UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
Agreement and Plan of Merger
On December 22, 2023, Theseus Pharmaceuticals, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Concentra Biosciences, LLC, a Delaware limited liability company (“Concentra”), and Concentra Merger Sub II, Inc., a Delaware corporation and a wholly-owned subsidiary of Concentra (“Merger Sub”). The Merger Agreement provides for, among other things: (i) the acquisition of all of the Company’s outstanding shares of common stock, par value $0.0001 per share (the “Common Stock”), by Concentra through a cash tender offer (the “Offer”) by Merger Sub, for a price per share of the Common Stock of (A) $3.90 (the “Base Price Per Share”), (B) an additional amount of cash of up to $0.15 per share of Common Stock (such amount as finally determined in accordance with the Merger Agreement, the “Additional Price Per Share,” and together with the Base Price Per Share, the “Cash Amount”), plus (C) one contingent value right (a “CVR”) (such amount being the “CVR Amount” and the Cash Amount plus the CVR Amount, collectively being the “Offer Price”); and (ii) the merger of Merger Sub with and into the Company (the “Merger”) with the Company surviving the Merger.
The Company’s Board of Directors (the “Board”) has unanimously (i) determined that the Offer, the Merger and the other transactions contemplated by the Merger Agreement and the CVR Agreement (as defined below) (collectively, the “Transactions”) are fair to and in the best interest of the Company and its stockholders, (ii) approved and declared advisable the Merger and the execution, delivery and performance by the Company of the Merger Agreement and the consummation of the Transactions, (iii) resolved that the Merger Agreement and the Merger shall be governed by and effected under Section 251(h) of the Delaware General Corporation Law (the “DGCL”) and that the Merger shall be consummated as soon as practicable following the Offer Closing Time (as defined in the Merger Agreement), and (iv) recommended that the Company’s stockholders accept the Offer and tender their shares of Common Stock pursuant to the Offer. Under the Merger Agreement, Concentra is required to commence the Offer as promptly as practicable, and in any event no later than 10 business days after the date of the Merger Agreement.
Pursuant to the terms of the Merger Agreement, as of immediately prior to the effective time of the Merger (the “Effective Time”), by virtue of the Merger and without any action on the part of the holders of Common Stock, (i) each outstanding share of Common Stock of the Company, other than any shares of Common Stock held in the treasury of the Company, or by any stockholders of the Company who are entitled to and who properly exercise appraisal rights under Delaware law, will be converted into the right to receive the Offer Price; (ii) the vesting for each option to purchase shares of Common Stock from the Company (“Company Stock Options,” and each a “Company Stock Option”) shall be accelerated and (A) each Company Stock Option that has an exercise price per share that is less than the Cash Amount (each, an “In-the-Money Option”) that is then outstanding will be cancelled and, in exchange therefore, the holder of such cancelled In-the-Money Option will be entitled to receive in consideration of the cancellation of such In-the-Money Option, (1) an amount in cash, without any interest thereon, less any applicable tax withholding, equal to the product obtained by multiplying (x) the excess of the Cash Amount over the exercise price per share of Common Stock underlying such In-the-Money Option by (y) the number of shares of Common Stock subject underlying such In-the-Money Option as of immediately prior to the Effective Time and (2) one CVR for each share of Common Stock underlying such In-the-Money Option and (B) each Company Stock Option that is not an In-the-Money Option will be cancelled for no consideration; and (iii) each outstanding and unvested restricted stock unit of the Company shall be cancelled and the holder thereof shall be entitled to receive (A) an amount in cash without interest, less any applicable tax withholding, equal to the Cash Amount and (B) one CVR.
Merger Sub’s obligation to accept shares of Common Stock tendered in the Offer is subject to conditions, including: (i) that the number of shares of Common Stock validly tendered (and not properly withdrawn) prior to the expiration of the Offer (excluding shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” by the “depository,” as such terms are defined by Section 251(h) of the DGCL), equals at least one share more than 50% of all shares of Common Stock then issued and outstanding as of the expiration of the Offer; (ii) the absence of Legal Restraint (as defined in the Merger Agreement) in effect preventing or prohibiting the consummation of the Offer, the Merger or any of the other transactions contemplated by the Merger Agreement or the CVR Agreement; (iii) the accuracy of the representations and warranties made by the Company in the Merger Agreement, subject to specified materiality qualifications; (iv) compliance by the Company with its covenants under the Merger Agreement in all material respects; and (v) the Closing Net Cash (as defined in the Merger Agreement) shall be no less than approximately $187.6 million. The obligations of Concentra and Merger Sub to consummate the Offer and the Merger under the Merger Agreement are not subject to a financing condition.
Following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Concentra, pursuant to the procedure provided for under Section 251(h) of the DGCL, without any additional Company stockholder approvals. The Merger will be effected as soon as practicable following the time of purchase by Merger Sub of shares of Common Stock validly tendered and not withdrawn in the Offer.
The Merger Agreement contains representations and warranties from both the Company, on the one hand, and Concentra and Merger Sub, on the other hand, customary for a transaction of this nature. The Merger Agreement also contains customary covenants and agreements, including with respect to the operations of the business of the Company between the date of the Merger Agreement and the closing of the Merger.
The Merger Agreement contains customary termination rights for both Concentra and Merger Sub, on the one hand, and the Company, on the other hand, including, among others, for failure to consummate the Offer on or before April 21, 2024. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, including in connection with the Company’s entry into an agreement with respect to a superior proposal, the Company will be required to pay Concentra a termination fee of approximately $3.6 million. If Concentra terminates the Merger Agreement due to the Company having Closing Net Cash of less than $187.6 million, the Company will be required to pay to Concentra an expense reimbursement fee up to a maximum amount of $1.25 million.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
The Merger Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, Concentra, Merger Sub or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by the Company, on the one hand, and Concentra and Merger Sub, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are subject to qualifications and limitations agreed to by the respective parties in negotiating the terms of the Merger Agreement, including information in confidential disclosure schedules delivered in connection with the signing of the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were made as of a specified date, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the Company, on the one hand, and Concentra and Merger Sub, on the other hand, rather than establishing matters as facts. Accordingly, the representations and warranties in the Merger Agreement should not be relied on by any persons as characterizations of the actual state of facts about the Company, Concentra, Merger Sub or their respective subsidiaries or affiliates at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Guaranty
Concurrently with the execution of the Merger Agreement, and as a condition and inducement to the Company’s willingness to enter into the Merger Agreement and the CVR Agreement, Tang Capital Partners, LP, a Delaware limited partnership, has delivered to the Company a duly executed limited guaranty, dated as of the date of the Merger Agreement, in favor of the Company, in respect of certain of Concentra and the Merger Sub’s obligations arising under, or in connection with, the Merger Agreement and CVR Agreement. Certain obligations under the Limited Guaranty are subject to a cap of $177,614,912, plus certain enforcement costs, under the Merger Agreement and an amount equivalent to the CVR Proceeds, plus certain enforcement costs, under the CVR Agreement.
Contingent Value Rights Agreement
At or prior to the time at which Merger Sub first irrevocably accepts for purchase the shares of Common Stock tendered in the Offer, Concentra and Merger Sub expect to enter into a Contingent Value Rights Agreement (the “CVR Agreement”) with a rights agent (“Rights Agent”) and a representative, agent and attorney in-fact of the holders of CVRs. Each CVR will represent a contractual right to receive contingent cash payments equal to (i) 80% of Net Proceeds (as defined in the CVR Agreement), if any, from any sale, transfer, license or other disposition (each, a “Disposition”) by Concentra or any of its affiliates, including the Company after the Merger, of all or any part of the CVR Products that occurs within the period beginning on the Effective Time and ending 180 days following the date of the closing of the Merger (the “Disposition Period”) and (ii) 50% of any net savings versus the Closing Net Cash that is realized between the date of the closing of the Merger and the end of the Disposition Period (the “CVR Proceeds”). Pursuant to the CVR Agreement, “CVR Products” means collectively (a) the Company’s product candidate known as THE-349, a fourth-generation epidermal growth factor receptor, or EGFR, inhibitor for the treatment of non-small cell lung cancer, (b) the Company’s next-generation BCR-ABL program focused on relapsed/refractory chronic myeloid leukemia and Philadelphia chromosome-positive acute lymphoblastic leukemia, or (c) the Company’s KIT inhibitor program for the treatment of gastrointestinal stromal tumor. In the event that no CVR Proceeds are achieved within the Disposition Period, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. During the Disposition Period, Merger Sub shall, and shall cause its subsidiaries, licensees and rights transferees to, use Commercially Reasonable Efforts (as defined in the CVR Agreement) to, among other things, (i) enter into one or more agreements for a Disposition as promptly as practicable following the Effective Time and (ii) continue to seek partnerships or investments for the CVR Products.
The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or any other instrument and will not be registered with the SEC. The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in Concentra, any constituent corporation party to the Merger or any of their respective affiliates. No interest will accrue on any amounts payable on the CVRs to any holders.
The form of the CVR Agreement is included herein as Exhibit C to Exhibit 2.1 attached hereto and is incorporated herein by reference. The foregoing description of the CVR Agreement is qualified in its entirety by reference to the full text thereof.
Support Agreements
In connection with the execution of the Merger Agreement, Concentra and Merger Sub entered into support agreements (the “Support Agreements”) with certain of the Company’s stockholders. The Support Agreements provide that, among other things, those certain Company stockholders irrevocably tender the shares of Common Stock held by them in the Offer, upon the terms and subject to the conditions of such agreements. The shares of Common Stock subject to the Support Agreements comprise approximately 59% of the outstanding shares of Common Stock. The Support Agreements will terminate upon certain circumstances, including upon termination of the Merger Agreement or if the Board votes to approve a superior proposal.
The form of the Support Agreement is included herein as Exhibit D to Exhibit 2.1 attached hereto and is incorporated herein by reference. The foregoing description of the Support Agreements is qualified in its entirety by reference to the full text thereof.
| Item 1.02 | Termination of a Material Definitive Agreement. |
On December 21, 2023, the Company entered into a Lease Termination Agreement (the “Lease Termination”) with MIT 314 Main Street Leasehold LLC (the “Landlord”), which, effective January 31, 2024 (the “Lease Termination Date”), terminated the Lease Agreement, dated September 16, 2021, by and between the Company and the Landlord (the “Lease”), pursuant to which the Company leased approximately 7,351 square feet of space on the fourth floor of the building located at 314 Main Street, Cambridge, MA 02142 (the “Premises”). Pursuant to the Lease Termination, the Company will pay the Landlord a termination fee of $4.6 million. The Company will have no further rent obligations to the Landlord pursuant to the Lease after the Lease Termination Date.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On December 21, 2023, the Compensation Committee of the Board approved a one-time cash bonus payment (the “Transaction Bonus”) to Bradford D. Dahms, a director, President and Chief Financial Officer of the Company, in the amount of $425,000, payable following the closing of the Merger.
| Item 7.01 | Regulation FD Disclosure. |
On December 22, 2023, the Company issued a press release announcing the signing of the Merger Agreement, a copy of which is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The information contained in this Item 7.01, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Important Additional Information and Where to Find It
The Offer described in Current Report on Form 8-K has not yet commenced, and this Current Report on Form 8-K is neither a recommendation, nor an offer to purchase nor a solicitation of an offer to sell any shares of the common stock of Theseus or any other securities. On the commencement date of the Offer, a tender offer statement on Schedule TO, including an offer to purchase, a letter of transmittal and related documents, will be filed with the SEC by Concentra and its acquisition subsidiary, and a Solicitation/Recommendation Statement on Schedule 14D-9 will be filed with the SEC by Theseus. The Offer to purchase the outstanding shares of the common stock of Theseus will only be made pursuant to the offer to purchase, the letter of transmittal and related documents filed as a part of the Schedule TO. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE TENDER OFFER MATERIALS (INCLUDING THE OFFER TO PURCHASE, A LETTER OF TRANSMITTAL AND RELATED DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 REGARDING THE OFFER, AS THEY MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT INVESTORS AND SECURITY HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. Investors and security holders may obtain a free copy of these statements (when available) and other documents filed with the SEC at the website maintained by the SEC at www.sec.gov or by directing such requests to the information agent for the Offer, which will be named in the tender offer statement. Investors and security holders may also obtain, at no charge, the documents filed or furnished to the SEC by Theseus under the “Investors & Media” section of Theseus’ website at www.theseusrx.com.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding Theseus’ beliefs and expectations and statements about the Offer, Merger and related transactions contemplated by the Merger Agreement (the “Transactions”), including the timing of and closing conditions to the Transactions; the potential effects of the proposed Transactions on Theseus; and the potential payment of proceeds to the Theseus stockholders, if any, pursuant to the CVR Agreement. These statements may be identified by their use of forward-looking terminology including, but not limited to, “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” and “would,” and similar words expressions are intended to identify forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected, expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the possibility that various closing conditions set forth in the Merger Agreement may not be satisfied or waived, including uncertainties as to the percentage of Theseus’ stockholders tendering their shares in the Offer; the possibility that competing offers will be made; Theseus’ ability to retain key personnel; the risk that the Transactions may not be completed in a timely manner, or at all, which may adversely affect Theseus’ business and the price of its common stock; significant costs associated with the proposed Transactions; the risk that any stockholder litigation in connection with the Transactions may result in significant costs of defense, indemnification and liability; the risk that activities related to the CVR Agreement may not result in any value to the Theseus stockholders; and other risks and uncertainties discussed in Theseus’ most recent annual and quarterly reports filed with the SEC as well as in Theseus’ subsequent filings with the SEC. As a result of such risks and uncertainties, Theseus’ actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. There can be no assurance that the proposed Transactions will in fact be consummated. Theseus cautions investors not to unduly rely on any forward-looking statements.
The forward-looking statements contained in Current Report on Form 8-K are made as of the date hereof, and Theseus undertakes no obligation to update any forward-looking statements, whether as a result of future events, new information or otherwise, except as expressly required by law. All forward-looking statements in this document are qualified in their entirety by this cautionary statement.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| No. | Description of Exhibit | |
| 2.1+ | Agreement and Plan of Merger, by and among Concentra Biosciences, LLC, Concentra Merger Sub II, Inc. and Theseus Pharmaceuticals, Inc., dated December 22, 2023. | |
| 99.1 | Press Release of Theseus Pharmaceuticals, Inc., dated December 22, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
+ Certain schedules and annexes have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules and annexes upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any annexes or schedules so furnished..
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Theseus Pharmaceuticals, Inc. | |||
| By: | /s/ Bradford D. Dahms | ||
| Name: | Bradford D. Dahms | ||
| Title: | President and Chief Financial
Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||
| Date: December 22, 2023 | |||