IM Cannabis and Kadimastem announce reverse merger deal

IM Cannabis Corp. (CSE: IMCC) (NASDAQ: IMCC), known for its significant strides in the medical cannabis sector, has announced a business combination with Kadimastem Ltd, an Israeli clinical cell therapy company. This strategic reverse merger, detailed in a non-binding term sheet and subsequent Loan Agreement, signals a pivotal shift in IM Cannabis Corp’s business direction, venturing from medical cannabis into the biotechnological realm.

At the heart of this merger, Kadimastem Ltd, which is publicly traded on the Tel Aviv Stock Exchange under the symbol TASE: KDST, is set to reverse merge into IM Cannabis Corp. This move is designed to culminate in the formation of a new biotechnological entity, with Kadimastem shareholders acquiring an 88% majority of the resulting issuer’s common shares, leaving IM Cannabis Corp’s shareholders with 12%. The arrangement underscores a mutual aspiration to leverage Kadimastem’s advanced clinical stage cell therapy innovations, especially in the wake of its FDA-approved Phase IIa clinical trials for ALS and diabetes product development.

The collaboration is envisaged to deliver unparalleled value to shareholders, as echoed by Oren Shuster, CEO of IMC, and Ronen Twito, Kadimastem’s Executive Chairman. Shuster’s acknowledgment of the merger’s potential to maximize shareholder value aligns with Twito’s affirmation of Kadimastem’s strategic NASDAQ listing endeavor. This endeavor aims to amplify the reach and impact of their ALS and diabetes therapies in the lucrative US market, further buoyed by recent FDA nods and partnerships for clinical trials in the US.

A noteworthy aspect of this merger is the planned spin-out of IMC’s existing medical cannabis operations into a contingent value right (CVR). This strategic move is set to precede the closure of the merger, ensuring that the legacy business’s net value is preserved and potentially enhanced through a future sale. The proceeds from such a sale are earmarked for debt settlement and rewarding CVR holders, showcasing a carefully crafted approach to safeguarding and optimizing legacy asset value.

The merger’s fruition hinges on several key conditions, including due diligence satisfaction, definitive agreement execution, shareholder approvals, and regulatory green lights. With Kadimastem bringing approximately $5 million in gross funds to the table at closing, the stage is set for a transformative leap towards a new era of biotechnological innovation and shareholder enrichment.

In conclusion, the reverse merger between IM Cannabis Corp. and Kadimastem Ltd not only marks a significant pivot in IMC’s strategic direction but also heralds a new chapter in the development and commercialization of groundbreaking cell therapies for ALS and diabetes. This merger is poised to reshape the landscape of biotechnology and medical cannabis, promising a future where innovative therapies and shareholder value coalesce.

This merger represents a strategic realignment with profound implications for the biotechnology and medical cannabis sectors. By transitioning into biotechnology, IM Cannabis Corp. is not just diversifying its portfolio but is also tapping into the high-growth potential of cell therapy for chronic conditions. Kadimastem’s advanced position in clinical trials and regulatory approvals positions the new entity for success in the competitive US market. Stakeholders should closely monitor the merger’s progress, as its successful execution could set a precedent for similar strategic realignments in the industry.