Investing.com -- Protagenic Therapeutics (NASDAQ: PTIX ) shares surged 190% following the announcement of a definitive share exchange agreement with Phytanix Bio Inc. The merger aims to form a new entity, Phytanix, Inc., which will focus on developing treatments for obesity, metabolic disorders, and stress-related and CNS disorders.

The combined pipelines of the two companies will include six drug candidates, among them PT-00114, a peptide asset in Phase I/IIa that may qualify for regulatory data exclusivity. The merger will also bring together multiple cannabinoid-based compounds with composition-of-matter intellectual property (IP) and modified stilbenoid compounds with anticonvulsant activity in preclinical models.

Protagenic Therapeutics shareholders stand to benefit from an expanded and diversified pipeline, with significant milestones expected over the next 18 months. The merger will also integrate team members from Phytanix Bio who have expertise from working on notable CNS drugs such as Sativex® and Epidiolex® at GW Pharma (NASDAQ: GWPH ).

Garo H. Armen, PhD, Executive Chairman of Protagenic Therapeutics, expressed optimism about the merger, stating, "This combination aligns two pipelines with complementary assets and expertise to address unmet needs in neuropsychiatry, CNS and other disorders." Barrett Evans, President and CEO, also highlighted the anticipated synergies, "We look forward to uniting our teams and advancing these programs for patients and shareholders."

Under the terms of the exchange agreement, Protagenic Therapeutics will issue shares of its common stock, Series C Convertible Preferred Stock, Series C-1 Convertible Preferred Stock, and Series D Preferred Stock, as well as common stock purchase warrants to Phytanix Bio stockholders. The transaction, which took place on May 16, 2025, will result in approximately 35% ownership for pre-Combination stockholders of Protagenic Therapeutics and approximately 65% for Phytanix Bio stockholders.

The issuance of shares of common stock upon conversion of the Preferred Stock and exercise of the Warrants issued in the Combination will be subject to stockholder approval in compliance with the rules of the Nasdaq Stock Market. The market’s response to the merger reflects optimism for the potential of the combined company’s drug development pipeline and the strategic benefits of the business combination.

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