In July 2008, Inovio and VGX Pharmaceuticals executed a definitive merger agreement, which provides for the issuance of Inovio’s securities in exchange for all of the outstanding securities of VGX and the merger of an acquisition subsidiary of Inovio with VGX. As per the merger agreement, under the amended agreement Inovio will issue common stock in exchange for all outstanding VGX common stock based on an exchange ratio derived from the comparative fully diluted share capitalization of the companies, excluding the shares of VGX common stock underlying outstanding VGX convertible debt.
Inovio will assume all outstanding VGX options and warrants, which will become exercisable for Inovio common stock, with the number of shares into which they are exercisable and the exercise price to be adjusted based on the exchange ratio. Outstanding VGX convertible debt at the time of the merger (anticipated to be $4.4 million at the time of the merger) will be assumed on a consolidated basis and become convertible into Inovio common stock at $1.05 per share.
The amended agreement provides that five significant VGX stockholders will place eight million shares of Inovio common stock received in the merger into a voting trust, effective concurrent with the closing of the merger, to be administered by an independent committee of the board of directors of the combined company. The trustees would vote the shares in accordance with the percentage of votes cast by all stockholders on any particular matter.
Under the terms of the amended agreement, the post-merger parent company will retain the name Inovio Biomedical. The company will have a five-person board of directors consisting of three directors from Inovio’s current board and two directors from VGX’s current board.
The company is expected to be led by Joseph Kim of VGX as CEO and a director, and Avtar Dhillon of Inovio as president, chairman of the board and a director. Peter Kies of Inovio is anticipated to continue as CFO. The combined company’s headquarters are anticipated to remain in San Diego, California, while maintaining operations in Blue Bell, Pennsylvania, The Woodlands, Texas, and Oslo, Norway.
The transaction remains subject to completion of the registration of Inovio’s securities to be issued in the merger with the SEC, receipt of approval from both companies’ stockholders of the transaction and other customary closing conditions.
Avtar Dhillon, president and CEO of Inovio Biomedical, said: As Inovio and VGX advanced the merger process and assessed the strategic prospects that lay ahead for the combined company, we refined the terms of the proposed merger to best meet the needs of our mutual stakeholders and to launch the combined company with the broadest possible management resources. We now aim to file the S-4 with the SEC this week and conclude the merger in the first quarter of 2009.