Business Context and Reporting Period
This Form 6-K filing by Bioblast Pharma Ltd. (now Enlivex Therapeutics Ltd.) covers the month of November 2018, specifically dated November 19, 2018. The filing announces the execution of a definitive Merger Agreement between Bioblast Pharma Ltd. and Enlivex Therapeutics, Ltd. Under the agreement, a wholly-owned subsidiary of Bioblast will merge with and into Enlivex, with Enlivex surviving as a wholly-owned subsidiary of Bioblast. The combined entity will be renamed Enlivex Therapeutics Ltd. and is expected to continue trading on the Nasdaq Capital Market under a new ticker symbol.
Key Financial Metrics and Transaction Structure
The filing does not provide historical revenue, profit, cash flow, or debt metrics for either company. The financial focus is on the transaction structure and pro forma ownership:
- Exchange Ratio: Enlivex shareholders will receive Bioblast ordinary shares based on a quotient of total Bioblast shares issued divided by outstanding Enlivex shares (including options and converted preferred shares).
- Pro Forma Ownership: Enlivex equity holders are expected to own approximately 96% of the combined company, while current Bioblast shareholders will own approximately 4%.
- Concurrent Financing: A condition of closing is the consummation of a private offering of Bioblast securities resulting in no less than $7.5 million in gross proceeds.
- Termination Fees: Both parties are subject to a $250,000 termination fee under specific circumstances, such as accepting a superior proposal or failing to obtain shareholder approval.
Material Changes and Transaction Conditions
The primary material change is the proposed reverse merger, which will result in a change of corporate name, ticker symbol, and board composition. The closing of the Merger is subject to several material conditions:
- Approval by Bioblast shareholders at an extraordinary general meeting.
- Listing approval of Bioblast Ordinary Shares on The Nasdaq Stock Market.
- Receipt of required governmental approvals and a tax ruling from Israeli Tax Authorities.
- Completion of the concurrent private offering raising at least $7.5 million.
- Passage of statutory waiting periods (30 days under Israeli law and 50 days following filing with the Israeli Companies Registrar).
- Absence of a material adverse effect on Bioblast.
Outlook, Management Commentary, and Contingencies
Management and Governance: Upon closing, the board of the combined company will include current Enlivex board members. Mr. Shai Novik (current Enlivex Executive Chairman) is expected to serve as Executive Chairman, and Mr. Shmuel Hess, Ph.D. (current Enlivex CEO) is expected to serve as CEO. The current Bioblast board will nominate these directors and then resign.
Contingent Value Rights (CVRs): Bioblast shareholders will receive one CVR for each ordinary share held. These rights entitle holders to potential payments derived from a "Trehalose Transaction" (sale or licensing of Bioblast's Trehalose product candidate).
- Payment Structure: CVR holders receive consideration from Trehalose transactions less unreimbursed expenses. Bioblast may deduct the lesser of 10% of the first payment or $250,000 for transaction expenses.
- Cap and Split: Once CVR payments aggregate $20,000,000, subsequent consideration will be split 50% to Bioblast and 50% to CVR holders.
- Termination: CVRs terminate if the Trehalose program is terminated or if no transaction occurs within one year of the Merger closing (at Bioblast's discretion).
Timeline: Bioblast anticipates completing the Merger during the first quarter of 2019, subject to the satisfaction of all conditions.
Investor Verification Checklist
- Verify the final exchange ratio and the number of Bioblast shares to be issued once the definitive share counts are confirmed.
- Confirm the successful closing of the concurrent private offering to raise the required $7.5 million.
- Monitor the outcome of the Bioblast shareholder vote and the subsequent statutory waiting periods in Israel.
- Review the status of negotiations for the Trehalose program, as this directly impacts the value of the Contingent Value Rights (CVRs).
- Check for the issuance of the required tax ruling from the Israeli Tax Authorities.
- Confirm the new ticker symbol and listing approval on the Nasdaq Capital Market.