Focused on the development and commercialisation of therapeutic products for a variety of viral diseases, including influenza, Adamis Pharmaceuticals Corporation has entered into a definitive merger agreement with Cellegy Pharmaceuticals, Inc.
Adamis' chief executive officer, Dr. Dennis Carlo, is expected to become the chief executive officer of the combined company. Dr. Carlo is a veteran of the pharmaceutical and biotechnology industry, having previously served as CEO of publicly traded Immune Response Corporation, president of Telos Pharmaceuticals, and Vice President of Research and Development and Therapeutic manufacturing of Hybritech Inc. prior to its acquisition by Eli Lilly & Co.
Adamis is a privately held specialty pharmaceuticals company that is engaged in the research, development and commercialization of products for the prevention of viral infections, including influenza. Adamis currently markets and sells a line of prescription products for a variety of allergy, respiratory disease and paediatric conditions, and also owns a GMP certified independent contract packager of pharmaceutical and nutraceutical products.
The transaction was unanimously approved by the boards of directors of both companies and is anticipated to close during the second or third quarter of 2008, subject to the filing of a registration statement and proxy statement with the Securities and Exchange Commission, the approval of Adamis' and Cellegy's respective stockholders at stockholder meetings following distribution of a definitive proxy statement, and other customary closing conditions. Holders of approximately 40 per cent of Cellegy's outstanding common stock have entered into voting agreements pursuant to which they agreed to vote their shares in favour of the transaction. The combined company expects to continue to be publicly traded after completion of the merger, although under a different corporate name.
"The merger of Cellegy and Adamis will create a new specialty pharmaceutical company focused on the development and commercialization of therapeutic products for a variety of viral diseases, including influenza," said Williams, CEO, Cellegy. "We like the fact that in addition to technologies in development that we believe are promising, Adamis has allergy and respiratory products already being sold in the US marketplace, and a contract packaging company that provides a source of current revenue and the potential for future revenue and income growth," said Williams.
"This merger allows us to fulfil our strategic objective of building a publicly traded company that combines biopharmaceutical research and development with the financial stability of a company producing immediate revenues from the sale of specialty pharmaceutical products and from the packaging of drugs for major pharmaceutical distributors. We believe the concept makes sense both financially and operationally," said Dr. Carlo.
Cellegy estimates that its stockholders will hold between approximately 4 to 6 per cent of the total number of outstanding shares immediately after the merger, and Adamis' stockholders are expected to hold in excess of 94 per cent of the total number of outstanding shares of the combined companies. If the transaction is approved by the stockholders, before the closing of the merger Cellegy will implement a reverse stock split of its common stock so that the outstanding Cellegy shares will be converted into a number of shares equal to the sum of 3,000,000 plus the amount of Cellegy's net working capital at the time of the closing of the merger divided by $0.50. It is estimated based on assumptions that the reverse split will be between 8.5 to 1 and 9.945 to 1. The actual amounts and percentages will depend on many factors, and actual amounts and percentages could be higher or lower. There are currently approximately 29.8 million outstanding Cellegy shares.
At the effective time of the merger, each outstanding share of Adamis common stock will be converted into the right to receive one (post-reverse stock split) share of Cellegy common stock (excluding in all cases dissenting shares), subject to cash payment in lieu of the issuance of fractional shares. Adamis currently has approximately 50 million outstanding shares of common stock, excluding options, warrants and convertible securities.
In connection with the signing of the merger agreement, Cellegy also provided a loan to Adamis in the amount of $500,000 to provide additional funds to Adamis during the pendency of the merger transaction.