Cyclo Therapeutics and Rafael Holdings Announce Merger
Cyclo Therapeutics has entered into a merger agreement with Rafael Holdings, Inc. Under the deal, Cyclo Therapeutics will become a wholly-owned subsidiary of Rafael. The merger, expected to close in Q4 2024, requires approval from both companies’ stockholders.
Stock Declines Following Cyclo Therapeutics and Rafael Holdings Merger Announcement
Following the Rafael Holdings merger announcement, Cyclo Therapeutics’ stock experienced a notable decline. The merger involves issuing Rafael Class B Common Stock in exchange for Cyclo Therapeutics shares. Rafael will also fund Cyclo Therapeutics’ clinical trials post-merger and provide a convertible note to support operations until the merger is finalized.
Cyclo Therapeutics Rafael Holdings Merger Details and Financial Support
The merger aims to qualify as a tax-free reorganization. Rafael has agreed to lock-up and support agreements controlling the sale and voting of the newly issued shares. The financing agreement includes a convertible note to sustain Cyclo Therapeutics until the deal is completed.
Cyclo Therapeutics’ Second Quarter 2024 Results
Last week, Cyclo Therapeutics released its Q2 2024 results. Revenue was reported at $123.1k, up 5.1% from Q2 2023. However, net loss widened by 29% to $5.98 million, with a loss per share of $0.21.
Revenue and Earnings Miss Expectations
Revenue missed analyst estimates by 54%, while earnings per share (EPS) fell short of expectations by 35%. Looking ahead, revenue is forecasted to grow at an average rate of 71% per annum over the next three years, compared to a 23% growth forecast for the U.S. biotech industry.
Stock Performance Overview
Cyclo Therapeutics’ stock has seen significant movements. The market cap stands at $26.32 million, with a revenue (ttm) of $1.13 million and a net income (ttm) of -$20.74 million. The company has 28.70 million shares outstanding, with an EPS of -0.85. The stock opened at $0.950 today, down from the previous close of $1.260. The day’s trading range has been between $0.830 and $0.985. Over the past year, the stock has fluctuated between $0.830 and $2.120. Analysts have a strong buy rating on the stock.
Market Reaction and Future Outlook
The stock’s decline following the merger announcement reflects investor concerns about the transition and merger integration. Despite the current stock performance, the forecasted revenue growth offers a promising outlook for Cyclo Therapeutics. As the merger progresses, the company’s strategic partnership with Rafael Holdings may drive future growth and stability.
Cyclo Therapeutics’ merger with Rafael Holdings represents a significant shift for the company. The stock’s decline post-announcement highlights investor caution. However, the long-term growth potential and strategic support from Rafael may offer a positive outlook for Cyclo Therapeutics as it moves forward.
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