Innovative Therapies finds innovative fund raising solution

The company will raise $10 million via stock market shell Novo Energies, with merging into it.

Immunovative Therapies, which is developing an immunization against cancer, and is part of the Trendlines International Ltd. group, will not carry out a merger with US company Novo Energies, as it sought to do in the past. Instead, the company will grant Novo Energies rights to sell all the products in its portfolio, when they reach the market. In exchange, Novo Energies will raise $10 million to finance a Phase IIb trial for Immunovative Therapies' leading product.

Novo Energies is an inactive company traded on the US OTC market at a market acp of $10 million. On Friday, after the announcement of the deal with Immunovative Therapies, its share price rose 18%.

Immunovative Therapies business manager Tali Gan told "Globes" today that, after carrying out due diligence, Novo Energies believed that, thanks to the new agreement, it would be able to raise $10 million.

Under the agreement between the two companies, even if the fund raising round does not succeed, Novo Energies will pay Immunovative Therapies at least $150,000 a month to cover its regular cash burn rate, and a further $2 million when approval is received for carrying out the IIb clinical trial. If it fails to make the payments, Novo Energies will lose the marketing rights.

This structure is apparently simpler for Immunovative Therapies than setting up a new company and merging it into the market shell. The deal also does not involve the export of intellectual property from Israel, and therefore does not trigger Immunovative Therapies' obligations to the Chief Scientist.

The agreement does include the possibility of a merger between the companies if the Phase II trial is completed successfully. If that happens, the shareholders in Immunovative Therapies will hold control of Novo Energies, and will recover the marketing rights to the product.

"The capital market is currently pretty much closed to new offerings by innovative pharma companies, while the funds do not give good terms to companies at our stage. We therefore decided that linking up with an entity like Novo, which has connections in the capital market and knows how to conduct itself as a public company, could be a good source for raising money, with the advantage of preserving our status as a privately-held Israeli company," says Gan.

Published by Globes [online], Israel business news - www.globes-online.com - on December 18, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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