NLS Pharmaceutics Ltd. (NASDAQ:NLSP) has secured significant financial backing to support its planned merger with Kadimastem Ltd., announcing the closing of a $2 million equity financing and the signing of a $25 million committed equity facility agreement.
The Swiss clinical-stage biopharmaceutical company closed the initial equity financing on March 28, 2025, raising $2 million through the issuance of preferred shares at a stated value of $1.65 per share—representing a 10% premium to the market share price as of March 26, 2025. A potential second closing could provide an additional $1 million, subject to shareholder approval.
In parallel, NLS has established a $25 million committed equity facility agreement, significantly strengthening the financial position of the soon-to-be-merged entity.
Strategic Funding for Cell Therapy Advancement
The financing package is specifically designed to support the planned merger with Kadimastem, an Israeli clinical-stage cell therapy company specializing in treatments for neurodegenerative diseases and diabetes. Following the merger, the combined company intends to advance two key clinical programs:
- A Phase IIa multi-site clinical trial for AstroRx®, Kadimastem's cell therapy candidate for Amyotrophic Lateral Sclerosis (ALS)
- A Phase I clinical trial for IsletRx, a potential treatment for type 1 diabetes patients
"We are pleased to have secured this capital on favorable terms, which reflects investor confidence in our vision and the transformative potential of our planned merger with Kadimastem," said Alex Zwyer, CEO of NLS. "We believe that with these financial resources in place, we are well-positioned to move forward with completing the transaction and creating a leading company in the field of regenerative medicine and CNS disorders."
Kadimastem's Innovative Cell Therapy Platform
Kadimastem has developed a proprietary technology platform for the expansion and differentiation of Human Embryonic Stem Cells (hESCs) into functional cells. The company's lead product, AstroRx®, is an astrocyte cell therapy currently in clinical development for ALS and in pre-clinical studies for other neurodegenerative conditions.
The company's second product candidate, IsletRx, comprises functional pancreatic islet cells capable of producing and releasing insulin and glucagon, intended to treat and potentially cure patients with insulin-dependent diabetes.
Ronen Twito, Executive Chairman and CEO of Kadimastem, expressed optimism about the financing: "We are happy to receive this financing as a vote of confidence by investors in the planned merger, Kadimastem leadership team and the assets of Kadimastem. We believe the financing package will allow the merged company to initiate the planned Phase IIa clinical trial for AstroRx® and the Phase I clinical trial for IsletRx, paving the way for potentially transformative treatments in both ALS and diabetes."
Merger Progress and Regulatory Steps
The announcement follows NLS's filing of an amendment to its registration statement on Form F-4 with the SEC. The merger remains subject to customary closing conditions, including regulatory and shareholder approvals.
The securities described in the financing were issued in a private placement under Section 4(a)(2) of the Securities Act of 1933 and Regulation D, and have not been registered under the Securities Act or applicable state securities laws.
Complementary Expertise and Technologies
The merger aims to combine NLS's focus on central nervous system disorders with Kadimastem's regenerative medicine platform. NLS has been developing next-generation therapies for sleep disorders, neurodegenerative diseases, and metabolic dysfunctions, including a portfolio of non-sulfonamide dual orexin receptor agonists (DOXA) through a strategic licensing agreement with Aexon Labs.
Kadimastem, founded by Professor Michel Revel, Chief Scientific Officer and Professor Emeritus of Molecular Genetics at the Weizmann Institute of Science, brings significant scientific expertise to the merger. Professor Revel is known for the invention and development of Rebif®, a multiple sclerosis blockbuster drug sold worldwide.
Market and Financial Implications
The net proceeds from the offering will be used for expenses relating to the merger with Kadimastem, working capital, and general corporate purposes. The equity investment and committed equity facility are intended to strengthen the merged company's balance sheet and provide flexibility needed to support the integration process and future pipeline development.
The transaction represents a significant step in the consolidation of expertise in the regenerative medicine and CNS therapeutic spaces, potentially creating a stronger entity capable of advancing multiple clinical programs simultaneously.
