Chondrial Therapeutics, Inc., a clinical-stage biotechnology company focused on developing treatments for complex rare diseases, today announced the completion of its reverse merger with Zafgen, Inc. (Nasdaq:ZFGN). The combined, publicly traded clinical-stage biotechnology company will operate under the name Larimar Therapeutics, Inc. and its shares will commence trading on the Nasdaq Global Market on May 29, 2020, under the ticker symbol “LRMR.”
The combined company also announced it has secured funding commitments in a private placement financing of common stock (or pre-funded warrants to purchase common stock in lieu thereof) for $80 million of gross proceeds before placement agent fees and expenses. The financing is being led by Cowen Healthcare Investments, and includes participation from biotechnology specialist funds Acuta Capital, funds managed by Janus Henderson Investors, Logos Capital, OrbiMed, RA Capital Management, and Vivo Capital, along with other healthcare-focused institutional investors. Along with the company’s largest existing investor, Deerfield Management, the new investors in the financing create a strong institutional shareholder base for the company.
Together with approximately $40 million in cash on Zafgen’s balance sheet at the time of the merger, the combined company has approximately $116 million in cash.
On May 28, 2020, prior to the consummation of the merger, Zafgen effected a one-for-twelve reverse stock split. All issued and outstanding shares of common stock of Zafgen were subject to the reverse stock split. No fractional shares will be issued in connection with the reverse stock split. Instead, cash will be paid in lieu of fractional shares. Upon completion of the merger, taking into consideration the reverse stock split, the holder of shares of Chondrial capital stock outstanding immediately prior to the merger received 6,091,250 shares of Zafgen common stock.
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Larimar will issue approximately 6,734,006 shares of common stock (or pre-funded warrants to purchase common stock in lieu thereof) in the private placement. The shares and pre-funded warrants are being sold at a price of $11.88 and $11.87, respectively. Each pre-funded warrant will have an exercise price of $0.01 per share and will be exercisable immediately. The private placement is expected to close on June 1, 2020.
Source: BioSpace