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APEX Innovative Sciences - Embracing Transactional Complexity to Enhance Patient Outcomes

FocalPoint advised on successful execution of a three-company M&A deal to create a new clinical industry trial leader, Apex Innovative Sciences, Inc.

“Our healthcare investment banking practice embraces transactional complexity when the strategic vision is ultimately intended to reduce the cost of care while enhancing patient outcomes.”

James Castro, Managing Director

Transaction

Two leading clinical research site operators, CNS Network, Inc. (“CNS”) and Hassman Research Institute LLC (“HRI”), have merged to form Apex Innovative Sciences Inc. (“Apex” or the “Company”), a bicoastal clinical trials leader with significant experience conducting phase I-IV studies across a wide range of therapeutic areas, specifically central nervous system indications including neurology, psychiatry, addiction, and general medicine. FocalPoint was hired by each company separately to explore strategic alternatives. Upon analyzing the potential synergies in a combination, CNS and HRI decided to explore a merger transaction and raise growth equity capital in support of the Company’s aggressive growth plans.

Deal Challenges

Throughout the process, both companies benefited from accelerating financial performance; however, there were two primary challenges that needed to be overcome prior to completing the transaction. CNS was in forbearance with its existing lender, who was accommodating throughout the process, but also applied pressure to the transaction by mandating repayment by a specified date. CNS’ Employee Stock Ownership Plan (ESOP) needed to be unwound and bought out as part of the transaction.

Solution

FocalPoint navigated the extremely complex nature of this transaction, including the negotiations with and buyout of the CNS ESOP, the refinancing of CNS’ existing debt, and the multifaceted shareholder dynamics. In addition to advising both CNS and HRI on the merger, FocalPoint advised on and assisted with negotiations for the Apex acquisition of Clinical Trial Centers Alliance, a leading coordinator of clinical trial site studies for pharmaceutical and biotechnology sponsors and contract research organizations. This transaction was completed simultaneously with the closing of the CNS and HRI combination. Ultimately, FocalPoint ran a narrow marketing process resulting in a significant infusion of growth equity capital from Bison Capital, a Los Angeles- and New York-based private equity firm with deep experience in the healthcare services sector. In collaboration with FocalPoint, the CNS and HRI shareholders determined that a sophisticated minority equity investor, such as Bison Capital, would provide the necessary operational expertise and growth capital to support the Company’s strategic initiatives, while maintaining significant equity ownership for the CNS and HRI shareholders going forward.