By John Vandermosten, CFA

OTC:BIOAF

READ THE FULL BIOAF RESEARCH REPORT

Bioasis Acquisition by Midatech Pharma plc.

On December 13^th, 2022, Bioasis Technologies Inc. (OTC:BIOAF) announced that it will merge with Midatech Pharma plc (NASDAQ:MTP). Midatech is a drug delivery technology company with three platforms and eight programs advancing six different compounds. Its lead candidate, MTX110, generically known as panobinostat, is in Phase I trials for multiple brain cancers and enrolled its first patient in mid-November 2022.

After the merger is complete between Midatech and Bioasis, the company will change its name to Biodexa Pharmaceuticals plc (NASDAQ:BDRX). The new company will focus on therapeutics for rare and orphan drug diseases in oncology and neurodegenerative disorders. Midatech has entered into a financing agreement that is expected to contribute $10 million that will be completed in parallel with the Bioasis acquisition.

The new company’s emphasis on rare and orphan disease will center on two assets, MTX110 in brain cancer and CRES101 (to be renamed BDX101) in optic neuritis. Other assets in the go-forward pipeline will include two other Cresence assets for Guillain-Barré and chronic inflammatory demyelinating polyneuropathy (CIDP). Assets that do not fall under the scope of the new strategy will be available for partner licensing.

Midatech will acquire all of Bioasis’ outstanding common shares in exchange for Midatech American Depository Shares (ADS). The ratio of exchange will be 0.0382 ADSs for each Bioasis share which values the acquisition at $5.0 million based on Midatech’s closing price on December 12, 2022 and Bioasis share balance as of August 31, 2022. Following the merger and anticipated follow-on financing, ownership of the new entity on a diluted basis will be 15% Bioasis shareholders, 11% Midatech shareholders and 74% new investors.

As a condition of the merger, Bioasis will receive a bridge loan from Midatech which will be repaid after the close of the deal. The $750,000 bridge loan will be advanced in three equal tranches of $250,000 made available on December 19, 2022, January 3, 2023 and February 6, 2023. In contrast to details provided in the initial release, Midatech will not be required to seek delisting from the Alternative Investment Market (AIM), a sub market of the London Stock Exchange (LSE).

The completion of the merger is reliant on shareholder approval, closure of the $10 million financing arrangement and approval of the arrangement by the Supreme Court of British Columbia. Neither of the parties to the merger will solicit another acquisition proposal and a termination fee of $330,000 will be paid by the offending party if the agreement is terminated under certain circumstances.

Following the completion of the merger, which is expected in 1Q:23, Midatech will immediately change its name to Biodexa Pharmaceuticals plc and restructure its board of directors. It will hold a NASDAQ listing and trade under new ticker BDRX. The successor company will file semiannually under UK rules and file Forms 6-K and 20-F with the SEC for US reporting requirements. Stephen Parker will serve as non-executive chairman and Deborah Rathjen, Mario Saltarelli and Simon Turton will serve as non-executive directors and Stephen Stamp will be Chief Executive Officer and director.

The security holder meeting date for the vote on the merger agreement has been set for February 3, 2023. The meeting will be virtual and all materials will be available online.

Merger benefits include the enhanced scientific, technical and operational expertise that comes from combining the research teams and cost reductions from the elimination of duplicative salaries, administrative, regulatory and other public company expenses. Some of the primary benefits of the merger include:

➢ Synergies from xB³ platform for use in Midatech’s lead program in DIPG

o Improved delivery via the SynchroMed II Pump

o Opportunity for new chemical entity and additional IP protection when employing xB³

➢ Reduction in duplicative general and administrative expenses

➢ Improved capital raising abilities with NASDAQ listing

➢ Elimination of Lind debt from Bioasis’ balance sheet

➢ Corporatewide focus on rare disease

o Enables small, cost-effective clinical trials

o Eligible for fast-track designation and early approval

➢ Expanded experience and breadth of research and development team

Summary

Bioasis has entered into a merger arrangement with Midatech Pharma, a UK-based oncology company with several delivery platforms. The new company offers many synergies that include the use of the xB³ platform to enhance Midatech’s lead candidate, combination of the scientific teams, access the the NASDAQ along with enhanced financing opportunities and the reduction of duplicative costs. The new entity is focused on two programs, a brain cancer program that uses panobinostat and Bioasis recently acquired Crescence asset for MS-related optic neuritis which will be designated BDX-101.

xB³ programs will continue with partners and new partners will be sought for this effective platform for crossing the blood brain barrier. The new company will also allocate preclinical resources to advancing xB³ work in Hunter’s Syndrome, progranulin and other areas of interest.

The merger is reliant on the close of a $10 million financing that is expected to take place shortly after shareholder approval in early February. Following the close of the deal, Midatech will change its corporate name to Biodexa Pharmaceutical and execute the new strategy. As we wait for the deal to close, we suspend our valuation, which will be driven predominantly by the opportunities for the glioblastoma and optic neuritis programs.

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1. Source: Bioasis Corporate Presentation, December 20, 2022

2. Source: Bioasis Corporate Presentation, December 20, 2022

3. Source: Bioasis Corporate Presentation, December 20, 2022. Includes EGF Platform, xB³ Platform and panobinostat.