Adaltis plans C$20 million sale of convertibles; Proteome wraps A$2.5 million placement of stock

By Devika Patel

Knoxville, Tenn., Aug. 25 - Adaltis Inc. announced a large private placement Monday in an otherwise quiet PIPE market, agreeing to sell C$20 million of convertibles to Clarity China Partners, LP and FMRC Family Trust.

The news, however, failed to rouse investors as the company's shares (Toronto: ADS) dropped 13%, or 3 cents, to close at C$0.20.

Separately, Proteome Systems Ltd. said it concluded a A$2.5 million stock sale, which will provide the company with funds needed to move its focus to its diagnostic programs.

Adaltis arranges C$20 million

In vitro diagnostic company Adaltis negotiated a private placement with Clarity China Partners and FMRC.

The company will sell C$20 million in five-year notes with a 10% coupon and a redemption price at maturity of C$20.6 million. The notes are convertible into common shares at C$0.32 per share.

They will be sold in two tranches, with the first tranche of C$16 million (C$15 million from Clarity China and C$1 million from FMRC) settling on Sept. 5 and a second tranche of C$4 million from Clarity China settling within 90 days of the first tranche.

Proceeds will be used for working capital and general corporate purposes.

"This transaction is a key milestone for Adaltis and we are pleased to obtain the support from such a prestigious investor as Clarity China," Adaltis president and chief executive officer Pierre Larochelle said in a press release. "The support of Clarity China is consistent with Adaltis' strategy to focus on China and emerging markets, and is an important validation of its strategy and potential.

"It will also provide Adaltis with capital as well as access to Clarity China's extensive global network of entrepreneurial and managerial relationships and focus on China. This transaction will further enhance Adaltis' ability to meet our clients' needs in China and on a global basis."

The drop in share price is part of a steady decline recently following the company's Aug. 14 announcement that its second-quarter losses widened from last year. Revenues were also down nearly 19%.

The company reported a net loss for the second quarter of C$6.96 million, or C$0.09 per share, wider than a net loss of C$6.04 million, or C$0.10 per share, in the year-ago quarter. Revenues for the quarter declined 18.8% to C$5.59 million from C$6.93 million during the same quarter the year before.

Assuming Adaltis' new notes are fully converted, Clarity China would hold 83,242,606 of Adaltis' common shares, representing 42.1% of the outstanding shares and making Clarity China Adaltis' largest shareholder.

Also, upon the settling of the first tranche, Clarity China will have the right to nominate two members to the company's board of directors.

Adaltis is based in Montreal.

Proteome settles A$2.5 million

Proteome Systems announced the completion of a A$2.5 million private placement of shares in which it sold 23,809,524 shares at A$0.105 per share.

Proceeds will be used to maintain development timelines for the company's two lead diagnostic programs, TB, a rapid point-of-care test for tuberculosis, and WheatRite, an onsite test for determining wheat quality and thus pricing.

The company said in an Aug. 21 press release that it was planning to redirect its efforts, focusing entirely on diagnostics, while moving away from its earlier efforts in therapeutic developments.

"Since my appointment as CEO, the management team has been dedicated to harnessing Proteome Systems' expertise in biomarker discovery and development to produce a pipeline of diagnostic products based on the company's proprietary platform," chief executive officer Jenny Harry said in the Aug. 21 release.

"Proteome Systems must remain focused on allocating resources to leverage the progress made with our two near-term revenue generating programs - TB and WheatRite - to consolidate the company's role as a leader in developing point-of need diagnostic tests for infectious and respiratory diseases," Harry said in the release.

The Sydney, Australia-based biotechnology company's shares (Australia: PXL) remained unchanged at A$0.11 on Monday.

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