VANCOUVER, British Columbia and SAN FRANCISCO - Aerovate Therapeutics, Inc. (NASDAQ:AVTE) and Jade Biosciences, a biotechnology firm specializing in autoimmune disease therapies, have announced a definitive merger agreement. The all-stock transaction will see the merged company, which will operate under the Jade Biosciences name and trade on Nasdaq with the ticker symbol JBIO, focusing on advancing a portfolio of novel biologics, including JADE-001, a treatment for IgA nephropathy.
The combined entity is expected to be funded through 2027 with approximately $300 million, including proceeds from an oversubscribed pre-closing private financing led by a group of healthcare investors. The financing reflects the conversion of $95 million convertible notes and includes common stock and pre-funded warrants to purchase additional shares.
Tom Frohlich, CEO of Jade, expressed that the merger and financial support will significantly aid in advancing their programs into clinical development. Jade plans to initiate a clinical trial for JADE-001 in the second half of 2025, with initial data expected in the first half of 2026. JADE-001 targets a protein involved in IgA nephropathy, a chronic kidney disease, with the aim of reducing IgA levels and preserving kidney function.
Prior to the merger's completion, anticipated in the first half of 2025, Aerovate is expected to declare a cash dividend of approximately $65 million to pre-merger stockholders. Post-merger, pre-merger Aerovate stockholders are projected to own about 1.6% of the new company, with pre-merger Jade stockholders owning approximately 98.4%.
The merger has been approved by the Boards of Directors of both companies and is subject to customary closing conditions, including stockholder approvals and the effectiveness of a registration statement with the U.S. Securities and Exchange Commission.
The transaction is advised by legal and financial experts, with Gibson, Dunn & Crutcher LLP serving as legal counsel to Jade and Wedbush Securities Inc. as the exclusive strategic financial advisor to Aerovate.
This news is based on a press release statement and does not constitute financial advice or an endorsement of the companies' claims. The information presented is for informative purposes only.
In other recent news, Aerovate Therapeutics, Inc. has announced the immediate resignation of Dr. Maha Katabi from its board of directors, as well as her roles on the Audit Committee and Compensation Committee. This development follows the company's previous disclosure that it had fallen out of compliance with Nasdaq's audit committee requirements due to an insufficient number of audit committee members. To address this, Aerovate's board approved Habib J. Dable as a new member of the audit committee, effectively bringing the company back into compliance with Nasdaq Listing Rule 5605(c)(2).
Aerovate's swift action to rectify the compliance issue demonstrates its commitment to adhering to Nasdaq's corporate governance standards. Despite the change in leadership, the company continues its operations without interruption, focusing on advancing its pipeline of therapies designed to address unmet medical needs. These recent developments reflect the ongoing attention to corporate governance and board composition across the pharmaceutical industry.
While the process for filling the vacancy left by Dr. Katabi has not yet been detailed, it is expected that Aerovate will seek to fill these roles with qualified individuals who can contribute to the company's growth and adherence to regulatory compliance. The information regarding these recent corporate developments is based on press release statements filed with the Securities and Exchange Commission.
InvestingPro Insights
As Aerovate Therapeutics (NASDAQ:AVTE) prepares for its merger with Jade Biosciences, InvestingPro data provides additional context to the company's financial situation. With a market capitalization of $77.65 million, Aerovate's stock has experienced significant volatility, showing a strong 20.33% return over the last three months but a substantial 89.06% decline over the past six months.
InvestingPro Tips highlight that Aerovate holds more cash than debt on its balance sheet, which could be advantageous as the company prepares for the merger and the anticipated cash dividend. However, the company is quickly burning through cash and is not profitable over the last twelve months, with an adjusted operating income of -$94.22 million for the last twelve months as of Q2 2024.
The company's price-to-book ratio of 0.67 suggests that the stock may be undervalued relative to its book value, which could be of interest to investors considering the upcoming merger. Additionally, Aerovate's liquid assets exceed short-term obligations, potentially providing some financial flexibility during the transition period.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Aerovate Therapeutics, providing deeper insights into the company's financial health and market position.
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