June 7, 2023
- Phoenix Biotech Acquisition Corporation (PBAX) to acquire CERo Therapeutics (Private) in a transaction valuing the pro forma entity at $112 million in Enterprise Value ($145 million equity value) assuming 50% redemptions from the current level of 92.6%.
- CERo Therapeutics shareholders will receive an equity consideration of $50 million at $10.0 per share (subject to adjustments) and 1.20 million earnout shares in three tranches based on post-closing trading prices at $12.5 and $15.0 and if there is change in control of the combined company.
- Minimum net cash condition of $30.0 million.
- No termination fees.
- Business combination transaction is targeted to close in the third quarter of 2023.
- SPAC Details:
- Unit Structure: 1 Class A Ordinary Share + 0.5 Redeemable Warrant
- #Cash in Trust: $14,031,783 (105.3 % of Public Offering)
- Public Shares Outstanding: 1,288,298 shares
- Private Shares Outstanding: 5,481,250 shares (including 885,000 shares contained in private placement units)
- Trust Value/Share: $10.53Current Liquidation Date: July 8, 2023
- Outside Liquidation Date: July 8, 2023
- Name of Target: CERo Therapeutics
- Target Description: CERo is an innovative immunotherapy company advancing the development of next generation engineered T cell therapeutics for the treatment of cancer. Its proprietary approach to T cell engineering, which enables it to integrate certain desirable characteristics of both innate and adaptive immunity into a single therapeutic construct, is designed to engage the body’s full immune repertoire to achieve optimized cancer therapy. This novel cellular immunotherapy platform is expected to redirect patient-derived T cells to eliminate tumors by building in engulfment pathways that employ phagocytic mechanisms to destroy ancer cells, creating what CERo refers to as Chimeric Engulfment Receptor T cells (“CER-T”). CERo believes the differentiated activity of CER-T cells will afford them greater therapeutic application than currently approved chimeric antigen receptor (“CAR-T”) cell therapy, as the use of CER-T may potentially span both hematological malignancies and solid tumors. CERo anticipates initiating clinical trials for its lead product candidate, CER-1236, in 2024 for hematological malignancies.
- Announced Date: June 5, 2023
- Expected Close: “Second Half of 2023”
- Press Release: https://www.sec.gov/Archives/edgar/data/1870404/000119312523160387/d494471dex991.htm
- Transaction Terms (https://www.sec.gov/Archives/edgar/data/1870404/000119312523160387/g494471ex99_2s39g1.jpg)
| Redemption Rate | 50% from current level of 92.6% |
| Share Price | $10.0 per share |
| Enterprise Value | $112 million |
| Market Cap Value | $145 million |
- Target Shareholders Receive (~34.5%):
- Equity consideration of $50 million at $10.0 per share (5 million shares of PBAX Class A common stock) subject to following:
- $50 million – Aggregate Liquidation Preference
- $50 million – (Series A Preferred Stock*Liquidation preference per share thereof) + (Shares of Series Seed Preferred Stock *Liquidation preference per share thereof)
- Earnout consideration of 1.20 million shares (4 years post-closing) as follows:
- 0.50 million shares if Share price equal or exceeds $12.5
- 0.50 million shares if Share price equal or exceeds $15.0
- 0.20 million shares if there is a change of control within earnout period
- PIPE / Financing (https://www.sec.gov/Archives/edgar/data/1870404/000119312523160387/g494471ex99_2s39g1.jpg)
- Expected to raise PIPE investment of $32.5 million which includes:
- $25.0 million from new investors
- $7.25 million from existing CERo investors
- Expected to raise PIPE investment of $32.5 million which includes:
- Redemption Protections:
- Before closing PBAX, Sponsor and certain Pre-Closing PBAX Stockholders will enter into non-redemption agreement
- Support Agreement:
- Standard voting support
- Lock-Up:
- SPAC Sponsors:180 days post-closing
- Early release: if share price equals or exceeds $12.50 after post-closing.
- Key Target Shareholders: Same as Sponsors
- Closing Conditions:
- Termination date: September 30, 2023 (December 30, 2023, with extension)
- Minimum net cash condition of $30.0 million
- Cash includes:
| Cash in Trust | |
| Less: | Redemptions |
| Add: | PIPE Financing |
| Less: | Target Expenses |
| Less: | SPAC Expenses |
- Other customary closing conditions
- Termination:
- Standard termination clauses
- Advisors:
- SPAC Legal Advisors: Goodwin Procter LLP
- Target Legal Advisors: Cooley LLP and Ellenoff Grossman & Schole LLP
- SPAC Financial Advisor: Cohen and Company Capital Markets
- Financials:
- No finacials provided
- Comparable:
- No valuation provided
- Equity Incentive Plan:
- SPAC will grant to certain Persons the number of restricted stock units
*Denotes estimated figures by CPC
#Reported as on 31st March 2023