Good Works II Acquisition Corp. (GWII) to acquire Direct Biologics (private) in a transaction valuing the pro forma entity at $723 million in enterprise value ($823 million of equity value).
The combined company will be organized in an “Up-C” structure.
Direct Biologics members will receive $625 million of equity consideration at $10.00/share (Shares of Class B TopCo + Direct Biologics Up-C Units). Up to an additional $400 million in earn-out consideration based on clinical milestones.
Good Works shareholders will receive 1 TopCo Class A Common Stock for each GWII Class A Common Stock held at closing.
Good Works sponsors will receive 1 TopCo Class A Common Stock for each founder share held at closing.
IB 1, an affiliate of I-Banker Securities, has invested $5 million in private placement.
Sponsor agreed to cancel up to 1.925 million founder shares (or *33.48%) based on closing cash. Additionally, the Sponsor & certain other initial shareholders have agreed to cancel up to 0.15 million founder shares (or *2.61%) based on entry valuation for the Private Placement.
The Sponsor will agree to transfer 25,000 Founder Shares to Direct Biologics for the purposes of Direct Biologics donating such shares to a charity of its choice.
Good Works and IBS amended and restated the Business Combination Marketing Agreement to reduce the fee payable (3.50% of IPO Gross Proceeds of $230 million or $8.05 million) based on the available closing cash (between $75 million and $230 million).
Minimum net closing cash of $75 million.
No termination fees or expense reimbursement.
Business combination transaction is targeted to close in the first half of 2023.
SPAC Details:
Unit Structure: 1 share of Common Stock + 0.50 Redeemable Warrant
#Cash in Trust: $24.85 million (100.4% of Public Offering)
Public Shares Outstanding: 2,474,470 shares (20,525,530 shares redeemed)
Private Shares Outstanding: 6,100,000 shares (including 350,000 common stocks included in private placement units)
Reported Trust Value/Share: $10.04
Liquidation Date: October 14, 2022
Outside Liquidation Date: April 14, 2023 (On October 11, 2022, Good Works II held a shareholder vote to extend the period from October 14, 2022 to April 14, 2023)
Name of Target: Direct Biologics
Target Description: Direct Biologics is an innovative, cGMP manufacturer of regenerative biologic products. The company’s flagship product, ExoFlo™, is a therapeutic candidate in late-stage development, created using the company’s proprietary EV platform technology. This platform is designed to produce a new class of transformative medicines for many difficult to treat diseases by leveraging the anti-inflammatory, immunomodulatory and regenerative properties of bmMSC-derived extracellular vesicles. ExoFlo is currently in a Phase 3 clinical trial for the treatment of hospitalized adults with severe-to-critical COVID-19 associated moderate-to-severe ARDS, as well as an FDA-authorized Expanded Access Protocol for hospitalized patients with COVID-19 associated moderate-to-severe ARDS. Direct Biologics intends to pursue additional clinical applications of ExoFlo. Headquartered in Austin, Texas, Direct Biologics also has an R&D facility at the Center for Novel Therapeutics on the campus of University of California, Davis and an operations and order-fulfillment center in San Antonio, Texas.
*2,474,470 shares of class A common stock of Company TopCo
SPAC Sponsors Receive:
*4,000,000 shares of class A common stock of Company TopCo
Target Members Receive:
Shares of Class B TopCo + Direct Biologics Up-C Units = 62.5 million ($625 Million of equity consideration at $10.00/Share)
Aggregate Earnout consideration of $400 million at $10.00/share:
Earnout Securities consist of:
Valuation
Milestone
Shares of Class B Common Stock of Company TopCo and Direct Biologics Up-C Units
$50 million
Triggering Event I Achieve a primary efficacy endpoint of 60-day all-cause mortality in its Phase 3 EXTINGuish trial by December 31, 2023
Shares of Class B Common Stock of Company TopCo and Direct Biologics Up-C Units
$350 million
Triggering Event II Obtain either Biologics License Application approval or Emergency Use Authorization from the FDA for its ExoFlo product (or a derivative product for any applicable indication) by December 31, 2024
