Vital Therapies Inc. will undergo a reverse merger with privately held German biotechnology company Immunic AG in an all-stock deal.
San Diego-based Vital, which develops cell therapies to treat liver failure, said the new company will be 89% owned by Immunic, which develops treatments for chronic inflammatory and autoimmune diseases. The new company will adopt the Immunic Inc. name, trade on Nasdaq and be headquartered in Boston.
An investor syndicate, which includes private equity firms Life Sciences Partners BV, Fund+ NV, Bayern Kapital GmbH, High-Tech Gründerfonds Management GmbH, IBG Beteiligungsgesellschaft Sachsen-Anhalt mbH, Omega Funds and LifeCare Partners, will invest about €26 million in the new company to advance the development of Immunic's product candidates, which include IMU-838 for the treatment of ulcerative colitis — an inflammatory bowel disease that causes long-lasting inflammation and ulcers in the digestive tract.
The merger is contingent upon the financing, which along with cash on hand, will allow the combined company to have between $35 million to $40 million in cash on hand, or enough to fund development until the third quarter of 2020.
Immunic's President and CEO, Daniel Vitt, will lead the combined company while Vital's CEO, Russell Cox, will leave the company following the merger. The new company's board will comprise five members — four from Immunic plus Vital's current President, Duane Nash.
Prior to the merger's closing, Vital will seek stockholder approval to effect a reverse split of common stock to satisfy Nasdaq's minimum bid price requirement of $1 for continued listing.
In case the merger is terminated, Vital may pay a termination fee of $500,000 to Immunic, while Immunic may be obligated to pay $2 million to Vital.
The transaction has been approved by the board of both companies and the stockholders of Immunic.
The transaction is expected to close in the second quarter of 2019, subject to the approval of Vital stockholders, as well as other customary conditions.
Ladenburg Thalmann & Co. Inc. is acting as exclusive financial adviser, while Pillsbury Winthrop Shaw Pittman LLP is serving as legal counsel to Vital Therapies.
BMO Capital Markets is acting as exclusive financial adviser, while Dentons is serving as legal counsel to Immunic.