SciSparc Signs Definitive Agreement to Sell MitoCareX, Computational Drug Discovery Company Targeting Resistant Cancers

Rhea-AI Summary

SciSparc (Nasdaq: SPRC) has signed a definitive agreement to sell its entire 52.73% ownership stake in MitoCareX Bio , a cancer therapeutics drug discovery company, to N2OFF Inc. (Nasdaq: NITO). The transaction includes:

- $700,000 cash payment for 4,961 MitoCareX shares
- Exchange of remaining shares for 40% of N2OFF's fully diluted capital stock
- Potential additional N2OFF stock up to 25% based on milestones
- 30% share of N2OFF's financing proceeds over 5 years (max $1.6M)
- N2OFF's commitment to invest $1M in MitoCareX post-closing

The deal requires N2OFF shareholder approval and must close within 30 days. Dr. Alon Silberman will continue as CEO with a 5% restricted stock grant vesting over 3 years. Upon completion, MitoCareX will become a wholly-owned subsidiary of N2OFF.

Positive

• Immediate cash injection of $700,000
• 40% ownership stake in N2OFF with potential additional 25% based on milestones
• Guaranteed 30% share of future financing proceeds up to $1.6M
• Secured $1M investment commitment for MitoCareX development

Negative

• Sale subject to N2OFF shareholder approval
• Deal must close within 30 days or face termination
• Potential conflict of interest with shared board members between companies

Insights

Financial Analyst

SciSparc's sale of MitoCareX represents a strategic financial restructuring with multiple value streams for shareholders. The $700,000 immediate cash component provides liquidity while the equity conversion grants SciSparc and other sellers a substantial 40% stake in N2OFF's fully diluted capital - creating significant potential upside without operational responsibility.

The deal's structure includes several value-enhancing mechanisms beyond the initial consideration: milestone-based equity of up to additional 25% of N2OFF, profit-sharing rights to 30% of N2OFF's financing proceeds (capped at $1.6M), and N2OFF's commitment to invest $1M in MitoCareX post-closing.

For a microcap company with $4M market capitalization, this transaction effectively monetizes a significant asset while maintaining considerable economic interest through the substantial N2OFF equity position. The deal transforms SciSparc's direct majority ownership in a private subsidiary into a minority stake in a public entity, potentially creating more transparent value and improved liquidity pathways.

The overlapping leadership between companies (shared chairman and board member) likely facilitated favorable terms but warrants governance scrutiny. The 30-day closing timeline with N2OFF shareholder approval requirement introduces near-term execution risk that investors should monitor.

Biotech Specialist

This transaction reshapes SciSparc's therapeutic portfolio, allowing the company to focus capital and resources on its core CNS drug development platform while maintaining significant economic exposure to MitoCareX's cancer drug discovery assets targeting the mitochondrial SLC25 protein family.

MitoCareX's computational approach to drug discovery for resistant cancers represents a distinct therapeutic methodology from SciSparc's CNS pipeline. The acquisition by N2OFF creates a more dedicated development path with $1M committed post-closing investment, potentially accelerating development progress compared to remaining as a non-core subsidiary.

The continued leadership of Dr. Alon Silberman as CEO with a 5% equity stake (vesting over three years) ensures continuity in scientific direction. The structuring of additional equity compensation around milestones creates aligned incentives for successful therapeutic development.

From a pipeline perspective, this transaction doesn't diminish SciSparc's therapeutic potential but rather reconfigures ownership structure while preserving economic interest. The agreement's milestone provisions suggest confidence in MitoCareX's scientific approach while the streamlined corporate structure may enable more efficient capital deployment toward advancing both companies' respective therapeutic platforms.

SciSparc will sell its MitoCareX’s shares for $700,000 and exchange its remaining shares for common stock in N2OFF

TEL AVIV, Israel, March 03, 2025 (GLOBE NEWSWIRE) -- SciSparc Ltd. (Nasdaq: SPRC) (the “Company” or “SciSparc”), a specialty clinical-stage pharmaceutical company focusing on the development of therapies to treat disorders of the central nervous system, announced it has signed a definitive agreement to sell its entire ownership interest in MitoCareX Bio Ltd. (“MitoCareX”), the Company’s venture with Dr. Alon Silberman that focuses on drug discovery and development of cancer therapeutics by targeting the mitochondrial SLC25 protein family, to N2Off, Inc., a publicly-traded company in the United States (Nasdaq: NITO) (“N2OFF”). SciSparc currently owns 52.73% of the issued and outstanding share capital of MitoCareX.

SciSparc Ltd. has entered into a Securities Purchase and Exchange Agreement with N2OFF, under which SciSparc and other sellers, including Dr. Alon Silberman and Prof. Ciro Leonardo Pierri, will transfer full ownership of MitoCareX Bio Ltd. to N2OFF. As part of the agreement, SciSparc will sell 4,961 shares of MitoCareX to N2OFF for $700,000 and exchange its remaining shares for common stock in N2OFF. In total, SciSparc and the other sellers will receive N2OFF common stock equivalent to 40% of the company’s fully diluted capital stock. The transaction is subject to certain conditions, including approval of N2OFF’s shareholders. Upon closing, MitoCareX will become a wholly owned subsidiary of N2OFF, with its board restructured under N2OFF’s control.

In addition, SciSparc and the other sellers will be entitled to receive additional N2OFF stock based on milestone achievements, representing up to 25% of N2OFF’s fully diluted capital stock. As part of the financial terms, SciSparc, along with the other sellers, will collectively receive 30% of N2OFF’s financing proceeds over five years, up to a maximum of $1.6 million. N2OFF has also committed to investing $1 million in MitoCareX post-closing. Dr. Silberman will continue as CEO under a revised employment agreement, which includes a restricted stock grant of 5% of N2OFF’s capital stock, vesting over three years. The agreement contains customary representations, warranties, and provisions for termination if the closing does not occur within 30 days.

Mr. Amitay Weiss, who serves as the chairman of the board of directors of SciSparc, also serves as the chairman of the board of directors of N2OFF. In addition, Ms. Liat Sidi, who also serves as a member of the board of directors of SciSparc, also serves as a member of the board of directors of N2OFF.

About SciSparc Ltd. (Nasdaq: SPRC):

SciSparc Ltd. is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists. SciSparc’s focus is on creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, the Company is currently engaged in the following drug development programs based on THC and/or non-psychoactive CBD: SCI-110 for the treatment of Tourette Syndrome, for the treatment of Alzheimer’s disease and agitation; SCI-160 for the treatment of pain; and SCI-210 for the treatment of ASD and status epilepticus. The Company also owns a controlling interest in a subsidiary whose business focuses on the sale of hemp seed oil-based products on Amazon Marketplace.

Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. For example, SciSparc is using forward-looking statements when it discusses: the transactions contemplated by the Securities Purchase and Exchange Agreement with N2OFF, including milestone-based achievements; the commitment by N2OFF to invest $1 million in MitoCareX post-closing; and that closing of the transaction is subject to certain conditions, including approval of N2OFF’s shareholders. . Because such statements deal with future events and are based on SciSparc’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of SciSparc could differ materially from those described in or implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties, including those discussed under the heading “Risk Factors” in SciSparc’s Annual Report on Form 20-F filed with the SEC on April 1, 2024, and in subsequent filings with the U.S. Securities and Exchange Commission. Except as otherwise required by law, SciSparc disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date they were made, whether as a result of new information, future events or circumstances or otherwise.

Investor Contact:
IR@scisparc.com
Tel: +972-3-6167055

FAQ

What is the total value of SciSparc's (SPRC) MitoCareX sale to N2OFF?

The deal includes $700,000 cash, 40% of N2OFF's stock, potential additional 25% stock based on milestones, and 30% of financing proceeds up to $1.6M over 5 years.

How much ownership stake is SciSparc (SPRC) selling in MitoCareX?

SciSparc is selling its entire 52.73% ownership stake in MitoCareX Bio

What investment commitment has N2OFF made for MitoCareX post-acquisition?

N2OFF has committed to investing $1 million in MitoCareX after the closing of the transaction.

What happens to MitoCareX's management after the SPRC sale to N2OFF?

Dr. Silberman will continue as CEO with a new employment agreement including a 5% restricted stock grant vesting over 3 years.