Protagenic Therapeutics, Phytanix Bio to combine in all-stock transaction

Protagenic Therapeutics (PTIX) and Phytanix Bio have entered into a definitive share exchange agreement pursuant to which the two entities will combine in an all-stock transaction. The combined entity, to be called Phytanix, Inc., will bring together two pipelines focused on stress-related and CNS disorders, five preclinical assets and one clinical-stage asset. Under the terms of the exchange agreement, the company, in exchange for all of the outstanding shares of Phytanix Bio, issued on a pro rata basis to each of the common stockholders of Phytanix Bio, an aggregate of 117,690 shares of the company’s common stock, par value $0.0001 per share, which shares represent a number equal to no more than 19.99% of the outstanding shares of common stock as of immediately before the closing on May 16, 5,705 shares of the company’s Series C Convertible Preferred Stock, par value $0.000001 per share and 950,000 shares of the company’s Series C-1 Convertible Preferred Stock, par value $0.000001 per share. In addition, in exchange for all of the outstanding preferred stock of Phytanix Bio, the company issued on a pro rata basis to each of PHX’s preferred stockholders an aggregate of 20,000 shares of Series D Preferred Stock, par value $0.000001 per share of the company, and common stock purchase warrants to purchase up to 715,493 shares of common stock. The issuance of the shares of common stock, the preferred stock, and the warrants occurred on May 16. Each share of preferred stock is convertible into one of common stock, subject to certain conditions described in the exchange agreement. As calculated on a fully diluted basis, post-combination pre-financing ownership will be approximately 35% for the pre-combination stockholders of the company and approximately 65% for Phytanix Bio stockholders. The issuance of shares of common stock upon conversion of the Preferred Stock and exercise of the Warrants issued in the Combination shall be subject to stockholder approval in compliance with the rules of the Nasdaq Stock Market.