Transaction Case Studies
SELL-SIDE ENGAGEMENT LEADING TO A REVERSE MERGER BETWEEN BIOPHARMX AND TIMBER PHARMACEUTICALS
Situation Assessment
- A wholly-owned subsidiary of BioPharmX merged with and into Timber, with Timber surviving the merger as a wholly-owned subsidiary of BioPharmX
- Locust Walk was engaged to run a strategic sell-side process for BioPharmX’s two Phase 3-ready 505(b)(2) dermatology assets for the treatment of inflammatory lesions of acne vulgaris and papulopustular rosacea
- While there were several prospective bidders over the course of the process, no binding offers were received for the Phase 3 assets
- Given inbound inquiries, Locust Walk recognized that BioPharmX’s public listing had intrinsic value thereby providing additional strategic options to the company
- As a result, Locust Walk orchestrated a reverse merger with Timber, giving the combined entity the liquidity of a publicly-listed company
- Conducted a comprehensive global outreach effort to 49 strategic partners with a specific focus on dermatology and 505(b)(2) focused players
- Led approximately 15 companies through a confidential due diligence process and facilitated discussions with several interested companies
- Given inbound inquiries following the announced engagement, Locust Walk recognized the intrinsic value of BioPharmX’s public listing and conducted outreach with strategic partners to highlight the opportunity for increased liquidity due to becoming a publicly-listed company
- Received multiple term sheets from prospective merger candidates
- Negotiated a bridge loan for BioPharmX in connection with the merger agreement
- Provided strategic advice on deal structure, term sheet, and final agreement negotiations
- BioPharmX and Timber Pharmaceuticals entered into a definitive merger agreement in January 2020
- As a condition to closing, Timber to secure a $20M investment to recapitalize the combined entity
- Timber members and investors providing $20M investment to own 88.5% of the outstanding common stock and BioPharmX stockholders to own 11.5% of the common stock in the combined entity, subject to adjustment
- Timber to provide a bridge loan of $2.25M allowing BioPharmX to not further dilute its current stockholders while seeking approval of the merger