Vivos Therapeutics has entered into a definitive agreement for an 11% fully diluted equity interest in SOD Sciences along with a 50% undivided co-ownership stake in its pseudohypoxia early-warning diagnostic test.
Under the terms of the Mutual Stock Purchase and Asset Exchange Agreement, the transaction involves no cash consideration.
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It will be funded through the issuance of 12,000 newly created Series C Convertible Preferred Stock shares, which carry an aggregate stated value of $12m.
The transaction is subject to closing conditions, including Nasdaq notification, auditor concurrence, and consent from the holder of the company’s Series B Non-Convertible Preferred Stock.
Vivos expects to classify the preferred shares within permanent stockholders’ equity to assist in regaining compliance with Nasdaq listing standards.
Subject to that outcome, management plans to seek capital to fund operations aimed at reaching profitability and positive cash flow in early 2027.
The preferred stock converts at a fixed $0.15 per share into up to 80 million common shares, though a 19.99% cap applies until shareholders approve the measure.
Under the co-ownership agreement, Vivos will receive 50% of the contribution margin from sales of the diagnostic test across all channels.
The test combines SOD’s ReBalU genotype and biomarker panel with nocturnal oxygen desaturation and recovery measurements to detect cellular indicators linked to chronic diseases, including cancer.
However, the company noted that clinical utility has not been established and existing regulatory clearances for Vivos’ obstructive sleep apnoea devices do not cover the test.
Vivos chairman and CEO R Kirk Huntsman said: “We have been working on this transaction for months and believe the total value accretion to Vivos has the potential to far exceed the immediate dilution from the issuance of the preferred shares.
“Upon closing, we expect to pursue collaboration efforts contemplated by SOD’s existing relationship with Cleveland Clinic Weston and with American Health Associates, subject to negotiation and execution of definitive agreements and satisfaction of applicable regulatory and clinical requirements.
“It is contemplated that Vivos will retain 80% of the contribution margin on sales of Vivos products through those channels, and that the parties will share contribution margin 50/50 on sales of the jointly owned test.”
Through SOD’s commercial channels, the agreement could facilitate clinical research with Cleveland Clinic in Weston, Florida, comparing CARE oral appliances with continuous positive airway pressure (CPAP).
It could also open marketing opportunities through American Health Associates across around 3,000 facilities in 25 states.
