Calidi Biotherapeutics And First Light Acquisition Group Announce Merger Agreement To Create, Clinical-Stage Biotechnology Company Utilizing Stem Cell-Based Platforms To Revolutionize Oncolytic Virotherapies; Expected To Be Completed In The Q2 Of 2023

-Total gross proceeds from transaction, before payment of transaction expenses, expected to be up to $82 million assuming no redemptions, combining a possible PIPE financing of up to $40 million and up to $42 million held in First Light trust account
 

-Cash resources will fund Calidi's NeuroNova (CLD-101) and SuperNova (CLD-201) development programs into the 1st half of 2025 through multiple clinical milestones

-Calidi's novel platform addresses a critical obstacle in traditional oncolytic virotherapy, overcoming virus inactivation through allogeneic stem cell delivery mechanism to [successfully] target a wide range of cancers, including high-grade gliomas and solid tumors

-Business combination expected to be completed in the second quarter of 2023; combined company expected to be listed on the NYSE American under the ticker "CLDI"

LA JOLLA, Calif. and RESTON, Va., Jan. 09, 2023 (GLOBE NEWSWIRE) -- Calidi Biotherapeutics, Inc. ("Calidi" or the "Company"), a clinical-stage biotechnology company that is pioneering the development of allogeneic cell-based delivery of oncolytic viruses, and First Light Acquisition Group ("FLAG") (NYSE:FLAG), a special purpose acquisition company organized to acquire or merge with one or more businesses, today announced they have entered into a definitive merger agreement to create a public company focused on developing oncolytic viral therapies with stem cell-based delivery platforms to treat a wide range of cancers with significant unmet needs. Upon closing of the transaction, anticipated to occur in the second quarter of 2023, the combined company will be named Calidi Biotherapeutics, Inc. and led by Allan Camaisa, CEO and Chairman of the Board. In addition, the combined company's common stock intends to list on the NYSE American under the ticker "CLDI."

Calidi Biotherapeutics is revolutionizing the clinical development of first-in-class allogenic stem cell-based delivery platforms to protect, deliver, and potentiate oncolytic viruses for the treatment of cancer. Calidi's technology directly addresses a critical obstacle in traditional oncolytic virotherapy, overcoming the oncolytic virus inactivation by a patient's immune system through an allogeneic stem cell delivery mechanism to successfully target a wide range of cancers, including high-grade gliomas (HGG) and solid tumors. Calidi's pipeline includes two "off-the-shelf" clinical programs, NeuroNova (CLD-101) and SuperNova (CLD-201), which utilize allogeneic stem cell technologies loaded with either vaccinia virus or adenovirus, being developed in partnership with leading research institutions.

"We are excited to partner with FLAG which we believe will accelerate our ability to bring life-changing therapies to patients, pairing our first-in-class, allogeneic stem cell-based technology with strategic partnering opportunities, to advance our goal of revolutionizing cancer treatment," said Allan Camaisa, CEO and Chairman of the Board of Calidi Biotherapeutics. "This business combination positions us well as we build upon the momentum generated to date from our NeuroNova and SuperNova platforms, which have the potential to overcome the limitations of first-generation oncolytic virus therapies. Furthermore, the merger will allow us to leverage FLAG's comprehensive network in both the private and public sectors, capital markets and operational experience, and successful track record addressing missions of U.S. national and global importance. We believe recent legislative progress supporting federal funding for new cancer treatments provides an immediate opportunity to showcase our combined synergy, where our strong backgrounds align with a shared goal of bringing novel therapeutic options to cancer patients in need."

"We are very pleased to announce this merger with Calidi Biotherapeutics as their differentiated technology shows potential to enable improved quality of care, extend survival, and lower cost of treatment in a market with a high unmet need," said Tom Vecchiolla, CEO of FLAG. "Our goal is to invest in people and technologies that address the most important priorities and to deliver results with national and global effect. We believe that Calidi's innovative technology offers a differentiated immuno-oncology solution with a proprietary allogeneic stem cell-based universal delivery system that harnesses the potential of oncolytic viruses to address therapeutic needs in hard-to-treat cancers."

The transaction includes gross proceeds of up to $42 million in trust with FLAG (assuming no redemptions by existing FLAG shareholders). The parties will attempt to arrange a PIPE Investment from institutional investors of up to $40 million.

Net proceeds from the transaction are expected to provide Calidi with capital into the first half of 2025 to advance its pipeline of therapeutic candidates through multiple clinical milestones, including:

• NeuroNova (CLD-101): allogeneic neural stem cells loaded with an oncolytic adenovirus for the treatment of HGG. A completed open-label, Phase 1, dose-escalation clinical trial in patients with newly diagnosed high-grade gliomas demonstrated that CLD-101 was well tolerated and showed promising preliminary clinical results of efficacy.
  
  
  
  In August 2022, City of Hope received U.S. Food and Drug Administration (FDA) authorization to proceed with another Phase 1 physician-sponsored clinical trial that will use Calidi's CLD-101 platform in patients with recurrent HGG. The trial will assess the safety and tolerability of administering serial doses of CLD-101 in adult patients with recurrent histologically confirmed HGG (WHO grade III or IV). Secondary endpoints will evaluate treatment efficacy, including progression-free and overall survival as well as any immune response. Interim clinical results are expected in the first half of 2024.

• SuperNova (CLD-201): allogeneic adipose-derived mesenchymal stem cells (AD-MSC) loaded with tumor-selective CAL1 oncolytic vaccinia virus for the treatment of advanced metastatic solid tumors. A previously conducted physician-sponsored clinical trial using autologous adipose-derived stromal cells demonstrated that CLD-201 was well tolerated and showed early signs of efficacy in 24 patients with advanced solid tumors and two patients with acute myeloid leukemia (AML).
  
  
  
  In December 2022, Calidi was awarded $3.1 million from the California Institute for Regenerative Medicine (CIRM) to support the clinical development of CLD-201 through an Investigational New Drug (IND) application, which the company anticipates submitting in the second half of 2023. Additionally, Calidi expects interim results from a CLD-201 Phase 1 trial in the first half of 2024.

• Proceeds from the transaction are also expected to support expansion of Calidi's stem cell-based delivery platforms into additional indications
   

Key Transaction Terms

Upon closing of the business combination (the "Business Combination"), shareholders of Calidi (assuming the conversion of all derivative securities other than unvested options) will be entitled to receive 25,000,000 shares of FLAG common stock, subject to adjustments and after the closing, shareholders of Calidi may be entitled up to 18,000,000 additional shares of FLAG common stock (the "Escalation Shares") during a five year period with incremental releases of 4,500,000 shares if the trading price of FLAG common stock is $12, $14, $16 and $18 for a period for any 20 days within any 30 consecutive day trading period. Furthermore, holders of FLAG Class A common stock who do not redeem their shares may be entitled to their pro rata portion of up to an additional 2,000,000 shares of FLAG common stock during a five-year period with incremental releases of up to 500,000 shares if the trading price of FLAG common stock is $12, $14, $16 and $18 for a period for any 20 days within any 30 consecutive day trading period. Assuming no redemptions of shares of FLAG by its public shareholders and a possible PIPE Investment from institutional investors of up to $40 million, Calidi expects to have cash and cash equivalents, prior to transaction expenses, of up to $82 million and an anticipated pro forma enterprise valuation of approximately $335 million.

The boards of directors of Calidi and FLAG unanimously approved the proposed transaction, which is anticipated to close in the second quarter of 2023. The closing of the transaction is subject to the approval of FLAG shareholders, regulatory approval, a minimum cash condition of $15 million, after the payment of transaction expenses, and the satisfaction or waiver of certain other customary closing conditions.

A Current Report on Form 8-K, filed by FLAG with the Securities and Exchange Commission (SEC), will provide additional information about the proposed business combination and will be available on the SEC's website at www.sec.gov. In addition, FLAG intends to file a registration statement on Form S-4 with the SEC, including a proxy statement/prospectus, and will file other documents regarding the proposed transaction with the SEC.

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