DelMar Pharmaceuticals, Inc. Announces $5.6 Million Private Placement Of Preferred Shares

VANCOUVER, British Columbia and MENLO PARK, Calif., May 5, 2016 /PRNewswire/ -- DelMar Pharmaceuticals, Inc. (OTCQX: DMPI) ("DelMar" and the "Company"), a biopharmaceutical company focused on the development and commercialization of new cancer therapies, today announced a closing of a private placement of Preferred Shares for gross proceeds of $5.6 million, and the restructuring of 2,095,238 warrants. These steps enable DelMar to substantially improve its balance sheet, remove a significant portion of the derivative liability from its balance sheet and help position the Company to qualify to list its common stock on a senior exchange.

"We believe the structure of this preferred share financing, with no warrants, provides motivation for our investors to maintain a long-term interest in our shares as we continue to build our company," said Jeffrey Bacha, Chairman and CEO of DelMar Pharmaceuticals. "This infusion of new capital and the decrease in derivative liability are part of a broader strategy to pursue a senior listing, a goal that we believe will allow us to attract a wider range of institutional investors and increase share liquidity, which in turn should increase shareholder value."

"DelMar has made a great deal of progress in the development of our lead product candidate, VAL-083.  These new funds will allow us to maintain the momentum we have established in this program through 2017 as we continue to pursue our mission to benefit patients and create shareholder value by developing and commercializing anti-cancer therapies."

Thus far in 2016, DelMar's progress in developing VAL-083 has included:

• Confirmation that the Company plans to meet with the FDA to discuss a Phase III study design for refractory glioblastoma multiforme (GBM) during the first half of 2016;
• Presentation of new data demonstrating that VAL-083 appears to have a distinct mode of action from other chemotherapies widely used in the treatment of cancer;
• Entering into a collaboration agreement with the University of Texas MD Anderson Cancer Center ("MD Anderson") to accelerate the clinical development of VAL-083 for the treatment of GBM.  As part of the collaboration, MD Anderson will initiate a new Phase II clinical study with VAL-083 in patients with GBM at first recurrence/progression, prior to Avastin® exposure;
• Obtaining an orphan drug designation for VAL-083 in the United States for the treatment of ovarian cancer and medulloblastoma, in addition to previous orphan drug designations for VAL-083 in glioma in the USA and Europe; and
• Presenting data at the American Association for Cancer Research (AACR) annual meeting that confirmed a well-tolerated VAL-083 dosing regimen of 40 mg/m2/daily every 3 days in a 21 day cycle has been selected for advancement into a Phase III study as a potential new therapy for the treatment of refractory GBM.

In this offering, DelMar sold 700,238 Series B Preferred Shares for gross proceeds of $5.6 million.  Each Preferred Share is convertible into 10 shares of the Company's common stock at the holder's discretion.  The Series B Preferred Shares are not registered for resale.  The terms of the Series B Preferred Shares to not include anti-dilution price protection and there were no warrants issued to investors in conjunction with the Series B Preferred Shares.

As an incentive to the investors to retain ownership of the Preferred Shares, DelMar also entered into a Royalty Agreement with the holders whereby DelMar shall pay a single-digit royalty based on their pro rata ownership of the Preferred Shares.  The royalty shall be payable based on future direct sales of VAL-083 by the Company or for cash received from partnering or licensing arrangements.  The royalty is earned by the holder at closing; however, upon conversion of the Preferred Shares to common, a holder will only be entitled to receive royalties that have vested prior to conversion.  The royalty will vest equally at the end of each year during the first three years after closing to holders who continue to hold Preferred Shares upon each of the first, second and third 12 month anniversary dates of closing. 

In parallel with the offering, DelMar also entered into an agreement with certain warrant holders to amend terms of 2,095,238 warrants by removing and changing certain language in order to remove derivative liability accounting treatment.  In consideration of acceptance of amended terms, the warrant term was extended by one year to March 31, 2019. The warrants remain exercisable at $0.78 and are subject to a redemption provision, at the Company's option, if the price of the Company's common shares trades above $1.60 for twenty (20) consecutive trading days.

About DelMar Pharmaceuticals, Inc. DelMar Pharmaceuticals, Inc. was founded to develop and commercialize new cancer therapies in indications where patients are failing or have become intolerable to modern targeted or biologic treatments. The Company's lead drug in development, VAL-083, is currently undergoing clinical trials in the U.S. as a potential treatment for refractory glioblastoma multiforme. VAL-083 has been extensively studied by U.S. National Cancer Institute, and is currently approved for the treatment of chronic myelogenous leukemia and lung cancer in China. Published pre-clinical and clinical data suggest that VAL-083 may be active against a range of tumor types via a novel mechanism of action that could provide improved treatment options for patients.

DelMar has been conducting a Phase I/II clinical trial with VAL-083 as a potential new treatment for glioblastoma multiforme (GBM), the most common and aggressive form of brain cancer.  DelMar provided an update on this ongoing trial at AACR confirming that results to date support the potential of a VAL-083 to offer a clinically meaningful survival benefit and a promising new treatment option for GBM patients who have failed or are unlikely to respond to currently available chemotherapeutic regimens.  The Company anticipates meeting with the FDA in the first half of 2016 to discuss a proposed registration-directed Phase III protocol and data from its current clinical trial with a goal of advancing VAL-083 into registration-directed clinical trials for GBM patients who have failed temozolomide and bevacizumab.

For further information, please visit http://delmarpharma.com/; or contact DelMar Pharmaceuticals: [email protected] / (604)629-5989 / (212)675-2100. Connect with the Company on Twitter, LinkedIn, Facebook, and Google+.

Safe Harbor Statement Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties. The factors that could cause actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties relating to the Company's ability to develop, market and sell products based on its technology; the expected benefits and efficacy of the Company's products and technology; the availability of substantial additional funding for the Company to continue its operations and to conduct research and development, clinical studies and future product commercialization; and, the Company's business, research, product development, regulatory approval, marketing and distribution plans and strategies. These and other factors are identified and described in more detail in our filings with the SEC, including, our current reports on Form 8-K.

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SOURCE DelMar Pharmaceuticals, Inc.