Cellect Biotechnology Ltd. (NASDAQ: APOP), a developer of
innovative technology that enables the functional selection of stem
cells, and Quoin Pharmaceuticals Inc. (“Quoin”), a privately held
specialty pharmaceutical company, today announced that the Boards
of Directors of the two companies have unanimously approved a
definitive Merger Agreement (the “Agreement”).
Under the terms of the Agreement, Cellect
shareholders will retain approximately 25% of the combined shares
before investment while the shareholders of Quoin will receive
shares of Cellect common stock representing approximately 75% of
the pre-investment number of shares. Cassel Salpeter & Co., an
independent investment banking firm, provided a fairness opinion
with respect to the 1:3 ratio of shares between Cellect original
shareholders and Quoin.
In connection with the merger, Quoin has secured
$25 million in committed equity funding from Altium Capital, a
highly regarded institutional healthcare investor. Quoin has also
negotiated an $18.5 million venture loan from a leading U.S.
commercial bank. The merger agreement provides for certain dilution
protections for the pre-closing Cellect shareholders in connection
with such equity financing.
Quoin is a specialty pharmaceutical company
focused on rare and orphan diseases. Quoin’s leadership team is
made up of industry veterans, with extensive relevant executive
experience and proven records of recent success in the
pharmaceutical industry.
“This strategic merger provides Quoin with
additional capital and an exciting opportunity to continue
advancing our innovative product pipeline. As we work to build a
strong foundation for growth, we remain committed to addressing the
unmet medical needs of the rare disease communities. We look
forward to accelerating the clinical development of our
programs and delivering enhanced value to our shareholders,” stated
Dr. Michael Myers, Chief Executive Officer of Quoin
Pharmaceuticals.
Cellect has also signed an agreement to sell the
entire share capital of Cellect’s subsidiary company, Cellect
Biotherapeutics LTD. (the “Subsidiary”), that will include all of
the existing assets, to EnCellX Inc., a newly formed U.S. privately
held company based in San Diego, CA (the “Share Transfer”). The
Share Transfer is intended to close concurrently with the closing
of the Cellect and Quoin merger. In consideration for the Share
Transfer, the pre-closing Cellect shareholders will receive a
contingent value right (“CVR”) entitling the holders to earnouts
comprised of royalties, milestone payments and exit fees.
Adi Mohanty, the former President & Chief
Executive Officer at Lineage Cell Therapeutics (formerly BioTime
Inc.) is the Chief Executive Officer of EnCellX. Prior
to joining Lineage, Mr. Mohanty served in various leadership
positions of increasing responsibilities at private and public
biotechnology companies, including a long tenure at Shire plc,. Dr.
Shai Yarkoni, Cellect’s current Chief Executive Officer, will join
Mr. Mohanty as the Chief Technology Officer and a member of its
Board of Directors. Dr. Yarkoni’s compensation will include a
significant component contingent upon the success of EnCellX.
Further information and detail will be provided in the materials
that will be submitted to the SEC and the Proxy to be distributed
to the shareholders before Cellect’s shareholders’ meeting.
“This is a win-win for our shareholders and
represents the best path forward to maximize their investment”
commented Dr. Yarkoni, Chief Executive Officer of Cellect
Biotechnology. “Our Board has thoroughly reviewed several
opportunities and believe that Quoin’s clinical program, coupled
with its experienced leadership and the committed funding, has the
potential to reward our shareholders. In addition, the payments to
be distributed to Cellect’s pre-closing shareholders under the CVRs
create a unique opportunity to reap the benefits of the continued
development of our cell and gene therapy assets. Current management
is fully committed to continue the development of Cellect’s
technology under EnCellX .”
“I strongly believe in the potential of
Cellect’s programs, and I am committed to continue the development
of these programs through commercialization,” commented Mr.
Mohanty. “The expansion of the program with the upcoming U.S. trial
is an opportune time to pivot key operations to the U.S., and
working alongside Dr. Yarkoni, I look forward to building and
expanding on previous achievements.”
Completion of the merger is subject to approval
of the Cellect and Quoin shareholders and certain other conditions
and is expected to close by the end of the second quarter of
2021. Following the completion of the merger. Cellect will be
renamed Quoin Pharmaceuticals and will begin trading on NASDAQ
under the symbol 'QNRX.'
A Current Report on Form 6-K containing more
detailed information regarding the merger transaction will be filed
with the Securities and Exchange Commission.
JMP Securities is acting as exclusive advisor to
Quoin Pharmaceuticals for the proposed transaction. Cassel Salpeter
& Co., an independent investment banking firm was the exclusive
advisor for Cellect and rendered the fairness opinion. BDO served
as external evaluator of current Cellect assets.
About Cellect Biotechnology
Ltd.
Cellect Biotechnology (APOP) has developed a breakthrough
technology for the selection of stem cells from any given tissue
that aims to improve a variety of cell-based therapies.
The Company's technology is expected to provide
researchers, clinicians and pharmaceutical companies with the tools
to rapidly isolate specific cells in quantity and quality, allowing
cell-based treatments and procedures in a wide variety of
applications in regenerative medicine. The Company's current
clinical trial is aimed at bone marrow transplantations in cancer
treatment.
About Quoin Pharmaceuticals
Quoin is a privately held specialty
pharmaceutical company with a portfolio of development stage
products addressing major unmet medical needs in rare and orphan
diseases. The company’s lead products are under development for a
number of rare skin diseases including Netherton Syndrome, Peeling
Skin Syndrome, SAM Syndrome, Palmoplantar Keratoderma and
Epidermolysis Bullosa.
Forward Looking Statements
This press release contains forward-looking
statements about the Company's expectations, beliefs and
intentions. Forward-looking statements can be identified by the use
of forward-looking words such as "believe", "expect", "intend",
"plan", "may", "should", "could", "might", "seek", "target",
"will", "project", "forecast", "continue" or "anticipate" or their
negatives or variations of these words or other comparable words or
by the fact that these statements do not relate strictly to
historical matters. For example, forward-looking statements are
used in this press release when we discuss Cellect's expectations
regarding timing of the commencement of its planned U.S. clinical
trial and its plan to reduce operating costs. These forward-looking
statements and their implications are based on the current
expectations of the management of the Company only and are subject
to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the
forward-looking statements. In addition, historical results or
conclusions from scientific research and clinical studies do not
guarantee that future results would suggest similar conclusions or
that historical results referred to herein would be interpreted
similarly in light of additional research or otherwise. The
following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements: the Company's history of losses and needs for
additional capital to fund its operations and its inability to
obtain additional capital on acceptable terms, or at all; the
Company's ability to continue as a going concern; uncertainties of
cash flows and inability to meet working capital needs; the
Company's ability to obtain regulatory approvals; the Company's
ability to obtain favorable pre-clinical and clinical trial
results; the Company's technology may not be validated and its
methods may not be accepted by the scientific community;
difficulties enrolling patients in the Company's clinical trials;
the ability to timely source adequate supply of FasL; risks
resulting from unforeseen side effects; the Company's ability to
establish and maintain strategic partnerships and other corporate
collaborations; the scope of protection the Company is able to
establish and maintain for intellectual property rights and its
ability to operate its business without infringing the intellectual
property rights of others; competitive companies, technologies and
the Company's industry; unforeseen scientific difficulties may
develop with the Company's technology; the Company's ability to
retain or attract key employees whose knowledge is essential to the
development of its products; and the Company’s ability to pursue
any strategic transaction or that any transaction, if pursued, will
be completed. Any forward-looking statement in this press release
speaks only as of the date of this press release. The Company
undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by any
applicable securities laws. More detailed information about the
risks and uncertainties affecting the Company is contained under
the heading "Risk Factors" in Cellect Biotechnology Ltd.'s Annual
Report on Form 20-F for the fiscal year ended December 31, 2019
filed with the U.S. Securities and Exchange Commission, or SEC,
which is available on the SEC's website, www.sec.gov, and in the
Company's periodic filings with the SEC.
ContactCellect Biotechnology
Ltd.Eyal Leibovitz, Chief Financial
Officerwww.cellect.co+972-9-974-1444
Or
EVC Group LLC Michael Polyviou(732)
933-2754mpolyviou@evcgroup.com
Cellect Biotechnology (NASDAQ:APOP)
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