Going Public: Closing of Merger Lands etrials on the Nasdaq

"For all intents and purposes, this is our IPO," said an excited John Cline, chief executive officer of etrials, a provider of electronic and other services for clinical trials. "I'm feeling good."

etrials

, which was founded in 1999 and has 105 employees, actually didn't have an initial public offering. The company went public by merging with CEA Acquisition Corp, a Florida firm that was publicly traded and had been created for the purpose of acquiring another company to take public.

Shareholders in CEA, a so-called specified purpose acquisition corporation, approved the merger of the two companies on Thursday. Cline was in New York working with his legal team on the closing. The deal was announced last August.

As part of the merger, etrials will be funded by $20 million raised as part of CEA's own public offering.

The funds as well as the value of the merger (more than $35 million based on CEA's stock price of $5.71) helped etrials qualify for the Nasdaq national market as opposed to having to be traded over the counter. That's good news for etrials, according to Cline.

"We will be listed on the Nasdaq national market because of the size of the transaction and the funding we are receiving," Cline said. "We met all the criteria.

"This gives you more exposure," he added, noting mutual funds and other investors are likely to be more interested in the stock. "This puts us more in touch with a lot of institutional investors."

The national listing also gives etrials more credibility, Cline explained.

"Drug companies that hire us entrust us with their crown jewels - their data," he said. "A strong balance sheet makes us a better partner."

Cline also has aggressive plans to grow the company.

"When the stock price reaches $8.50, " he said etrials will have warrants for an additional 12 million shares of stock that can be executed at $5. "That's a built-in $60 million," Cline said.

The prospects of those funds and the $20 million in the bank has Cline in an "acquisition" mode.

Before the merger, etrials was profitable with the exception of one-time charges, according to Cline. He said etrials can operate on its existing cash flow so the $20 million and additional money to be raised through future stock sales can be used "to grow the company".

etrials shareholders received some 7.4 million shares of the initial 12 million shares created by CEA. etrials also holds three of the merged company's five board seats.

etrials had received venture funding from Prodea of Richardson TX and Newlight Associates of New York as well as high-worth individuals.