Summary: NLS Pharmaceutics Ltd and Kadimastem Ltd have entered into a definitive merger agreement. The merged entity will focus on advancing NLS’s dual orexin agonist platform, which has applications in sleep disorders, and Kadimastem’s cell therapy programs targeting ALS and diabetes. NLS plans to divest certain legacy assets like Mazindol ER, with net proceeds distributed to shareholders, while Kadimastem expects this merger to enhance its US market presence and support ongoing clinical trials.
Key Takeaways:
- Focus on Dual Orexin Agonist and Cell Therapy: The merger will prioritize NLS’ dual orexin agonist platform for sleep disorders and Kadimastem’s cell therapy programs for ALS and diabetes.
- Shareholder Value through Legacy Asset Divestment: NLS intends to divest non-core assets, with proceeds benefiting shareholders and warrant holders via a contingent value agreement.
- Increased U.S. Market Access for Clinical Trials: Kadimastem aims to leverage the merger for enhanced US market exposure, with plans to initiate phase IIa trials for ALS treatment and progress their diabetes therapy pipeline.
Swiss biopharmaceutical company NLS Pharmaceutics Ltd has entered into a definitive merger agreement with Kadimastem Ltd, a clinical-stage cell therapy company developing and manufacturing “off-the-shelf” allogeneic cell products for the treatment of neurodegenerative diseases and potential cure of diabetes.
The companies announced plans for the merger in August.
Under the agreement, the two companies will combine to focus on advancing NLS’ first-in class dual orexin agonist platform and Kadimastem’s allogenic cell therapy program with its clinical assets (mainly targeting diabetes and amyotrophic lateral sclerosis [ALS]), with phase 2a studies are planned to be initiated in the US following the closing of the transaction.
NLS intends to divest its other legacy assets, including Mazindol ER—which was being developed for the treatment of narcolepsy—but excluding the dual orexin agonist platform, and the net proceeds of any such disposition, after deducting certain costs, fees, and expenses as set forth in a contingent value agreement, will be distributed to NLS’ shareholders and warrant holders.
‟I believe that the merger is an outstanding opportunity to progress our proprietary [dual orexin agonist platform] and help to enhance Kadimastem’s portfolio of neurodegenerative and diabetes candidates,″ says Alex Zwyer, chief executive officer of NLS, in a release. “This transaction represents NLS’ commitment to delivering value to its shareholders by preserving the value of our legacy assets, including Mazindol, through the contingent value rights agreement, while also providing the opportunity for upside in the combined company with a promising cell therapy technological platform.”
Terms of Merger Agreement
At the closing, pursuant to the terms of the merger agreement, NLS will issue shares of its common stock to Kadimastem’s shareholders based on an initial target fully diluted share split, post-transaction, of 85% to Kadimastem stakeholders and 15% to NLS stakeholders, in exchange for 100% of Kadimastem’s issued and outstanding shares.
The target fully diluted share split of 85%/15% is subject to adjustment pursuant to the terms of the merger agreement, including as a result of estimated closing cash of NLS and Kadimastem and estimated closing indebtedness of NLS. The parties currently estimate the fully diluted share split at the closing will be 80% to Kadimastem stakeholders and 20% to NLS stakeholders.
“We are pleased to announce our merger with NLS and believe that the exposure of the combined company’s assets to the US capital markets through our new Nasdaq listing will enable us to develop our portfolio and increase Kadimastem shareholder value. We remain focused on initiating our phase IIa multi-site clinical trial of AstroRx, a product candidate for the potential treatment of ALS, which is planned to be initiated following the closing of the merger, and jointly progressing our diabetes program IsletRx with our US-based partner to a pre-investigational new drug submission with the US Food and Drug Administration in the first quarter of 2025,” says Ronen Twito, Kadimastem’s executive chairman and president, in a release.
The boards of directors of Kadimastem and NLS have unanimously approved this transaction and expect it to close in January 2025, pending approval of each of NLS’ and Kadimastem’s shareholders, as well as other customary closing conditions, including Nasdaq approval.
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