phase II trial with its second compound, DM-83, which
showed a decrease in insulin levels. Results from a phase IIa
clinical trial demonstrated encouraging results that DM-99 may be
able to lower blood glucose in type 2 diabetes patients after
consumption of a meal. The company's DM-199 compound is an improved
proprietary recombinant version of DM-99. DiaMedica has been
recognized as one of Canada's Top 10(TM) Life Sciences Company's
for 2007/2008 and 2008/2009 by the Ottawa Centre for Research and
Innovation. The company is listed on the TSX Venture Exchange under
the trading symbol "DMA". For additional information please visit
the Company's website: www.diamedica.com.
Caution Regarding Forward-Looking Information
Certain statements contained in this press release constitute
forward-looking information within the meaning of applicable
Canadian provincial securities legislation (collectively,
"forward-looking statements"). These forward-looking statements
relate to, among other things, our objectives, goals, targets,
strategies, intentions, plans, beliefs, estimates and outlook,
including, without limitation, our anticipated future operating
results, and can, in some cases, be identified by the use of words
such as "believe," "anticipate," "expect," "intend," "plan,"
"will," "may" and other similar expressions. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements.
These statements reflect management's current beliefs and are
based on information currently available to management. Certain
material factors or assumptions are applied in making
forward-looking statements, and actual results may differ
materially from those expressed or implied in such statements.
Important factors that could cause actual results to differ
materially from these expectations include, among other things:
DiaMedica's early stage of development, lack of product revenues
and history of operating losses, uncertainties related to clinical
trials and product development, rapid technological change,
uncertainties related to forecasts, competition, potential product
liability, additional financing requirements and access to capital,
unproven markets, supply of raw materials, income tax matters,
management of growth, partnerships for development and
commercialization of technology, effects of insurers' willingness
to pay for products, system failures, dependence on key personnel,
foreign currency risk, risks related to regulatory matters and
risks related to intellectual property and other risks detailed
from time to time in DiaMedica's filings with Canadian securities
regulatory authorities, as well as DiaMedica's ability to
anticipate and manage the risks associated with the foregoing.
Additional information about these factors and about the material
factors or assumptions underlying such forward-looking statements
may be found in the body of this news release, as well as under the
heading "Risk Factors" contained in DiaMedica's final long-form
prospectus dated March 12, 2007. DiaMedica cautions that the
foregoing list of important factors that may affect future results
is not exhaustive. When relying on DiaMedica's forward-looking
statements to make decisions with respect to DiaMedica, investors
and others should carefully consider the foregoing factors and
other uncertainties and potential events.
These risks and uncertainties should be considered carefully and
prospective investors should not place undue reliance on the
forward-looking statements. Although the forward-looking statements
contained in this press release are based upon what management
believes to be reasonable assumptions, DiaMedica cannot provide
assurance that actual results will be consistent with these
forward-looking statements. DiaMedica undertakes no obligation to
update or revise any forward-looking statement.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: DiaMedica Inc. Kevin Richardson, Ph.D 204.478.5605
204.453.3745 (FAX) krichardson@diamedica.com www.diamedica.com
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