Clinical-stage psychedelic drug development firm Filament Health Corp. (OTCQB: FLHLF) and special purpose acquisition company Jupiter Acquisition Corporation (NASDAQ: JAQC) have entered into a definitive agreement to merge, creating a new public company expected to be listed on the Nasdaq.
The deal, announced Wednesday, assigns Filament an equity value of $176 million or $0.85 per share and carries a pro forma enterprise valuation of approximately $210 million. The transaction is anticipated to close in the fourth quarter this year, providing at least $5 million of net proceeds to the combined company.
The merger is expected to accelerate the company’s botanical psychedelic drug development platform, Filament said.
“Today’s announcement is an important milestone for Filament as we gain access to the broader capital markets needed to advance our drug development platform,” the company’s CEO, Benjamin Lightburn, said in a statement.
“Filament was founded on the belief that standardized, naturally-derived psychedelic medicines can improve the lives of millions of people suffering from treatable conditions. Partnering with Jupiter brings us a step closer to making this a reality.”
Jupiter CEO James Hauslein expressed excitement over the business combination, citing Filament’s “novel” approach to psychedelic drug development through natural botanical extracts.
Under the terms of the deal, Jupiter will merge with and into a wholly-owned subsidiary of the new public company, and Filament will amalgamate with another wholly-owned subsidiary. Filament’s convertible securities will be assumed by the new public company at closing.
Both Jupiter and Filament’s boards have approved the proposed merger, with Filament’s board receiving a fairness opinion from independent financial advisor Evans & Evans, Inc.
The transaction still requires regulatory approval, court orders from the Supreme Court of British Columbia, and the approval of Filament’s security holders and Jupiter’s stockholders. Directors and management of Filament, collectively owning approximately 42.8% of outstanding common shares, have committed to vote in favor of the proposed merger.
In addition to the SPAC news, Filament also reported a private placement of C$2 million by Negev Capital, a psychedelic medical intervention investment fund.
“Negev Capital is pleased to support Filament, among the most compelling early‐stage companies in the psychedelic space,” said Ken Belotsky, Partner at Negev Capital.
“Filament’s strategy of thoughtfully developing innovative psychedelic treatments could positively impact millions of lives. With vertically integrated manufacturing capabilities creating standardized, botanical drug candidates, Filament is poised to succeed.”
Negev Capital has made over 20 investments to date and is the lead investor of the offering. The company said in a statement that the net proceeds are expected to be used to recruit patients and initiate the company’s phase 2 Methamphetamine Use Disorder clinical trial which has already received FDA approval, as well as other general corporate purposes.