71 Capital Corp. Announces Letter of Intent for Qualifying Transaction

NOT FOR DISSEMINATION TO U.S. NEWSWIRE SERVICES

(TSXV: SVN.P)

TORONTO, Oct. 28 /CNW/ - 71 Capital Corp. (the "Corporation") (TSXV: SVN.P) has entered into a letter of intent (the "Letter of Intent") for the amalgamation of the Corporation with Orx Pharmaceutical Corporation ("Orx").  Orx is a specialty pharmaceutical drug delivery company that applies advanced drug-delivery technologies to existing drug compounds to create new therapeutic indications and improve the clinical effectiveness of medicines. The Corporation is a capital pool company and intends for the amalgamation with Orx to constitute the Qualifying Transaction of the Corporation (the "Qualifying Transaction") as such term is defined in the policies of the TSX Venture Exchange (the "Exchange").

Terms of Qualifying Transaction

Pursuant to the terms of the Letter of Intent, subject to completion of satisfactory due diligence, completion of the financing described below, a definitive amalgamation agreement (the "Agreement") and receipt of applicable approvals, the Corporation intends to amalgamate with Orx.  Following completion of the amalgamation and not including securities issued pursuant to the Private Placement shareholders of the Corporation will hold equity interests equal to approximately 1.7% of the combined entity with the remaining equity interests being held by companies controlled by Dr. Alexander MacGregor, (the President and sole director of Orx currently) and investors in the Private Placement, assuming its completion on the terms described below.

The Qualifying Transaction is an arm's length transaction.  No insiders of the Corporation own securities in Orx and no insiders of Orx own securities in the Corporation. It is intended that the Corporation will complete a 5 for 1 consolidation of its shares and a name change in connection with the Qualifying Transaction.  The Corporation intends to call a meeting of its shareholders in the near future in order to authorize the Qualifying Transaction.

Upon completion of the Qualifying Transaction, the Corporation will be engaged in the business of Orx.

Orx

Orx was founded in 2002 under the laws of Canada and is focused on the development of superior orally ingestible therapies that improve delivery, distribution and optimize the bioavailability of new and existing drug compounds that have proven therapeutic potential. Orx is exclusively focused on the development of new formulations of currently available drug products for which it can obtain patent protection.

In conjunction with the Qualifying Transaction, Orx will acquire an intellectual property portfolio that includes issued or pending patents for four (4) new pharmaceutical formulations involving certain existing drugs together with all intellectual property rights associated with or relating to the existing clinical development regarding these new pharmaceutical formulations.  Each of these new formulations target indications that have a large addressable market. These indications include diabetes, obesity and bacterial and viral infections. They are at various stages of development, with the two leading candidates, GlycoBien (Type II Diabetes) and Leptivia (Obesity and Weight Loss), with GlycoBien expected to begin generating revenue by 2012.

Immediately prior to the completion of the Qualifying Transaction, all of the issued and outstanding shares of Orx will be held by companies controlled by Dr. Alexander MacGregor including Transpharm Canada Inc. ("Transpharm").  Dr. Alexander MacGregor is the principal shareholder of such companies.

Transpharm, a company controlled by Dr. MacGregor, owns the property and assets of the Toronto Institute of Pharmaceutical Technology,  North America's premier pharmaceutical training institute located in Toronto, Ontario,  and is a full-service clinical development business that provides clinical trial services to biotechnology companies. Since 2007, Transpharm has provided to Orx all management services required by Orx to operate and maintain the business of Orx. It shall be a condition of the Qualifying Transaction that Transpharm enter into suitable arrangements with the resulting issuer to continue to provide such management services.

Management and Board of Directors of the Resulting Issuer

Upon completion of the Qualifying Transaction, it is anticipated that the resulting issuer's board of directors will consist of Dr. MacGregor and four (4) additional board members to be named.  It is intended that such new board members will be qualified independent directors.

It is also intended that Gregory Hewitt will resign as President and Chief Executive Officer of the Corporation and George Matthew will resign as Chief Financial Officer and Secretary of the Corporation, and Dr. MacGregor will become the new President and Chief Executive Officer of the Corporation.  The Corporation will be working with Orx to identify a suitable chief financial officer and corporate secretary for the resulting issuer.  Once identified the Corporation will provide the required disclosure regarding this proposed officer.

Dr. Alexander MacGregor -Proposed President, Chief Executive Officer and Director

Dr. Alexander MacGregor is an experienced scientist and educator who is also the founder of the Toronto Institute of Pharmaceutical Technology, North America's premier post-graduate pharmaceutical institute of science and technology. Prior to establishing Orx, Dr. MacGregor was a consultant to major pharmaceutical industries in Europe, Asia, and North America and acted as the managing director of PharmClinical consultants and Transpharm International U.K. Ltd., a United Kingdom based group specializing in clinical testing and pharmaceutical drug licensing.  Dr. MacGregor received an honours degree (Magna Cum Laude) in Medical Biochemistry from the University of Wales, completed his doctor of philosophy (PhD) research in Clinical Pharmacology at the Royal Post-Graduate Medical School, UK, and obtained a Doctor of Science (DSc) degree in Biomedical Sciences from Pacific University, U.S.

Sponsorship of Qualifying Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with the Exchange policies. The Corporation is currently reviewing the requirements for sponsorship and may apply for exemption from sponsorship requirements pursuant to the policies of the Exchange, however there is no assurance that the Corporation will ultimately obtain this exemption.

Proforma Capital Structure

The Corporation currently has 5,411,271 common shares issued and outstanding and 823,449 reserved for issuance on the exercise of options and or compensation options.  Upon closing of the Qualifying Transaction and subject to the completion of a 5 for 1 share consolidation, the Corporation will have approximately 56,300,307 common shares issued and outstanding on a non-diluted basis, assuming completion of the Private Placement described below. Following completion of the transaction and the Private Placement, the shareholders of Orx would hold approximately 65% of the shares of the resulting issuer, shareholders of the Corporation would hold approximately 2% of the shares of the resulting issuer and purchasers under the financing would hold approximately 28% of the shares of the resulting issuer on an undiluted basis.  There may also be additional options granted to directors, officers and consultants in the future prior to the completion of the Qualifying Transaction in accordance with applicable TSXV requirements. 

Furthermore it is anticipated that prior to the completion of the Qualifying Transaction Orx will complete a private placement financing for gross proceeds of $10 million (the "Private Placement").  It is intended that the net proceeds of the financing will be used by Orx to continue its research and clinical development activities regarding Orx's new pharmaceutical formulations and otherwise be used for general corporate purposes.  It is anticipated that the Private Placement will be structured as an offering of subscription receipts ("Subscription Receipts") at a price of $0.65 per Subscription Receipt. Each Subscription Receipt will entitle the holder thereof to receive, for no additional consideration, subject to adjustment in certain circumstances, one unit of the Company (a "Unit") immediately prior to the completion of the Qualifying Transaction.  Each Unit shall be comprised of one common share (a "Common Share") in the capital of the Company, and one half of one share purchase warrant (a "Warrant").  Each whole Warrant shall entitle the holder to purchase one common share (a "Warrant Share") of the Company on or before the 18 month anniversary of their issuance, at a post consolidation exercise price of $0.80 per Warrant. All securities issued by Orx in the financing will be replaced by securities of the resulting issuer with the same terms upon completion of the Qualifying Transaction.  Orx has engaged Loewen, Ondaatje, McCutcheon Limited to act as its exclusive "best efforts" agent in connection with the Private Placement. It is a condition of the Qualifying Transaction that the Private Placement be completed realizing minimum gross proceeds of $10 million.

In accordance with Exchange policy, the Corporation's shares are currently halted from trading and will remain so until the completion of the Qualifying Transaction.

Termination

The letter of intent will terminate (i) on the mutual consent of both the Corporation and Orx, (ii) automatically if the Agreement is not executed on or before 5:00 p.m. (Toronto time) on November 15, 2010, (iii) automatically if a regulatory authority notifies the Corporation or Orx that the transaction may not proceed and (iv) if either the Corporation or Orx are not satisfied with their due diligence review prior to November 15, 2010.

Description of Significant Conditions to Closing

Completion of the Qualifying Transaction is subject to a number of conditions including but not limited to, due diligence, Exchange acceptance and if required by Exchange policies, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained.  There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

The Corporation will make a subsequent news release with information on sponsorship and summary financial information in accordance with Exchange policy.

Cautionary Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the proposal to complete the Qualifying Transaction and associated transactions, including statements regarding the terms and conditions of the Qualifying Transaction and associated transactions.  Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Qualifying Transaction and associated transactions, that the ultimate terms of the Qualifying Transaction and associated transactions will differ from those that currently are contemplated, and that the Qualifying Transaction and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, Orx, or their respective financial or operating results or (as applicable), their securities.

Neither 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.

For further information:

71 CAPITAL CORP.
ERIC ROBLIN
PHONE NO: [phone]