NEWARK, N.J. - Rafael Holdings, Inc. (NYSE: RFL) and Cyclo Therapeutics, Inc. (Nasdaq: CYTH) have entered into a definitive merger agreement, the companies announced Thursday. The merger aims to advance the development of Trappsol® Cyclo™, a treatment for the rare genetic disorder Niemann-Pick Disease Type C1.
The agreement stipulates that Rafael Holdings will issue shares of its Class B common stock to Cyclo Therapeutics shareholders. The exchange ratio values Cyclo Therapeutics at $.95 per share and Rafael Holdings based on its cash, marketable securities, investments, and liabilities. Rafael will also consider convertible notes funding Cyclo's operations through the merger's closing.
The boards of both companies have approved the transaction, which is expected to close in late 2024, subject to shareholder approval, registration of Rafael Holdings shares, and other customary conditions.
Rafael Holdings first invested in Cyclo Therapeutics in March 2023 to support treatment innovation for Niemann-Pick Disease Type C1. The company led another financing round in fall 2023 and has provided further support through convertible debt financings in 2024.
Bill Conkling, President and CEO of Rafael Holdings, expressed confidence in the merger, highlighting Cyclo Therapeutics' progress with its TransportNPC™ Phase 3 clinical study, which completed enrollment in late May 2024. Results from the 48-week interim analysis are anticipated in mid-2025.
N. Scott Fine, CEO of Cyclo Therapeutics, noted the partnership's success in reaching this merger agreement, which is expected to solidify efforts to deliver trial results to shareholders and patients.
Cyclo Therapeutics is conducting a Phase 2b trial for Trappsol® Cyclo™ in early Alzheimer's disease, based on promising data from an Expanded Access program.
Financial advisor Cassel Salpeter & Co. and legal advisors Schwell Wimpfheimer & Associates and Fox Rothschild LLP are facilitating the transaction.
Rafael Holdings focuses on clinical and early-stage pharmaceutical investments, including a planned merger with Cyclo Therapeutics, which is developing treatments for challenging diseases.
This news is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. The merger's completion is not guaranteed and is subject to various conditions and approvals.
In other recent news, Cyclo Therapeutics has made significant advancements in its Alzheimer's disease treatment program. The biotechnology firm secured approval from the European Patent Office for their Alzheimer's disease treatment method, adding value to their patent portfolio. The patent, numbered 3873604B, is set to take effect in 2024. The company's product, Trappsol® Cyclo™, which has orphan drug designation in the United States and Europe, is being tested in clinical trials for early onset Alzheimer's disease.
In financial developments, Cyclo Therapeutics secured a $2 million convertible promissory note deal with Rafael Holdings, Inc. The note, bearing a 5% annual interest rate, is set to mature in 2024. The proceeds from this note are planned to be allocated towards working capital and general corporate purposes.
Ascendiant Capital initiated coverage on Cyclo Therapeutics, assigning a Buy rating based on a net present value analysis. These are recent developments in the company's ongoing efforts to secure funding, gain analyst recognition, and expand its product range.
InvestingPro Insights
As Rafael Holdings, Inc. (NYSE: RFL) and Cyclo Therapeutics, Inc. (Nasdaq: CYTH) announce their definitive merger agreement, investors are keen to understand the financial health and market position of Cyclo Therapeutics. With the merger set to enhance the development of treatments for rare genetic disorders, here are some key insights from InvestingPro that could prove valuable:
InvestingPro Data highlights a market capitalization of $36.16 million for Cyclo Therapeutics, indicating the size of the company in the pharmaceutical industry. The company's revenue for the last twelve months as of Q2 2024 stands at $1.13 million, with a significant gross profit margin of 91.56%. These figures suggest a strong ability to convert sales into profit, which is crucial for a company in the capital-intensive biotech sector.
From the InvestingPro Tips, two notable points stand out. Firstly, Cyclo Therapeutics is expected to see net income growth this year, signaling potential for improved financial performance and investor returns. Secondly, the company's impressive gross profit margins underscore its efficiency in managing production costs relative to sales.
Currently, there are additional InvestingPro Tips available for Cyclo Therapeutics, which can be found at https://www.investing.com/pro/CYTH. These tips provide deeper insights into the company's financial metrics and market behavior, which could be particularly useful for investors considering the implications of the merger with Rafael Holdings.
The merger's success could hinge on these financial indicators and the strategic fit between the two companies. As the pharmaceutical industry continues to evolve, understanding these metrics becomes increasingly important for investors tracking the progress of such corporate actions.
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