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PsyBio Therapeutics and Leo Acquisitions Announce Closing of CAD$14.5 Million Oversubscribed Private Placement

Ryan Allway

December 4th, 2020

Psychedelics

PsyBio Therapeutics, Inc. (“PsyBio”) and Leo Acquisitions Corp. (NEX: LEQ.H) (“Leo”) are pleased to announce the closing of the previously announced brokered private placement (the “Financing”) of subscription receipts (the “Subscription Receipts”) of PsyBio Therapeutics Financing Inc. (“Finco”), a special purpose British Columbia company incorporated solely for the purpose of the Financing and wholly-owned by the Chief Executive Officer of PsyBio, at a price of CAD$0.35 per Subscription Receipt for aggregate gross proceeds of CAD$14,493,394, approximately three times the original CAD$5.0 million target, with significant US and Canadian institutional investor support.

Eight Capital acted as lead agent in connection with the Financing (the “Lead Agent”) together with Canaccord Genuity Corp. (together with the Lead Agent, the “Agents”) to offer the Subscription Receipts for sale on a “best efforts” agency basis.

“We are extraordinarily pleased to have experienced such a successful financing working with Eight Capital and Canaccord Genuity Corp.” said Evan Levine, Chairman and Chief Executive Officer of PsyBio Therapeutics. “PsyBio is in the business of discovering and developing a portfolio of psychoactive medications and this offering, including the participation by prominent health care institutional investors, validates our vision that a paradigm shift for the treatment of mental health issues is long overdue.”

Evan continued “Our proprietary biosynthesis drug discovery platform is expected to enable the rapid generation of highly stable compounds far cheaper, faster and greener than any other published method. The capital received from this offering will enable PsyBio to continue to work towards the discovery of new valuable target molecules, and further the movement of our products towards Investigational New Drug Applications.”

The Company has filed patent applications relating to psilocybin and its intermediates and expects to file new patent applications over the coming year based on other hallucinogenic plants, fungi and non-natural compounds with psychoactive properties.

Summary of the Financing

The Financing was completed in connection with a series of transactions that will result in the reverse takeover of Leo by the shareholders of PsyBio (the “Transaction”). The Transaction will constitute Leo’s “Qualifying Transaction” as such term is defined in Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the “TSXV”). Further details of the Transaction were previously announced by Leo on October 6, 2020, October 26, 2020 and December 2, 2020. References herein to the “Resulting Issuer” refer to Leo following the completion of the Transaction.

An aggregate of 41,409,698 Subscription Receipts were issued in connection with the Financing. Each Subscription Receipt entitles the holder thereof to receive, upon the satisfaction or waiver (to the extent such waiver is permitted) of certain escrow release conditions (the “Escrow Release Conditions”) prior to the Escrow Release Deadline (as defined below), including all conditions precedent to the Transaction being satisfied, and without payment of additional consideration therefor, one common share in the capital of Finco (each, a “Finco Share”). On completion of the Transaction, each Finco Share underlying the Subscription Receipts will be exchanged for one subordinate voting share of the Resulting Issuer (each, a “Subordinate Voting Share”), all in accordance with the terms of the business combination agreement among the Company, PsyBio and Finco, 1276949 B.C. Ltd. and Eluss, Inc., dated December 2, 2020 (the “Definitive Agreement”) governing the terms of the Transaction.

In connection with the Financing, the Agents are entitled to receive a cash commission of CAD$527,229 (the “Agents’ Commission”)and 1,506,368 compensation warrants (the “Compensation Warrants”),. Each Compensation Warrant is exercisable to acquire one Finco Share at the Issue Price for a period of 24 months from the satisfaction of the Escrow Release Conditions (the “Exercise Period”). Upon completion of the Transaction, each holder of Compensation Warrants will receive Subordinate Voting Shares in lieu of Finco Shares upon exercise of the Compensation Warrants, including the payment therefor. The Agents are also entitled to receive, in connection with certain advisory services provided by the Agents pursuant to the terms of an advisory agreement among the Agents and Finco, cash advisory fees of CAD$374,000 (the “Finance Fee”) and 1,069,000 advisor warrants (each, an “Advisor Warrant”), with each Advisor Warrant having the same characteristics as the Compensation Warrants. On closing of the Financing, the Agents received payment of 50% of the Agents’ Commission, 50% of the Finance Fee and were issued all of the Compensation Warrants and Advisor Warrants. The remaining 50% of the Agents’ Commission and 50% of the Finance Fee will be paid to the Agents upon escrow release.

The gross proceeds of the Financing (less an amount equal to 50% of the Agents’ Commission, 50% of the Finance Fee, and all of the reasonable costs and expenses of the Agents in connection with the Financing) (the “Escrowed Funds”) have been deposited in escrow with the subscription receipt agent until the satisfaction of the Escrow Release Conditions, including that all conditions precedent to the Transaction have been satisfied or waived.

In the event that the Escrow Release Conditions have not been satisfied by February 28, 2021, or such other date as Finco and the Lead Agent may determine (the “Escrow Release Deadline”), or Finco advises the Lead Agent or announces to the public that it does not intend to satisfy the Escrow Release Conditions, or that the Transaction has been terminated in accordance with the terms of the Definitive Agreement, the aggregate issue price of the Subscription Receipts together with any earned interest shall be returned to the applicable holders of the Subscription Receipts (net of any applicable withholding taxes), and such Subscription Receipts shall be automatically cancelled and be of no further force and effect.

All Subscription Receipts issued in connection with the Financing are subject to a statutory hold period in accordance with Canadian securities laws. Following completion of the Transaction, the Subordinate Voting Shares received upon the exchange of Finco Shares underlying the Subscription Receipts will not be subject to a statutory hold period in Canada.

Upon completion of the Transaction, the proceeds of the Financing are anticipated to be used principally to fund the Transaction, and for research and development, manufacturing, corporate and general working capital purposes.

About PsyBio Therapeutics

PsyBio is a US-based biotechnology company developing a new class of drugs intended for the treatment of mental health challenges and other disorders. In collaboration with Miami University based in Oxford, Ohio, PsyBio has retained the global exclusive rights to a proprietary platform technology that biologically synthesizes psilocybin and other targeted next generation psychoactive compounds that are produced naturally in fungi and plants. Management of PsyBio expects that the technology will enable the rapid generation of these highly stable psychoactive compounds cheaper, faster and greener than other published methods. PsyBio was incorporated under the laws of the State of Delaware on January 21, 2020 and is not a “reporting issuer” under applicable securities legislation in any jurisdiction and its securities are not listed for trading on any stock exchange.

About Leo Acquisitions

Leo was incorporated under the Business Corporations Act (Ontario) on October 28, 2009 and is a Capital Pool Company (as defined in TSXV Policy 2.4 – Capital Pool Companies of the Corporate Finance Manual). Leo is listed on the NEX board of the TSXV. Leo has no commercial operations and no assets other than cash.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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