Jaguar Animal Health Inc. (NASDAQ:JAGX) Formal Merger Agreement Pops Shares

Jaguar Animal Health Inc. (NASDAQ:JAGX)

Jaguar Animal Health Inc. (NASDAQ:JAGX) has formally entered into a merger agreement with Napo Pharmaceuticals, Inc. The deal was first announced on March 8,2017 when JGX shares closed trading at $0.68. The following day JAGX shares gapped up to open at $10.3 and hit a high of $1.23 before closing back at $1.03. Today JAGX shares gapped up again to open at $1.25 and have hit an inter-day high of $1.30 but are now trading around $1.10. Volumes are heavy – about 15 times their daily average.

Terms of the merger include a 3-to-1 Napo-to-Jaguar value ratio to calculate the relative ownership of the combined entity. As of January 31, 2017, Napo owned approximately 19% of Jaguar’s outstanding shares of common stock. Shareholders, option, and warrant holders of Jaguar Animal Health Inc. (NASDAQ:JAGX) , calculated on a fully diluted basis as of today (excluding approximately 365,437 shares issuable under securities convertible at $5.00 or more per share), will hold approximately 25% of the total outstanding fully diluted equity of Jaguar Animal Health Inc. (NASDAQ:JAGX). Conversely, the balance of the outstanding fully diluted equity of Jaguar will be held by existing Napo creditors, RSU, option and warrant holders together with new convertible debt and equity investors upon consummation of the merger. Holders of Napo common stock immediately prior to the merger (the “Napo Stockholders”) will receive contingent rights to receive, upon the satisfaction of certain conditions as described more fully below, up to 21.5% of Jaguar’s shares calculated on a fully-diluted basis.

Napo develops and commercializes gastrointestinal prescription products from plants used traditionally in rainforest areas. Jaguar Animal Health Inc. (NASDAQ:JAGX) develops and commercializes gastrointestinal products for companion animals, horses and production animals. Napo’s proprietary, patented gastrointestinal compound, crofelemer, is an anti-secretory agent sustainably harvested from the rainforest. The merger of the two companies will provide Jaguar with an important prescription revenue stream from sales of Mytesi™ (crofelemer 125mg delayed-release tablets), a Napo prescription product formerly known as Fulyzaq. Mytesi™ is a human drug approved by the U.S. FDA for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy.

3/31/2017
Ticker Symbol JAGX
Last Price a/o 10:44 AM EST  $                      1.52
Average Volume                1,120,000
Market Cap (mlns)  $                    14.06
Sales (mlns) $0.10
Shares Outstanding (mlns) 14.8
Share Float (mlns) 9.28
Shortable Yes
Optionable No
Inside Ownership 0.00%
Short Float 15.24%
Short Interest Ratio 1.27
Quarterly Return 49.61%
YTD Return 32.68%
Year Return -39.87%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

Author: James Marion

James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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