Exhibit 2.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger and Reorganization
On July 26, 2023, Ayala Pharmaceuticals, Inc., a Delaware corporation (the “Company”), Advaxis Israel Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of the Company (“Merger Sub”) and Biosight, Ltd., a company organized under the laws of the State of Israel (“Biosight”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”).
The Merger Agreement provides, among other things, that on the terms and subject to the conditions set forth therein: (i) Merger Sub will merge with and into Biosight, with Biosight being the surviving entity as a wholly-owned subsidiary of the Company (the “Merger” and collectively with the other transactions contemplated by the Merger Agreement, the “Transactions”), (ii) each share of Biosight issued and outstanding immediately prior to the effective time of the Merger (excluding any shares held by any of Biosight’s subsidiaries, Parent, Merger Sub or any of their respective subsidiaries, which will remain outstanding, and certain dormant shares under Israeli law, which will be cancelled, retired and cease to exist) will automatically be deemed to have been transferred to the Company in exchange for the right to receive 1.82285 shares (the “Exchange Ratio”) of common stock, par value $0.001 per share (the “Common Stock”) of the Company. The Exchange Ratio is subject to equitable adjustment pursuant to the terms of the Merger Agreement. Each outstanding option or other right to purchase ordinary or preferred shares of Biosight will be cancelled as of the Effective Time and will have no further force or effect. At the Closing (as defined below), shares of Parent Common Stock constituting 10% of the aggregate Merger Consideration (as defined in the Merger Agreement) shall be deposited in escrow to support an indemnification obligation of Biosight pursuant to the Merger Agreement.
Conditions to Closing
Under the Merger Agreement, the consummation of the Merger (the “Closing”) is subject to, and will take place within two business days of, the satisfaction or waiver of certain customary closing conditions, including, without limitation: (i) Biosight must have obtained the approval of its stockholders of the Merger and the Transactions contemplated by the Merger Agreement (the “Biosight Stockholder Approval”), (ii) any waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, must have been terminated or expired, (iii) Biosight obtaining certain tax rulings under Israeli law and (iv) the receipt by the Company of waivers from certain Biosight option holders and holders of Series C preferred shares.
Representations and Warranties
The parties to the Merger Agreement have agreed to customary representations and warranties for transactions of this type. In addition, the parties to the Merger Agreement agreed to be bound by certain customary covenants for transactions of this type, including, among others, covenants with respect to the conduct of the business and operations of the Company, Biosight and their respective subsidiaries during the period between execution of the Merger Agreement and the Closing.
The representations, warranties, agreements and covenants of the parties set forth in the Merger Agreement will terminate at the Closing.
Termination and Termination Fees
The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including without limitation: (i) by mutual written consent of the Company and Biosight; (ii) by either the Company or Biosight, if (a) the Closing has not occurred on or before January 22, 2024, (b) if a governmental authority shall have issued a final and non-appealable permanent restraining order, permanent injunction or other similar permanent order which has the effect of making the Merger illegal or otherwise prohibiting consummation of the Transactions, and (c) the Biosight Stockholder Approval has not been obtained at the Biosight stockholders meeting (or any adjournments or postponements thereof), in each of (a), (b) and (c) where the terminating party’s failure to fulfill any obligation under the Merger Agreement is not the primary cause of, or has directly resulted in, the failure of such condition; (iii) by Biosight if (a) subject to certain conditions, the Company or Merger Sub breaches or fails to perform any of its representations, warranties or covenants contained in the Merger Agreement and such breach or failure is not cured in accordance with the Merger Agreement and would result in the failure of a condition to Closing under the Merger Agreement, (b) the board of directors of the Company (x) makes a public recommendation in connection with a tender or exchange offer other than a recommendation against such tender or exchange offer or (y) fails to recommend against any third-party acquisition proposal within ten business days after such acquisition proposal has been publicly announced or disclosed, or (c) the Company has willfully breached the Merger Agreement; and (iv) by the Company if (a) subject to certain conditions, Biosight breaches or fails to perform any of its representations, warranties or covenants contained in the Merger Agreement and such breach or failure is not cured in accordance with the Merger Agreement and would result in a failure of a condition to Closing under the Merger Agreement, (b) Biosight has willfully breached its non-solicitation covenant, (c) the Biosight board of directors changes its recommendation to its stockholders to approve the Merger and related Transactions or (d) Biosight has willfully breached the Merger Agreement. As further detailed in the Merger Agreement, each party is required to pay a termination fee in the amount of (x) $1,000,000 or (y) $3,000,000, depending on the circumstance of the termination, in each case to the other party, upon the occurrence of certain events that would impede or prevent the Closing, which are the responsibility of the paying party.
The foregoing summary of the Merger Agreement does not purport to be complete and is qualified in its entirety be reference to the full copy of the Merger Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K (the “Form 8-K”) and incorporated into this Item 1.01 by reference.
Support Agreements
In connection with the Merger, certain shareholders of Biosight that are affiliated with the current directors of Biosight (each such Biosight shareholder, a “Supporting Shareholder”), have each entered into a Support Agreement (each, a “Support Agreement” and together, the “Support Agreements”), by and among the Company, Biosight and the applicable Supporting Shareholder. Pursuant to the Support Agreements, the Supporting Shareholders have agreed, among other things, to vote any shares of Biosight held by such Supporting Shareholder in favor of, and to adopt and approve, the Merger, the Merger Agreement and the related Transactions at any meeting of the Biosight stockholders, as applicable (or any adjournment or postponement thereof) held to obtain the Biosight Stockholder Approval.
The foregoing summary of the Support Agreements does not purport to be complete and is qualified in its entirety be reference to the full copy of a form of the Support Agreement, which is attached as Exhibit 2.2 to this Form 8-K and incorporated into this Item 1.01 by reference.
Item 5.07 Submission of Matters to a Vote of Security Holders.
On July 28, 2023, the Company held the Company’s 2023 annual meeting of stockholders (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders (i) elected seven directors to the Company’s board of directors to hold office until the next annual meeting of stockholders and until their respective successors have been duly elected and qualified, subject to their earlier resignation or removal; (ii) approved an advisory (non-binding) resolution regarding the compensation of the Company’s executive officers; (iii) ratified the appointment of Kost, Forer, Gabbay & Kasierer, a Member of EY Global, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023; and (iv) approved an amendment to the Company’s 2015 Incentive Plan to increase the total number of shares authorized for issuance thereunder by 2,900,000 shares to 2,981,248 shares, to increase certain other maximum number of awards that may be granted annually and to change the name of the plan to reflect the Company’s recent corporate name change. The results of these votes, as certified by the inspector of elections for the Annual Meeting, are set forth below.
Proposal 1. Election of seven members to the Company’s Board of Directors to hold office until the next annual meeting of stockholders and until their respective successors have been duly elected and qualified, subject to their earlier resignation or removal.
| Nominee | Votes For | Votes Against | Abstentions | Broker Non-Votes | ||||||||||||
| Dr. David Sidransky | 816,431 | 297,235 | 12,064 | 1,225,138 | ||||||||||||
| Dr. Vered Bisker-Leib | 1,044,805 | 56,607 | 24,318 | 1,225,138 | ||||||||||||
| Roni A. Appel | 1,049,429 | 64,571 | 11,730 | 1,225,138 | ||||||||||||
| Kenneth Berlin | 971,936 | 129,897 | 23,897 | 1,225,138 | ||||||||||||
| Dr. Robert Spiegel | 1,037,380 | 63,012 | 25,338 | 1,225,138 | ||||||||||||
| Murray Goldberg | 1,031,823 | 69,461 | 24,446 | 1,225,138 | ||||||||||||
| Dr. Samir N. Khleif | 1,044,071 | 56,096 | 25,563 | 1,225,138 | ||||||||||||
Proposal 2. Approval of an advisory (non-binding) resolution regarding the compensation of the Company’s executive officers.
| Votes For | Votes Against | Abstentions | Broker Non-Votes | ||||||||||
| 795,482 | 304,581 | 25,667 | 1,225,138 | ||||||||||
Proposal 3. Ratification of the appointment of Kost, Forer, Gabbay & Kasierer, a Member of EY Global, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
| Votes For | Votes Against | Abstentions | Broker Non-Votes | ||||||||||
| 2,239,170 | 64,501 | 47,197 | — | ||||||||||
Proposal 4. Approval of an amendment to the Company’s 2015 Incentive Plan to increase the total number of shares authorized for issuance thereunder by 2,900,000 shares to 2,981,248 shares, to increase certain other maximum number of awards that may be granted annually and to change the name of the plan to reflect the Company’s recent corporate name change.
| Votes For | Votes Against | Abstentions | Broker Non-Votes | ||||||||||
| 678,752 | 327,854 | 119,124 | 1,225,138 | ||||||||||
Item 8.01 Other Events.
On July 27, 2023, the Company issued a press release announcing entry into the Merger Agreement with Biosight. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated into this Item 1.01 by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 2.1 | Agreement and Plan of Merger and Reorganization, by and among the Company, Merger Sub, and Biosight, dated as of July 26, 2023. | |
| 2.2 | Form of Support Agreement, dated as of July 26, 2023, by and between the Company, Biosight and each director and executive officer of Biosight. | |
| 99.1 | Press Release of the Company, dated July 27, 2023 | |
| 104.1 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| August 1, 2023 | AYALA PHARMACEUTICALS, INC. | |
| By: | /s/ Kenneth A. Berlin | |
| Name: | Kenneth A. Berlin | |
| Title: | President and Chief Executive Officer | |
Exhibit 2.1
Exhibit 2.2
Exhibit 99.1
Ayala Pharmaceuticals and Biosight Enter into Definitive Merger Agreement
Combined company to operate as Ayala Pharmaceuticals, Inc.
Merger to add a clinical stage oncology asset to Ayala’s portfolio with data anticipated in the first half of 2024
REHOVOT and TEL AVIV, ISRAEL & MONMOUTH JUNCTION, N.J., July 27, 2023 — Ayala Pharmaceuticals, Inc. (OTCQX: ADXS), a publicly-traded clinical-stage oncology company, and Biosight Ltd., a privately-held pharmaceutical company developing innovative therapeutics for hematological malignancies and disorders, today announced they have entered into a definitive merger agreement pursuant to which Ayala will combine with Biosight in an all-stock transaction. Upon completion of the merger, the combined company will operate under the name Ayala Pharmaceuticals, Inc., and will continue to trade on the OTCQX under Ayala’s current ticker symbol (“ADXS”). Certain of the current Biosight shareholders have agreed to support the proposed transaction.
The combined company will work to advance a portfolio of oncology assets, with a primary focus on Ayala’s AL102, a once-daily, potent, selective, oral gamma-secretase inhibitor (GSI) and Biosight’s Aspacytarabine (BST-236). AL102 is currently being evaluated in the registrational RINGSIDE study in desmoid tumors. There are currently no FDA-approved therapies for the treatment of unresectable, recurrent or progressive desmoid tumors. Data from the Phase 2 portion of RINGSIDE were presented at the recent American Society of Clinical Oncology Annual Meeting demonstrating AL102’s activity against progressing desmoid tumors. These data showed 50% partial response and 100% disease control rates in evaluable desmoid tumor patients treated with AL102 in the 1.2 mg once daily arm, the dosing regimen being tested in the ongoing Phase 3 study. The majority of the patients from Phase 2 have continued on study and are now in the open label extension of the Phase 3 portion of RINGSIDE. Ayala expects to present updated data on these patients at a medical conference later this year.
“The addition of Biosight’s lead asset aspacytarabine (BST-236) fits with our strategic vision and core competencies and provides us with additional avenues towards key clinical catalysts,” said Ken Berlin, President and CEO of Ayala. “Along with the merger, we have plans to strengthen our balance sheet and execute our clinical plans, with the goal of creating sustainable value for patients and shareholders.”
Pini Orbach, PhD, Chairman of Biosight, commented, “The Ayala team shares our commitment to bringing innovative treatments to cancer patients in need and we are excited to enter into this merger. Leveraging the combined capabilities and resources of both organizations will provide a truly unique opportunity to build a leading, publicly-traded oncology company with advanced and diverse clinical stage assets. I would like to express my deepest appreciation to the entire Biosight team, and I am proud of their excellent work and dedication in advancing aspacytarabine and our pipeline.”
About the Merger
Under the terms of the merger agreement, upon completion of the merger, ownership of the combined company will be split, with 55% ownership going to Biosight stockholders and 45% going to Ayala stockholders. The merger agreement has been unanimously approved by the Board of Directors of each company, by all directors entitled to vote. The transaction is expected to close prior to the end of the third quarter of 2023, subject to regulatory and other conditions including approval of Biosight stockholders.
Management and Organization
Effective as of the closing of the merger, the combined company will be led by Ayala’s existing senior management team, with Ken Berlin serving as President and CEO. Additionally, the Board of Directors is expected to consist of nine members, including four designated by Ayala and four designated by Biosight, as well as Mr. Berlin.
Advisors
Morgan, Lewis & Bockius LLP and Meitar are serving as legal counsel to Ayala. Goodwin Procter LLP and Horn & Co. Law Offices are serving as legal counsel to Biosight.
About Ayala Pharmaceuticals, Inc.
Ayala Pharmaceuticals, Inc. is a clinical-stage oncology company primarily focused on developing and commercializing small molecule therapeutics for people living with rare tumors and aggressive cancers and is also developing proprietary Lm-based antigen delivery products for patients suffering from more common cancers. The Company’s lead candidates under development are the oral gamma secretase inhibitor, AL102, for desmoid tumors; ADXS-504, a Lm-based therapy for early-stage prostate cancer; and the intravenous gamma secretase inhibitor, AL101, for adenoid cystic carcinoma. AL102 has received Fast Track Designation from the U.S. FDA and is currently in the Phase 3 segment of a pivotal study for patients with desmoid tumors (RINGSIDE). For more information, visit www.ayalapharma.com.
About AL102
AL102 is an investigational small molecule gamma secretase inhibitor (GSI) that is designed to potently and selectively inhibit Notch 1, 2, 3 and 4, and is currently being evaluated in the Phase 2/3 RINGSIDE clinical studies in patients with progressing desmoid tumors. AL102 is designed to inhibit the expression of Notch gene targets by blocking the final cleavage step by the gamma secretase required for Notch activation. Ayala obtained an exclusive, worldwide license to develop and commercialize AL102 from Bristol-Myers Squibb Company in November 2017. AL102 was granted U.S. FDA Fast Track Designation for the treatment of desmoid tumors.
About Biosight Ltd.
Biosight is a private clinical stage biotech company developing innovative therapeutics for hematological malignancies and disorders. Biosight’s lead product, aspacytarabine (BST-236), is an innovative proprietary anti-metabolite designed to address unmet medical needs by enabling high-dose chemotherapy with reduced systemic toxicity. For additional information, please visit www.biosight-pharma.com.
About Aspacytarabine (BST-236)
Aspacytarabine (BST-236) is being developed to serve as a superior novel backbone for acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS) therapy, either as a single agent or in combination with other therapies, including targeted therapy agents. Results from a recently completed Phase 2b study evaluating aspacytarabine as a single-agent first-line AML therapy demonstrate safety and impressive single-agent activity. Additional studies are ongoing to evaluate aspacytarabine in combination with venetoclax as a first-line treatment of AML, as well as a second line monotherapy for patients with relapsed or refractory MDS or AML. Aspacytarabine has been granted FDA Fast Track Designation for first-line treatment of AML patients unfit for standard chemotherapy, and Orphan Drug designations from the FDA and EMA in AML, as well as Orphan Drug designation in MDS from the FDA.
Contacts:
Ayala Pharmaceuticals:
+1-857-444-0553
info@ayalapharma.com
Investors:
Tim McCarthy
LifeSci Advisors, LLC
tim@lifesciadvisors.com
917-679-9282
Cautionary Statement Regarding Forward-Looking Statements
This communication relates to the proposed transaction pursuant to the Agreement and Plan of Merger and Reorganization dated as of July 26, 2023, by and among Ayala Pharmaceuticals, Inc.(“Ayala”), Advaxis Israel Ltd. and Biosight Ltd. (“Biosight”). This communication includes express or implied forward-looking statements about the proposed transaction between Ayala and Biosight and the operations of the combined company that involve a number of risks and uncertainties, including statements regarding the future conduct of our studies and the potential efficacy and success of product candidates. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the risk that the conditions to the closing of the proposed transaction are not satisfied, including the failure to timely or at all obtain stockholder approval for the proposed transaction or the failure to timely or at all obtain any required regulatory clearances; uncertainties as to the timing of the consummation of the proposed transaction and the ability of each of Ayala and Biosight to consummate the proposed transaction; the ability of Ayala and Biosight to integrate their businesses successfully and to achieve anticipated synergies; the possibility that other anticipated benefits of the proposed transaction will not be realized, including without limitation, anticipated revenues, expenses, earnings and other financial results, and growth and expansion of the combined company’s operations, and the anticipated tax treatment of the combination; potential litigation relating to the proposed transaction that could be instituted against Ayala, Biosight or their respective directors; possible disruptions from the proposed transaction that could harm Ayala’s and/or Biosight’s respective businesses; the ability of Ayala and Biosight to retain, attract and hire key personnel; potential adverse reactions or changes to relationships with customers, employees, suppliers or other parties resulting from the announcement or completion of the proposed transaction; potential business uncertainty, including changes to existing business relationships, during the pendency of the proposed transaction that could affect Ayala’s or Biosight’s financial performance; certain restrictions during the pendency of the proposed transaction that may impact Ayala’s or Biosight’s ability to pursue certain business opportunities or strategic transactions; the success and timing of clinical trials, including subject accrual, the ability to avoid and quickly resolve any clinical holds and the ability to obtain and maintain regulatory approval and/or reimbursement of product candidates for marketing; the ability to obtain the appropriate labeling of products under any regulatory approval; plans to develop and commercialize our products; our ability to continue as a going concern; our levels of available cash and our need to raise additional capital, including to support current and future planned clinical activities; the successful development and implementation of our sales and marketing campaigns; the size and growth of the potential markets for our product candidates and our ability to serve those markets; our ability to successfully compete in the potential markets for our product candidates, if commercialized; regulatory developments in the United States and other countries; the rate and degree of market acceptance of any of our product candidates; new products, product candidates or new uses for existing products or technologies introduced or announced by our competitors and the timing of these introductions or announcements; market conditions in the pharmaceutical and biotechnology sectors; our available cash, including to support current and planned clinical activities; uncertainties as to our ability to obtain a listing of our common stock on Nasdaq; our ability to obtain and maintain intellectual property protection for our product candidates; the success and timing of our preclinical studies including IND-enabling studies; the timing of our IND submissions; our ability to get FDA approval for study amendments; the timing of data read-outs; the ability of our product candidates to successfully perform in clinical trials; our ability to initiate, enroll, and execute pilots and clinical trials; our ability to maintain our existing collaborations; our ability to manufacture and the performance of third-party manufacturers; the performance of our clinical research organizations, clinical trial sponsors and clinical trial investigators; our ability to successfully implement our strategy; legislative, regulatory and economic developments; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors; and such other factors as are set forth in our periodic public filings with the SEC, including but not limited to those described under the heading “Risk Factors” in the Form 10-K for the fiscal year ended December 31, 2022 of Old Ayala, Inc. (f/k/a Ayala Pharmaceuticals, Inc.) and the Form 10-K for the fiscal year ended October 31, 2022 of Ayala Pharmaceuticals, Inc. (f/k/a Advaxis, Inc.) (“Ayala” or “we,” “us” or “our”), and such entities’ periodic public filings with the SEC, including but not limited to those described under the heading “Risk Factors” in Ayala’s Form 10-K for the fiscal year ended October 31, 2022. Except as required by applicable law, we undertake no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
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