Nuformix (LON: NFX), the London-listed drug developer, has signed non-binding heads of terms to buy private respiratory firm Biovara in an all-share “merger of equals”, and its shares are lower. The company announced the proposal in a 7am statement today. It would also move the group from the Main Market to AIM.
The shares were at 0.0965p by about 11.14am, down about 8% from yesterday’s close of 0.105p, which values the company at roughly £2.7m. They opened at 0.115p, reached 0.13p and fell as low as 0.09p. The quote is delayed and the session is still running.
Heads of terms are a non-binding outline of a deal’s main terms. Nuformix would buy all of Biovara’s issued and to be issued shares by swapping them for new Nuformix shares. Biovara’s lead asset, LipAprep, is a lipid formulation of aprepitant for lung cancer-related cough. It has finished a single-dose Phase 1 safety trial and is preparing a Phase 2 study.
Nuformix’s own NXP002 is an inhaled form of tranilast for IPF. Tim Metcalfe, Non-Executive Chairman of Nuformix, said the two programmes fit together.
This is not diversification for its own sake. We see clear alignment between the programmes, the capabilities needed to advance them and the pharmaceutical partners most likely to be interested in their potential.
Tim Metcalfe, Nuformix
The AIM move is part of the package. The statement says the deal may be a reverse takeover, meaning one large enough to need fresh admission to the market. In that case Nuformix could not re-admit to its current Main Market category and would need an FCA-approved prospectus to stay there if AIM admission did not proceed. AIM is the London Stock Exchange’s market for smaller growing companies, with lighter rules.
The statement gives no consideration, exchange ratio or Biovara financials, and the combined valuation is “to be agreed”, so the dilution for existing shareholders cannot be quantified. Uncertainty over dilution and the listing change is one reading of the fall, but it is an inference. The shares had already fallen about 36% from 0.165p at the end of August to yesterday’s close of 0.105p.
The deal needs due diligence, final documents and shareholder approval, and probably a Takeover Panel Rule 9 waiver, an exemption from making a mandatory bid. Exclusivity runs six months and the long-stop date is the 30th of April 2027.