Halifax-based drug discovery company Appili Therapeutics has agreed to be acquired by Richmond, Virginia-based Aditxt for C$16.8 million in cash, stock and assumed debt, though the acquirer has to raise US$20 million to close the deal.

Last week, the two companies jointly announced the sale agreement, which is denominated in U.S. dollars and will pay Appili investors 4.7 US cents in cash plus 0.0027 of an Aditxt share for each Appili share they now hold. Aditxt shares are currently trading at about US$3.11, so the deal values each Appili share at 7.6 Canadian cents, or a premium of about 69 percent to the current share price. 

The deal values Appili’s 121.27 million shares, which are currently trading for 4.5 cents, at C$9.2 million. On Dec. 31, Appili had long-term debt of $7.6 million on its balance sheet, which means the total value of the takeover would be C$16.8 million. 

Appili has been warning since last summer that, despite a US$14 million research and development deal with the United States Department of Defence, it was in rocky financial straits. In June, the company said it was unclear how long it would be able to continue as a going concern.

As is typical for buyouts of public companies, the sale is still subject to approval by Appili’s shareholders, whose permission management hopes to secure by the end of the second quarter. More unusually, the deal is contingent on Aditxt raising US$20 million of funding, though the company expects that to happen before the end of the third quarter. Aditxt's current market capitalization is about US$5.2 million, though it was worth about 10 times that amount a year ago.

“Appili’s programs can now leverage Aditxt’s proven research and development, operations, and commercialization expertise to accelerate the development of our three programs,” said Appili CEO Don Cilla in a statement. “As a NASDAQ-listed company, Aditxt will facilitate access to capital for Appili’s programs in this challenging economic environment.”

Both companies’ shares have traded relatively flat on the news. With the bid offering the equivalent of about 63 Canadian cents per share, plus the Aditxt stock, Appili investors stand to pocket about a 40 percent premium over the current share price.

Founded in 2017, Aditxt sells several medical technologies related to immunology, such as an immunotherapy to help reduce the likelihood of a transplant recipient’s body rejecting their new organ, as well as a test for measuring immune system activity.

Despite its cash-strapped status, meanwhile, Appili has been on a run of success on the regulatory and business development fronts. In September, it won United States Food and Drug Administration approval for its liquid formulation of the common antibiotic metronidazole. And in November, it announced it had secured a patent for its vaccine against the dangerous bacterial infection Tularemia, which is the subject of the company's research agreement with the U.S. Department of Defence.

“The ability of (Appili) to advance its programs in its pipeline is dependent on raising additional financing through equity and non-dilutive funding and partnerships,” said management in a December regulatory filing. “There can be no assurance that additional financing will be available on acceptable terms or at all. If the Company is unable to obtain additional financing when required, Appili may have to substantially reduce or eliminate planned expenditures.”

“This acquisition will enhance Aditxt’s portfolio of subsidiaries and create synergies with its existing programs, particularly precision diagnostics. Integrating Appili’s expertise and product lines would pave the way for a comprehensive approach to population health, from early detection and prevention to treatment,” said Aditxt. “The potential for collaboration within the Aditxt ecosystem can streamline patient care, from early detection through precision diagnostics to developing tailored treatment strategies.”