Poolbeg Pharma, the clinical-stage biopharmaceutical company led by serial entrepreneur Cathal Friel, saw its shares plunge on Thursday as it revealed it is in merger talks with a Nasdaq-listed peer that has been going through significant restructuring over the past year.
An all-share deal – being engineered as a reverse takeover – would see Poolbeg investors initially take a 55 per cent stake in the merged entity, with shareholders in its prospective partner, Hookipa Pharma, left with the remainder, the companies said in a joint statement.
A planned $30 million (€28.9 million) equity raise immediately after the tie-up is completed may dilute legacy Poolbeg investors’ stake to about 40 per cent, they said.
Poolbeg’s shares closed down 38 per cent at 4.4 pence in midday trading on London’s junior stock market, known as AIM, pushing its market value down to £22 million (€26.5 million). Hookipa’s shares were little changed in early afternoon trading in New York.
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Shares in Hookipa, where Irish life sciences industry veteran Julie O’Neill is chairperson, slumped by almost 76 per cent in 2023 as the company went through senior management changes and announced three rounds of large job cuts. The latest, announced at the end of November, pointed to the group reducing its workforce to below 20 – down from 180 at the start of 2024.
Hookipa, which raised more than $70 million in share sales in 2023, saw its cash resources fall by almost 50 per cent over the first nine months of the year, to $60 million.
Industry observers have suggested Poolbeg may see a turnaround opportunity at Hookipa.
The combined group would be led by Mr Friel as executive chairman, the same role he holds in Poolbeg. Hookipa’s chief executive of six months, Malte Peters, is on track to be chief executive of the bigger organisation. Ian O’Connell, Poolbeg’s co-founder and chief financial officer, will head the finance function.
The plan is to retain Hookipa’s Nasdaq listing and drop Poolbeg’s current AIM quotation, subject to the deal going through.
“The boards believe that the potential combination would create a Nasdaq-listed combined group operated by a combined management team experienced in successfully developing and commercialising medicines with a focus on execution and operational excellence,” the statement said.
The two companies also believe the merger would create a diversified pipeline of potential treatments, led by Hookipa’s so-called HB-700, a next generation immunotherapy that could offer additional treatment options for cancers with limited existing options, and Poolbeg’s POLB 001, a potentially breakthrough preventive therapy against certain negative reactions to cancer immunotherapies.
Poolbeg was established as a stand-alone company when it was spun out by fellow London-listed Hvivo, a clinical trials business, through an initial public offering in 2021.
The current talks follow a number of deals carried out by Mr Friel in the pharma space in the past decade.
Mr Friel orchestrated the IPO of Open Orphan, a pharma services company, in 2019 through the reverse takeover of Dublin-listed Venn Life Sciences. The company went on later that year to buy Hvivo, which was struggling at the time. The since-renamed Hvivo group currently has a market value of £133.6 million.
In 2006, the Donegal native merged a London-listed cash shell, called Fastnet Oil & Gas, with Amryt Pharma, which was looking to buy and develop a pipeline of drug candidates focused on treating rare and orphan diseases.
Amryt was acquired for about $1.48 billion in 2023 by Chiesi Farmaceutici, an Italian pharmaceutical company. Three former senior Amryt executives, David Allmond, John McEvoy and Laura Maher, joined Poolbeg early last year.
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