Direct Biologics leverages a proprietary
extracellular vesicle platform technology designed to harness the
power of bone marrow-derived mesenchymal stem cells to develop
cell-free therapeutics
Product candidate, ExoFlo™, is in a Phase 3
clinical trial for treating moderate-to-severe acute respiratory
distress syndrome in hospitalized adults with severe-to-critical
COVID-19
Proposed transaction values Direct Biologics at
an enterprise value of $675 million
Good Works II Acquisition Corp. (Nasdaq: GWII) (“Good Works
II”), a publicly traded special purpose acquisition company
(“SPAC”), and Direct Biologics, LLC (“Direct Biologics”), a
late-stage biotechnology company, today announced the signing of a
letter of intent for a potential business combination. The letter
of intent is non-binding except with respect to certain specified
provisions relating to, among other things, exclusivity, expenses
and other customary provisions.
The letter of intent provides that, until November 21, 2022,
Good Works II and Direct Biologics will negotiate exclusively with
each other to achieve a definitive agreement whereby Good Works II
would combine with Direct Biologics, resulting in a combined
publicly traded company. Completion of the proposed transaction is
subject to the negotiation of a definitive agreement and the
satisfaction of conditions contained therein. Accordingly, there
can be no assurance that a definitive agreement will be entered
into or that the proposed transaction will be consummated or, if a
transaction is consummated, as to its terms, structure or
timing.
Direct Biologics is using its proprietary extracellular vesicle
(“EV”) platform technology designed to harness the power of bone
marrow-derived mesenchymal stem cells (“bmMSC”) to develop
cell-free therapeutic candidates. Its product candidate, ExoFlo, is
in a Phase 3 clinical trial for treating moderate-to-severe acute
respiratory distress syndrome (“ARDS”) in hospitalized adults with
severe-to-critical COVID-19 (the “EXTINGuish COVID-19 trial”).
ExoFlo received regenerative medicine advanced therapy (“RMAT”)
designation for this indication from the U.S. Food and Drug
Administration (“FDA”), which is designed to expedite the approval
of promising regenerative medical products in the U.S. that
demonstrate clinical evidence indicating the ability to address an
unmet medical need for a serious life-threatening disease or
condition.
Commencing in the fourth quarter of 2022 and the first quarter
of 2023, the company intends to initiate clinical trials with
ExoFlo in all-cause ARDS, ulcerative colitis, Crohn’s disease and
abdominal solid organ transplant. In addition, there are numerous
investigator-initiated trials underway with ExoFlo at leading
research institutions addressing other applications as Direct
Biologics believes ExoFlo holds potential in a wide range of other
medical indications involving inflammation and tissue repair,
including mild-to-moderate and long COVID.
Good Works II’s Chief Executive Officer, Cary Grossman,
commented, “The Good Works II team has a long-standing history of
working with life sciences companies. We were attracted to Direct
Biologics because we believe their technology holds substantial
potential as a platform to treat numerous conditions that involve
inflammation or that would benefit from the regenerative properties
of their proprietary EV technology. We were also impressed that
Direct Biologics’ product candidate is in advanced clinical
development in an underserved patient population, and was generally
well-tolerated and demonstrated clinical activity in multiple
investigator-initiated trials for various indications and in a
company-sponsored Phase 2 trial in COVID-19 patients with
moderate-to-severe ARDS. Direct Biologics also has cGMP
manufacturing in place, which we believe positions Direct Biologics
to take advantage of the market opportunity if ExoFlo receives
either BLA approval or Emergency Use Authorization from the
FDA.”
The EXTINGuish COVID-19 trial is a multicenter, randomized,
double-blinded, placebo-controlled clinical trial investigating the
infusion of ExoFlo in up to 610 adults. The primary efficacy
endpoints are all-cause mortality at Day 60 and median days to
recovery. The trial includes an interim efficacy analysis based on
50% enrollment, with potential to submit a Biologics License
Application (“BLA”) should statistical significance be reached.
“The time is right for Direct Biologics to transition to public
company status with the numerous benefits such a listing affords.
We have made tremendous progress across our business over the past
few years, and we believe gaining access to the equity capital
markets will be extremely valuable as we continue to position
Direct Biologics for success. We believe that the opportunity to
participate in a business combination transaction with Good Works
II is an efficient route to pursue our business objectives,” said
Mark Adams, Direct Biologics co-founder and Chief Executive
Officer. “Building upon the promising results of our Phase 2 trial
of 102 adults with COVID-19 associated moderate-to-severe ARDS and
leveraging the RMAT designation granted by the FDA for ExoFlo in
that indication, we look forward to our future with momentum and
optimism.”
Transaction Overview
The proposed transaction values Direct Biologics at an
enterprise value of $675.0 million. As a condition to closing the
transaction, the combined company is required to have at least
$75.0 million in net cash at closing, to consist of proceeds from a
private placement of Direct Biologics securities in addition to
cash from the Good Works II trust account. IB Investments I LLC, an
affiliate of the placement agent and the sponsor, has invested $5.0
million in the private placement. The Good Works II trust account
currently holds approximately $231.4 million in cash from its
initial public offering in July 2021. On October 11, 2022, Good
Works II will hold a shareholder vote to amend its amended and
restated certificate of incorporation to extend the date by which
Good Works II must consummate a business combination from October
14, 2022 to April 14, 2023 (the “Extension Meeting”). At the
Extension Meeting, Good Works II shareholders will have the
opportunity to redeem their shares of Good Works II for a
proportional amount of the money held in Good Works II’s trust
account. If the proposed transaction with Direct Biologics is
consummated, cash from the transaction, net of transaction fees, is
intended to be used to fund clinical trials and provide working
capital for commercializing ExoFlo.
Assuming no redemptions from the trust account (at both the
Extension Meeting and at the closing of the proposed transaction)
and proceeds from the private placement in an amount of $100.0
million, resulting in gross proceeds of $331.4 million, current
Direct Biologics owners will become the majority owners of the
combined company at closing with approximately 61.7% pro forma
ownership, and existing shareholders and investors will continue to
hold their equity ownership subject to a one-year lock-up period.
Private placement investors will own approximately 11.4% of the
combined company, presuming a $100.0 million raise, and the sponsor
of Good Works II and its public shareholders will own approximately
26.9% of the combined company.
If in 2023 the company obtains either BLA approval or Emergency
Use Authorization from the FDA for its ExoFlo product (or a
derivative product for any applicable indication), owners of Direct
Biologics may receive, subject to certain conditions, common stock
currently valued at $325 million in the combined company.
The proposed transaction is expected to be completed in the
first half of 2023 and will be subject to approval by Good Works
II’s stockholders, and the satisfaction or waiver of any closing
conditions identified in the definitive agreement, including the
minimum net cash condition of $75.0 million.
Advisors
Raymond James & Associates, Inc. is serving as financial
advisor to Direct Biologics. IB Capital LLC (“IBC”) is serving as
placement agent for the private placement and an affiliate of IBC,
I-B Good Works 2, LLC, is the sponsor of Good Works II. I-Bankers
Securities, Inc., an affiliate of both IBC and the sponsor of Good
Works II, acted as the sole book-running manager and the
representative of the underwriters for the initial public offering
of Good Works II.
ArentFox Schiff LLP is acting as legal counsel to Good Works II.
Goodwin Procter LLP is acting as legal counsel to Direct Biologics.
Ellenoff Grossman & Schole LLP is acting as legal counsel to
IBC.
About Direct Biologics
Direct Biologics is an innovator and cGMP manufacturer of the
regenerative biologic product candidate ExoFlo™, a therapeutic
candidate in late-stage development derived from the company’s
proprietary EV platform technology that is designed to leverage the
regenerative properties of bmMSC-derived extracellular vesicles.
ExoFlo is currently in a Phase 3 clinical trial for the treatment
of hospitalized adults with severe-to-critical COVID-19 associated
moderate-to-severe ARDS, as well as an FDA-authorized Expanded
Access Protocol for hospitalized patients with COVID-19 associated
moderate-to-severe ARDS. Direct Biologics intends to pursue
additional clinical applications of ExoFlo. With headquarters in
Austin, Texas, Direct Biologics has an R&D facility on the
campus of the University of California San Diego, Center for Novel
Therapeutics, and operations and an order-fulfillment center in San
Antonio, Texas. For more information, please visit
www.directbiologics.com.
About Good Works II Acquisition Corp.
Good Works II Acquisition Corp. is a blank-check company
organized for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
other similar business combination with one or more businesses or
entities. Good Works II may pursue a business combination
opportunity in any business or industry it chooses. As was the case
with Good Works Acquisition Corp., its founders have donated a
substantial portion of its founders stock to not-for-profit
organizations to further its “Good Works” purpose.
Forward-Looking Statements
This document contains certain forward-looking statements within
the meaning of the federal securities laws with respect to the
proposed business combination between Good Works II and Direct
Biologics, including statements regarding the benefits of the
proposed business combination, the anticipated timing of the
proposed business combination, the products being developed by
Direct Biologics and the markets in which Direct Biologics intends
to operate, business strategies, debt levels, industry environment,
potential growth opportunities and the effects of regulations.
These forward-looking statements generally are identified by the
words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“intend,” “strategy,” “future,” “forecast,” “opportunity,” “plan,”
“may,” “should,” “will,” “would,” “will be,” “will continue,” “will
likely result,” “positions,” “enables” and similar expressions
(including the negative versions of such words or expressions).
Forward-looking statements are predictions, projections and
other statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this
document, including but not limited to: (i) the risk that the
proposed business combination may not be completed in a timely
manner or at all, which may adversely affect the price of Good
Works II’s securities; (ii) the risk that the proposed business
combination may not be completed by Good Works II’s business
combination deadline and the potential failure to obtain an
extension of the business combination deadline; (iii) the failure
to satisfy the conditions to the consummation of the proposed
business combination, including the approval of the proposed
business combination by the stockholders of Good Works II, the
satisfaction of the minimum cash amount of $75.0 million net cash
following completion of a private placement by Direct Biologics and
redemptions by Good Works II’s public stockholders, and the receipt
of certain governmental and regulatory approvals; (iv) the effect
of the announcement or pendency of the proposed business
combination on Direct Biologics’ business relationships,
performance and business generally; (v) risks that the proposed
business combination disrupts current plans of Direct Biologics;
(vi) the outcome of any legal proceedings that may be instituted
against Good Works II, or related to the agreement and plan of
merger or the proposed business combination; (vii) the ability to
maintain the listing of Good Works II’s securities on the NASDAQ;
(viii) the price of Good Works II’s securities, including
volatility resulting from changes in the competitive and highly
regulated industries in which Direct Biologics plans to operate,
variations in performance across competitors, changes in laws and
regulations affecting Direct Biologics’ business and changes in the
combined capital structure; (ix) the ability to implement business
plans, forecasts and other expectations after the completion of the
proposed business combination, and identify and realize additional
opportunities; (x) risks related to the approval of Direct
Biologics’ product candidate and the timing of expected regulatory
and business milestones; (xi) the impact of competitive products or
product candidates; and (xii) the impact of COVID 19 and global
economic and political conditions, including the Russia-Ukraine
conflict. The foregoing list of factors is not exhaustive. You
should carefully consider the foregoing factors and the other risks
and uncertainties described in Good Works II’s final proxy
statement/information statement/prospectus contained in the Form
S-4 registration statement described below, including those under
“Risk Factors” therein, the Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and other documents filed by Good Works II and
the combined company registrant from time to time with the U.S.
Securities and Exchange Commission. These filings identify and
address other important risks and uncertainties that could cause
actual events and results to differ materially from those contained
in the forward-looking statements. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and Good Works II and
Direct Biologics assume no obligation and, except as required by
law, do not intend to update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise. Neither Good Works II nor Direct Biologics gives any
assurance that either Good Works II or Direct Biologics will
achieve its expectations.
No Offer or Solicitation
This press release is not a proxy statement or solicitation
of a proxy, consent or authorization with respect to any securities
or in respect of the potential transaction and shall not constitute
an offer to sell or a solicitation of an offer to buy the
securities of Good Works II, Direct Biologics or the combined
company, nor shall there be any sale of any such securities in any
state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of such state or jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of the Securities Act of 1934, as amended.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220927005436/en/
Good Works II Acquisition Corp. Cary Grossman
713-204-3873 cgrossman@shorelinecapitaladvisors.com
Direct Biologics LHA Investor Relations Yvonne Briggs
310-691-7100 ybriggs@lhai.com
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