NLS and Kadimastem stocks surge post-merger deal

Switzerland-based NLS Pharmaceutics and Kadimastem, headquartered in Israel, have entered into a definitive merger agreement to create a unified biopharmaceutical company. This new entity will focus on developing treatments for neurogenerative diseases and diabetes.

As part of the merger, NLS will issue its common stock to Kadimastem’s shareholders. The post-transaction share distribution is expected to allocate 80% to Kadimastem stakeholders and 20% to NLS stakeholders. This distribution is contingent on the final cash and debt status of both companies at the closing of the deal, anticipated to occur in January 2025.

Following the merger announcement, stock prices for both companies experienced significant increases. Kadimastem’s stock surged over 22% during trading on November 5 at the Tel Aviv Stock Exchange. Similarly, NLS’s stock price closed at $4.39 on Nasdaq on November 1, marking a 21.9% increase from the previous trading day.

NLS Pharmaceutics has announced intentions to divest some of its existing assets, including the extended-release formulations of mazindol, marketed under the names Quilience and Nolazol, used for treating narcolepsy. The proceeds from these sales will be distributed to NLS’s shareholders and warrant holders as per a contingent value agreement.

The newly merged entity will concentrate on advancing NLS’s Dual Orexin Agonist (DOA) platform and Kadimastem’s allogeneic cell therapy program. One of the initial projects for the combined company will be a Phase IIa clinical trial in the United States, assessing Kadimastem’s cell therapy, AstroRx, as a treatment for amyotrophic lateral sclerosis (ALS). AstroRx is derived from embryonic astrocytes, a type of glial cell integral to the central nervous system.

In February 2023, Kadimastem shared promising results from an open-label Phase I/IIa trial of AstroRx involving 10 ALS patients. The data revealed clinical benefits three months after administration, with both doses of the therapy being well tolerated and no treatment-emergent adverse events reported.

Additionally, the companies plan to submit a pre-investigational new drug application to the US Food and Drug Administration (FDA) for Kadimastem’s islet cell therapy, IsletRx, targeting insulin-dependent diabetes.

The merger, initially announced in July, originally envisioned Kadimastem becoming a wholly owned subsidiary of NLS. Ronen Twito, Kadimastem’s executive chairman and president, expressed optimism about the merger, stating that the new Nasdaq listing would enhance the development of their portfolio and increase shareholder value.

The combined expertise and resources of NLS Pharmaceutics and Kadimastem are expected to accelerate the development of innovative treatments, potentially offering new hope to patients suffering from neurogenerative diseases and diabetes. The collaboration reflects a strategic move to leverage the strengths of both companies, aiming to make significant strides in the biopharmaceutical industry.