Business Context and Reporting Period
This Form 8-K was filed by Celsus Therapeutics Plc (referred to as "Celsus" or the "Company") on August 17, 2015. The filing reports the entry into a Material Agreement for a private placement financing and a concurrent acquisition. The Company is organized under the laws of England and Wales and trades on the NASDAQ Capital Market.
Key Financial Metrics and Transaction Details
- Financing Amount: $75 million in aggregate value of restricted American Depositary Shares (ADSs).
- Valuation: Fully-diluted pre-money valuation of $150 million, giving effect to the acquisition of Volution Immuno Pharmaceuticals SA.
- Purchase Price: Not less than $4.60 per ADS (equivalent to $0.046 per Ordinary Share), representing 75% of the closing bid price on August 17, 2015.
- Transaction Fees: Approximately $5.25 million (7.0% of gross proceeds) payable to placement agents Citigroup Global Markets Inc. and MTS Securities, LLC.
- Use of Proceeds: Clinical development of Coversin and general corporate purposes.
- Investor Participation: Led by Deerfield, including Venrock, Vivo Capital, Foresite Capital, New Enterprise Associates, QVT Financial, RA Capital Management, and Chairman Mark Cohen (investing $200,000).
Material Changes and Corporate Actions
- Acquisition: Celsus agreed to acquire all capital stock of Volution Immuno Pharmaceuticals SA from RPC Pharma Limited in exchange for Ordinary Shares. The financing is contingent upon the closing of this acquisition.
- ADS Ratio Change: To comply with NASDAQ minimum bid price requirements, Celsus will change the ADS ratio from 10 Ordinary Shares per ADS to 100 Ordinary Shares per ADS. This is effective on or about September 17, 2015, and has the same effect as a 1-for-10 reverse split of the ADSs.
- Registration Rights: Celsus agreed to file a registration statement within 30 days of the financing completion and have it declared effective within 60 days (or 120 days if under SEC review).
Outlook, Risks, and Contingencies
- Closing Conditions: The financing is subject to shareholder approval of both the acquisition and the financing, the closing of the acquisition, and satisfaction of customary closing conditions.
- Market Risk: The Company provides no assurance that the ADS Ratio Change will result in satisfying or maintaining the minimum bid price requirement of the NASDAQ Capital Market.
- Indemnification: Celsus agreed to indemnify investors against liabilities relating to breaches of representations, warranties, and covenants in the Purchase Agreement.
- Regulatory Compliance: The securities are being sold under Rule 506 of Regulation D without general solicitation. A Form D will be filed with the SEC.
Investor Verification Checklist
- Verify the status of shareholder approval for both the Volution acquisition and the $75 million financing.
- Confirm the effective date of the ADS Ratio Change (targeted for September 17, 2015) and its impact on share count and price.
- Review the definitive Share Exchange Agreement for the Volution acquisition to understand the exact share exchange ratio.
- Monitor the filing and effectiveness of the registration statement for the resale of the newly issued ADSs.
- Assess the Company's cash runway post-financing relative to the clinical development timeline for Coversin.