Monster Digital Inc (NASDAQ:MSDI) has announced signing a definitive Merger Agreement under which shareholders of Biopharmaceuticals, Inc, a privately-held company will acquire majority stake in Monster Digital, Inc. if the merger is approved by the company’s shareholders, the combined company will advance a late stage drug for celiac disease, which Innovate believes is a significant unmet medical need, into expected Phase 3 clinical trials.
In a statement, Christopher P. Prior, Ph.D, the CEO of Innovate said the merger will provide an easy access to the market which is key to driving the company’s program for celiac disease into its final stage of clinical testing. He added that they are fully committed to assisting patients with persistent symptoms.
CEO of Monster David H. Clarke on his part said they are very happy to implement the merger with Innovate Biopharmaceuticals. He added that they intend to file a proxy statement with SEC in coming weeks to offer more information in the merger for the benefit of shareholders.
According to the terms of the merger, pending the approval of the shareholders, Innovate shareholders will be issued with new Monster in exchange for Innovate stock. The ratio of exchange will be based on a pre-transaction valuation of $60 million for Innovate’s business and $6 million for Monster’s business. Consequently, current shareholders of Monster shareholders with cumulatively own around 9% while Innovate stockholders will own around 91% of the combined company on a pro-forma basis. This provision is subject to adjustments which will be based on Monster’s net cash balance and both companies’ capitalization at closing.
The merged company will be led by Innovate’s management team and will be named Innovate Biopharmaceuticals, Inc. before closing the transaction, Monster will seek the approval of its shareholders to a carry out a reverse of its share in line with Nasdaq Capital Market (NasdaqCM) requirements. The merged company will trade on the NasdaqCM under a new ticker symbol. Following the closure of the transaction the boards of director of the new company will consist of seven Innovate members. The agreement has been approved by the boards of directors of both companies.