MYnd Analytics, Inc. (Nasdaq: MYND), a predictive
analytics company aimed at improving the delivery of mental health
services through the combination of telemedicine and data
analytics, and
Emmaus Life Sciences, Inc.
(“Emmaus”), a leader in sickle cell disease treatment,
today provided an update to shareholders in which the two companies
addressed recent questions related to the recently announced
definitive stock-for-stock merger agreement.
What percentage of MYnd (to be renamed
“Emmaus Life Sciences, Inc.”
and referred to as “New Emmaus”) will
current MYnd Analytics (“MYnd”) shareholders own upon completion of
the transaction?
MYnd shareholders will own 5.9% of the fully diluted shares of
Emmaus post closing.
Who will own the predictive analytics and telemedicine
business once it is spun off from
MYnd?
We currently intend that MYnd shareholders, as of a record date
(which we expect to be a day prior to the closing of the Merger),
will receive new shares in connection with a spin-off equal to 100%
of the equity in the entity that will own and operate the
predictive analytics and telemedicine business, which we expect to
begin trading as a new standalone company. This is subject to
change as the approval process progresses.
If I buy shares in MYnd today,
will I continue to own shares in New Emmaus post
closing?
Yes. So long as you do not sell your MYnd shares prior to the
completion of the Merger, your MYnd shares will represent shares of
New Emmaus after the closing of the merger.
What is the current market value of Emmaus?
Emmaus is not publicly listed or traded and the value of the New
Emmaus shares after the closing of the merger will ultimately be
determined by the markets, but given the $3 billion worldwide
market for its target disease, positive Phase 3 clinical date, FDA
approval, reimbursement approval by the Centers for Medicare and
Medicaid Services, distribution agreements with the nation’s
leading distributors, strong market update and rapid
commercialization, this transaction is expected to create
significant value for all shareholders.
What will be the value of the 5.9% ownership interest in
New Emmaus shares to be owned by MYnd shareholders post
closing?
We will be issuing to the shareholders of Emmaus shares of MYnd
equal to 94.1% of the shares in the MYnd parent company on a fully
diluted basis. The final exchange ratio will be determined on a
fully diluted basis, as we need to take into account the treatment
of options and warrants.
For illustrative purposes we are providing an estimate of
outstanding common shares assuming conversion of preferred shares.
Based on an estimated 9.2 million shares currently outstanding on a
fully diluted basis, at yesterday’s closing price of $1.06, the
current market capitalization of MYnd would equal $10.6 million.
Based on the current stock price, the value of 5.9% of New Emmaus
after the closing of the transaction would be $169.1 million.
For each $100 million of New Emmaus valuation, the MYnd
shareholders will continue to own shares with $5.9 million of
value.
Therefore, to illustrate:
- If New Emmaus is ultimately valued by the market post closing
at $200 million, the MYnd shareholders would own $11.8 million in
value of shares of the surviving company
- If New Emmaus is ultimately valued by the market post closing
at $300 million, the MYnd shareholders would own $17.7 million in
value of shares of the surviving company
- If New Emmaus is ultimately valued by the market post closing
at $400 million, the MYnd shareholders would own $23.6 million in
value of shares of the surviving company
- If New Emmaus is ultimately valued by the market post closing
at $500 million, the MYnd shareholders would own $29.8 million in
value of shares in the surviving company
- If New Emmaus is ultimately valued by the market post closing
at $600 million, the MYnd shareholders would own $35.4 million in
value of shares in the surviving company
What due diligence was conducted by the Board of
Directors of MYnd prior to executing the definitive merger
agreement?
MYnd’s board conducted extensive due diligence and evaluated
multiple, independent analysis/valuations by third-parties and
received an independent fairness opinion on the transaction. The
Board believes significant value will be created for MYnd
shareholders through this transaction, while current MYnd
shareholders are expected to maintain 100% ownership of the
predictive analytics and telemedicine business.
What is the benefit to current Emmaus shareholders in
this transaction?
Emmaus will submit a listing application on The Nasdaq Capital
Market, which will provide greater exposure within the investment
community, which in turn, should help to significantly enhance
value for current Emmaus shareholders. Based on current market
comparables, taking into consideration the market opportunity, FDA
approval, and rapid commercialization, Emmaus should benefit from a
much greater valuation in the market as a publicly traded
company.
Why is Emmaus conducting a merger transaction with MYnd
rather than a direct listing on Nasdaq?
A direct listing on The Nasdaq Capital Market would require an
initial public offering of shares. Given the FDA approval and
commercial stage of the Company, Emmaus management felt it was in
the best interest of its shareholders not to raise capital at this
time, which would be unnecessarily dilutive to shareholders.
What will happen to the warrants I own in MYnd post
closing?
Unless MYnd decides to offer warrant holders an opportunity to
participate in a pre-closing warrant swap or similar transaction,
the existing warrants will remain outstanding as New Emmaus
warrants for their remaining term. The warrants will represent the
right to purchase common stock of New Emmaus in accordance with the
terms provided for in the final warrant agreements filed with the
SEC and appearing on EDGAR.
What is the risk the merger transaction does not
occur?
The merger transaction is subject to the
approval of shareholder by both companies, and other conditions.
However, we have confidence that the merger will close given the
strong support expressed by the major shareholders of both
companies.
What happens if the transaction is not
approved by shareholders?
Both companies will continue to operate as
standalone companies and the equity ownership of the current
shareholders will remain unchanged.
Both MYnd and Emmaus shareholders are encouraged
to contact the respective companies with any additional questions.
The companies intend to provide further disclosures and updates in
advance of the closing.
About Sickle Cell Disease
Sickle Cell Disease is an inherited blood
disorder characterized by the production of an altered form of
hemoglobin which polymerizes and becomes fibrous, causing red blood
cells to become rigid and change form so that they appear sickle
shaped instead of soft and rounded. Patients with Sickle Cell
Disease suffer from debilitating episodes of sickle cell crises,
which occur when the rigid, adhesive and inflexible red blood cells
occlude blood vessels. Sickle cell crises cause excruciating pain
as a result of insufficient oxygen being delivered to tissue,
referred to as tissue ischemia, and inflammation. These events may
lead to organ damage, stroke, pulmonary complications, skin
ulceration, infection and a variety of other adverse outcomes.
Sickle Cell Disease is an orphan disease with significant unmet
medical needs, affecting approximately one hundred thousand
patients in the U.S. and millions worldwide.
About Endari
Indication Endari is indicated to reduce the
acute complications of sickle cell disease in adult and pediatric
patients 5 years of age and older.
Important Safety Information The most common
adverse reactions in clinical studies include constipation, nausea,
headache, and abdominal pain.
Adverse reactions leading to treatment discontinuation included
one case each of hypersplenism, abdominal pain, dyspepsia, burning
sensation, and hot flash.
The safety and efficacy of Endari in pediatric patients with
sickle cell disease younger than five years of age has not been
established.
For more information, please see full Prescribing Information of
Endari at: www.ENDARIrx.com/PI
About Emmaus Life Sciences
Emmaus Life Sciences, Inc. is a commercial stage
biopharmaceutical company engaged in the discovery, development,
marketing and sale of innovative treatments and therapies,
including those in the rare and orphan disease categories. Its lead
prescription product, Endari, demonstrated positive clinical
results in a completed Phase 3 clinical trial for sickle cell
disease and received FDA approval in July 2017. The company's
research on sickle cell disease was initiated by Yutaka Niihara,
MD, MPH, Chairman and CEO of Emmaus, at the Los Angeles Biomedical
Research Institute at Harbor-UCLA Medical Center. For more
information, please visit www.emmauslifesciences.com.
About MYnd Analytics
MYnd Analytics, Inc. (www.myndanalytics.com), with its wholly
owned subsidiary Arcadian Telepsychiatry Services, LLC, is a
technology-enabled telepsychiatry and teletherapy company that
provides enhanced access to behavioral health services, improves
patient outcomes and helps lower the costs associated with
behavioral health issues. The MYnd Psychiatric EEG Evaluation
Registry (PEER) is a predictive analytics decision support tool
that helps physicians reduce trial and error treatment for
behavioral health conditions. PEER provides the physician a
personalized care plan with recommended treatment options based on
a patient’s unique brain markers, reducing treatment time and
treatment costs. Arcadian Telepsychiatry Services, LLC provides a
suite of complementary telemedicine services that can be combined
with PEER, including telepsychiatry, teletherapy, digital patient
screening, curbside consultation, on-demand services, and scheduled
encounters for all age groups. MYnd’s customers include major
health plans, health systems, and community-based organizations. To
read more about the benefits of this patented technology for
patients, physicians and payers, please visit:
www.myndanalytics.com.
Additional Information and How to Find
It
This release is being made in respect of the
proposed business combination involving MYnd Analytics, Inc. and
Emmaus Life Sciences, Inc. In connection with the proposed
transactions, MYnd and Emmaus plan to file documents with the U.S.
Securities and Exchange Commission (the “SEC”), including the
filing by MYnd of a Registration Statement on Form S-4 containing a
Joint Proxy Statement/Prospectus and each of MYnd and Emmaus plan
to file with the SEC other documents regarding the proposed
transactions. INVESTORS AND SECURITY HOLDERS OF MYND AND EMMAUS ARE
URGED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS (WHEN
AVAILABLE) AND OTHER DOCUMENTS FILED WITH THE SEC BY MYND AND
EMMAUS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTIONS. Investors and security holders may obtain
free copies of these documents (when they are available) and other
documents filed with the SEC at the SEC’s web site at www.sec.gov
and by contacting MYnd Investor Relations or Emmaus Investor
Relations.
MYnd, Emmaus and their respective directors and
executive officers may be deemed participants in the solicitation
of proxies with respect to the proposed transaction. Information
regarding the interests of these directors and executive officers
in the proposed transaction will be included in the Joint Proxy
Statement/Prospectus described above. Additional information
regarding the directors and executive officers of MYnd is also
included in MYnd’s proxy statement for its 2018 Annual Meeting of
Shareholders, which was filed with the SEC on March 1, 2018, as
updated in MYnd’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2018, and additional information regarding the
directors and executive officers of Emmaus is also included in
Emmaus’ proxy statement for its 2018 Annual Meeting of
Stockholders, which was filed with the SEC on August 23, 2018.
No Offer or Solicitation
This document does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offering of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Forward-looking Statements
Certain statements in this release, including
statements relating to the Merger Agreement, the Merger and the
other transactions contemplated by the Merger Agreement and the
combined company’s future financial condition performance and
operating results, strategy and plans are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 giving MYnd’s and Emmaus’ expectations or
predictions of future financial or business performance or
conditions. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties which change over
time. Forward-looking statements speak only as of the date they are
made and MYnd and Emmaus assume no duty to update forward-looking
statements. In addition to factors previously disclosed in MYnd’s
and Emmaus’ reports filed with the U.S. Securities and Exchange
Commission (the “SEC”) and those identified elsewhere in this
release, the following factors, among others, could cause actual
results to differ materially from forward-looking statements and
historical performance: the ability to obtain NasdaqCM listing
approval and meet other closing conditions to the Merger, including
requisite approval by MYnd’s and Emmaus’ stockholders on a timely
basis or at all; delay in closing the Merger; the ability to effect
the proposed spin-off; adverse tax consequences; disruption
following the Merger; the availability and access, in general, of
funds to fund operations and necessary capital expenditures. Other
risks and uncertainties are more fully described in MYnd’s Annual
Report on Form 10-K for the fiscal year ended September 30, 2018,
and Emmaus’ Annual Report on Form 10-K for the year ended December
31, 2017, each filed with the SEC, and in other filings that MYnd
or Emmaus makes and will make with the SEC in connection with the
proposed transactions, including the Joint Proxy
Statement/Prospectus described herein under “Important Additional
Information About the Transaction Will be Filed with the SEC.”
Existing and prospective investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. The statements made in this release speak only
as of the date stated herein, and subsequent events and
developments may cause MYnd’s or Emmaus’ expectations and beliefs
to change. While MYnd or Emmaus may elect to update these
forward-looking statements publicly at some point in the future,
each of MYnd and Emmaus specifically disclaims any obligation to do
so, whether as a result of new information, future events or
otherwise, except as required by law. These forward-looking
statements should not be relied upon as representing MYnd’s or
Emmaus’ views as of any date after the date stated herein.
Contact:
For MYnd:Crescendo Communications, LLCTel: +1
(212) 671-1020Email: mynd@crescendo-ir.com
For Emmaus:Kurt KrugerCFO, Emmaus Life Sciences,
Inc.Email: kkruger@emmauslifesciences.com
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