Digg It - Business

Small and mid-size companies looking to go public usually think IPO (Initial Public offering), but find it difficult to get an underwriter to look at them. They go out an engage a consultant that

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

advises them to do a reverse merger and they usually jump into it head first without exploring the options.

If you have read some of my previous articles you may find this repetitious, but I can’t em

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

phasis enough the importance of selecting a good consultant. A consultant that is working for you and you alone, and does not have an interest in selling you a corporate shell and getting your compan

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

trading, so that they can sell their stock and move on to the next victim.

What are the options?

(1) An initial public offering (ipo) is the absolute best but the most difficult and most expensi

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ve but with the financing that is raised it will enable the company to be listed on one of the more visible markets. Such as Nasdaq Small Cap, or American Stock Exchange.

And if your company is bi

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

g enough it may qualify for the Nasdaq National Market System, which would make your company attractive to analyst and institutional investors.

(2) A Reverse Merger is for the those small and mid-s

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

ze companies that are aggressive and will like to grow quickly and find that by being a public company they can achieve those goal sooner. I will give you some of the benefits of being a public comp

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

any later.

In a reverse merger the privately held company purchases a publicly traded

company with substantially no assets (a “shell”). The shell issues stock to the owners of the private company.

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

The shell issues sufficient stock, usually 90-95% enough to effectively control the public company.

The public company will normally change its name to the private company’s name and elect a new

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

oard of Directors which will appoint the officers. The public corporation will usually have a base of shareholders sufficient to meet the 300 shareholders requirement for eventual admission to quot

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ation on the NASDAQ Small Cap Market or the American Stock Exchange (if the private company’s financial condition substantiates either NASDAQ or AMEX requirements). Although some shells have as few a

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s 35-50 shareholders and currently listed (or can apply for listing on the OTC Bulletin Board or the NQB Pink Sheets.

(3) Regulation D (504) offering. Under the Securities Act of 1933, any offer

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

o sell securities must either be registered with the Securities and Exchange Commission or meet and exemption.

Regulation D provides three exemption from registration requirements, allowing some

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

smaller companies to offer and sell their securities without having to register the securities with the SEC.

While companies using a Regulation D exemption do not have to register their securities a

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

nd usually do not have to file reports with the SEC. They must file what is known as form D.

Under Regulation D (504) you are allowed to raise up to $1,000,000.00 In a twelve month period. Some of t

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

e characteristics of Regulation D are:

Securities can be sold to an unlimited number of persons.

General solicitation or advertising can be used to market this securities.

These securities are free

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ly traded and not “restricted” which investors can sell their securities in the open market without registration.

This securities are not exempt from the Securities Act of 1933 anti fraud provisi

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

on.

Benefit of going public: Your access to capital will increase, since you can contact more potential investors.

Your company may become more widely known.

You can obtain financing more easily

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

in the future if investor interest in your company grows.

Controlling shareholders such as the company’s officers or directors, may have a ready market for their shares at retirement.

Your company

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

may be able to attract and retain more highly qualified personnel if it can offer stock options, bonuses or other incentive with a known market value.

Company can use stock for acquisition purposes

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Digg It - Reverse Merger; One of Several Options

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