Shares of Alliqua Biomedical Inc (NASDAQ: ALQA), a company that has unwound itself in phases, were more than doubling in value Wednesday. The stock was trading higher by more than 100 percent at $3.33 at the time of publication.
Alliqua announced an agreement Wednesday to spinoff of its AquaMed Technologies subsidiary and merge it with the Israeli cannabinoid-based pharma therapy company TO Pharmaceuticals LLC. The boards of both companies have approved the transaction.
The AquaMed unit manufactures electron beam cross-linked aqueous polymer sheet hydrogel products with high water content that are used by customers to make medical devices, cosmeceuticals and other commercial products.
The new company, TO Pharma, would develop novel therapeutics based on TO Pharma LLC's proprietary cannabinoid product platform in a number of FDA-regulated clinical indications and select OTC markets, according to Alliqua.
On completion of the deal, Alliqua's shareholders will retain a minority interest in the new company, while TO Pharma LLC's shareholders will hold a majority interest. Per the deal, Alliqua will distribute its shares of Aquamed on a pro rata basis to record holders of Alliqua before the consummation of the previously announced merger with Adnyxx.
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Why It's Important
The deal provides Alliqua shareholders with an opportunity to capitalize on the market opportunity for cannabis.
"We are extremely excited to form this exciting new company in a fast-growing sector of the market," Alliqua CEO Dave Johnson said in a statement.
The newly created TO Pharma will seek a Nasdaq listing and domicile in Langhorne, Pennsylvania, Alliqua said. TO Pharma LLC's Seth Yakatan is expected to serve as CEO and Alliqua's Johnson is expected to serve as chairman.
The deal's projected timeframe for closing is the first quarter of 2019.
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