Privately held MyMedicalRecords.com, Los Angeles, the developer of an online personal health-record platform, has signed an agreement to merge with publicly traded but financially troubled drug developer Favrille, San Diego, the companies have announced.
Under terms of the deal, MyMedicalRecords will become a wholly owned subsidiary of Favrille located in Los Angeles, but MyMedicalRecords shareholders will own 64% of the equity in the combined company while Favrille shareholders would own 29%, a news release stated. The remaining 7% of equity will be allocated to certain Favrille creditors in the form of warrants to purchase common stock, according to the companies release.
MyMedicalRecords President and Chief Executive Officer Robert Lorsch will become the chairman and CEO of the merged company. Lorsch said in the release that the transaction with Favrille will give MyMedicalRecords broader access to the investment community, which is essential to our sales and marketing strategy and continued expansion of our customer base.
Favrille also extended a $500,000 bridge loan to MyMedicalRecords, in addition to $100,000 previously extended, to fund operations until the merger is completed, which is expected to close by year-end, the release stated. The deal has been approved by the boards of directors of both companies, but is subject to approval by MyMedicalRecords stockholders and conditions requiring Favrille to settle creditor claims.
Favrille has spent more than $154 million on the development of Specifid, a drug for patients with a type of non-Hodgkins lymphoma to which the company devoted substantially all of our research, development and clinical efforts and financial resources, according to its latest Securities and Exchange Commission filing.
According to the SEC filing, after unfavorable results in a phase-three trial, Favrille ceased manufacturing of Specifid and terminated 141 of its 144 employees, noting that if it were unable to complete the merger or any other strategic transaction, it will likely not be able to continue as a going concern.