If you happen to own a position in public-offering consultant and soon-to-be-biotech company EastBridge Investment Group Corp. (PINK:EBIG), then you're about to own fewer shares. Don't sweat it, though, because each of those shares of EBIG are about to become worth a whole lot more. It's all ultimately part of the plan to get a Chinese biotech outfit called Cellular Biomedicine Group Inc. trading on one of the senior exchanges in the United States. Ergo, in some ways it's an IPO, and in some ways it's a reverse merger. No matter how you slice it up, though, EastBridge Investment Group is becoming a very compelling way to quietly (and affordably) slide into China's budding biotech industry.
Confused? Don't be - let's just start at the beginning.
EastBridge Investment Group helps companies (mostly Asian) get through the process of going public in the United States. Some of its recent clients include Alpha Lujo, Dwarf Technology, and Wonder International Education and Investment. Sometimes, though, the need and opportunity call for something slightly different.... and slightly bigger. That's what materialized between EBIG and China's Cellular Biomedicine Group a few months ago, and the fruits of that labor are on the verge of blooming.
Although both companies have said the deal isn't a reverse merger, in effect, that's what it is. It's not your typical reverse merger, however. While many past reverse mergers ended up being catastrophic, Cellular Biomedicine is a real company with real products marching into a real opportunity. Likewise, EBIG is a real corporation too, performing a real service, and driving real revenue. EasyBridge could have led Cellular Biomedicine Group (or CBMG) to an IPO, but as was noted above, that may not have done the biotech company justice, and it may not have allowed EBIG to fully realize the underlying potential here.
CBMG is developing dendritic cell-based cancer therapies for the Chinese market. But, there's a twist with the way China handles and approves biotech that makes it different than the approval process most American investors are used to. See, China's pharmaceutical regulators don't view cell-specific dendritic therapies as a drug because each of these treatments is custom-built for a particular patient. This approach is considered a technology, and therefore doesn't need to go through three trial phases and years of trials before it can be approved (and generate revenue). It's a one step process that only takes a year or two - depending on various issues - to complete.
More important to anyone reading this, Cellular Biomedicine Group has a couple of such developments in the hopper right now.... a hepatocellular carcinoma (liver cancer) therapy, and metastatic melanoma treatment. Also falling into this category of drug development are ovarian, lung, and gastric cancer therapies.
Point being, unlike so many U.S.-based biotech companies, one won't have to wait years and years and years for CBMG to start producing something. The management team at EastBridge Investment Group Corp. seems to feel the same way, and rather than just merely helping it go public and raise some funds here, it's getting in on the action.
Fast forward to today: Both companies have made it clear they're gunning for a listing on an exchange. To do so they have to qualify in a couple of different ways. One of those qualifiers is a matter of stock price and market cap. With the upcoming 1-for-100 split, the price of EBIG is going to move from $0.45 to $4.50. That takes care of that. As for company size, CBMG's investment banking consultants have already valued the company at more than $100 million, so achieving the minimum qualification for an exchange listing is within reach.
For investors, however, the most exciting aspect of this story is how the relatively uncommon approach to a U.S. listing against the backdrop of a very potent biotech pipeline is all unfurling under the radar. Most traders don't know it's happening at all, and the ones who do don't seem to realize just how attractive this combined company will be once all the paperwork is done. It's an unusual approach to be sure, but that's actually working in favor of investors who are getting in now before CBMG raises money through a U.S. IPO... probably shortly after it gets that exchange listing.
In the meantime, the reverse split will be effective as of tomorrow.