Investors
Novakand Pharma is publicly traded on the Nasdaq First North Premier Growth Market. The company is developing a new class of drugs with focus on treatment of inflammation and cancer.
Q&A’s concerning announced reverse takeover
Why has Novakand Pharma made this decision now?
In order to drive the company’s development program forward, significant investments in e.g. clinical development and manufacturing of study drug are required. The capital required to make these investments exceeds the company’s current cash. This means that external capital is needed.
The company’s board and management have for a long period of time evaluated every option for capital injection available, primarily through partnerships with other drug development companies or professional investors. As these options have not materialized, at reasonable terms for the company, the board views that the opportunity to conduct a reverse take over is the best option available to create value to shareholders. If this does not succeed, given the company’s financial position, the alternative is to de-list and perform a liquidation of the company.
Have no drug development companies been willing to in-license or acquire the program?
Novakand Pharma has for a long period of time conducted comprehensive business development activities aiming to establish partnerships. However, without additional significant investments in clinical development and manufacturing, the probability of materialization near-term is perceived to be low.
Have no companies been willing to invest in Novakand Pharma?
The company has for a long time worked intensively to seek external financing, with primary focus on professional long-term investors that can support the long-term strategy. Considering the macroeconomic situation, the outcomes in the company’s recent capital raising processes and the continued challenging situation on the international capital markets, the opportunities to raise a sufficient amount of capital near-term are considered as low.
Why can’t you merge with another company?
The company has engaged in evaluations of potential structural transactions with other drug development companies, without success.
What is a reverse takeover and have you already identified any interested parties?
Novakand Pharma’s listing at the Nasdaq First North Growth Market in Stockholm and cash are perceived to be attractive for a privately held growth company aiming to become a public company. The board has therefore made the decision to initiate a process to seek target companies for a so-called reverse takeover transaction.
A reverse takeover can be seen as an alternative to a traditional IPO, as the private company through such transaction, will become listed through the already listed company. A decision to execute a reverse takeover transaction is subject approval by the shareholders at a general meeting. A reverse take over is also subject to a new listing review by Nasdaq.
Kancera is not at the moment engaged in any concrete discussions, but the board intends to keep the market updated regarding significant events during the process.
What will happen with the company’s operations in the meantime?
The company will continue to operate, however activities to reduce operational expenses have been initiated. The main focus will now be to execute the process as efficiently as possible, both with regards to costs and timelines, in order to achieve highest possible value preservation for shareholders.
What’s the lead time for such process?
A reverse takeover process may take several months, depending on interest, complexity and legal requirements. The board emphasizes that there is not a guarantee that a transaction will be executed, but intends to keep the market updated regarding significant events during the process.
What happens if no reverse takeover will be executed, is there a risk of bankruptcy?
In the event that the company will not be successful in executing a reverse takeover, and there is a lack of other strategic options, the board intends to recommend a de-listing from the Nasdaq First North Growth Market and voluntary liquidation of the company, by which available cash will be distributed to current shareholders.
In the event that no significant measures would be taken, there is a risk that the company will become financially insolvent, and ultimately, face bankruptcy. The board and management are therefore now working with taking suitable measures to secure the continued survival of the company.
Will shareholders have a say during the process?
A decision regarding a potential reverse takeover, de-listing or liquidation of the company, will be subject to approval by the shareholders at a general meeting. A reverse takeover also requires a new listing review by Nasdaq.
What will happen with Novakand Pharma’s candidate drugs?
Novakand Pharma has made significant progress in the development of the fractalkine program. The two candidate drugs rugocrixan and fosrugocrixan have been advance from preclinical to clinical development stage and in total seven clinical studies in patients and healthy subjects have been completed. Even though the company is not currently engaged in any concrete discussions concerning out-licensing or divestment of the fractalkine program there is still hope that a potential buyer can be found. However, the board emphasizes that there are no guarantees that such a buyer can be found.
What will be the next steps?
The company will now initiate a process to identify and meet with potential stakeholders. The market will be updated on significant events in accordance with the rules and regulations of publicly traded companies. All significant information will be communicated through press releases and be available on the company’s website.