Cardax Pharmaceuticals, a privately held Hawaii-based biotech firm, will issue publicly traded shares as part of its expansion plans, company officials announced Friday.
The move will allow Cardax to raise money and expand the production and marketing of its pharmaceutical and nutraceutical products, said David Watumull, Cardax president and chief executive officer.
Cardax also plans on strengthening its partnership with German chemical giant BASF AG, according to Watumull. BASF manufactures a key component used to make the Cardax’s proprietary pharmaceutical compound Xancor for cardiovascular inflammatory disease.
"The growth of Cardax counters any perception that startup biotech ventures can’t be successful in Hawaii," Watumull said.
"Our goal now is to build a much larger company based in Hawaii with global reach," he said. "This certainly can be done in Hawaii. Being here is not a geographic restriction," Watumull said.
Cardax has 10 employees split between its offices at the Manoa Innovation Center and its lab in Aiea.
Cardax will undertake what is called a "reverse merger" with a mainland company that is already publicly traded. Shares of the company, Houston-based Koffee Korner Inc., are traded in the over-the-counter market. Koffee Korner is a specialty coffee retailer with one location in downtown Houston.
Under terms of the agreement, Koffee Korner will acquire Cardax in exchange for Koffee Korner shares that will be issued to Cardax and its investors. Once Cardax and its investors have a majority of the issued and outstanding shares, Koffee Korner will change its name to Cardax Inc., and the Koffee Corner assets will be divested. The new Cardax shares will continue to trade in the over-the-counter market, and the ticker symbol will be changed to reflect the Cardax name.
Koffee Corner shareholders will be compensated with new Cardax shares. The price of the Cardax shares will be determined by the market.
The deal is expected to close in two to three weeks, Watumull said.
The procedure being used by Cardax is known as an alternative public offering. It is a simpler way of taking a company public than with an initial public offering because the shell company, in this case Koffee Korner, already meets shareholder requirements of certain exchanges.
"It shortens the time frame considerably and lowers market risk," Watumull said.
Most of work done by Cardax is in developing nutraceutical and pharmaceutical products that provide the anti-inflammatory benefits of steroids but with fewer side effects, according to a news release from Cardax. The company’s products are used in the treatment of osteoarthritis, rheumatoid arthritis, dyslipidemia, metabolic disease, diabetes, cardiovascular disease, hepatitis, cognitive decline, macular degeneration and prostate disease, according to the news release.
