Ceapro Inc V.CZO

RE:Parasitic merger? No thanks

[prophetoffactz]

Apostata, "No one...has made a case for this being anything other than a parasitic merger, where the better outfit (CZO) is forced to have its advantages, its IP and its shareholder value sucked dry by a floundering mess of a company (AEZS)."

You know more than Ronnie Miller and Dr. Li with Gilles by their side in the catbird of both companies along with Bloom Burton? The merger was universally approved by the Special Committee and CZO's Board of Directors. Ronnie Miller, arguably the most important biotech executive in Canada in the last 20 years, said they are "thrilled". He said that after careful consideration this is the best path forward for shareholders. We are fortunate to have his opinion.

“We are thrilled with this exciting transaction to merge with Aeterna and combine two complementary companies and teams, in support of our plan to drive significant growth,” said Ronnie Miller, Chairman of Ceapro. “After careful consideration, we believe this transaction is the best way forward for Ceapro and our valued shareholders.” news release

H.C. Wainwright issued a US$15 target price on AEZS before the recent ~40% surge in the S&P Biotech ETF. Given this is a merger of equals, and using H.C. Wainwright's target price ignoring the recent 40% surge in biotech, that arguably puts a target price on CZO of C$1.25 per share. Getting CZO's near-term revenue generating pipeline fully financed without warrants at that price could be amazing.  The capital and internal capabilities of AEZS CZO could also put CZO in a position of strength in negotiating PGX deals, etc., as PGX hits the decision point for mass industrialization expected this year.
 
Tell us the value of AEZS's ~C$45 cash million unrestricted cash as of September 30, 2023, C$113 million tax loss carryforwards, the expected upfront and milestone payments from of a new North American diagnostic deal. Novo Nordisk was willing to pay ~C$235 in cash, equity, and potential milestone payments plus royalties for the diagnostic. AEZS's lead AIM Biologicals program targets a market expected to be worth US$2.5 billion. It is expected to have excellent tolerability. If safety i believes significantly addressed is it expected to work? It is based on natural science. The body of an expected mother doesn't reject a fetus despite the fetus being half foreign protein. Proof has been established across more than one disease and in various in-vitro and in-vivo models as well as in human blood from patients. What is the potential US$2.5 billion market worth to AEZS? The technology is further a platform technology potentially expandable to other diseases using the same principle. AEZS also has other pipeline assets. Gilles has refered to AEZS's pipeline as "...exciting projects Aeterna has been developing..."

The cash burning phase for AEZS's diagnostic is now over and its time to generate upfront, milestone payments and royalties. It's a cash cow that can fund CZO's opportunities. AEZS's ultra-high risk pipeline has been groomed to the 'go'/'no go' decision point for human clinical trials where value accretion can accelerate with human data. It's game on for the pipeline. The S&P Biotech ETF is pressing up against a mult-year high and potential breakout after the worst biotech market in history. Gilles may have scooped, with epic timing, AEZS's biotech pipeline below the value of its cash let alone the value of its diagnostic that is about to become a cash cow. Post-merger it gives CZO shareholders about C$.35 cents per share cash based on the September 30, 2023 unrestricted cash balances of both companies. That ignores the cash cow diagnostic and C$113 million taxloss carryforwards. With PGX nearing commercialization perhaps it could be spunout to shareholders with the tax loss carryforwards in the future. Again, AEZS's capital fully funds CZO's near term revenue generating pipeline without warrants and along with AEZS's internal capabilities strengthens CZO's bargaining position for PGX, avenanthramide pill, and wound healing deals as well as for the potential internal development of assets. CZO needs to build its clinical trial capabilities for the next phase; it can't stay a small company on the TSX-V forever. 

Ronnie Miller has been around the block as the President and CEO of Roche Canada for 20 years. Roche is one of the biggest companies in the world. He's got all the information with Gilles and the CZO team by his side, etc. He's "thrilled" and believes this is the best path. The Special Committee and Board of Directors have universally agreed.