Zafgen Inc. (NASDAQ:ZFGN) and Chondrial Therapeutics Inc. have announced the finalization of a reverse merger transaction forming a new public company. The combined biotechnology company will trade under Larimar Therapeutics Inc. with its stock starting to trade on Nasdaq Global Market under ticker “LRMR.”
The combined company attracts various institutional investors
The new combined company has signed a private placement of common shares, raising around $80 million. The gross proceeds from the private placement are before considering expenses and agent fees. Cowen Healthcare Investments is leading the financing, and other biotechnology institutional funds like Logos Capital, Acuta Capital, RA Capital Management Vivo Capital, and Janus Henderson Investor managed funds.
Also, some healthcare-focused investors are part of the financing. The investors include Deerfield Management, who is the company’s biggest investor. With the financing, the company will have a robust institutional stockholder base. At the time of the merger, Zafgen had $40 million cash on its balance sheet and the merged company having around $116 million in cash.
Chondrial shareholders received 6.091 million common shares of Zafgen
Before the consummation of the transaction, On May 28, 2020, Zafgen triggered a one for twelve reverse shares split. As a result, all the company’s outstanding and issued common shares were subject to the reverse split. There will be o issuance of fractional shares concerning the reverse shares split, but instead, there will be payment of cash instead of fractional stock. After the finalization of the merges and after considering the reverse split, Chondrial outstanding shareholders before the merger received around 6.091 million Zafgen common shares.
The newly merged company, Larimar, is expected to issue around 6,734,006 common shares in the private placement. The company’s shares, as well as the pre-funded warrants, are correspondingly offered at $11.88 and $11.87.
Larimar CEO and President Carle Ben-Maimon indicated that they were delighted to complete the merger, becoming a public traded entity focusing on the development of rare disease treatments through the powerful peptide tech platform.