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Phoenix Biotech Acquisition Corp. *

Phoenix Biotech Acquisition Corp. *

Sep 13, 2021 by Anthony Sozzi

PROPOSED BUSINESS COMBINATION: CERo Therapeutics, Inc.

ENTERPRISE VALUE: $112 million
ANTICIPATED SYMBOL: CERO

Phoenix Biotech Acquisition Corp. entered into a business combination agreement with CERo Therapeutics, Inc.

CERo is an innovative immunotherapy company advancing the development of next generation engineered T cell therapeutics for the treatment of cancer. Its proprietary approach to T cell engineering, which enables it to integrate certain desirable characteristics of both innate and adaptive immunity into a single therapeutic construct, is designed to engage the body’s full immune repertoire to achieve optimized cancer therapy.

SUBSEQUENT EVENT – 2/14/24 – LINK

  • On February 13, 2024, the parties involved in the Business Combination Agreement signed Amendment No. 2, introducing two new pools of earnout shares of common stock.
    • The first pool contains 875,000 shares, fully vested at the combination’s closure, issued as compensation for Phoenix Biotech Sponsor, LLC’s forfeiture of an equal number of shares.
    • The second pool, comprising 1,000,000 shares, vests upon reaching specific regulatory milestones.
    • Additionally, this amendment adjusts the issuance process and timing for another 1,200,000 shares under different earn-out conditions.

SUBSEQUENT EVENT – 2/6/24 – LINK

  • The minimum cash condition was removed.
  • Reset the stock-price milestones for earnouts:
    • (a) the First Level Earnout Target’s trading price condition changes from $12.50 to 125% of the Series A Preferred Stock’s Conversion Price upon its reset, and
    • (b) the Second Level Earnout Target’s trading price condition changes from $15.00 to 150% of the Conversion Price upon reset.
  • Additionally, increase the Class A common stock issuable to CERo stockholders from 4,651,704 shares to 5,000,000 shares in the Business Combination, plus up to 1,200,000 shares for earn-out conditions and 382,651 shares for rollover options or warrants.

PIPE Financing

  • On February 5, 2024, the Company signed a securities purchase agreement with an accredited investor for a PIPE Financing deal.
    • New CERo will issue $2.0 million of Series A convertible preferred stock and warrants for 125,000 shares of Common Stock, generating $2.0 million in cash proceeds for New CERo.

EXTENSION – 1/5/24 – LINK

  • The SPAC approved the extension from January 8, 2024 to April 8, 2024.
    • 11,625 shares were redeemed for $11.02 per share.
    • $0.03/share per month will be deposited into the trust account.

EXTENSION – 7/10/23 – LINK

  • The SPAC approved the extension from July 8, 2023 to January 8, 2024.
    • 523,341 shares were redeemed for $10.74 per share.
    • $0.048/share per month will be deposited into the trust account.

TRANSACTION

  • Upon closing of the transaction, anticipated to occur in the second half of 2023, the combined company will be named CERo Therapeutics Holdings, Inc.
  • The combined company’s common stock is expected to be listed on the Nasdaq Capital Market under the ticker symbol “CERO.”
  • The combined company will be led by CERo and PBAX’s founding members, including Daniel Corey, M.D., CERo’s CEO, Chris Ehrlich, PBAX’s CEO, and Brian G. Atwood, the Chairman of PBAX. Mr. Atwood will serve as Chief Executive Officer of the combined company, Mr. Ehrlich will serve as its Chief Financial Officer and Chief Operating Officer and Dr. Corey will serve as its Chief Technology Officer.
  • Upon the closing of the business combination, and assuming no redemptions of shares of PBAX by its public stockholders, CERo would expect to receive up to $13.7 million of cash held in trust.
  • The business combination reflects a pre-money equity value of $50 million for CERo and a pro forma capitalization of the combined company of $145 million.

SPAC FUNDING

  • PIPE Financing
    • On February 5, 2024, the Company signed a securities purchase agreement with an accredited investor for a PIPE Financing deal.
      • New CERo will issue $2.0 million of Series A convertible preferred stock and warrants for 125,000 shares of Common Stock, generating $2.0 million in cash proceeds for New CERo.

EARNOUT

  • CERo Earnout:
    • The Company has the right to receive a portion of up to 1,200,000 additional shares of Class A common stock if, at any time during the period following the Closing and expiring on the fourth anniversary of the Closing Date (the “Earn-Out Period”):
      • (i) the VWAP of the shares of the Class A Common Stock equals or exceeds $12.50 for any twenty Trading Days within a period of thirty consecutive Trading Days, then as soon as possible 500,000 shares of Class A Common Stock shall be released,
      • (ii) the VWAP of the shares of Class A Common Stock equals or exceeds $15.00 for any twenty Trading Days within a period of thirty consecutive Trading Days, then as soon as possible 500,000 shares of Class A Common Stock shall be released, and
      • (iii) a definitive agreement with respect to a Change of Control is entered into, then as soon as possible 200,000 shares of Class A Common Stock shall be released.
  • Reset the stock-price milestones for earnouts: – LINK
    • (a) the First Level Earnout Target’s trading price condition changes from $12.50 to 125% of the Series A Preferred Stock’s Conversion Price upon its reset, and
    • (b) the Second Level Earnout Target’s trading price condition changes from $15.00 to 150% of the Conversion Price upon reset.
  • Amended Earnout Agreement
    • On the Closing Date, SPAC will issue an additional 3,075,000 shares of Class A Common Stock as Earn-Out Consideration to Company Stockholders, subject to vesting requirements over an Earn-Out Period ending four years post-Closing.
      • The shares will vest based on achieving specific targets:
        • 500,000 shares for reaching a VWAP of $12.50 or 125% of the Series A Conversion Price,
        • 500,000 shares for a VWAP of $15.00 or 150%,
        • 200,000 shares upon entering a Change of Control Agreement
        • 1,000,000 shares for submitting an IND application to the FDA
        • 875,000 shares will vest upon Closing.
      • Unvested shares are subject to forfeiture if vesting requirements are not met.

LOCK-UP

  • Company and Sponsor:
    • Both the Company and Sponsor will have their shares subject to a lock-up period, which is defined as the earliest of:
    • (i) 180 days after the date of the Closing, and
    • (ii) subsequent to the Closing, if the last reported sale price of the Class A Common Stock equals or exceeds $12.50 per share for any 20 trading days within any 30 consecutive trading day period commencing after the Closing.

NOTABLE CONDITIONS TO CLOSING

  • PBAX and CERo shareholder approvals
  • The business combination is subject to a minimum cash condition of $30 million, net of transaction expenses, which is expected to be funded through proceeds of the trust account and additional financing, including investments from existing stockholders of CERo.
    • The minimum cash condition was removed. – LINK

NOTABLE CONDITIONS TO TERMINATION

  • The Business Combination Agreement may be terminated by the Company or CERo, if the Closing has not occurred by September 30, 2023 (the “Outside Date”), such date may be extended by one successive period of three months if certain conditions are satisfied.

ADVISORS

  • CERo Advisors:
    • Cooley LLP and Ellenoff Grossman & Schole LLP are acting as legal counsel
  • PBAX Advisors:
    • Cohen and Company Capital Markets, a Division of J.V.B. Financial Group, LLC is acting as the financial advisor and lead placement agent
    • Goodwin Procter LLP is serving as legal counsel

EXTENSION – 12/20/22 – LINK

  • The SPAC approved to extend the business combination period for an additional three months, from January 8, 2023 to April 8, 2023, and provide its board of directors the ability to further extend the date by which the Company has to consummate a business combination up to three additional times for one month each time, for a maximum of six additional months.

The below-announced combination was terminated on 12/7/22.  It will remain on the page for reference purposes only. Once a new combination is announced it will be added to the top of the page.

PROPOSED BUSINESS COMBINATION: Intrinsic Medicine, Inc. [TERMINATED 12/7/22]

ENTERPRISE VALUE: $207.3 million
ANTICIPATED SYMBOL: INRX

Phoenix Biotech Acquisition Corp. proposes to combine with Intrinsic Medicine, Inc.

Intrinsic Medicine, Inc. is a preclinical-stage therapeutics company leveraging synthetic biology-manufactured human milk oligosaccharides (HMOs), as new medicines to treat large patient populations underserved by current treatment options. In the first half of 2023, Intrinsic plans to initiate a Phase 2 clinical trial under an approved protocol in Australia using FDA recommended primary end points to test its lead drug candidate in over 400 patients with the constipation dominant form of irritable bowel syndrome (IBS), which is estimated to affect approximately five million patients in the United States alone.

TRANSACTION

  • Upon the closing of the business combination, and assuming no redemptions of shares of PBAX by its public stockholders, Intrinsic would expect to receive up to $178.8 million of cash held in trust.
  • The business combination reflects a pre-money equity value of $136 million for Intrinsic.

intrinsic medicine

PIPE

  • In connection with the business combination, the parties intend to seek to secure additional financing via a private placement or otherwise.

LOCK-UP

  • Company
    • 180 days after the Closing date or if the share price equals or exceeds $12.50 for any 20/30 trading days
  • Sponsor
    • One year after the Closing date or if the share price equals or exceeds $12.00 for any 20/30 trading days at least 150 days after the Closing

NOTABLE CONDITIONS TO CLOSING

  • The Available Closing Cash shall be greater than or equal to $15,000,000, including the amount released from the Company’s trust account (after reduction for the aggregate amount of payments made or required to be made in connection with the SPAC Stockholder Redemption) and the amount of funds available to consummate the Merger pursuant to the PIPE Financing, minus certain transaction expenses of the Company and Intrinsic.

NOTABLE CONDITIONS TO TERMINATION

  • The Closing has not occurred by June 30, 2023 (the “Termination Date”), unless the breach of any covenants or obligations of the party (Intrinsic, on one hand, or the Company or Merger Sub, on the other hand) seeking to terminate the Business Combination Agreement proximately caused the failure to consummate the Merger
  • By the Company or Intrinsic, in the event, an applicable governmental, regulatory or administrative authority has issued a final and non-appealable order having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger

ADVISORS

  • Spartan Capital Securities LLC is acting as lead placement agent to PBAX.
  • Revere Securities LLC is acting as capital markets advisor to Intrinsic.
  • Ropes & Gray LLP is acting as legal counsel to Intrinsic.
  • Cohen and Company Capital Markets, a Division of J.V.B. Financial Group, LLC is acting as the financial advisor to PBAX.
  • Goodwin Procter LLP is serving as legal counsel to PBAX

MANAGEMENT & BOARD

Executive Officers

Chris Ehrlich, 51
Chief Executive Officer and Director

He previously served as the Chief Executive Officer of Locust Walk Acquisition Corp. (NASDAQ: LWAC) from January 2021 to August 2021. Prior to that, Mr. Ehrlich served as Senior Managing Director and Head of Locust Walk Partners’ Global Biopharmaceutical team. Prior to joining Locust Walk Partners in 2013, Mr. Ehrlich served as a Managing Director at InterWest Partners, a venture capital firm focused on healthcare and information technology, from 2000 to 2013. At InterWest, he served on the boards of KAI Pharmaceuticals, a privately held pharmaceutical company (acquired by Amgen in 2012), Biomimetic Therapeutics, Inc., a biotechnology company (acquired by Wright Medical Technologies in 2013), InvuitY, Inc., a medical technology company acquired by Stryker in 2018) and Xenon Pharmaceuticals, a biopharmaceutical company (NASDAQ: XENE). Prior to joining InterWest, Mr. Ehrlich was the Director of Licensing and Business Development at Purdue Pharma, a private pharmaceutical firm, where he was responsible for developing a biologic oncology franchise, including in-licensing key intellectual properties, establishing and managing collaborations with biotechnology companies and leading the commercial operations of Purdue BioPharma, a biotechnology company. Prior to joining Purdue BioPharma, Mr. Ehrlich worked in business development at Genentech, a biotechnology company, in venture capital at the U.S. Russia Investment Fund, and in biotechnology strategy development at L.E.K. Consulting. Since 2014, Mr. Ehrlich has served on the Board of Directors of Prostate Management Diagnostics, Inc., a diagnostics company, on the Advisory Board of the Peter Michael Foundation, a charity focused on prostate cancer where he has been a Senior Advisor since 2012, and on the Healthcare at Kellogg Advisory Board at Northwestern University since 2019. Mr. Ehrlich has also served as a member of the board of directors of eFFECTOR Therapeutics, Inc. since August 2021. Mr. Ehrlich has a B.A. in Government from Dartmouth College and a M.B.A. from the Kellogg Graduate School of Management at Northwestern University. He is also a registered representative with FINRA, holding his Series 79, 63 and 24 licenses.

Daniel Geffken, 63
Chief Financial Officer

He previously served as the Chief Financial Officer of LWAC from January 2021 to August 2021. He has been an executive in the life sciences industry since 1993. Mr. Geffken is a founder and managing director at Danforth Advisors, LLC, a management consulting firm to the life science industries, where he has served since 2011. Through Danforth, Mr. Geffken has served as Chief Financial Officer for ProMIS Neurosciences (TSX: PMN; OTCQB: ARFXF), a biotechnology company focused on the discovery and development of antibody therapeutics for neurodegenerative diseases, since March 2017, and Eloxx Pharmaceuticals, Inc. (NASDAQ: ELOX), a biotechnology company, since April 2021. He is currently chief financial officer of or consultant to various life sciences companies including Prilenia Therapeutics Development Corp., Apic Bio Inc., Myeloid Therapeutics, Calcimedica Inc., Elicio Therapeutics Inc., and Dermbiont, Inc. Since 2013, he has participated in more than 14 initial public offering, or IPO, filings and has assisted in raising more than $1 billion in debt and equity securities. Since 2019, Mr. Geffken has been a member of the board of directors of Windtree Therapeutics (NASDAQ: WINT), a biopharmaceutical company and, from May 2013 to October 2017, he was a member of the board of directors of Alcobra Ltd., a public biotechnology company that merged with Arcturus Therapeutics, Inc. (NASDAQ: ARCT). From November 2017 until May 2018, Mr. Geffken served on the board of directors of Arcturus. Mr. Geffken holds a B.S. in Economics from The Wharton School, University of Pennsylvania, and a M.B.A. from Harvard Business School.

Douglas Fisher, 45
President

He is currently a Venture Partner at Revelation Partners, which he joined in 2020, and an Executive-in Residence at InterWest Partners. Dr. Fisher joined InterWest’s healthcare team in 2009, focusing on biopharmaceutical, diagnostic and medical device investments. He is a board member of Gynesonics, Indi Molecular, Precipio Diagnostics (NASDAQ: PRPO), and WeavR Health. He is also actively involved in InterWest’s investments in PMV Pharma, Potenza Therapeutics, Sera Prognostics (NASDAQ: SERA, where he serves as the Chief Business Officer), and Tizona Therapeutics. Prior to joining InterWest, Dr. Fisher was a vice president at New Leaf Venture Partners where he spent three years focusing on biopharmaceutical, medical device, and diagnostics investments including Pearl Therapeutics, Interlace Medical (Acquired by Hologic), and Stromedix (Acquired by Biogen Idec). Prior to joining New Leaf, Dr. Fisher was a project leader with The Boston Consulting Group where he was a member of the Health Care Practice Area, consulting for leading pharmaceutical and biotech companies. Previously, Dr. Fisher worked for Centocor (a J&J operating company) in the Global Biologic Strategic Marketing Group. He received an A.B. in Economics and a B.S. in Biology, from Stanford. Dr. Fisher has a M.D. from the University of Pennsylvania School of Medicine and a M.B.A. from The Wharton School, University of Pennsylvania.

Board of Directors

Brian G. Atwood, 68
Director Nominee

Mr. Atwood serves as a Managing Director for Versant Ventures, a healthcare-focused venture capital firm that he co-founded in 1999. In 2015, Mr. Atwood co-founded Cell Design Labs, Inc., a biotechnology company focused on developing human cell engineering technology for the treatment of multiple diseases, including cancer, where he served as President and Chief Executive Officer until 2017, when it was acquired by Gilead Sciences. Mr. Atwood serves on the board of directors of Clovis Oncology, Inc. (NASDAQ: CLVS), and Atreca, Inc. (NASDAQ: BCEL), where he is Chairman. He also served on the board of directors of Immune Design Corp. from May 2008 until June 2016 (acquired by Merck in 2019), Veracyte, Inc., from its founding in 2008 until December 2016, OpGen Inc., from July 2007 until December 2017, Five Prime Therapeutics, from 2002 until March 2016, Cadence Pharmaceuticals, Inc. from March 2006 until its acquisition in March 2014, Helicos Biosciences from 2003 until September 2011, Pharmion Corporation from 2000 until its acquisition in March 2008, Trius Therapeutics, Inc. from February 2007 until its acquisition in September 2013 and LWAC from January 2021 until the consummation of its business combination in August 2021. Mr. Atwood holds a B.S. in Biological Sciences from the University of California, Irvine, a M.S. in Ecology from the University of California, Davis, and a M.B.A. from Harvard Business School.

Kathleen LaPorte, 59
Director Nominee

Ms. LaPorte. is an experienced executive, founder and board member, focused on life sciences. She co-founded New Leaf Ventures, served as a General Partner of The Sprout Group, and was Chief Business Officer and Chief Executive Officer of Nodality Inc. Ms. LaPorte has served on thirteen public company boards and twelve public company audit committees and numerous private company boards. Ms. Laporte currently serves as an independent director for Bolt Biotherapeutics (NASDAQ: BOLT), Precipio Diagnostics (NASDAQ: PRPO), D2G Oncology, and Elysium Therapeutics. Ms. LaPorte serves as the chair of the audit committees of both Bolt Biotherapeutics and Precipio Diagnostics. She previously served on the California Institute for Regenerative Medicine, a state agency board. Ms. LaPorte has a B.S. degree in Biology from Yale University and a M.B.A. from the Stanford University Graduate School of Business.

Barbara Kosacz, 63
Director Nominee

 From January 2021 to August 2021, Ms. Kosacz served as a director of LWAC. Since July 2020, Ms. Kosacz has served as the Chief Operating Officer and General Counsel of Kronos Bio, Inc. (NASDAQ: KRON), a publicly traded clinical-stage biopharmaceutical company. Prior to that, Ms. Kosacz was a Partner at the international law firm of Cooley LLP from January 1997 to December 2000, and again from February 2002 until July 2020, where she led the international Life Sciences Practice. Ms. Kosacz has more than 25 years of experience in counseling clients in the life sciences arena, ranging from early stage startups to larger public companies, venture funds, investment banks, and non-profit institutions. She has served as a member of the BIO Emerging Companies’ Section Governing Board, is a member of the Board of Trustees of the Keck Graduate Institute, an advisory board member of Locust Walk Partners, and has been a speaker at multiple life sciences-related conferences, as well as guest lecturer at the University of California, Berkeley, Columbia University, University of Pennsylvania, and Stanford University about biotechnology law, biotechnology business models, corporate partnering negotiations and deal structures, and bioethics. Recognized by Best Lawyers in America since 2008 and most recently as Biotechnology Lawyer of the Year in 2018, Ms. Kosacz was listed as a “leading lawyer” for healthcare and life sciences in the 2018 Legal 500, as a “Band 1” attorney in the 2018 edition of Chambers USA: America’s Leading Lawyers for Business and recognized as a “highly recommended transactions” lawyer by IAM Patent 1000 for her “nearly three decades advising diverse companies in the industry at a deeply strategic and commercial level and overseeing their most complex and profitable deals.” Ms. Kosacz is currently a member of the board of directors of XOMA Corp. (NASDAQ: XOMA), a royalty aggregation company, and Athira Pharma, Inc. (NASDAQ: ATHA), a late-clinical stage biotechnology company. Ms. Kosacz received her received B.A. from Stanford University and her J.D. from the University of California, Berkeley School of Law.

Caroline Loewy, 55
Director Nominee

Ms. Loewy serves on public company boards, provides strategic advisory services to life science companies, and has more than 25 years of experience in the biopharmaceutical industry. From January 2021 to August 2021, Ms. Loewy served as a director of LWAC. She co-founded and served as Chief Financial Officer and Chief Business Officer of Achieve Life Sciences, Inc., a specialty pharmaceuticals company, from 2015 to 2017. Prior to Achieve Life Sciences, she served as Chief Financial Officer of several life sciences companies, including Tobira Therapeutics, Inc. from 2012 to 2014, Corcept Therapeutics Inc. from 2008 to 2011 and Poniard Pharmaceuticals, Inc. from 2006 to 2008. Prior to that, Ms. Loewy was a senior biotechnology equity research analyst at Morgan Stanley, Inc. from 2000 to 2004 and Prudential Securities, Inc. from 1996 to 1999. She began her career as a financial analyst at BankAmerica Corporation. Ms. Loewy is a founding board member of the Global Genes Project and a member of the Steering Committee of the Forum for Collaborative Research in Rare Diseases. She is also a founding board member of the KCNQ2 Cure Alliance Foundation. Ms. Loewy currently serves on the boards of directors of, Zogenix, Inc., CymaBay Therapeutics Inc., Aptose Biosciences Inc. and PhaseBio Pharmaceuticals, Inc. Ms. Loewy holds a B.A. from the University of California, Berkeley, and a M.B.A./M.S. degree from Carnegie Mellon University.

ByAnthony Sozzi