One of the prize winners in the 43North business plan competition in 2014 is on the verge of being acquired by a British investment company in a deal worth nearly $11 million.
HemoGenyx, a New York City company that is developing new types of treatment patients undergoing bone marrow transplants or blood stem cell treatments, is being acquired by a British company, Silver Falcon Plc, that was formed more than two years ago as a vehicle for its founders to make an acquisition.
The acquisition, if it is approved by shareholders on Oct. 4, would put the 43North contest in a position to potentially receive a payoff from the 5 percent ownership stake that it received in HemoGenyx as a condition of it winning a $250,000 prize as one of the finalists in the first year of the competition.
But whether 43North will receive a payoff – and how big it might be – still is up in the air. The acquisition, structured as a reverse takeover, places a nearly $11 million value on HemoGenyx. That means a 5 percent stake would be worth about $540,000, or more than double the $250,000 prize that HemoGenyx received.
However, the deal is structured as an all-stock transaction, so the ultimate value of 43North's stake will depend on the price of the shares it receives through the deal, and the value of those shares could rise or fall, depending on what happens when the shares begin trading on the London Stock Exchange. 43North and other major investors have agreed not to sell any shares for a one-year period after the deal takes effect. 43North will own a 3.1 percent stake in the acquiring company, Silver Falcon, which plans to change its name to HemoGenyx Pharmaceuticals.
"We are proud of the roles that 43North and Buffalo, N.Y., have had in helping the company reach this next milestone in the development of new treatments for blood disease," said William Maggio, 43North's chairman, in a statement.
HemoGenyx, as a start-up company still trying to develop its medical products, has no revenues. It posted a loss of nearly $636,000 last year as it worked to develop its products, according to a regulatory filing.
The acquisition will help HemoGenyx by giving the fledgling company access to enough capital to fund its operations for at least a year, the filing said. HemoGenyx is preparing for pre-clinical studies within the next 18 months or so for one of its products, which uses a patient's immune cells to eliminate unwanted blood stem cells in preparation for a bone marrow transplant. The funding also will help HemoGenyx continue developing a second product, which uses a certain type of cells to generate other cancer-free stem cells that can be injected into a transplant recipient after a transplant.
"We are encouraged by the extensive work done to date and excited by the prospect of taking this forward into human trials and beyond, thanks to the fundraising facilitated by the reverse listing of our company on the London Stock Exchange," said Valdislav Sandler, HemoGenyx's chief executive officer and co-founder, in a statement.
In addition to its 43North funding, HemoGenyx also raised $1 million in a private-equity deal last year.
"We believe we have found an exciting transaction, acquiring a company with the potential to transform blood stem cell transplant treatments and bring relief to sufferers of several severe diseases," said Geoffrey Dart, Silver Falcon's chairman, in a statement.