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Timber Pharmaceuticals (NYSE:TMBR) fell ~16% in the early hours on Thursday ahead of a special meeting scheduled later this week to obtain shareholder approval for its proposed merger with Danish dermatology company LEO Pharma.
Shares of the nano-cap pharma company surged in August in reaction to the deal under which LEO US Holding, a unit of LEO Pharma, is set to acquire TMBR for $14M in upfront cash and an additional $22M in contingent value rights ((CVRs)).
However, since then, the stock has lost ~34%, as the company’s previous attempt to obtain shareholder approval in October failed amid insufficient votes at a special meeting.
The latest meeting, scheduled for November 17 at 12:00 p.m., “could very well be the last opportunity for shareholders to accept LEO Pharma’s offer before the merger is finally terminated,” Seeking Alpha analyst Bart van Velzen argues.
The analyst who owns Timber (TMBR) shares points to millions of dollars LEO has agreed to provide as bridge financing for the company.
If “shareholders do not approve the merger, Timber immediately owes LEO Pharma an amount of money from the loan it will not be able to pay back and will likely have to declare bankruptcy,” Velzen warned.