2020-11-03 10:57 ET – News Release

Mr. Roderick Matheson reports

ALPHANCO VENTURE CORP. TO ACQUIRE MARVEL BIOTECHNOLOGY INC. IN A REVERSE TAKEOVER TRANSACTION

Alphanco Venture Corp. has signed a merger agreement dated Oct. 28, 2020, pursuant to which the company will acquire all of the outstanding shares of Marvel Biotechnology Inc. The proposed transaction is intended to be a qualifying transaction for the company as defined under TSX Venture Exchange policies. A copy of the agreement is available under the company’s profile on SEDAR.

Marvel was incorporated pursuant to the Business Corporations Act (Alberta) on Aug. 1, 2018, and is a Calgary-based biotechnology company that utilizes a target repurposing approach to drug development in large markets that have few or no competitors. Marvel is focused on a non-traditional biotech model in that it identifies assets, compounds or new chemical entities that have come off patent protection for certain already approved disease indications. Unlike a traditional or repurposing biotech model, Marvel develops synthetic chemical derivatives to significantly enhance certain compounds that results in a new novel and patentable asset for a new disease indication. The result is that there is significantly less cost and time to develop Marvel’s assets compared with traditional biotech companies.

Marvel has currently developed several new patented and patentable chemical entities, using synthetic chemical derivatives of known, off-patent drugs that inhibit the A2a adenosine receptor with application to neurological diseases (depression and anxiety, Alzheimer’s, attention-deficit/hyperactivity disorder and addiction), cancer and application to the non-neurological disease of non-alcoholic steatohepatitis liver fibrosis. Marvel is also exploring additional undisclosed targets to expand its asset pipeline.

The controlling shareholder of Marvel is Renaissance Mercantile Corp., which is controlled by J. Roderick Matheson.

Summary of the proposed transaction

The proposed transaction will be completed by way of a merger between Marvel and a newly incorporated and wholly owned Alberta subsidiary of the company. Marvel will become a wholly owned subsidiary of the company on completion of the proposed transaction by way of the shareholders of Marvel exchanging their shares in Marvel at a ratio of 1 to 1 for shares of the company at a deemed price of 40 cents per company share. Other than the issuance of company shares, there is no other consideration payable by the company to acquire Marvel. Upon completion of the proposed transaction, the company will continue on with the business of Marvel and, accordingly, the resulting issuer intends to list as a Tier 2 life sciences issuer on the TSX-V.

In connection with the proposed transaction, the resulting issuer intends to appoint five directors to its board of directors, to continue its corporate status into Alberta, to appoint MNP LLP as its auditors and approve a new stock option plan. AVC has called a shareholder meeting to approve these matters to be effective on completion of the proposed transaction.

Prior to the closing of the proposed transaction, the company intends to change its name to Marvel Biotechnology Corp., or such other name as may be agreed upon the parties.

On completion of the proposed transaction and financings:

  1. The shareholders of Marvel will exchange their shares for shares of the resulting issuer at the deemed QT price and will hold up to approximately 15,610,098 common shares of the resulting issuer for a deemed total valuation of Marvel of approximately $6.25-million; and
  2. The shareholders of Marvel will exchange their 16,668,200 common share purchase warrants at varying exercise prices and varying terms at a ratio of 1 to 1 for common share purchase warrants issued by the resulting issuer at duplicate exercise prices and terms, not including the potential exercise of up to five million common share purchase warrants held by a founder of Marvel.

In the event the founder warrants are exercised, the shareholders of Marvel will hold approximately 20,610,098 common shares of the resulting issuer at the deemed QT price and 11,668,200 common share purchase warrants at varying exercise prices and varying terms.

No deposits, advances or loans have been made by the company to Marvel and none are contracted to be made pursuant to the agreement.

The company will be seeking a waiver of the sponsorship requirements of TSX-V Policy 2.2 Sponsorship and Sponsorship Requirements, but there is no assurance that such waiver will be granted.

Conditions to the proposed transaction

The completion of the proposed transaction remains subject to a number of terms and conditions customary for transactions of this nature, including regulatory and shareholder approval of the matters contemplated by the agreement and the satisfactory completion of due diligence on the company by Marvel.

As a condition of completion of the proposed transaction and subject to the minimum AVC participation, the resulting issuer will complete, concurrent with closing, a non-brokered private placement of a minimum five million shares and up to a maximum of 10 million resulting issuer shares at a price of 40 cents per resulting issuer share, for aggregate gross proceeds of a minimum $2-million and a maximum of $4-million. Finder’s fees may be payable on a portion of the concurrent financing to eligible finders.

Pursuant to the merger agreement and the execution of a subsequent definitive agreement, AVC has committed to AVC shareholders or purchasers sourced by AVC purchasing a minimum of $1-million worth of securities in connection with this transaction made up of the aggregate dollar amount taken down by such purchasers in (i) the Marvel private placement of up to $250,000, and (ii) the balance of a minimum $750,000 of the concurrent financing, as totals $1-million (or more) (referred to as the minimum AVC participation). It is expected that insiders of Marvel, their assigns or their friends, family, business associates or accredited investors shall subscribe for a minimum of $2-million in the concurrent financing.

In addition, pursuant to the terms of the merger agreement, 670,000 outstanding AVC stock options will be cancelled.

Financings

Marvel is also in the process of completing an additional private placement to finance further clinical studies and for general corporate purposes. Prior to Nov. 13, 2020, Marvel intends on completing, in one or more closings, a non-brokered unit private placement at 30 cents per unit of no less than $250,000 (of which $106,000 has been raised so far) and no more than $500,000, each unit consisting of a common share and a common share purchase warrant, with each warrant entitling the holder to purchase an additional common share at 50 cents per share for a period of 24 months. Marvel has granted AVC the option for AVC shareholders or purchasers sourced by AVC to purchase up to $250,000 of the Marvel private placement. No further issuances of securities by Marvel will occur prior to the closing of the proposed transaction.

Share capital and escrow

On completion of the proposed transaction and the concurrent financing, the company is anticipated to have approximately the following capitalization:

  • Up to a minimum 32,310,098 and maximum 37,310,098 resulting issuer shares.
  • Up to 12,068,200 resulting issuer share warrants to purchase resulting issuer shares inclusive of 400,000 broker warrants already issued and prior to the concurrent financing.

The resulting issuer intends to grant stock options pursuant to a new stock option plan. A finder’s fee in the amount of $5,000 plus applicable taxes will be paid on completion of the proposed transaction.

It is anticipated that current securityholders of the company are expected to hold approximately 20.7 per cent of the resulting issuer assuming the minimum concurrent financing or 18 per cent of the resulting issuer shares assuming the maximum amount of the concurrent financing, and approximately 15.1 per cent (minimum concurrent financing) or 13.6 per cent (maximum concurrent financing) on a fully diluted basis.

Securities issued to Marvel shareholders by AVC pursuant to the proposed transaction (other than those issued pursuant to the concurrent financing and or other than prescribed exceptions in TSX-V policies), held by principals of the resulting issuer, are subject to escrow, and all securities held by non-principals are subject to seed share resale restrictions. No new insiders of the resulting issuer (excluding those in their capacities as proposed directors and officers) are expected to be created under the proposed transaction.

The common shares of the company were halted, effective Oct. 28, 2020, and are not expected to recommence trading on the TSX-V prior to completion of the proposed transaction. The proposed transaction is anticipated to close on or before Feb. 1, 2021. The proposed transaction is not a non-arm’s-length qualifying transaction as such term is defined under TSX-V policies.

Proposed directors and officers of the resulting issuer

On completion of the proposed transaction, the directors and officers of AVC are expected to resign, other than Joanne Yan, who is expected to remain a director, and the following board of directors and management team are expected to be appointed:

Mr. Matheson, chief executive officer and director 

Mr. Matheson has spent over 35 years of his career in the investment and capital markets industries and is an experienced and seasoned senior executive in diverse areas of finance, capital markets, entrepreneurship and investing. Among his accomplishments are multiple financings in excess of $1-billion of both public and private companies in the biotechnology, technology, mining, oil and gas industries as well as numerous venture start-ups. Mr. Matheson began his career at Wood Gundy in 1983 becoming vice-president and director. He left Wood Gundy in 1995 to spearhead the Calgary operations of Canaccord Capital Corp. and after several years moved to Bolder Investment Partners, starting up its Calgary operations. In 2010, Bolder merged and Mr. Matheson and his colleagues moved to other independent investment firms concluding with Aligned Capital Partners Inc. until late 2019. A significant amount of Mr. Matheson’s career has been spent in capital markets advisory and risk management services to companies and industries that require his expertise. In late 2019, Mr. Matheson commenced the operation of Renaissance Mercantile Corp., a privately owned merchant bank where he is executive chairman and is a shareholder of Marvel Biotechnology Inc.

Mr. Matheson currently provides services as the president and chief executive officer of Marvel pursuant to an executive management and administrative services agreement from Renaissance Mercantile Corp.

Dr. Mark Williams, president, chief science officer and director 

Dr. Williams is chief scientific officer of Marvel and has 15 years of experience in drug and medical device development having repurposed three drugs from preclinical studies directly to positive phase 2 data, including manufacturing and toxicology. Dr. Williams is the author of more than 12 patents and an inventor of DM199 (a recombinant protein) in phase 2 trials for stroke and kidney disease. Dr. Williams is also involved in the financing and collaboration/partnership side of life science companies, having assisted to secure arrangements with drug foundations, pharma companies and various government agencies including Health Canada and U.S. FDA.

Dr. Williams has a master in business administration from the University of Manitoba and a PhD from the University of Alberta.

Preston Maddin, chief financial officer 

Mr. Maddin has been a chartered professional accountant for over 30 years and since 1983 has been president and chief executive officer of Pan-Meridian Capital Corp., a private management, investment and consulting company that provides independent executive contract services to junior and emerging private and public companies with an emphasis on companies in the biotechnology and medical device sector. Mr. Maddin has over 38 years of experience with domestic, international private and public company equity and debt financings, stock exchange listings and advisory to board and management teams, corporate capital structuring, corporate acquisitions of assets and or shares, executive contract management and corporate governance.

Mr. Maddin has a bachelor of commerce degree from the University of Saskatchewan.

Mr. Maddin provides services as the chief financial officer of Marvel pursuant to an executive management and administrative services agreement from Renaissance Mercantile Corp.

Ms. Yan, director

Ms. Yan has extensive public company experience having been a leading director, a governance committee chair and executive officer of numerous companies listed on the TSX-V and the Toronto Stock Exchange. Since September, 1994, Ms. Yan has been president of Joyco Consulting Services Inc., a wholly owned private Vancouver, B.C., company, providing business consulting services particularly with respect to mergers and acquisitions and related public and private financings.

Jacqueline Groot, corporate secretary

Ms. Groot began her career in the investment industry with Wood Gundy in 1987 and was a licensed investment adviser at Wood Gundy and Canaccord Capital Corp. until 1998. From 2010, Ms. Groot was a licensed investment adviser with the independent firms Sora Group Wealth Advisors, Jordan Capital Markets, Salman Partners and concluding with Aligned Capital Partners until late November, 2019. A significant amount of Ms. Groot’s career has been spent in capital markets advisory. She has extensive knowledge of capital markets, trade execution, financial products including derivatives, and investment themes. Ms. Groot also has a strong background in technical and relative strength market analysis. 

In late 2019, Ms. Groot joined the operation of Renaissance Mercantile Corp., a privately owned Calgary-based merchant bank where she is corporate secretary and director of administration. Ms. Groot currently provides services as corporate secretary of Marvel pursuant to an executive management and administrative services agreement from Renaissance Mercantile Corp.

The resulting issuer plans to expand the board of directors from three to five directors and to elect two additional nominees of Marvel as directors of the resulting issuer, conditional and effective on completion of the proposed transaction.

About Marvel

Marvel as described above, carries on the business as a biotechnology and life sciences company.

The attached table presents certain unaudited historical management-prepared financial information of Marvel for the financial year ended July 31, 2020, and is subject to further amendment and adjustment on completion of the year-end audit, inclusive of scientific research and experimental development disclosure or accruals as appropriate.

                                    Marvel (unaudited)
                                       as at July 31, 2020
Current assets                                    $259,810
Total assets                                      $260,147
Current liabilities                               $123,148
Total liabilities                                 $146,504
Shareholders' (or members') equity                $113,643
(deficit)

 

About Alphanco Venture Corp.

AVC is a capital pool company pursuant to the policies of the TSX Venture Exchange with a view to completing a qualifying transaction within 24 months of listing. Management of the company has been actively engaged in assessing possible projects with a view to completing an acquisition.

We seek Safe Harbor.

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