Catalyst Biosciences, GNI Group complete first step in reverse merger plan

Catalyst Biosciences announced that the parties have signed definitive agreements for the sale and purchase of GNI’s proprietary new chemical entity F351 program. F351 has shown clinical efficacy as a treatment for both liver and kidney fibrosis. In a separate independent transaction, GNI and other minority stockholders will, subject to stockholder approval and certain customary closing conditions, exchange their controlling interest in Beijing Continent, a commercial-stage pharmaceutical company based in China and majority-owned subsidiary of GNI, for newly issued shares of Catalyst. Catalyst will continue to trade on Nasdaq under the ticker symbol "CBIO" after both transactions. Continent is the first marketer of pirfenidone in China for idiopathic pulmonary fibrosis, which was approved in China in 2011. Continent recorded sales of $73M in the nine months ended September 30. Continent has operated profitably during the last five years while funding a clinical pipeline focused on other fibrosis indications, including F351 for hepatitis B virus, or HBV-associated fibrosis and non-alcoholic steatohepatitis, or NASH. In conjunction with these transactions, CBIO will distribute $7.5M on January 12, 2023 as a special dividend and grant a non-transferable, each to stockholders of record on January 5, 2023. The CVR entitles stockholders of record to future dividends associated with the monetization of Catalyst intellectual property and other assets, including additional potential cash distributions. Catalyst expects the ex-dividend date for its common stock to be January 13, 2023. This distribution follows a previous distribution of $45M in September. The company expects to make one or more additional distributions through the CVR in 2023. The acquisition of F351, consummated concurrently with the execution of the definitive asset purchase agreement, provides Catalyst with the global rights to F351 in consideration for 6,266,521 shares of common stock and 12,340 shares of a new series of preferred stock with economic rights equivalent to Catalyst’s common stock. Each share of Series X preferred stock is convertible into 10,000 shares of common stock, subject to stockholder approval under Nasdaq rules and subject to a beneficial ownership conversion blocker. Both the conversion of the Series X preferred stock and the acquisition of a 65.18% interest in Continent will be subject to Catalyst stockholder approval, which will be sought in 2023. If the acquisition is approved by stockholders, Catalyst would issue at closing a total of up to 1,110,776,224 shares of common stock for a controlling interest in Continent, at which point Catalyst would expect to consolidate results of operations with Continent.