Vision Sensing (NASDAQ:VSAC) has entered into a definitive agreement to combine with Korean drug developer firm Mediforum at an enterprise value of $250 million.

Seoul-based Mediforum provides supplements and medicines derived from traditional ingredients to treat Alzheimer’s and memory loss.

The combined company is expected to trade on the Nasdaq.

Transaction Overview

The SPAC has about $14.9 million in its current trust after seeing 86.7% of shares redeemed in earlier extension votes and it aims to add $50 million in additional committed funding to the deal.

Mediforum shareholders are to receive 25,000,000 shares as compensation and potentially more in an earnout agreement that has yet to be finalized. Vision Sensing must maintain more than $5 million in cash available in order for the deal to close.

The parties also continue to negotiate ancillary agreements and due diligence as well as agreements on how parties will handle ongoing D&O insurance coverage.

The parties have not yet released an investor presentation, but Vision Sensing’s profile page will be updated once more information is made available.

Quick Takes: It is not often that one is directed to discounts on shipping on a biotech firm’s website, but that is because Mediforum is not yet operating through the normal US structures.

An important footnote to all of its medical claims reads:

“For viewers outside of the United States: This statement has been evaluated by the Ministry of Food and Drug Safety in Korea and verified through multiple clinical trials.

For viewers in the United States: This statement has not been evaluated by the U.S. Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.”

But, hey, free shipping on all orders over $50 and they take Venmo.

Most of its products cross that threshold on their own. The supplements come in ornate packaging with prices ranging from $49 to $499 under the current sale.

It has made progress in the past in gaining clinical validation, however. But, as the above disclaimer notes, while some clinical trials may have verified some benefits, the company stop shorts of saying that the Korean regulators have approved any of its products as medical treatments.

The last announcement it made on its clinical path was a contract it signed with LSK Global Pharma Service for a Phase III study in Korea in January 2019.

Four years on, it has provided little in the way of an update, but notes in the announcement press release that this drug candidate, PM012, is in Phase IIb trials in Korea. It is also investigating whether its MF018 candidate could serve as a potential treatment for chemotherapy-induced peripheral neuropathy and that study is in Phase II in Korea.

According to a 2021 blog post, it planned a broader push to get into PCR testing, probiotics and cancer treatments. But, most of its efforts appear to have focused on new product lines in the supplements space.

Many of its health teas and supplements are now distributed both through brick and mortar locations and ecommerce in both Korea and the US.

Overall, it could be positive for Mediforum to have those additional revenue streams while it continues the capital-intensive work of getting new drugs approved. But, biotech investors still nonetheless tend to be more interested in the upside of the latter part of that equation.

Supplements alone is a space that hit a slump in the US in recent years with long-time leader GNC sliding into bankruptcy and eventually being bought out by its largest shareholder for $760 million in 2020.

Its competitor, Nature’s Sunshine Products (NASDAQ:NATR) is itself trading at more than double its 52-week low, but despite its scale that still amounts to a $340 million market cap and valuation at 0.6x revenue and 9.9x EBITDA.

Nonetheless, if Mediforum is profitable, it could present a more stable target than the SPAC’s first prospective partner.

Vision Sensing initially announced a combination with Israel-based imaging chipmaker Newsight in August 2022, but the parties called it off last month.

Although the SPAC was quick to get an alternate deal announced, it will not be able to again use as much time as the 16 months that the Newsight transaction was pending.

Vision Sensing would need to ask shareholders for an extension to get it beyond May 3, 2024 and the three-year anniversary of its own listing is coming up in November.

ADVISORS

• Company
  • Norwich Capital Limited and American General Business Association & SME Overseas IPO Capital Group are acting as the Lead Advisor and Co-Advisor.
  • Loeb & Loeb LLP is acting as the US Legal Counsel.
  • Next Law LLP is acting as the Korean Legal Counsel.
• SPAC
  • EF Hutton, division of Benchmark Investments, LLC, is serving as Capital Market Advisor.
  • ARC Group Limited is serving as Financial Advisor.