Business Context and Reporting Period
This Form 8-K, dated July 10, 2015, reports that Celsus Therapeutics Plc (the "Company") entered into a Share Exchange Agreement to acquire Volution Immuno Pharmaceuticals SA ("Volution"), a Swiss-based clinical stage biotechnology company. Upon completion, the Company will change its name to Akari Therapeutics Plc. The transaction constitutes a reverse merger where Volution's sole shareholder, RPC Pharma Limited ("RPC"), will become the majority owner.
Key Financial Metrics and Transaction Terms
- Ownership Structure: Post-acquisition, RPC will own 91.68% of the combined company's ordinary shares on a fully diluted basis, while existing Celsus shareholders will own 8.32%.
- Termination Fees: The agreement includes a $6,000,000 termination fee payable by the Company if shareholder approval is not obtained or the board withdraws its recommendation. A $6,000,000 fee is also payable if either party accepts a Third Party Offer.
- Working Capital: Volution and certain shareholders are expected to provide working capital advances up to $4,000,000 prior to closing, accruing interest at 3% per annum, repayable shortly after the acquisition.
- Lock-Up Period: RPC has agreed to a 180-day lock-up period on shares received in the transaction.
Material Changes Versus Prior Period
This filing represents a material change in control and corporate structure rather than a periodic financial update. Key changes include:
- Change in Control: The transaction results in a change of control, with Volution's leadership assuming majority ownership and board representation.
- Corporate Name: The registrant will change its name from Celsus Therapeutics Plc to Akari Therapeutics Plc.
- Headquarters: The corporate headquarters will relocate to New York, NY.
- Management: Gur Roshwalb, M.D. will remain CEO. Ray Prudo, M.D. will become Executive Chairman, and Clive Richardson will become Chief Operations Officer.
Guidance, Outlook, and Risks
Outlook and Strategy: The combined company will focus on developing anti-complement and anti-inflammatory molecules for rare and orphan conditions in the autoimmune and inflammatory disease sectors.
Conditions to Closing: The acquisition is subject to several conditions, including shareholder approval, NASDAQ listing approval for the new American Depositary Shares (ADSs), and satisfaction of financing terms by RPC.
Risks and Contingencies:
- The transaction may be terminated if conditions are not met within four months (or an extended period).
- Termination fees of $6,000,000 may be triggered by failure to obtain shareholder approval, acceptance of a superior third-party offer, or financing dissatisfaction.
- Board composition is contingent on RPC's shareholding percentage, with specific rights to appoint directors to audit, nomination, and compensation committees.
Important Facts for Investor Verification
- Verify the final exchange ratio and the exact number of shares to be issued to RPC upon closing.
- Confirm the outcome of the shareholder vote required to approve the acquisition and the name change.
- Review the upcoming proxy statement for detailed financial projections and risk factors associated with Volution's clinical pipeline.
- Monitor the status of the NASDAQ listing application for the new ADSs.
- Assess the impact of the $4,000,000 working capital advance on the combined entity's immediate liquidity post-closing.