Viewpoint Molecular Targeting to merge with Isoray Inc.

Coralville-based Viewpoint Molecular Targeting, a radiopharmaceutical company developing alpha-particle therapies and diagnostic imaging agents, is expected to merge with Isoray Inc., a medical technology company specializing in seed brachytherapy and headquartered in Richland, Washington. According to the terms of the agreement, a newly formed wholly owned subsidiary of Isoray will merge with and into Viewpoint, with Viewpoint continuing as the surviving corporation and a subsidiary of Isoray. "I believe the combination of Isoray and Viewpoint Molecular Targeting presents a unique platform company in the precision radiation therapy market," said Viewpoint CEO Thijs Spoor. "The companies’ shared vision of treating cancer from the inside out and pioneering effective, personalized cancer fighting therapies that aim to minimize unwanted side effects presents a compelling proposition for patients, clinicians and investors.”

Motivating factors

The merger agreement filed to the Securities and Exchange Commission (SEC) Sept. 28 explains Viewpoint's desire to be acquired, saying that the Coralville company needs "capital to complete its medical trials, apply for FDA approvals and launch the market and sale of its proprietary alphaemitter lead-based isotope," in addition to infrastructure needed to scale the company. The company is entering phase one imaging studies — soon to be followed by therapy trials — for its melanoma and neuroendocrine tumor programs, according to a release. Viewpoint's alpha radiation technology uses specialized targeting peptides to target cancer cells. Its complementary imaging diagnostics allows for personalized treatment, with the intention of improving efficacy and minimizing toxicity seen in other cancer treatments. In a statement, current Isoray CEO Lori Woods cited Viewpoint's focus on targeted alpha therapy as a major motivator behind completing the merger, saying the technology has "significant potential" in treating cancer. Utilizing $50 million in cash, Isoray believes they can effectively distribute Viewpoint's products to physicians throughout the United States, and that the alphaemitter market has synergies to its own products, the merger agreement states. Isoray's core business revolves around seed brachytherapy. Brachytherapy seeds are small devices that deliver a personalized targeted therapeutic dose of radiation, one of the primary treatments for prostate cancer. Placing seeds as close as possible to the cancerous tumor lets Isoray deliver radiation and kill cancer cells while minimizing damage to healthy tissue, according to Isoray's 10-K filing. In the fourth quarter of 2022, Isoray's core prostate brachytherapy revenue declined 12% when compared to fourth quarter 2021. Fourth quarter gross profit decreased 31% versus last year's comparable period. Isoray contributed the drop to decreased sales, higher isotope material costs, and increased payroll and benefits expenses. Isoray, which trades on the New York Stock Exchange (NYSE), also acknowledged they may have difficulties integrating Viewpoint's business, and they have not yet determined the exact nature of the businesses and operations will combined following a merger.

Merger details

Mr. Spoor will become Isoray CEO and one of the board's new directors. The Isoray board of directors will increase to five members, with two directors chosen by Viewpoint and three by Isoray. Ms. Woods will join the board and act as chairperson. Isoray's Chief Financial Officer Jonathan Hunt will continue in the same role. Each issued and outstanding share of Viewpoint will be converted into Isoray common stock. Stockholders of Viewpoint will own 49% of the fully diluted outstanding capital stock of Isoray. Regarded as the "acquirer" in the deal, Isoray will increase the number of common stock shares to 400 million. There will be no cash consideration in connection to the merger. The deal is subject to meeting customary closing conditions including:

• The merger must officially occur no later than Jan. 31, 2023
• Both parties must obtain approval from shareholders, governmental and regulatory authorities, non-governmental third parties
• Exchange Shares must be approved for listing on the New York Stock Exchange (NYSE)
• No unforeseen event or change occurs which could reasonably have an adverse effect on the company before the merger takes place.

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