Seneca Biopharma (NASDAQ: SNCA) and Leading Biosciences said on Thursday that they have entered into a definitive merger agreement which will see a wholly-owned subsidiary of Seneca merge with Leading Biosciences in an all-stock transaction.
In a statement, the companies said that the new combined company will focus on advancing Leading’s lead pipeline asset, LB1148, in clinical studies to evaluate its potential.
Upon completion of the deal, the company is expected to operate under the name Palisade Bio inc and trade on the Nasdaq under the ticker symbol PALI.
Seneca shareholders will own approximately 26.2% of the combined company while Leading Biosciences shareholders will own about 73.8% of the combined company on a fully diluted basis.
Shareholders of Seneca will also receive one contingent value right for each share of Seneca common stock as a dividend.
Investment firm Altium Capital has agreed to invest $22.5 million once the merger is completed.
“Following an extensive review of strategic alternatives, we believe that this merger with Leading BioSciences is in the best interest of Seneca's stockholders, and has the potential to deliver both near- and long-term value to the stockholders,” commented Kenneth C Carter, executive chairman of Seneca.
Seneca’s stock price initially surged 61% following the merger news. It is currently trading 44.26% higher at $1.12 per share ahead of the US opening bell.