KBLM Releases Information on Their LOI and Changes Extension Terms

KBL Merger Corp. IV (KBLM), released details this morning on their previously announced non-binding term sheet ahead of their June 5th extension vote.  KBLM’s LOI with with CannBioRx Life Sciences Corp. (“CannBioRx”), would form a company combined of three programs focused on treating inflammatory diseases:

• 180 Therapeutics, a late clinical-stage biopharmaceutical company focused on the discovery and development of novel biologic therapies for treating fibrosis;
• Katexco Pharmaceuticals, a pre-clinical effort for developing orally available therapies harnessing the brain’s nicotinic receptors to treat inflammatory diseases; and
• CannBioRexPharmaceuticals, a pre-clinical initiative focused on the development and commercialization of man-made cannabinoids for arthritis, pain, diabetes and obesity.

Important to note, KBL states these opportunities are non-plant-touching, pharmaceutical-grade, non-psychoactive cannabis and drug development programs.

Shareholder Vote to Extend:  To be held June 5th, record date is May 15th

No further details on the transaction have been released as of yet, but it is important to note that KBLM will be changing it’s previous extension amendment.  Per the first extension amendment, KBLM had previously agreed to contribute $0.03 for each public share that was not redeemed for each calendar month commencing on June 7, 2019, through September 7, 2019 (should they need the full three months). However, KBLM is now asking for a potential six months, which would move their potential deadline date to December 7th instead.  Additionally, instead of $0.03 per share per month, KBLM will now be contributing $0.025 per share per month, for a total of $0.15 per share should they need the full six months.

Quick Takes: While cannabis companies are hot, we still do not have a lot of details on this transaction. However, two out of the three of CannBioRx’s programs are at the pre-clincial stage.  It’s difficult to evaluate the opportunity without specifics, but clearly this was announced ahead of the extension vote to give shareholders something to chew on before they decide to redeem or not.  However, reducing the per month contribution from $0.03 to $0.025 might be detrimental.  A longer duration and a reduced monthly contribution are generally not well received by SPAC investors.