“We are pleased to have been able to assist Neptune with their growth initiatives, while entering into favorable operational arrangements, including a licensing agreement in which Neptune will now market and sell Onemia,” highlighted Pierre Lemieux, PhD, Acasti’s chief operating officer. Onemia is a unique, proprietary krill oil-based omega-3 phospholipid, which is defined as a medical food.
“Given Neptune's leadership in innovation, sales and marketing in the omega-3 space, it is the ideal partner to maximize the potential of Onemia. As a result of this licensing agreement, Acasti is able to be singularly focused on the development pathway for its prescription drug candidate, CaPre, while further leveraging its medical food asset.”
On January 7, 2016 Neptune announced its acquisition of Biodroga Inc., a leading dietary solution provider. As part of the borrowing arrangements for this transaction, Acasti has agreed to support Neptune by granting to the Bank a limited recourse pledge in the amount of $2.0 million Canadian (the “Committed Funds”), in accordance with a security agreement with respect to deposits entered into between the Bank and Acasti at closing of the acquisition of Biodroga (the “Pledge Agreement”). The Bank will not have any personal recourse against Acasti, nor the assets of Acasti, other than the Committed Funds assigned in the Pledge Agreement. As such, the $2.0 million assigned in the Pledge Agreement should be considered as restricted cash and not available to Acasti until released by the Bank or reduced by Neptune.
Neptune has agreed to pay Acasti pursuant to a fee agreement (the “Fee Agreement”) an annual fee on the Committed Funds outstanding at an annual rate of 9% during the first six months, and 11% for the remaining term of the Pledge Agreement.
In connection with the completion of the transaction, Neptune and Acasti have also entered into operational agreements pertaining to: the marketing by Neptune of Onemia, a medical food of Acasti, pursuant to which Acasti will receive a royalty payment of 17.5% on net sales made by Neptune, the reduction of the operational charges payable by Acasti to Neptune, and the fixing of the selling cost of the Raw Krill Oil (RKO) material provided by Neptune to Acasti for CaPre Phase 3 clinical trials.
As previously disclosed, Acasti decided to find strategic alternatives for Onemia and focus its energy and resources on the development of CaPre. Consequently, the Corporation entered into a non-exclusive licensing agreement with Neptune in which Neptune will engage on a best commercial efforts basis to market Onemia. Given Neptune's sales and marketing leadership in the krill oil market, Acasti believes that Neptune is best placed to market Onemia.
The entering into of these agreements with Neptune collectively constitute a “related party transaction” within the meaning of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions (“Regulation 61-101”).
In connection with the Related Party Transaction, Neptune and Acasti are each relying on the formal valuation and minority approval exemptions of respectively subsection 5.5(a) and 5.7(1)(a) of Regulation 61-101 as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Related Party Transaction exceeds 25% of their respective market capitalization. The Board of Directors of Acasti has unanimously approved the Related Party Transaction. Mr. Jim Hamilton, who is a director of Acasti and Neptune, abstained from voting.
A material change report in respect of the Related Party Transaction will be filed by Acasti but could not be filed earlier than 21 days prior to its completion due to the fact that the transaction was still subject to the finalization and closing of the transaction involving the acquisition of Biodroga by Neptune.
For more information: www.acastipharma.com/en ; neptunekrilloil.com