Business Context and Reporting Period
This Form 6-K filing by Can-Fite Biopharma Ltd. ("Can-Fite") is dated May 22, 2017. The report discloses a significant corporate restructuring involving Can-Fite's subsidiary, OphthaliX, Inc. ("OphthaliX"), and Wize Pharma Ltd. ("Wize"). On May 21, 2017, OphthaliX and Wize entered into an Agreement and Plan of Merger. Under this agreement, Wize will merge with a wholly-owned subsidiary of OphthaliX, becoming a wholly-owned subsidiary of OphthaliX. Post-merger, OphthaliX intends to change its name to "Wize Pharma, Inc." and re-elect its board of directors as designated by Wize.
Key Financial Metrics and Transaction Terms
The filing details the financial mechanics of the proposed merger and related asset transfers rather than standard operating financial results for the period.
- Exchange Ratio: Each outstanding ordinary share of Wize will be converted into 5.3681 shares of OphthaliX common stock.
- Ownership Structure: Immediately following the merger, Wize shareholders are expected to own approximately 90% of OphthaliX's outstanding common stock on a fully diluted basis, while existing OphthaliX stockholders will own approximately 10%.
- Debt and Indebtedness: As a condition to closing, OphthaliX must sell its subsidiary, Eyefite Ltd., to Can-Fite. In exchange, Can-Fite will cancel and waive all indebtedness owed by OphthaliX and Eyefite, including approximately $4.5 million in deferred payments.
- Asset Assumption: Can-Fite will assume accrued milestone payments of $175,000 under an exclusive license agreement as part of the Eyefite purchase.
- Liquidity Condition: Wize must have available cash and cash equivalents of at least NIS 1,000,000 (approximately $280,000) as of the earlier of the Effective Time or August 30, 2017.
- Post-Transaction Asset: Following the sale of Eyefite, OphthaliX's sole asset is expected to consist of 446,827 ordinary shares of Can-Fite.
The filing text does not provide specific revenue, profit, cash flow, or margin figures for Can-Fite, OphthaliX, or Wize for the reporting period.
Material Changes and Transaction Conditions
The primary material change is the proposed reverse merger structure where Wize shareholders will gain controlling interest in the combined entity. The transaction is subject to several closing conditions:
- Effectiveness of a registration statement on Form S-4.
- Approval by stockholders of both OphthaliX and Wize.
- Approval of the arrangement by the Israeli District Court of Tel Aviv-Jaffa.
- Wize maintaining minimum cash levels (NIS 1,000,000).
- OphthaliX having no liabilities as of the Effective Time.
- Receipt of an interim tax pre-ruling from the Israeli Tax Authority.
Additionally, the exclusive license of Can-Fite's CF101 drug candidate granted to OphthaliX and related services agreements must be terminated as a condition to closing.
Guidance, Risks, and Contingencies
Timeline and Termination: The Merger Agreement may be terminated if the transaction is not completed by October 30, 2017, unless the failure is primarily due to a material breach by the terminating party.
Voting and Restrictions: Can-Fite has entered into a Voting and Undertaking Agreement to vote its OphthaliX shares in favor of the merger and against actions that could adversely affect it. Can-Fite has also agreed to indemnify Wize and OphthaliX regarding certain liabilities of OphthaliX occurring prior to closing, excluding liabilities related to legal proceedings arising from the merger itself.
Risk Factors: The filing includes standard disclaimers that representations and warranties in the agreements are qualified by confidential disclosure schedules and should not be relied upon as characterizations of the actual state of facts. Investors are urged to read the upcoming Form S-4 prospectus and proxy statement for complete information.
Key Facts for Investor Verification
- Verify the final approval status of the merger by OphthaliX and Wize shareholders and the Israeli District Court.
- Confirm the effectiveness of the Form S-4 registration statement and the contents of the proxy statement/prospectus.
- Monitor the status of the $4.5 million debt waiver and the transfer of Eyefite Ltd. to Can-Fite.
- Track the termination of the CF101 license agreement between Can-Fite and OphthaliX.
- Assess the impact of the name change to "Wize Pharma, Inc." and the shift in board control to Wize-designated directors.