RespireRx Pharmaceuticals (OTC:RSPI) shares rose on Wednesday morning after it announced that it has entered into agreements with its Australian subsidiary ResolutionRx to transfer RespireRx’s pharmaceutical cannabinoid program to ResolutionRx and establish it as an operating company.
Once RespireRx has transferred its cannabinoid drug development program to ResolutionRx, the latter will engage in research and development associated with that program, initially for the development of a new formulation of dronabinol for use in a Phase 3 clinical trial and the filing of regulatory approval for the treatment of obstructive sleep apnea.
In consideration, ResolutionRx issued 25 million of its shares to RespireRx plus US$1.
Additionally, ResolutionRx has confirmed the pricing of its previously disclosed securities offering for Series A Preference Shares after entering agreements with Cantheon Capital and PrimaryMarkets earlier this year.
The established price is 90% of a US$25 million value, which amounts to US$22.5 million, based on an independent valuation and aligning with the terms of the agreements.
“Since the incorporation of ResolutionRx at the beginning of this year, it has been our intention to restructure RespireRx by creating a fully operational, cannabinoid drug research and development entity in Australia that will have adequate capital to conduct its strategic and operational plans,” RespireRx CFO Jeff Margolis said.
ResolutionRx chief scientific officer Arnold Lippa added: “Our established relationships with our Australian-based law firm, our commercial bank, our Australian-based accountants and financial advisory firm as well as the previously announced term sheet and letter of intent for a debt facility to be provided by Radium Capital to finance 80% of ResolutionRx’s anticipated 43.5% of the Australian research and development tax incentive, and the previously disclosed letter of intent with Cantheon Capital have guided us to a pathway.”
He added that ResolutionRx’s service agreements with RespireRx and Australian contract research organization iNGENu will provide the needed infrastructure for its operations, which he noted have recently begun.
“Finally, the receipt of an independent valuation analysis has enabled us to establish the price for the Cantheon letter of intent and for the PrimaryMarkets offering at US$0.90 per Series A Share, equivalent to 90% of a US$25 million maximum negotiated value,” he added.
“We believe that these developments confirm our restructuring strategy to realize the intrinsic worth of our assets and, in turn, increase shareholder value.”
RespireRx shares had added 25% at US$0.0015 on Wednesday morning.
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