CDT Equity Inc. (NASDAQ:CDT) experienced an 11% drop in its share price on Friday after announcing a $115 million arrangement to acquire a 20% ownership stake in Sarborg Limited, an agentic artificial intelligence company focused on signature intelligence.
Under the terms disclosed by CDT, the consideration for the stake will be paid by issuing 598,005 newly created common shares and 109,978,918 pre-funded warrants. The issuance of those securities is subject to shareholder approval. In addition to the initial consideration, the agreement includes $8 million in deferred consideration that becomes payable when certain future fundraising milestones are completed.
Sarborg is described by CDT as a business that applies proprietary signature analysis and artificial intelligence to interpret biological, chemical and industrial signatures across several industrial sectors. The company has been collaborating with CDT to assess the latter's clinical assets as part of an ongoing relationship between the two firms.
CDT framed the investment as a strengthening of that collaboration and as a way to gain exposure to Sarborg's activities beyond the pharmaceutical space. The target company has developed intellectual property that includes solid-form and cocrystal assets, alongside signature-based analytical capabilities that produce data-driven outputs intended to inform scientific and commercial decision making.
"By acquiring a significant stake in Sarborg, we are strengthening that relationship and aligning ourselves with a business whose innovative approach and intellectual property are highly complementary to our own," said Dr. Andrew Regan, Chief Executive of CDT.
Dr. Regan is listed as both Director and Chief Executive Officer of CDT, and he also holds a directorship with Sarborg.
CDT characterized the transaction as enhancing strategic alignment between the two companies and creating potential for complementary asset strategies, with Sarborg's signature analysis generating large-scale datasets used to support scientific and commercial decisions.
Market reaction and next steps
Investors reacted to the announcement with an immediate pullback in CDT equity. The issuance of new common shares and the pre-funded warrants requires approval by CDT shareholders before the transaction can be completed, and the additional $8 million payment is contingent upon the closing of subsequent fundraising activity by Sarborg.
Until shareholder approval is secured and fundraising conditions are met, the transaction remains subject to those approvals and the completion of future financing events that trigger the deferred payment.