ResolutionRx Ltd, a Subsidiary of RespireRx Pharmaceuticals Inc., Enters into Letter of Intent with Cantheon Capital for the Financing of Anticipated Research and Development Costs
Glen Rock, N.J., May 24, 2023/Globe Newswire – RespireRx Pharmaceuticals Inc. (OTC Pink Market: RSPI) (“RespireRx”) and ResolutionRx Ltd (“ResolutionRx”), collectively “RespireRx” and its subsidiaries and business units are referred to in this press release as the “Company.” ResolutionRx, an unlisted public Australian company, (Australian Company Number or ACN: 664 925 651) and a wholly-owned subsidiary of RespireRx, and RespireRx are pleased to jointly announce that on May 18, 2023, ResolutionRx entered into a Letter of Intent (the “Cantheon LOI” or “Cantheon Term Sheet”) with Cantheon Capital (“Cantheon”) that describes an intended aggregate investment of US$3,125,000 by Cantheon in Australian Series A Preference Shares (the “Series A Shares”) to be issued by ResolutionRx to support clinical trial research and development (“R&D”) over the R&D period, with each tranche of the investment equal to 25% of the clinical trial costs of the cannabinoid program that are described in the the ResolutionRx clinical research services (“CRO”) agreement with iNGENu and the subject of ResolutionRx approved invoices received from iNGENu.
The terms of the Cantheon LOI are binding, subject only to, (i) satisfactory completion of definitive documents substantially consistent with the terms of the Cantheon Term Sheet, (ii) satisfactory completion of due diligence, (iii) the previously announced iNGENu services agreement being valid and enforceable by all parties, and (iv) the development and commercialization rights to the RespireRx cannabinoid program have been sub-licensed, licensed, assigned, transferred or otherwise made available to ResolutionRx.
The Series A Shares are convertible, and upon conversion, shall at all times be paid with Ordinary Shares and not in cash. The Series A Shares are subject to a mandatory and automatic conversion feature which is generally triggered the day before the consummation of an initial public offering (“IPO”) by ResolutionRx, or after certain timeframes have occurred or upon the occurrence of certain corporate events.
In the Cantheon LOI, ResolutionRx represented that it will incur R&D costs of approximately US$16,530,571 during the performance of R&D which is expected to occur over approximately two and a half years. ResolutionRx also represented that it will reasonably endeavor to ensure that the Ordinary Shares will be listed for trading on the Australian Securities Exchange (“ASX”) within eighteen months of the anniversary date of the services agreement with iNGENu. Such listing will be either by IPO, backdoor (shell merger) or direct listing or another mutually agreed method.
The Cantheon investment will be exempt from registration under the applicable U.S. federal and state securities laws, rules and regulations. Cantheon also acknowledged that ResolutionRx will be conducting additional financings, including but not limited to additional offerings of Series A Shares in Australia as well as other forms of financing.
“This Cantheon Term Sheet, along with our Letter of Intent and Term Sheet with Radium Capital, our services agreement with our CRO iNGENu, our recently established relationships with our Australian based research and development tax credit advisors and accounting firm and our Australian based law firm, our commercial bank and our new relationship (as of May 22, 2023) with our local Australian financial advisor, PrimaryMarkets Pty Ltd, as well as the restatement of our Australian Constitution to, among other things, establish the Series A Shares, we believe completes the major initial components of our plan to create a fully operational cannabinoid drug research and development company in Australia that will have adequate capital to conduct its strategic and operational plans,” said Jeff Margolis, Senior Financial Officer, ResolutionRx and Chief Financial Officer of RespireRx.
“This financing is a crucial next step in the restructuring of RespireRx and the founding and funding of ResolutionRx. Combined with the previously announced debt facility similar to a line of credit to be provided by Radium Capital to finance ResolutionRx’s anticipated 43.5% tax credit under the Australian Research and Development Tax Incentive, the Cantheon financing will provide a significant amount of the funds needed in order for ResolutionRx to conduct the upcoming research and development activities necessary for the commercialization of its pharmaceutical cannabinoid platform,” said Arnold Lippa, Interim CEO and CSO of RespireRx.
The above is a summary of what RespireRx and ResolutionRx believe are key the provisions of the Cantheon LOI and is qualified in its entirety by RespireRx’s Current Report on Form 8-K filed with the U.S. Securities and Commission on May 24, 2023.
