Item 1.01. Entry into a Material Definitive Agreement.
On September 6, 2022, Metacrine, Inc., a Delaware corporation ("Metacrine"),
entered into an Agreement and Plan of Merger (the "Merger Agreement")
with Equillium, Inc., a Delaware corporation ("Equillium"), Equillium
Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of
Equillium ("Acquisition Sub"), and Triumph Merger Sub, Inc., a Delaware
corporation and wholly owned subsidiary of Acquisition Sub ("Merger Sub").
Merger Agreement
Pursuant to the Merger Agreement, Merger Sub will be merged with and into
Metacrine and Metacrine will continue as the surviving corporation and an
indirect, wholly owned subsidiary of Equillium (the "Merger"). In connection
with the Merger, all of the issued and outstanding shares of common stock of
Metacrine, par value $0.0001 per share (the "Shares"), will be cancelled and
converted into the right to receive consideration per share consisting of
(i) the exchange ratio (the "Exchange Ratio") determined by dividing (x) (a)
125% of Metacrine's net cash as of the closing of the Merger (the "Closing") by
(b) the price per share of common stock of Equillium, par value $0.0001 per
share (the "Equillium Common Stock") determined based on the 10 day trading
volume weighted average price per share of Equillium Common Stock calculated 10
trading days prior to the Closing date, provided that the price per share of
Equillium Common Stock shall be no less than $2.70 and no more than $4.50 by
(y) the aggregate fully diluted shares of Metacrine, plus (ii) any cash payable
in lieu of fractional shares of Equillium's Common Stock. The Merger is intended
to be a taxable transaction.
The respective boards of directors of Equillium and Metacrine have each approved
the Merger Agreement, and the board of directors of Metacrine has resolved to
recommend that Metacrine's stockholders adopt the Merger Agreement. In addition,
the board of directors of Equillium has resolved to recommend that Equillium's
stockholders approve the issuance of Equillium Common Stock in the Merger.
Each of Metacrine's stock options (the "Options") that is outstanding as of
immediately prior to the effectiveness of the Merger (the "Effective Time") will
(i), if held by a continuing employee or service provider, be substituted
automatically into an Equillium option award to purchase the number of shares of
Equillium Common Stock equal to the number of Shares subject to the Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(ii) if the Option is held by a former employee, service provider or director of
Metacrine, (x) to the extent unvested, be cancelled without the payment of any
consideration and (y) to the extent vested, be cancelled and converted into a
right to receive the number of shares of Equillium Common Stock equal to (1) the
number of Shares subject to the Option immediately prior to the Effective time
multiplied by the excess, if any, of Metacrine's price per Share based on the 10
day trading volume weighted average price per Share calculated 10 trading days
prior to the Closing date over the per share exercise price for the Shares
underlying the Option immediately prior to the Effective Time (the "Metacrine
Share Value"), divided by (2) the Metacrine Share Value multiplied by the
Exchange Ratio.
Each of Metacrine's restricted stock unit awards (the "RSUs") that is
outstanding as of immediately prior to the Effective Time will (i), if held by a
continuing employee or service provider, whether vested or unvested, be
substituted automatically into an Equillium restricted stock unit award with
respect to a number of shares of Equillium Common Stock equal to the product
obtained by multiplying the total number of Shares subject to the RSU
immediately prior to the Effective Time by the Exchange Ratio, and (ii) if the
RSU is held by a former employee, service provider or director of Metacrine,
(x) to the extent unvested, be cancelled without the payment of any
consideration and (y) to the extent vested, be cancelled and converted into a
right to receive the number of shares of Equillium Common Stock equal to the
product obtained by multiplying the total number of Shares subject to the RSU
immediately prior to the Effective Time by the Exchange Ratio.
Each of Metacrine's warrants (the "Warrants") that are outstanding and
unexercised immediately prior to the Effective Time will be automatically
substituted into a warrant to purchase the number of shares of Equillium Common
Stock equal to the product obtained by multiplying the number of Shares subject
to the Warrant immediately prior to the Effective Time by the Exchange Ratio.
Each Warrant will have an exercise price per share of Equillium Common Stock
equal to exercise price per Share immediately prior to the Effective Time
divided by the Exchange Ratio.
Pursuant to the terms of the Merger Agreement, as soon as practicable following
the date of the Merger Agreement, Metacrine shall take all actions with respect
to Metacrine's 2020 Employee Stock Purchase Plan (the "ESPP") to provide that
with respect to any offering periods in effect as of the date of the Merger
Agreement (the "Current Purchase Period"), (i) no employee who is not a
participant in the ESPP as of the date of the Merger Agreement may become a
participant in the ESPP, and (ii) no individual participating in the Current
Purchase Period may increase his or her payroll contribution rate pursuant to
the ESPP from the rate in effect immediately prior to the date of the Merger
Agreement. In addition, (A) the Current Purchase Period will end on a specified
trading day occurring at least 10 days prior to the date on which the Effective
Date is expected to occur; (B) there will be no offering periods following the
Current Purchase Period and (C) in all events, Metacrine shall terminate the
ESPP prior to the Effective Time.
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Consummation of the Merger is subject to certain closing conditions, including
Metacrine's net cash being no less than $23,000,000, the absence of certain
legal impediments, the effectiveness of a registration statement on Form S-4 to
be filed with the Securities and Exchange Commission (the "SEC"), adoption of
the Merger Agreement by the holders of a majority of Metacrine's outstanding
common stock at Metacrine's stockholders' meeting, and approval of the issuance
of shares of Equillium Common Stock in the Merger by the holders of a majority
of Equillium's outstanding common stock at Equillium's stockholders' meeting.
The parties have made certain representations, warranties, and covenants in the
Merger Agreement, including covenants regarding the conduct of their respective
businesses and the use of reasonable best efforts to cause the conditions to the
Merger to be satisfied.
Metacrine and, subject to limited exceptions, Equillium are not permitted to,
among other things, solicit, initiate, knowingly induce, knowingly encourage, or
knowingly facilitate any inquiries or the making of any proposal or offer that
constitutes, or would reasonably be expected to lead to, an alternative
transaction proposal or to engage in discussions or negotiations with third
parties regarding any alternative transaction proposal. Notwithstanding this
limitation, prior to a party's stockholders' approving the transaction, such
party may under certain circumstances provide information to and engage or
participate in discussions or negotiations with third parties with respect to an
unsolicited, written alternative transaction proposal that its board of
directors has determined in good faith constitutes or could reasonably be
expected to result in a superior proposal and failure to take such action would
reasonably be expected to be inconsistent with the directors' fiduciary duties
under applicable law. Each party's board of directors may change its
recommendation to its stockholders (subject to the other party's right to match
and right to terminate the Merger Agreement following such change in
recommendation) in response to a superior proposal or an intervening event if
the board of directors determines in good faith that the failure to take such
action would be inconstant with the directors' fiduciary duties under applicable
law. Each party may also terminate the Merger Agreement in order to enter into a
transaction constituting a superior proposal.
The Merger Agreement contains certain termination rights for both Equillium and
Metacrine and further provides that, in connection with the termination of the
Merger Agreement by Metacrine under certain circumstances, including termination
by Metacrine to accept and enter into a definitive agreement with respect to a
superior proposal, Metacrine must pay Equillium a termination fee of
$1,250,000. In connection with the termination of the Merger Agreement by
Equillium under certain circumstances, including termination by Equillium to
accept and enter into a definitive agreement with respect to a superior
proposal, Equillium must pay Metacrine a termination fee of $1,750,000.
The foregoing description of the Merger Agreement and the transactions
contemplated thereby does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1
hereto and which is incorporated herein by reference.
The Merger Agreement has been filed to provide information to investors
regarding their respective terms. The Merger Agreement is not intended to
provide any other factual information about Equillium or Metacrine, their
respective businesses, or the actual conduct of their respective businesses
. . .
Item 8.01. Other Events.
A joint press release issued by Equillium and Metacrine announcing the Merger
Agreement was issued on September 6, 2022 and is attached as Exhibit 99.1 to
this Current Report on Form 8-K.
On September 7, 2022, Equillium will present a slide presentation to investors
regarding the Merger. A copy of the slide presentation is attached as Exhibit
99.2 to this Current Report on Form 8-K.
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Where You Can Find Additional Information
This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval with
respect to the proposed merger or otherwise. No offer of securities shall be
made except by means of a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended. In connection with Equillium's pending
acquisition of Metacrine, Equillium will file a registration statement on Form
S-4 containing a joint proxy statement/prospectus of Equillium and Metacrine and
other documents concerning the proposed Merger with the Securities and Exchange
Commission (the "SEC"). METACRINE URGES INVESTORS TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT EQUILLIUM,
METACRINE AND THE PROPOSED MERGER. Investors may obtain free copies of the joint
proxy statement/prospectus (when available) and other documents filed by
Equillium and Metacrine with the SEC at the SEC's website at www.sec.gov. Free
copies of the joint proxy statement/prospectus (when available) and Metacrine's
other SEC filings are also available on Metacrine's website at
www.metacrine.com.
Equillium, Metacrine and their respective directors, executive officers, certain
members of management and certain employees may be deemed, under SEC rules, to
be participants in the solicitation of proxies with respect to the proposed
merger. Information regarding Metacrine's officers and directors is included in
Metacrine's Definitive Proxy Statement on Schedule 14A filed with the SEC on
April 7, 2022 with respect to its 2022 Annual Meeting of Stockholders. This
document is available free of charge at the SEC's website at www.sec.gov or by
going to Metacrine's Investors page on its corporate website at
www.metacrine.com. Information regarding Equillium's officers and directors is
included in Equillium's Definitive Proxy Statement on Schedule 14A filed with
the SEC on April 13, 2022 with respect to its 2022 Annual Meeting of
Stockholders. This document is available free of charge at the SEC's website at
www.sec.gov or by going to Equillium's Investors page on its corporate website
at www.equilliumbio.com. Additional information regarding the persons who may,
under the rules of the SEC, be deemed participants in the solicitation of
proxies in connection with the proposed Merger, and a description of their
direct and indirect interests in the proposed Merger, which may differ from the
interests of Metacrine's stockholders or Equillium's stockholders generally,
will be set forth in the joint proxy statement/prospectus when it is filed with
the SEC.
Cautionary Statement Regarding Forward-Looking Statements
Statements contained in this Current Report on Form 8-K that relate to future
results and events may constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are subject to a number of risks and uncertainties
that may cause actual results to differ materially from those contained in the
forward-looking information, and are based on the current expectations,
estimates, forecasts and projections of Equillium and Metacrine. There can be no
assurances that the proposed Merger will be consummated. The following factors,
among others, could cause actual results to differ materially from those
described in the forward-looking statements: the net cash position of Metacrine,
economic, business, competitive, and/or regulatory factors affecting the
businesses of Equillium and Metacrine generally, including those set forth in
the filings of Equillium and Metacrine with the SEC, especially in the "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" sections of their respective Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, their Current Reports on Form 8-K and other
SEC filings. These forward-looking statements speak only as of the date hereof.
Equillium and Metacrine undertake no obligation to publicly release the results
of any revisions or updates to these forward-looking statements that may be made
to reflect events or circumstances after the date hereof, or to reflect the
occurrence of unanticipated events.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibit is furnished with this Current Report.
Exhibit
Number Description
2.1* Agreement and Plan of Merger, dated September 6, 2022, by and among
Equillium, Inc., Metacrine, Inc., Equillium Acquisition Sub, Inc., and
Triumph Merger Sub, Inc.
99.1 Press Release of Equillium, Inc. and Metacrine, Inc. dated September
6, 2022.
99.2 Investor Presentation.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. Metacrine
agrees to furnish supplementally a copy of any omitted schedule to the SEC upon
request
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