Pharmaceuticals Company Announces Binding Term Sheet For Merger
NLS Pharmaceutics and Kadimastem Announce Binding Term Sheet to Merge.
Disclaimer: This article is intended for informational purposes only and should not be construed as financial or investment advice. Always consult with a qualified financial advisor before making any investment decisions.
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NLS Pharmaceutics Ltd. (NASDAQ:NLSP) ("NLS"), a biopharmaceutical company, and Kadimastem Ltd ("KDST.TA", "Kadimastem"), a clinical-stage cell therapy company specializing in the development and manufacturing of "off-the-shelf" allogeneic cell products for neurodegenerative diseases and diabetes, have announced their entry into a binding term sheet for a significant transaction. According to the announcement, Kadimastem is anticipated to become a wholly owned subsidiary of NLS, with Kadimastem's shareholders acquiring an 85% interest in NLS. The combined entity is expected to operate under the name Kadimastem and will continue trading on the Nasdaq Capital Market upon completion of the transaction.
Structure of the Proposed Transaction
The proposed merger will be executed through a reverse triangular merger structure. In this arrangement, Kadimastem will be integrated as a wholly owned subsidiary of NLS. To facilitate this merger, NLS will issue shares to Kadimastem's shareholders. Upon completion, Kadimastem's shareholders will hold 85% of the issued and outstanding shares of the merged company, and the existing NLS shareholders will retain the remaining 15%. This transaction aims to maintain NLS's status as an SEC reporting company, with its shares listed on the Nasdaq Capital Market. The boards of directors of both companies have approved the binding term sheet, and finalization of the definitive agreement is expected by September 2024, with closure anticipated by December 31, 2024.
Post-transaction, the leadership structure of NLS will undergo changes. All but one of the current NLS officers and directors are expected to resign from their positions. This reshuffling will likely pave the way for Kadimastem's leadership to integrate into NLS, ensuring a seamless transition and alignment with Kadimastem's vision. The merged entity will continue to develop NLS’s Dual Orexin Agonist platform ("DOXA"), a promising first-in-class treatment. In addition, the remaining NLS assets are expected to be divested through a contingent value rights ("CVR") agreement, with proceeds being distributed entirely to the current NLS shareholders.
For the transaction to close, certain financial conditions must be met. Kadimastem is required to have $3.5 million in cash on hand, while NLS must have $0.6 million in cash at the time of closing. Additionally, the liabilities of NLS to its vendors and insiders need to be settled and removed from its balance sheet prior to the consummation of the transaction.
Shareholder and Regulatory Approvals
The binding term sheet has garnered the backing of shareholders representing more than 40% of the outstanding shares of both NLS and Kadimastem. However, the transaction remains subject to various approvals, including regulatory clearances, shareholder endorsements from both companies, and approval from Nasdaq.
This merger represents a move designed to leverage the complementary strengths of both companies. By merging their resources and expertise, NLS and Kadimastem aim to accelerate the development of groundbreaking treatments for neurodegenerative diseases and diabetes. The anticipated merger provides a stronger platform for innovation, enhancing the potential for success in developing therapeutic solutions.
This reflects their commitment to advancing medical therapies and positions the combined entity to better address the needs of patients with neurodegenerative diseases and diabetes. As the merged company prepares to operate under the Kadimastem name and continue trading on the Nasdaq Capital Market, stakeholders await the finalization of the definitive agreement and the successful closure of the transaction by the end of 2024.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial or investment advice. Always seek the guidance of a qualified financial advisor before making any investment decisions.
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