BVF backed ESSA Pharma and Realm Therapeutics to combine

ESSA Pharma Inc. (NASDAQ: EPIX; TSX-V: EPI) and Realm Therapeutics plc (NASDAQ: RLM) have entered into a definitive agreement pursuant to which ESSA will acquire all of the issued and outstanding shares of Realm in an all-stock transaction valued at US $21.5 million.

Biotechnology Value Fund (BVF) and certain affiliated funds are shareholders of both ESSA and Realm, holding less than 10% and 17.1% of the ESSA and Realm shares respectively.

The acquisition, subject inter alia to Realm Shareholder approval, is intended to be implemented by means of a United Kingdom Court-sanctioned scheme of arrangement and is expected to be completed by midyear 2019.

The acquisition does not require the approval of ESSA shareholders.

In March 2019, Realm Therapeutics completed the disposal of Vashe® wound care royalty stream assets and has been exploring strategic alternatives, to acquire or be acquired. Failing that, Realm will proceed to dissolution by winding down and distributing the remaining assets.

Blackstone Clarus III L.L.C. and Omega Fund Management, LLC are two significant shareholders, directly or indirectly, control 29% of 17% of ESSA outstanding shares.

Upon the close of the acquisition, ESSA’ss current management team will continue to lead the combined company. In addition, it is expected that the company’s board of directors will be increased to nine members of which three will be Realm-nominated candidates, with two current ESSA directors resigning.

Oppenheimer & Co. Inc. is acting as a financial advisor to ESSA and has delivered a fairness opinion to its board of directors. MTS Health Partners is acting as a financial advisor to Realm.

Eversheds Sutherland (International) LLP, Blake Cassels & Graydon LLP, and Skadden, Arps, Slate, Meagher & Flom LLP are acting as UK, Canadian, and US legal counsel, respectively, to ESSA. Cooley LLP is acting as US and UK legal counsel and Fasken Martineau DuMoulin LLP is acting as legal counsel to Realm.

photo credit: Realm Therapeutics

News Release

Agreement Reached for ESSA Pharma to Acquire Realm Therapeutics
Acquisition Expected to be Completed by Mid-Year 2019

Vancouver, Canada and Houston, Texas, May 16, 2019 – ESSA Pharma Inc. (“ESSA” or “the Company”) (NASDAQ: EPIX; TSX-V: EPI) announced today that it has entered into a definitive agreement with Realm Therapeutics plc (“Realm”) (NASDAQ: RLM) setting forth the terms of an acquisition (“Acquisition”) whereby ESSA will acquire all of the issued and outstanding shares of Realm in an all-stock transaction. The Acquisition, subject inter alia to Realm Shareholder approval, is intended to be implemented by means of a United Kingdom (“UK”) Court-sanctioned scheme of
arrangement under Part 26 of the UK Companies Act 2006 and is expected to be completed by midyear 2019. Upon the closing of the Acquisition, the Company will continue to operate as ESSA Pharma Inc., trade on the Nasdaq Capital Market and TSX-V Market and operate in the United States as
ESSA Pharmaceuticals Corp., a Houston, TX-registered wholly-owned subsidiary. The Company will focus on advancing ESSA’s pipeline of novel potential treatments for prostate and other cancers.

The terms of the Acquisition value Realm’s issued and outstanding shares at approximately USD $21.5 million, which represents a 5% premium over Realm’s estimated net cash amount of USD $20.5 million at the closing of the Acquisition. Under the terms of the Acquisition, Realm Shareholders will be entitled to receive approximately 0.058 ESSA ordinary shares for each Realm Share based upon a 60-day volume-weighted average price of ESSA shares of USD $3.19 per share of ESSA as of the close of trading on May 14th, 2019, subject to a final adjustment based on Realm’s final net cash amount prior to closing of the Acquisition. Upon the close of the Acquisition, ESSA’s current management team will continue to lead the Company. In addition, it is expected that the Company’s Board of Directors will be increased to nine members of which three will be Realm-nominated candidates, with two current ESSA directors resigning.

“We are truly excited by the opportunity afforded by this transaction to further advance ESSA’s aniten program of N-terminal domain inhibitors of the androgen receptor,” said Dr. David R. Parkinson, Chief Executive Officer of ESSA. “Our lead candidate EPI-7386 was recently nominated as the IND candidate for the treatment of prostate cancer. We believe that the current transaction, which is intended to be supplemented by an equity financing involving insiders and other investors, will deliver sufficient financial resources to ESSA to achieve multiple value-inflection points and key near-term objectives in the coming two years including: first, completion of a Phase 1 clinical trial for our lead program EPI-7386 in patients with advanced prostate cancer progressing on the latest generation of anti-androgens; secondly, generation of proof-of-concept clinical data from a Phase 1 trial for EPI-7386 in combination with those same anti-androgens in prostate cancer patients; and thirdly, further advance our early preclinical pipeline of novel anitens for the potential treatment of breast cancer.”

“We are very pleased to enter into this transaction with ESSA, whose lead program is a first-in-class therapy for the treatment of castration-resistant prostate cancer, which represents a significant unmet need for patients,” said Alex Martin, Chief Executive Officer of Realm. “Following a comprehensive review of strategic alternatives, Realm’s Board of Directors concluded that the proposed acquisition will provide an opportunity to create meaningful value and, as such we have significant support from our shareholders for the transaction.”

This Announcement is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. Any securities offered or sold in the United States pursuant to any financing must be either registered under the U.S. Securities Act or offered or sold pursuant an applicable exemption from such registration requirements.

Oppenheimer & Co. Inc. is acting as a financial advisor to ESSA and has delivered a fairness opinion to its Board of Directors. Eversheds Sutherland (International) LLP, Blake Cassels & Graydon LLP, and Skadden, Arps, Slate, Meagher & Flom LLP are acting as UK, Canadian, and US legal counsel, respectively, to ESSA. MTS Health Partners is acting as a financial advisor to Realm. Cooley LLP is acting as US and UK legal counsel and Fasken Martineau DuMoulin LLP is acting as legal counsel to Realm.

Acquisition Details

The Acquisition is intended to be implemented by means of a UK Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The Acquisition is conditional on, among other things: (i) the approval of Realm Shareholders at the Court Meeting and the passing of the resolutions by Realm Shareholders at the General Meeting; and (ii) the sanction of the Scheme by the UK Court.

The Acquisition does not require the approval of ESSA Shareholders.

The Acquisition is expected to become Effective by mid-year 2019, subject to the satisfaction (or, where applicable, waiver) of the Conditions set out in Appendix I to this Announcement.

Further details of the Acquisition will be contained in the Scheme Document which is intended to be posted to Realm Shareholders along with notices of the Court Meeting and General Meeting and the Forms of Proxy within 15 Business Days following the date of this Announcement, unless Realm and ESSA otherwise agree to a later date.

Biotechnology Value Fund (“BVF”) and certain affiliated funds are shareholders of both ESSA and Realm and will be receiving New ESSA Shares upon closing of the Acquisition. The issuance of the New Essa Shares to BVF pursuant to the Acquisition constitutes a related-party transaction under Canadian Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The foregoing transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to section 5.7(1)(c) of MI 61-101 and the exemption under 5.5(e) as the Acquisition is supported by Clarus Ventures LLC (Clarus), an arm’s length control person of ESSA.

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices).

The Acquisition will be subject to the Conditions and further terms that are set out in Appendix I, and to the full terms and conditions which will be set out in the Scheme Document. Appendix II contains the bases and sources of certain information used in this Announcement. Appendix III contains details of the irrevocable undertakings received in relation to the Acquisition. Appendix IV contains definitions of terms used in this Announcement.

About ESSA Pharma Inc.

ESSA is a pharmaceutical company focused on developing novel and proprietary therapies for the treatment of castration-resistant prostate cancer (“CRPC”) in patients whose disease is progressing despite treatment with current therapies. ESSA’s proprietary “aniten” compounds bind to the Nterminal domain of the androgen receptor (“AR”), inhibiting AR-driven transcription and the AR signaling pathway in a unique manner which bypasses the drug resistance mechanisms associated with current anti-androgens. The Company is currently progressing IND-enabling studies and expects to enter clinical studies with EPI-7386 in the first calendar quarter of 2020. For more information about ESSA, please visit www.essapharma.com or follow us on Twitter.

About Prostate Cancer

Prostate cancer is the second-most commonly diagnosed cancer among men and the fifth most common cause of male cancer death worldwide (Globocan, 2018). Adenocarcinoma of the prostate is dependent on androgen for tumor progression and depleting or blocking androgen action has been a mainstay of hormonal treatment for over six decades. Although tumors are often initially sensitive to medical or surgical therapies that decrease levels of testosterone, disease progression despite castrate levels of testosterone generally represents a transition to the lethal variant of the disease, metastatic CPRC (“mCRPC”), and most patients ultimately succumb to the illness. The treatment of mCRPC patients has evolved rapidly over the past five years. Despite these advances, additional treatment options are needed to improve clinical outcomes in patients, particularly those who fail existing treatments including abiraterone or enzalutamide, or those who have contraindications to receive those drugs. Over time, patients with mCRPC generally experience continued disease progression, worsening pain, leading to substantial morbidity and limited survival rates. In both in vitro and in vivo animal studies, ESSA’s novel approach to blocking the androgen pathway has been shown to be effective in blocking tumor growth when current therapies are no longer effective.

About Realm Therapeutics

Realm Therapeutics has been engaged in a strategic review. The Investing Policy, which has guided the strategic review by the Directors, requires the Company to seek to invest in, partner with, acquire and/or be acquired by a company with meaningful development potential in the life sciences sector or with good overall business prospects. For more information on Realm Therapeutics, please visit www.realmtx.com.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

ESSA Contacts:

Company Investor Relations
David R. Parkinson, President & Chief Executive Officer
Peter Virsik, Chief Operating Officer
ESSA Pharma Inc.
Contact: (778) 331-0962

Alan Lada
Solebury Trout
Contact: (617) 221-8006
Email: alada@soleburytrout.com

Ted Liu

Ted Liu, M.Sc. (Mining, Queen's), MBA (Finance, Toronto), is the Editor of Private Capital Journal, CanadaMetals.ca, TechWire.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, having most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA).

Ted is the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, Canada's most sophisticated and advanced all private capital and public market financing database.