NEW YORK - Titan Pharmaceuticals, Inc. (NASDAQ: NASDAQ:TTNP), a development stage company, announced today a merger agreement with KE Sdn. Bhd., a Malaysian distributor of human capital management solutions. The agreement, which has been approved by Titan's board of directors, is subject to stockholder approval and other customary closing conditions.
Upon completion, a two-step reverse merger will take place. First, TTNP Merger Sub, Inc., a subsidiary of BSKE Ltd., will merge with Titan, with Titan as the surviving entity. Subsequently, KE shareholders may exchange their shares for BSKE ordinary shares. Dato’ Seow Gim Shen, Titan's CEO, who also holds a significant stake in KE, will own 48.9% of the combined company post-merger, subject to any dilution from necessary financing.
The merger is expected to create value for stockholders by combining Titan's drug delivery technology with KE's established presence in the Asia Pacific region. The combined entity will have a diverse shareholder base, with existing KE and Titan security holders (excluding Sire and current Titan directors and officers) expected to own approximately 86.7% and 13.3%, respectively.
The merger is contingent on the approval of Titan’s stockholders, the issuance of shares related to the merger, the listing of BSKE on the Nasdaq Capital Market post-merger, and other conditions outlined in the merger agreement. There is no assurance that the merger will be consummated.
Titan, previously focused on proprietary therapeutics, began exploring strategic alternatives in December 2021. KE is recognized as one of the first licensees of PeopleSoft Human Resource and Payroll solutions in the region and serves significant clients in Malaysia, including financial institutions, manufacturers, and utilities.
The terms of the merger agreement will be detailed in Titan’s forthcoming Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission. This press release is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
InvestingPro Insights
As Titan Pharmaceuticals, Inc. (NASDAQ: TTNP) embarks on a strategic merger with KE Sdn. Bhd., investors are closely analyzing the company's financial health and stock performance. According to InvestingPro data, Titan's market capitalization stands at a modest $4.59 million. The company's balance sheet reflects a conservative financial position, with cash reserves outweighing debt, which is a positive sign for stability amidst the merger process.
Nevertheless, the company's financial metrics indicate significant challenges. Titan has been quickly burning through cash, and its gross profit margins are weak, with a gross profit margin of -63666.67% for the last twelve months as of Q2 2024. The stock has also taken a considerable hit, experiencing a one-week total price return of -7.99% and a one-year total price return of -49.4%, reflecting investor concerns and market volatility. These figures suggest that while the merger could offer new business opportunities, Titan's current financial performance is under scrutiny.
InvestingPro Tips highlight that analysts do not expect the company to be profitable this year, and net income is anticipated to drop. Titan's valuation implies a poor free cash flow yield, which could be a point of concern for investors looking at the long-term financial health of the company. With the next earnings date set for August 21, 2024, stakeholders will be keen to see if the merger can turn the tide for Titan's financial trajectory.
For those interested in a deeper analysis, InvestingPro offers additional insights and tips on Titan Pharmaceuticals, which could provide valuable context as the company navigates this pivotal merger. Currently, there are 14 additional InvestingPro Tips available, which could help investors make more informed decisions regarding their investment in Titan.
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