I-Mab Announces Closing of the Divestiture of Business Operations in China

Rhea-AI Summary

I-Mab successfully closes divestiture transaction transferring equity interest in I-Mab Shanghai, with a total consideration of up to US$80 million. The Company extinguishes repurchase obligations of approximately US$183 million and participates in Series C fundraising of the Hangzhou Company for US$19 million.

Insights

Financial Analyst

The completion of I-Mab's divestiture transaction, involving the transfer of equity interest from I-Mab Shanghai to the Hangzhou Company, represents a significant liquidity event for the firm. From a financial perspective, this transaction alters the capital structure of I-Mab by reducing its repurchase obligations substantially, by approximately US$183 million. This reduction in liabilities can improve the company's balance sheet and potentially its credit rating, which may lead to reduced borrowing costs in the future.

Additionally, the contingent consideration of up to US$80 million tied to regulatory and sales milestones can provide future cash inflows. However, these are uncertain and dependent on the Hangzhou Company's performance. Investors should note that such contingent deals can be quite common in the biotech industry, where future revenues are often unpredictable and tied to drug development success.

Lastly, I-Mab's participation in the Series C fundraising of the Hangzhou Company signals a strategic investment, which could yield substantial returns if the Hangzhou Company's therapies succeed in the market. However, such investments are also risky, particularly in the biotech sector where the success rate of therapies can be low.

Market Research Analyst

The divestiture of I-Mab Shanghai and the subsequent financial maneuvers indicate a strategic repositioning of I-Mab within the biotech market. By divesting a part of its business, I-Mab is likely aiming to streamline operations and focus on its core competencies in developing immunotherapies for cancer. This could be seen as a positive move by the market, as specialization often leads to greater efficiency and innovation.

Moreover, the extinguishment of repurchase obligations and the investment in the Hangzhou Company could be interpreted as a sign of confidence in the latter's potential. This may attract investor interest in both I-Mab and the Hangzhou Company. However, the actual impact on the stock price would depend on the market's perception of the transaction's long-term value creation potential versus the immediate reduction in capital available to I-Mab due to the cash outlay for the Series C investment.

Legal Expert

In transactions such as the one described, it is important to understand the legal implications of the transfer of equity interests and the extinguishment of repurchase obligations. The fact that the transaction has closed successfully indicates that all legal hurdles, including regulatory approvals and satisfaction of contractual conditions, have been navigated effectively.

Investors should be aware that the legal structuring of such deals can have significant tax implications and can also affect shareholder rights. The transfer on a cash-free and debt-free basis is typically designed to make the transaction as clean as possible, potentially avoiding the transfer of liabilities that could affect the valuation of the equity interests involved.

Furthermore, the contingent nature of part of the consideration introduces an element of legal complexity and potential for future disputes if there is disagreement over whether the milestones have been met. It is important for stakeholders to closely monitor the fulfillment of these milestones to gauge the likelihood of receiving the contingent payments.

ROCKVILLE, Md., April 2, 2024 /PRNewswire/ -- I-Mab (the "Company") (NASDAQ: IMAB) a U.S.-based, global biotech company, exclusively focused on the development and potential commercialization of highly differentiated immunotherapies for the treatment of cancer, today announced that all conditions precedent to the divestiture transaction previously announced on February 7, 2024 (the "Transaction") have been either satisfied or waived and accordingly, the Transaction has successfully closed.

The Company transferred 100% of the outstanding equity interest in I-Mab Biopharma Co., Ltd. ("I-Mab Shanghai") to I-Mab Biopharma (Hangzhou) Co., Ltd. (the "Hangzhou Company"), on a cash-free and debt-free basis, for an aggregate consideration of the RMB equivalent of up to US$80 million, contingent on the Hangzhou Company group's achievement of certain future regulatory and sales-based milestone events.

Concurrent with the aforementioned equity interest transfer, the Company's wholly owned subsidiary, I-Mab Biopharma Hong Kong Limited ("I-Mab Hong Kong"), transferred the equity interests it held in the Hangzhou Company to certain participating shareholders of the Hangzhou Company in exchange for extinguishment of certain repurchase obligations owed by I-Mab Hong Kong to those shareholders in the amount of approximately US$183 million. As a result of the closing of the Transaction, the repurchase obligations owed by I-Mab Hong Kong to those participating shareholders have been extinguished. The total amount of potential repurchase obligations owed by I-Mab Hong Kong and the Company to the non-participating shareholders of the Hangzhou Company is expected to range from US$30 million to US$35 million.

Meanwhile, the Company participated in the Series C fundraising of the Hangzhou Company for an equity interest subscription of US$19 million in cash.

For more information about the previously announced Transaction, please visit here.

About I-Mab

I-Mab (NASDAQ: IMAB) is a U.S.-based, global biotech company, exclusively focused on the development and potential commercialization of highly differentiated immunotherapies for the treatment of cancer. I-Mab has established operations in the U.S. in Rockville, Maryland, and in San Diego, California. For more information, please visit http://www.i-mabbiopharma.com and follow us on LinkedIn and X.

I-Mab Forward Looking Statements

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident," and similar statements. I-Mab may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, are forward-looking statements. Such statements reflect I-Mab's current beliefs and expectations, and current information available to I-Mab, and are subject to certain risks, uncertainties and assumptions, including, without limitation, statements regarding the expected aggregate consideration for the transfer of I-Mab Shanghai to the Hangzhou Company and the total amount of potential repurchase obligations owed by I-Mab Hong Kong and the Company to the non-participating shareholders of the Hangzhou Company. A number of factors could cause actual results to differ materially from those contained in these forward-looking statements, including but not limited to the following: I-Mab's ability to obtain anticipated pipeline assets, rights and interests, I-Mab's ability to demonstrate the safety and efficacy of its drug candidates; the clinical results for its drug candidates, which may or may not support further development or New Drug Application/Biologics License Application (NDA/BLA) approval; the content and timing of decisions made by the relevant regulatory authorities regarding regulatory approval of I-Mab's drug candidates; I-Mab's ability to achieve commercial success for its drug candidates, if approved; I-Mab's ability to obtain and maintain protection of intellectual property for its technology and drugs; I-Mab's reliance on third parties to conduct drug development, manufacturing and other services; I-Mab's limited operating history and I-Mab's ability to obtain additional funding for operations and to complete the development and commercialization of its drug candidates; as well as the discussions of potential risks, uncertainties, and other important factors in I-Mab's most recent annual report on Form 20-F and I-Mab's subsequent filings with the SEC. Under certain circumstances, such as an independent review or audit of the divestiture transaction the Company may remain liable for additional financial liability that may be difficult to determine at this time. All forward-looking statements are based on information currently available to I-Mab. I-Mab undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law.

I-Mab Contacts

Investors & Media
Tyler Ehler
Senior Director, Investor Relations
IR@imabbio.com

 

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SOURCE I-Mab Biopharma

FAQ

What is the total consideration for the divestiture transaction?

The total consideration for the divestiture transaction is up to US$80 million.

How much were the repurchase obligations extinguished by I-Mab Hong Kong?

I-Mab Hong Kong extinguished repurchase obligations of approximately US$183 million.

How much did the Company participate in the Series C fundraising of the Hangzhou Company?

The Company participated with US$19 million in cash in the Series C fundraising of the Hangzhou Company.