425: Mountain Crest V and CUBEBIO Announce Business Combination Agreement for Nasdaq Listing

CUBEBIO, a Korean in-vitro diagnostic company, plans to go public on Nasdaq through a business combination with Mountain Crest Acquisition Corp. V, valuing CUBEBIO at $375 million.

Summary

• Mountain Crest Acquisition Corp. V (MCAG), a special purpose acquisition company, and CUBEBIO Co., Ltd., an in-vitro diagnostic company, have entered into a definitive business combination agreement.
• The agreement will result in CUBEBIO becoming a publicly listed company on The Nasdaq Stock Market.
• The transaction involves a merger of CHL SPAC Merger Sub, Inc. with and into MCAG, with MCAG surviving as a wholly-owned subsidiary of CubeBio Holdings Limited (PubCo).
• CUBEBIO shareholders will transfer their shares to CHL Korea Exchange Sub, Ltd. in exchange for PubCo Ordinary Shares.
• The pre-transaction equity value for CUBEBIO is $375 million, based on the issuance of 37.5 million PubCo Ordinary Shares valued at $10 per share.
• CUBEBIO shareholders may receive an additional $245 million through an earnout, contingent on achieving revenues of $42.7 million (USD) for the fiscal year ending December 31, 2026.
• The business combination is expected to close in the first quarter of 2025.
• CUBEBIO has a $14.5 million contract with Taiwan Biotech Co., Ltd. to exclusively supply its products to Taiwan, Vietnam, and Malaysia, but does not expect to generate revenues under the Taiwan Biotech Contract until CUBEBIOs products are approved for sale in Taiwan, Vietnam, and Malaysia which may take up to 24 months or more.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive, reflecting the potential for growth and innovation in CUBEBIO's technology, balanced by the risks and uncertainties associated with SPAC mergers and achieving future revenue targets.

Positives

• CUBEBIO will gain access to public markets and capital to further develop and commercialize its cancer diagnostic technology.
• Mountain Crest Acquisition Corp. V has a track record of successfully completing SPAC business combinations.
• The combined company will be listed on The Nasdaq Stock Market, potentially increasing its visibility and access to investors.
• CUBEBIO has a $14.5 million contract with Taiwan Biotech Co., Ltd. to exclusively supply its products to Taiwan, Vietnam, and Malaysia.

Negatives

• The business combination is subject to customary closing conditions, including shareholder and regulatory approvals, which may not be obtained.
• CUBEBIO does not expect to generate revenues under the Taiwan Biotech Contract until CUBEBIOs products are approved for sale in Taiwan, Vietnam, and Malaysia which may take up to 24 months or more.
• The earnout payment is contingent on CUBEBIO achieving specific revenue targets, which may not be met.

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, including due to failure to obtain approval of the stockholders of Mountain Crest V and CUBEBIO, certain regulatory approvals, or satisfy other conditions to closing in the definitive merger agreement.
• The impact of COVID-19 pandemic on CUBEBIOs business and/or the ability of the parties to complete the proposed business combination.
• The inability to obtain the listing of post business combination entitys securities on Nasdaq following the proposed business combination.
• 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 CUBEBIOs business and the timing of expected business milestones.
• Other risks and uncertainties indicated from time to time in the final prospectus of Mountain Crest V for its initial public offering and the proxy statement relating to the proposed business combination, including those under Risk Factors therein, and in Mountain Crest Vs other filings with the SEC.

Future Outlook

CUBEBIO plans to become a global company by increasing corporate value after the business combination is completed.

Management Comments

• Dr. Suying Liu, Chairman, the CEO and CFO of Mountain Crest V commented, CUBEBIOs diagnostic innovation, non-invasive productization and active commercialization present significant growth potential. We are excited to be working with CUBEBIO on this proposed business combination.
• Eun-jong Choi, the CEO of CUBEBIO emphasized, We expect to consummate the business combination during the 1Q 2025 and will 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 healthcare companies seeking public listings through SPAC mergers, providing access to capital and increased visibility in the market.

Comparison to Industry Standards

• It is difficult to compare CUBEBIO to industry standards without more information about its specific technology and market position.
• However, the $375 million valuation is within the range of other diagnostic companies that have gone public through SPAC mergers.
• Comparisons could be made to companies like Exact Sciences (EXAS) or Guardant Health (GH), but these companies have more established revenue streams and market presence.

Stakeholder Impact

• Shareholders of Mountain Crest V will receive PubCo Ordinary Shares as consideration for the SPAC Merger.
• CUBEBIO shareholders will have the opportunity to participate in the growth of the company as public shareholders.
• The business combination could create new opportunities for employees of both companies.
• Customers of CUBEBIO may benefit from increased investment in research and development and expanded product offerings.

Next Steps

• File relevant materials with the SEC, including a registration statement on Form F-4 and a proxy statement on Schedule 14A.
• Mail the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting.
• Obtain approval of the stockholders of Mountain Crest V and CUBEBIO.
• Obtain certain regulatory approvals.
• Satisfy other conditions to closing in the definitive merger agreement.
• Close the Business Combination in the first quarter of 2025.

Key Dates