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SOUTH SAN FRANCISCO/VANCOUVER - ESSA Pharma Inc. (NASDAQ:EPIX), currently trading at $0.21 and down nearly 73% over the past year, has revised its business combination agreement with non-profit biotechnology company XenoTherapeutics Inc., reducing the expected cash payment to shareholders at closing. According to InvestingPro analysis, the company appears undervalued at its current market capitalization of $9.76 million.
Under the amended terms announced Wednesday, ESSA shareholders are now expected to receive approximately $0.12 per share in cash upon closing, down from the originally estimated $1.91 per share. Shareholders will also receive one non-transferable contingent value right (CVR) per share, representing the right to receive up to approximately $0.14 per CVR depending on the outcome of certain contingent liabilities. InvestingPro data shows the company maintains strong liquidity with a current ratio of 69.07, suggesting ample assets to meet short-term obligations.
The company cited "potential liabilities, associated expenses and the latest estimates of the Company’s expected cash balance at closing" as reasons for the change. ESSA had previously distributed approximately $1.69 per share to shareholders on August 22 as an initial cash distribution.
In connection with the amended agreement, ESSA has further adjourned its special meeting of shareholders, which was scheduled for September 29. The meeting will now reconvene on October 3 at 2:00 p.m. Pacific Time via online webcast.
ESSA intends to apply to the Supreme Court of British Columbia to amend the interim order obtained on August 5, which would provide for the new meeting date and related deadlines.
XOMA Royalty Corporation (NASDAQ:XOMA) continues to act as structuring agent and intends to provide financing for the transaction.
Leerink Partners is serving as the exclusive financial advisor to ESSA, with Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP serving as Canadian and U.S. legal counsel, respectively.
The announcement was made in a press release statement issued by the company. For investors seeking deeper insights into ESSA Pharma’s valuation and financial health metrics, InvestingPro offers additional analysis, including 8 more key ProTips and comprehensive financial metrics to help inform investment decisions.
In other recent news, ESSA Pharma Inc. announced a significant development in its corporate strategy. The company plans to distribute $80 million to its shareholders as part of its winding-up process, with the distribution scheduled for August 22. This decision follows approval from the Supreme Court of British Columbia. Additionally, ESSA Pharma is set to be acquired by XenoTherapeutics in an all-cash deal, with financing provided by XOMA Royalty Corporation. Shareholders are expected to receive approximately $1.91 per share, along with a non-transferable contingent value right that could yield an additional $0.06 per share within 18 months post-transaction. The company is also seeking court approval to expedite these cash distributions to shareholders before the acquisition is finalized. These recent developments mark a pivotal moment for ESSA Pharma and its investors.
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