Shares of Stellar Biotechnologies Inc (NASDAQ:SBOT) spiked Friday in the wake of its announcement of a reverse merger with Edesa Biotech, a private Canadian biotech, that will create a company focused on dermatological and gastrointestinal therapies.
Under the deal's terms, Edesa shareholders, who have agreed to exchange their shares for newly-issued shares of Stella, will own about 90% of the new company, with Stellar shareholders holding the remainder.
READ: Stellar Biotechnologies’ shares skyrocket after unveiling positive research results for its KLH products
Following the closing, which is set for the second quarter, Stellar will change its name to Edesa Biotech Inc. But Edesa will become a wholly owned subsidiary of Stellar.
In response, Stellar shares jumped 50.8% to $1.81 in afternoon trade Friday.
In the wake of the closing, Stellar intends to develop a plan for Stellar’s operations, which is expected to include the wind-down or spin-off of Stellar’s legacy business.
Based near Los Angeles, Stellar is a manufacturer of KLH, keyhole limpet hemocyanin, a key immune-stimulating protein used in multiple immunotherapy development pipelines targeting Alzheimer's, lupus and cancer.
Headquartered in Toronto, Edesa Biotech is a clinical stage company that has developed EBO1, a non-steroidal anti-inflammatory molecule for the treatment of allergic contact dermatitis.
Contact Ellen Kelleher at [email protected]