Shares in Poolbeg Pharma (POLB:AIM) nearly halved after the company announced it was in merger talks with US biotech firm Hookipa Pharma (HOOK:NASDAQ).

If the all-share proposition goes ahead the newly combined group, with a special focus on next-generation immunotherapies for the treatment of cancer and other serious diseases, would be listed on the Nasdaq Composite index.

Poolbeg would become a private subsidiary of Hookipa and cancel its listing on AIM .

As part of the deal Poolbeg shareholders will receive 0.03 Hookipa shares for each Poolbeg share held resulting in Poolbeg’s shareholders owning around 55% of the equity of the merged company with Hookipa’s shareholders holding approximately 45% of the equity in the combined group.

Hookipa plans a $30 million fundraise on completion of the deal. This would dilute Poolbeg’s stake in the combined firm to a little more than 40%, with Hookipa holding around 33% and new investors about 27%.

The talks are ‘non-binding’ and ‘non-exclusive’, both firms said in a statement and are dependent on the satisfactory completion of customary due diligence. 

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