QPT.V - Audit resolution.


Quest Pharma Tech Inc. (QPT.V) specializes in cancer and pharmaceutical therapies.


QPT.V has a 45% ownership interest in OncoQuest Inc. which it sold its immunotherapy technology assets to on April 20, 2020. Once the sale is finalized, shares of OQP are intended to be distributed to OncoQuest shareholders which would provide Quest with a direct ownership interest in OncoQuest Pharmaceuticals.


QPT.V also has a 24% ownership interest in OncoVent, a Chinese joint venture developing antibody-based immunotherapeutic products for cancer for the Greater China territory. QPT.V further has a 20% ownership interest in Bioceltran which is focused on SP Technology™ for transdermal delivery of drugs and photosensitizers for pharmaceutical and cosmetic purposes.


In addition, QPT.V is developing a mutant EGF technology licensed from Stanford University for chronic wound healing applications, and an antibody (AR 9.6) against truncated O-glycans on MUC16, licensed from University of Nebraska, for targeted solid tumour therapy applications.


Previous coverage May 2017, April 2018, September 2018, April 2019, October 2019, July 2020 and March 2021.


News Releases


Mar. 26 - Update on Immunotherapy Asset Transfer Between OncoQuest Inc. and OncoQuest Pharmaceuticals Inc.: A second closing of the transaction has now occurred at which time all legal title and registrations for OncoQuest's immunotherapy assets were transferred to OQP.


Under the terms of the transaction, the second closing entitled OncoQuest to receive the final payment of 65,229,709 shares of OQP with an ascribed value in the transaction of USD$175 million, subject to all regulatory approvals.


OQP and OncoQuest continue to focus on the execution of the Phase 3 clinical trial for oregovomab which has already received regulatory approval to proceed in the US, Canada, Taiwan, Spain, the Czech Republic, Hungary and Argentina, with 9 other countries pending. Currently, there are 28 clinical sites in the US and Canada that have started patient enrollment for the study. For more information, please go to clintrials.gov (NCT04498117, FLORA-5).


June 1 - Announces two presentations at the 2021 Annual Meeting of the American Association of Clinical Oncologists: Clinical investigators working with OncoQuest Pharmaceuticals, Inc. ("OQP") lead clinical candidate oregovomab, will be making two presentations as part of the American Society of Clinical Oncology (ASCO) conference proceedings.


The first presentation by Dr. Angeles Alvarez Secord, Principal Investigator and Associate Director of Clinical Research at Duke Cancer Institute of Duke University will update the research community on progress with the ongoing FLORA 5 phase III clinical study of front-line carboplatin-paclitaxel-oregovomab chemotherapy.


The second oregovomab report at ASCO being presented by Dr. Robert Holloway, Medical Director of the Gynecologic Oncology Program at Florida Hospital is an abstract presentation of the results from the Phase 1b oregovomab clinical trial protocol ORE-QPT-003H.


Lastly, Quest announces the granting of 1,250,000 stock options to officers, at an exercise price of $0.115 per common share, expiring 10 years from the date of grant, subject to TSX Venture Exchange approval.


July 7 - Announces Results from AGM: The following 4 directors have been elected to the Company's Board of Directors: J. Mark Lievonen, C.M., FCPA, FCA, LLD, Jeffrey Shon, JD, Shawn Lu, CIM, MFin, Madi R. Madiyalakan, Ph.D.


On a corporate matter, Quest announces the granting of 450,000 stock options to Directors, all at an exercise price of $0.10 per common share, expiring 10 years from the date of grant, subject to TSX Venture Exchange approval.


Sep. 1 - Announces First Patient Enrolled in Each of Two Investigator Initiated Clinical Trials of Oregovomab in Combination Therapy for the Treatment of Recurrent Ovarian Cancer:


The first study, led byProf. Jung KH, is being conducted at three centres in Korea (Korea Anam Hospital, Seoul St. Mary's Hospital and Seoul Asan Hospital). This is a Phase 1b/2 clinical trial evaluation of the safety and efficacy of oregovomab when used in combination with bevacizumab, paclitaxel, and carboplatin in subjects with platinum sensitive recurrent ovarian cancer. The study will establish the safety and compatibility of the combination of these agents as possible approaches in patient management(ClinicalTrials.gov Identifier: NCT04938583).


The second study (ORION-02), led by Clinical Assistant Professor Jack Chan, is being conducted at a single centre in Singapore (National Cancer Centre Singapore). This is a Phase 1/2 clinical trial evaluation of the safety and efficacy of platinum-based chemotherapy, oregovomab and the PD-1 blockade agent, nivolumab, in subjects with platinum sensitive recurrent epithelial cancer of ovarian, tubal, or peritoneal origin (ClinicalTrials.gov Identifier: NCT04620954).


OncoQuest has completed a Phase II study using oregovomab in combination with a TLR-3 agonist (Hiltonol®) in the recurrent ovarian cancer setting (ClinicalTrials.gov Identifier: NCT03162562). Oregovomab is currently being tested in a global Phase III study in 12 countries in combination with carboplatin and paclitaxel chemotherapy in the front-line ovarian cancer setting (ClinicalTrials.gov Identifier: NCT04498117).


OncoQuest is also in the process of initiating a clinical trial using oregovomab with niraparib in the recurrent ovarian cancer setting. "These additional clinical studies will guide us to select the optimal combinations for treatment throughout the course of this difficult disease," added Dr. Madiyalakan.


Summary


Oregovomab Phase 3

clinicaltrials.gov cites phase 3 trial were initiated on August 25, 2020. Trials include 602 patients. OncoQuest has received regulatory approval in Argentina, Belgium, Canada, Chile, Czechia, Hungary, Italy, Korea, Spain, Taiwan, and the United States with other countries pending. September 2021, the first patient enrollment were reported in Korea for two studies; ClinicalTrials.gov Identifier: NCT04620954, and NCT04938583.


OncoQuest Inc. Asset Tranfer

March 2021, QPT.V disclosed the second closing of the transaction including the confirmation that all legal title and registrations for OncoQuest's immunotherapy assets were transferred to OQP. However, Auditors of OQP were not able to pronounce themselves on the transaction with QPT.V due to the intagible nature of the assets. This resulted in OQP not meeting the deadline for audited financial statement, and consequently the suspension of trading of its shares on the KOSDAQ Exchange effective March 24, 2021. However, QPT.V managed to secure a 1% interest bearing charge (for up to five years with the first installment due on February 24, 2022) until regulatory approval.


Pending regulatory approval for the final share payment, OncoQuest has received a 1% interest-bearing unsecured OQP corporate bond with a face value of USD$175 million which is due on February 24, 2022 and can be extended annually for up to five years. OncoQuest and OQP have agreed that the corporate bond will be replaced with the OQP shares if and when the shares are approved by regulatory authorities to be issued to OncoQuest.


To resolve the issue encounted by the Audit, OQP spun off the assets of the QPT.V transactions into a private entity.


As Per MD&A (September 23, 2001)

In May 2021, OQP Korea determined to reorganize its biotechnology business, comprised of the immunotherapy assets acquired from OncoQuest, by transferring these assets to a separate subsidiary company. In August 2021, the reorganization was implemented and OQP Korea’s biotechnology business assets were transferred to OQP Bio, Inc. (Korea), a private Korean company. OQP Korea bonds held by OncoQuest can be converted into shares of OQP Bio, Inc. (Korea).


A piece in Money Today (머니투데이) provided additional details (July 2021). Below is an excerpt (Google translated).


According to OQP on the 26th, at the extraordinary general meeting of shareholders held on the 23rd, the proposal of a spin-off of OQP Bio, a bio division, and Dool C&T Holdings, in the investment and manufacturing management division, was approved. The split ratio is 0.678, 0.052, and 0.27 for OQP, OQP Bio, and Dool Mulsan Holdings, respectively. For companies established through spin-off, 83,06,958 shares will be issued, the same as the OQP.


This spin-off is to resolve the refusal of an audit opinion for 2020 that occurred in March. Dasan Accounting Firm will take into account the adequacy of the amount of intangible assets related to OncoQuest, a Canadian drug development company, transferred by OQP through an asset transfer contract in April 2020, significant uncertainties in in-kind investment, and the debt ratio paid in exchange for the acquisition of bio assets. We rejected the audit opinion as it was viewed as uncertainty about the going concern assumption. After that, the KOSDAQ market headquarters of the Korea Exchange granted an improvement period until April 14, 2022.


OQP plans to focus on responding to audits in 2021 and improving existing business performance by the end of the improvement period on April 14, 2022. According to the KOSDAQ listing regulations of the Korea Exchange as amended in March 2019, if a listed company has a reason for delisting due to refusal of an audit opinion, the audit opinion for the current fiscal year will be changed to an appropriate value or if an audit opinion for the next year is received appropriately, the reason for delisting will be resolved. because it is acknowledged.


The official said, "Accounting auditors in 2021 can already perform OQP audits after the spin-off without burden,".


In short

Shares of OQP Korea continues to be suspended on the KOSDAQ Exchange. While progress has been made toward the spin off "OQP Bio", communications from QPT.V remains minimal mostly due to its dependency.


However, the first enrollment of the Phase 3 Clinical trial study in September 2021 were encouraging.


Nonetheless.. As per MD&A (December 23, 2021)

Although OncoQuest management continue to work diligently with OQP Korea management to resolve these issues as quickly as possible, it remains uncertain at this time as to whether regulatory approval will ultimately be received or the timing of any such approval. OncoQuest’s ability to monetize the consideration received in the transaction with OQP Korea will be dependent upon OQP Korea’s ability to fund the repayment of any bonds that become due or that could be redeemed and a liquid trading market being available for any shares of OQP Korea that are received as consideration or issued upon conversion of the bonds held. Monetization of some of the consideration will be necessary for OncoQuest to fund Canadian income tax obligation resulting from the transaction.


Indeed. QPT.V who owns 45% of Oncoquest and OncoQuest is a privately held company with no public trading history. Furthermore, OQP has yet to articulate how it now intends to fund this transaction (i.e. whether an IPO for OQP Bio will ensue on KOSDAQ or anywhere else). The spin off of OQP Bio addresses the restrictions on OQP shares only.


As a matter of fact, OQP appears to be very active in actual re-organization to reach this goal. An announcement was made today (12/30/2021) with regards to yet again further delays.


Looking back, the asset transfer seemed poorly planned. Both OQP and QPT.V should have anticipated this audit issue if proper M&A consultations were taken. In addition, QPT.V's endorsement of the transaction now leaves it in a precarious position. OncoQuest assets have been fully transferred but most of the funds have yet to be received!


For QPT.V investors, two key dates to watch for: February 24, 2022; the deadline for the 1% interest-bearing unsecured OQP corporate bond ($1.7M) and April 14, 2022; the end of the improvement period for OQP's 2021 audit resolution.


DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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