Replies to post #207737 on Biotech Values

[DewDiligence]

OGXI/MSTX—…both seem to be getting similar equity in their respective merged companies (25% & 24%). Does the parallel end there? Are there other factors that differentiate the 2 deals making one better/worse than the other?

The proportion of the merged entity to be owned by shareholders of the public shell (or quasi-shell) company doesn’t tell you much by itself. You have to examine the overall (pro forma) capitalization of the merged company. Weak post-deal liquidity or sketchy disclosure of the post-deal capitalization are often reasons to look no further.

If the reverse merger passes the test above, then you evaluate the pipeline of the new controlling company—i.e. Savaria for the MSTX deal and Achieve Life Sciences for the OXGI deal.

At this point, I have not done the above work for these particular deals, so I don’t have an educated opinion on the merits of investing.