425: Mountain Crest Acquisition Corp. V Announces Proposed Business Combination with CUBEBIO Co., Ltd.

Mountain Crest Acquisition Corp. V and CUBEBIO Co., Ltd. have entered into a non-binding term sheet for a proposed business combination that would result in CUBEBIO becoming a publicly listed company on The Nasdaq Stock Market.

Summary

• Mountain Crest Acquisition Corp. V (MCAG), a special purpose acquisition company (SPAC), has announced a non-binding term sheet with CUBEBIO Co., Ltd., a Korea-based company specializing in early cancer diagnosis using urine analysis.
• The proposed business combination aims to make CUBEBIO a public company listed on The Nasdaq Stock Market.
• The pre-transaction equity value of CUBEBIO is estimated at $620 million, subject to adjustments based on due diligence and market conditions.
• CUBEBIO has secured a contract with Taiwan Biotech Co., Ltd. for approximately $14.5 million to supply cancer screening products to Taiwan, Vietnam, and Malaysia.
• The companies intend to file relevant materials with the SEC, including a proxy statement/registration statement on Form F-4.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the potential for growth and innovation in cancer diagnostics, but tempered by the risks and uncertainties associated with SPAC mergers and the non-binding nature of the term sheet.

Positives

• CUBEBIO's innovative technology for early cancer diagnosis using urine analysis presents a significant growth opportunity.
• The proposed business combination provides CUBEBIO with access to public markets and capital to expand its business globally.
• CUBEBIO has an existing contract with Taiwan Biotech Co., Ltd. for $14.5 million, demonstrating commercial traction.
• Mountain Crest Acquisition Corp. V has a management team with a track record of successfully completing four prior SPAC business combinations.
• CUBEBIO holds 37 patents related to cancer diagnosis, providing a competitive advantage.

Negatives

• The term sheet is non-binding, and the proposed business combination is subject to various conditions, including due diligence, regulatory approvals, and stockholder approval.
• The pre-transaction equity value of CUBEBIO is subject to adjustment based on due diligence and market conditions, which could impact the final valuation.
• The companies caution that forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations.

Risks

• The occurrence of any event, change, or other circumstances that could prevent the execution of the definitive merger agreement.
• The outcome of any legal proceedings that may be instituted against Mountain Crest V and CUBEBIO.
• The inability to complete the proposed business combination due to failure to obtain necessary approvals or satisfy other conditions.
• The impact of the COVID-19 pandemic on CUBEBIO's business and/or the ability of the parties to complete the proposed business combination.
• The inability to obtain the listing of the post-business combination entity's securities on Nasdaq.
• Changes in applicable laws or regulations.
• The possibility that Mountain Crest V or CUBEBIO may be adversely affected by other economic, business, and/or competitive factors.
• Risks related to the organic and inorganic growth of CUBEBIO's business and the timing of expected business milestones.

Future Outlook

The companies expect to execute a definitive merger agreement and complete the business combination, with the goal of growing CUBEBIO into a global company and increasing its corporate value.

Management Comments

• Dr. Suying Liu, Chairman, CEO and CFO of Mountain Crest V, commented, 'CUBEBIOs innovative diagnostic technology for cancer detection and active commercialization with contract in place point to significant growth potential. We are excited to be partnering with CUBEBIO on this proposed business combination.'
• Eun-jong Choi, CEO of CUBEBIO, emphasized, 'We expect to execute a definitive merger agreement with Mountain Crest V, faithfully carry out the process for completing the business combination, and grow CUBEBIO into a global company by increasing corporate value.'

Industry Context

The announcement reflects the ongoing trend of SPACs seeking to merge with innovative companies in the healthcare and biotechnology sectors, particularly those with promising diagnostic technologies.

Comparison to Industry Standards

• The $620 million pre-transaction equity value is within the typical range for SPAC mergers in the biotech sector, but the final valuation will depend on due diligence and market conditions.
• CUBEBIO's focus on early cancer diagnosis using urine analysis aligns with the industry's growing emphasis on non-invasive and accessible screening methods.
• Comparable companies in the cancer diagnostics space include Exact Sciences (EXAS) and Guardant Health (GH), which have achieved significant market capitalization through innovative testing solutions.

Stakeholder Impact

• Shareholders of Mountain Crest V will have the opportunity to participate in the potential upside of CUBEBIO's growth.
• Employees of CUBEBIO may benefit from the company's increased access to capital and global expansion.
• Customers (patients) may benefit from increased accessibility to early cancer screening.
• Suppliers and creditors of CUBEBIO may benefit from the company's improved financial stability and growth prospects.

Next Steps

• The companies intend to execute a definitive merger agreement.
• Mountain Crest V and CUBEBIO will file relevant materials with the SEC, including a proxy statement/registration statement on Form F-4.
• Mountain Crest V will mail the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting on the business combination.
• The companies will seek stockholder approval for the proposed business combination.
• The companies will work to satisfy the closing conditions to the proposed business combination, including obtaining regulatory approvals.

Key Dates