Business Context and Reporting Period
This Form 8-K, dated June 2, 2021, reports a material acquisition by PAVmed Inc. (PAVM). On May 28, 2021, PAVmed, through a newly formed subsidiary named Veris Health Inc. ("Veris"), acquired Oncodisc Inc., a digital health company specializing in remote patient monitoring for cancer care.
Key Financial Metrics and Transaction Details
- Equity Consideration: Veris issued approximately 19.6% of its equity interests to Oncodisc Holdings in exchange for all issued and outstanding equity of Oncodisc. PAVmed retains 80.4% ownership of Veris.
- Cash Consideration: PAVmed provided $155,250 in cash to pay off two Oncodisc convertible notes.
- Management Structure: PAVmed will manage Veris via a management services agreement and finance operations through intercompany advances until Veris raises independent capital.
- Executive Compensation: Dr. James Mitchell (new CMO of Veris) and Dr. Andrew Thoreson (consultant) are eligible for options to purchase 100,000 and 50,000 shares of PAVmed common stock, respectively, subject to committee approval.
Material Changes and Governance Provisions
The transaction introduces significant governance and financial contingencies outlined in the shareholders agreement:
- Board Composition: Veris's board will consist of up to four members, with up to three designated by PAVmed and one by Oncodisc Holdings.
- Anti-Dilution Rights: Oncodisc Holdings holds anti-dilution rights to maintain its percentage interest in future equity issuances, with specific exemptions for up to 2,000,000 shares issued to employees and convertible securities prior to conversion.
- Milestone Triggers: If Veris fails to achieve specified milestones by certain deadlines, Oncodisc Holdings may require PAVmed to transfer up to 80% of its Veris shares to Oncodisc Holdings.
- Redemption Rights: Veris may redeem Oncodisc Holdings' shares at 50% of fair market value for "cause" or 100% of fair market value if the board determines the technology is not in Veris's best interest (potentially paid via IP transfer).
Outlook, Risks, and Contingencies
PAVmed intends to leverage Oncodisc's technology, which includes an intelligent implantable vascular access port with biologic sensors and a remote digital healthcare platform. The filing notes that the anti-dilution and other shareholder rights will terminate upon a public listing of Veris, a sale of substantially all assets, or the exercise of redemption rights. The company faces execution risk regarding the integration of the new technology and the achievement of the milestones required to prevent a shift in control to Oncodisc Holdings.
Investor Verification Checklist
- Verify the specific milestones and deadlines in the shareholders agreement that could trigger a transfer of up to 80% of Veris equity to Oncodisc Holdings.
- Confirm the status of the $155,250 cash payment and the extinguishment of the convertible notes.
- Monitor the approval status of the stock options for Dr. Mitchell and Dr. Thoreson under the 2014 Long-Term Incentive Equity Plan.
- Assess the financial impact of the management services agreement and intercompany advances on PAVmed's liquidity.
- Review the attached press release (Exhibit 99.1) for additional details on the commercial strategy for Veris.