Animalcare Grp Regulatory News (ANCR)

Animalcare and Kane Biotech to form animal health company to target biofilm-related ailments

Animalcare to invest CA$5 million, consisting of CA$3 million to acquire one-third stake in STEM Animal Health, Kane Biotech's new animal health subsidiary, and a further CA$2 million for rights to commercialise products in global veterinary markets outside of the Americas

Animalcare to launch biofilm oral care range for Companion Animals in European and Asian markets

28 September 2020. Animalcare Group PLC (AIM:ANCR) today announced that it has entered into an agreement with Canada-based biotech company Kane Biotech Inc. (TSX-V:KNE; OTCQB:KNBIF) under which the parties will form STEM Animal Health Inc. ("STEM"), a company dedicated to treating biofilm-related ailments in animals.

The agreement will see Animalcare commercialise Kane Biotech's range of oral care products for companion animals in European and Asian markets and collaborate on the development of new biofilm treatments for animals.

Under the terms of the deal, Kane Biotech will create a new subsidiary, STEM, in which Animalcare will invest CA$3 million in installments over a period of 48 months to acquire, on entering into the agreement, a one-third plus one share equity interest. STEM will be established with a global license over Kane Biotech's existing range of animal health oral care products and in collaboration with Animalcare will also focus on the research and development of novel animal treatments based on biofilm targeting technology. Animalcare will have licensing rights over future STEM products in Europe and Asia and the option, for a period of six years, to acquire an additional one-sixth stake in the subsidiary for CA$4 million, payable to Kane.

STEM is designed to be self-financing from day one and will benefit from revenues already being generated in the US, Canada and South America as well as from Europe and Asia.

Additionally, in exchange for Animalcare receiving the right to commercialise Kane's coactiv+TM and DispersinB® products in global veterinary markets outside the Americas, Animalcare will provide an upfront payment to Kane Biotech along with a series of potential payments linked to various commercial milestones to a combined maximum of CA$2 million ("Licensing Fee") as well as ongoing royalties.

Animalcare intends to start commercialising Kane Biotech's range of oral care products in the second half of 2021 and expects the agreement to be earnings enhancing in 2022. The equity investment by Animalcare in STEM and the Licensing Fee are expected to be paid from existing cash resources.

Jenny Winter, Chief Executive Officer of Animalcare commented: "Our collaboration will bring the benefits of Kane Biotech's anti-biofilm oral and skin care technology to more animals and their owners in more countries around the world. The agreement complements Animalcare's existing portfolio and drives our future growth strategy by leveraging the Group's knowledge of our veterinary markets while combining our expertise and resources with Kane Biotech to develop new, differentiated and much-needed solutions to prevent and treat infections. 

"The creative structure of the deal befits Kane Biotech's innovative biofilm technology and underlines the commitment of both parties to a long-term sustainable commercial relationship."

Marc Edwards, President and Chief Executive Officer of Kane Biotech said: "We are very excited to partner with Animalcare to establish an animal health company dedicated to treating biofilms, while further expanding our footprint globally. This agreement provides STEM Animal Health, Kane Biotech's first commercialisation vehicle, with capital at a valuation that is highly attractive and non-dilutive to existing Kane shareholders. This will accelerate our product development and commercialisation globally and is a major step towards defining Kane Biotech as the preeminent global leader in biofilm research and product development. In the months to come, we plan on establishing additional commercialisation vehicles for both our wound care and our consumer goods businesses.

"Animalcare has more than 30 years of experience successfully developing, launching and marketing animal health products, so we believe this agreement provides further validation of the strength of our animal health product portfolio and the anti-biofilm technology on which it is based. In addition to Animalcare's many years of commercial success, its strong relationships with veterinary professionals and focus on customer service makes Animalcare an ideal partner."

The closing of the transactions referenced herein remain subject to the final approval of the TSX Venture Exchange.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

NOTES TO EDITORS

About biofilms

Biofilms are formed when bacteria or yeast adhere to surfaces and excrete a resin-like substance that acts as an anchor and provides protection from external factors such as host immune system defenses and antifungal or antibacterial drugs. Biofilms can make bacteria up to 1,000 times more resistant to antibiotics, disinfectants and the host immune system. The anti-biofilm technologies developed by Kane Biotech are designed to prevent and remove biofilms and have a positive impact on human, animal and environmental health through antimicrobial stewardship.

Analyst briefing

A briefing for analysts on publication of the Group's Interim Report will be held at 10:30 BST on Tuesday 29 September via teleconference. Analysts wishing to join should contact InvestorRelations@panmure.com

About Animalcare

Animalcare Group PLC is a UK AIM-listed international veterinary sales and marketing organisation. Animalcare operates in seven countries and exports to approximately 32 countries in Europe and a further 16 worldwide. The Group is focused on bringing new and innovative products to market through its own development pipeline, partnerships and via acquisition.

For more information about Animalcare, please visit www.animalcaregroup.com or contact

About Kane Biotech Inc.

Kane Biotech is a biotechnology company engaged in the research, development and commercialization of technologies and products that prevent and remove microbial biofilms. Kane Biotech has a portfolio of biotechnologies, intellectual property (52 patents and patents pending, trade secrets and trademarks) and products developed by Kane Biotech's own biofilm research expertise and acquired from leading research institutions. StrixNB™, DispersinB®, Aledex®, bluestem™, silkstem™, coactiv+™ and Kane® are trademarks of Kane Biotech Inc. Kane Biotech is listed on the TSX Venture Exchange under the symbol "KNE" and on OTCQB Markets under the symbol "KNBIF".

For more information, please visit www.kanebiotech.com or contact: