26th Feb 2021 10:26
(Alliance News) - 4D Pharma PLC on Friday said its registration statements for the issue of American depositary shares to Longevity Acquisition Corp shareholders were declared effective by the US Securities & Exchange Commission.
Shares in 4D were down 3.6% at 140.38 pence in London in morning trading.
The Leeds-based live biotherapeutic products developer will post a circular to 4D shareholders convening a general meeting for approving the merger with Longevity, a NASDAQ-listed special purpose acquisition company.
4D said it believes recent company developments support and validate its single strain approach to live biotherapeutics - a class of drug derived from the microbiome - as well as its MicroRx discovery platform.
Recent clinical advances from 4D include completing a phase two clinical trial of Blautix as a treatment for irritable bowel syndrome, which found significant increase in overall response in the combined IBS-C/D group compared to placebo and a positive but non-significant increase in overall response for both IBS-C and IBS-D cohorts individually.
4D also entered into a second clinical collaboration and drug supply agreement for MRx0518, with Merck KGaA and Pfizer Inc, where MRx0518 will be evaluated in combination with Bavencio as a first-line maintenance therapy for urothelial carcinoma.
In order to build on advances and enhance prospects, the firm has chosen to focus on merger with special purpose acquisition company Longevity as a way to access US capital markets.
Subject to shareholder approval, it will issue 31.1 million shares, allotting 19.8 million of these to Longevity. These are considered to be "merger shares".
Based on a price of GBP1.10 per ordinary share, an 18% premium to the closing share price on October 21 before the merger was announced, "the merger shares underlying the ADSs to be issued in exchange for each Longevity share in the merger represented an aggregate value of approximately GBP21.8 million."
At completion of the merger, 4D shareholders will own around 67% and Longevity 13% of the enlarge group's share capital. It will also issue warrants, receiving USD29 million if all of these are exercised.
4D expects its ADSs will start trading on NASDAQ following the merger's completion, likely on March 22.
The enlarged group will require additional external funding before the third quarter of 2021 in order to be able to continue as a going concern. It expects this finance to come mostly from equity funding, and is considering the option of raising a minimum of USD25 million. It plans to approach institutional buyers and investors regarding a possible private placement of ordinary shares or ADSs. This could take place alongside or after the merger's completion.
4D is thus also seeking approval to issue new shares on a non-pre-emptive basis for up to 40% of enlarge issue share capital after completion.
By Anna Farley; [email protected]
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