Hepion Pharmaceuticals enters merger agreement with Pharma Two B

Hepion Pharmaceuticals has entered into a definitive merger agreement with Pharma Two B Ltd., a late-clinical stage private Israeli company that is developing P2B001, an innovative combination product candidate in development for the treatment of Parkinson’s Disease. Under the Merger Agreement, Hepion will merge into and become an indirectly wholly-owned subsidiary of Pharma Two B. The combined company will continue to operate under the “Pharma Two B” name and Pharma Two B has agreed to file a registration statement on Form F-4 with the U.S. Securities and Exchange Commission to register the ordinary shares proposed to be issued to Hepion’s equity-holders in the acquisition, and will also apply to list its ordinary shares on Nasdaq under the ticker symbol “PHTB”. Hepion has also announced a private placement of $2.9 million non-convertible senior notes to qualified institutional investors. The notes are unsecured, interest-free, and were issued with an aggregate $400.0 thousand original issue discount, and mature at the earlier of December 31, 2024; the closing of Merger; or the termination of Merger pursuant to terms of Merger Agreement. Hepion also loaned $600.0 thousand of the proceeds to Pharma Two B through a non-convertible unsecured note that bears nominal interest and matures on the same terms as the $2.9 million notes, but which will be forgiven and cancelled upon consummation of the Merger. In connection with the purchase of the notes, the investors received 1,159,245 shares of Hepion common stock, or approximately 19.99% of Hepion’s outstanding common stock immediately prior to the issuance. In support of the Merger, Pharma Two B has entered into a securities purchase agreement for an $11.5 million private placement of ordinary shares and accompanying Series A warrants and Series B warrants with a syndicate of new and existing institutional life science investors. The private placement is expected to close immediately after the closing of the Merger. The Series A warrants will have a 5-year term, and an exercise price of $6.00 per ordinary share. The Series B warrants will have a 2.5-year term, and an exercise price of $6.00 per ordinary share. The warrants will have customary anti-dilution adjustments as well as anti-dilution price protection and share adjustment features, subject to a floor price of 20% of the initial exercise price per share, as well as a cash true up feature, in each case subject to certain limitations. Pharma Two B has agreed to register for resale the shares to be issued in the concurrent private financing. Under the terms of the Merger Agreement, the Merger is valued at an estimated pro-forma implied equity value of approximately $58.5 million. At close, Pharma Two B expects up to $11.5 million of gross cash proceeds, and intends to use net proceeds to fund continuing growth and expansion of its lead product candidate P2B001 and repay up to $2.9 million of Hepion’s senior unsecured notes to the extent outstanding at closing of the Merger. Following the Merger, the combined company will continue to be led by Pharma Two B’s management, a highly experienced team in PD, supported by top-tier scientific and clinical key opinion leaders and backed by a dedicated group of investors. The Merger is expected to close in the fourth quarter of 2024 and is subject to approval by Hepion’s stockholders, regulatory approval, and other customary closing conditions.