Shares of Cellect Biotechnology (NASDAQ:APOP) shot up more than 40% in pre-market trading on Thursday after a merger announcement. Shares of APOP stock gained on news that the biopharma firm would combine with Quoin Pharmaceuticals.
Cellect’s technology is focused on developing commodity-quality stem cells which are necessary for the creation of regenerative treatments of disease — a process of stimulating your cells, tissues or organs to repair and heal themselves.
Meanwhile, Quoin is a specialty pharmaceutical company focused on rare and orphan diseases. That focus and the cash that the deal brings to the effort are the two points that APOP stock investors should be considering.
In connection with the merger, Quoin has secured $25 million in committed equity funding from institutional healthcare investor Altium Capital. Quoin has also negotiated an $18.5 million commercial bank venture loan.
APOP Stock Holders Get 1:3 Deal
Cellect shareholders will retain approximately 25% of the combined shares before investment while the shareholders of Quoin will receive shares of APOP stock representing approximately 75% of the pre-investment number of shares. Confused by that math? The deal comes with a 1:3 ratio of shares between original Cellect shareholders and Quoin.
As trade publication Biopharma Dive noted, “pharma is built on deals. The biggest companies are fusions of biotechs large and small, bought up in quests to find the next breakthrough drug.”
And this deal is just the latest in the biopharma space. It looks like M&A activity is continuing to pick up from the grinding halt last year as the pandemic took hold.
However, the industry’s bigger concern is regulator scrutiny and intervention in deals as momentum picks up. The U.S. Federal Trade Commission will join European, British and Canadian regulators, along with the U.S. Justice Department and states attorneys general, to update how they review pharmaceutical acquisitions. Regulators are concerned that the high volume of these mergers could increase drug prices and other anti-competitive issues.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.