On June 5, 2023 CERo Therapeutics, Inc. ("CERo"), an innovative immunotherapy company seeking to advance the next generation of engineered T cell therapeutics that employ phagocytic mechanisms, and Phoenix Biotech Acquisition Corp. (NASDAQ:PBAX) ("PBAX"), a special purpose acquisition company formed for the purpose of acquiring or merging with one or more businesses, reported they have entered into a definitive business combination agreement (Press release, Cero Therapeutics, JUN 5, 2023, View Source [SID1234632499]). Upon closing of the transaction, anticipated to occur in the second half of 2023, the combined company will be named CERo Therapeutics Holdings, Inc. and will be led by CERo and PBAX’s founding members, including Daniel Corey, M.D., CERo’s CEO, Chris Ehrlich, PBAX’s CEO, and Brian G. Atwood, the Chairman of PBAX. The combined company’s common stock is expected to be listed on the Nasdaq Capital Market under the ticker symbol "CERO." Mr. Atwood will serve as Chief Executive Officer of the combined company, Mr. Ehrlich will serve as its Chief Financial Officer and Chief Operating Officer and Dr. Corey will serve as its Chief Technology Officer.

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"We are thrilled to join forces with PBAX ," said Daniel Corey, CEO of CERo. "With CERo technology we see an opportunity to engage the body’s full immune repertoire for optimized cellular immunotherapy. Chris and Brian bring a wealth of experience to the CERo team during this important time as we look to test the first CER T cell therapeutic candidate in the clinic."

"After an exhaustive search for the right target for PBAX, we are thrilled to merge with CERo. The talented founding team has done a tremendous job of creating value in a timely and capital efficient manner and we look forward to working together with them to advance their promising technology to the next level," stated Chris Ehrlich, CEO and director of PBAX.

"CERo technology is an exciting step forward in cancer cell therapy and I’ve been following the significant progress the company has made since its first round of institutional funding in 2019," said Brian G. Atwood, Chairman of PBAX. "I’m excited to join Daniel Corey and his team to lead the company’s first therapy, CER-1236, into clinical trials beginning in lymphoma and leukemia, and shortly afterward solid tumors."

CERo Therapeutics is pioneering a new and powerful class of cell-based therapies that combine the innate and adaptive arms of the immune system into single T cells, effectively creating cells that both phagocytose ("eat") and lyse ("explode") targeted cancer cells. This technology drives a more comprehensive and durable anti-tumor response, and demonstrated this in the company’s experiments. Since its Series A financing in 2019, the company has repeatedly demonstrated the ability to destroy cancer cells and tumors across several experimental models of liquid and solid tumors, in both in vivo and in vitro experiments. The company plans to file its first IND in 2024.

The resources of the combined company are expected to provide CERo with the capital to advance CER-1236, its lead product candidate, into clinical trials for hematologic malignancies and expand the clinical development of CER-1236 into other difficult to treat cancers, including solid tumors.

Key Transaction Terms

Upon the closing of the business combination, and assuming no redemptions of shares of PBAX by its public stockholders, CERo would expect to receive up to $13.7 million of cash held in trust. The business combination reflects a pre-money equity value of $50 million for CERo and a pro forma capitalization of the combined company of $145 million. The business combination is subject to a minimum cash condition of $30 million, net of transaction expenses, which is expected to be funded through proceeds of the trust account and additional financing, including investments from existing stockholders of CERo. The parties intend to seek to secure such additional financing through a private placement.

The boards of directors of both CERo and PBAX have unanimously approved the proposed transaction with expected completion in the second half of 2023. The closing of the transaction is subject to approval of PBAX shareholders and the satisfaction, or waiver of, the minimum cash condition and certain other customary closing conditions.

Additional information about the transaction will be provided in a Current Report on Form 8-K to be filed by PBAX with the Securities and Exchange Commission ("SEC") and will be available on the SEC’s website at www.sec.gov. In addition, PBAX intends to file a registration statement on Form S-4 with the SEC, which will include a proxy statement/prospectus, and will file other documents regarding the proposed transaction with the SEC.

Advisors

Cooley LLP and Ellenoff Grossman & Schole LLP are acting as legal counsel to CERo. Cohen and Company Capital Markets, a Division of J.V.B. Financial Group, LLC is acting as the financial advisor and lead placement agent to PBAX. Goodwin Procter LLP is serving as legal counsel to PBAX.