Monster Digital Inc. has signed a letter of intent to do a reverse merger with a North Carolina biotech company, a move that will likely see its core business of action sports cameras spun off or sold.
The Simi Valley camera developer and distributor would make Innovate Biopharmaceuticals Inc., in Raleigh, into a subsidiary and as the surviving company would change its name to Innovate. A new ticker symbol would be picked for the company to continue trading on the Nasdaq Capital Market.
Monster Chief Executive David Clarke said the company’s board and management believe the merger with Innovate is its best option.
“Upon a definitive merger agreement being signed and prior to the closing, we anticipate that the Monster Digital operating business will be sold or spun off into a separate company,” Clarke said in a prepared statement.
Innovate Biopharmaceuticals is focused on developing autoimmune/inflammation medicines. It is in clinical trials for a medication to treat celiac disease. Holders of securities in Innovate would be the majority owner in the merged companies.
Shares of Monster closed up 3 cents, or more than 6 percent, to 52 cents on the Nasdaq.