Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On December 14, 2020, Prevail Therapeutics Inc., a Delaware corporation
("Prevail Therapeutics" or the "Company"), entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Eli Lilly and Company, an Indiana
corporation ("Parent"), and Parent's wholly-owned subsidiary, Tyto Acquisition
Corporation, a Delaware corporation ("Purchaser").
Pursuant to the Merger Agreement, and upon the terms and subject to the
conditions thereof, Purchaser will commence a tender offer (the "Offer") to
purchase all of the issued and outstanding shares (the "Shares") of common
stock, par value $0.0001 per share (the "Common Stock"), of the Company in
exchange for (a) $22.50 per Share, net to the seller in cash, without interest
and less any applicable tax withholding (the "Closing Amount"), plus (b) one
non-tradable contingent value right (each a "CVR"), which represents the
contractual right to receive a contingent payment of up to $4.00 per share, net
to the seller in cash, without interest and less any applicable tax withholding,
which amount (or such lesser amount as determined in accordance with the terms
and conditions of the contingent value rights agreement to be entered into with
a rights agent mutually agreeable to Parent and the Company) will become
payable, if at all, if a specified milestone is achieved prior to December 1,
2028 (the "Offer Price"). If certain conditions are satisfied and the Offer
closes, Parent would acquire any remaining shares by a merger of Purchaser with
and into the Company (the "Merger").
Following the consummation of the Offer and subject to the terms and conditions
of the Merger Agreement, Purchaser will merge with and into the Company as
provided in the Merger Agreement, with the Company being the surviving
corporation. The Merger Agreement contemplates that the Merger will be effected
pursuant to Section 251(h) of the General Corporation Law of the State of
Delaware (the "DGCL"), which permits completion of the Merger without a
shareholder vote promptly following consummation of the Offer. At the effective
time of the Merger (the "Effective Time"), each Share, including each Share that
is subject to vesting or forfeiture restrictions granted pursuant to a Company
equity incentive plan, program or arrangement ("Company Restricted Stock")
(other than (i) Shares in treasury or owned by the Company and each Share owned
by Parent, Purchaser or any direct or indirect wholly-owned subsidiary of Parent
or Purchaser or (ii) Shares that are held by stockholders who properly demand
appraisal for such Shares in accordance with Section 262 of the DGCL) will be
cancelled and converted into the right to receive the Offer Price from Purchaser
(the "Merger Consideration").
The obligation of Parent and Purchaser to consummate the Offer is subject to the
condition that there be validly tendered and not validly withdrawn prior to the
expiration of the Offer a number of Shares that, together with the number
Shares, if any, then owned beneficially by Parent and Purchaser (together with
their wholly owned subsidiaries) would represent a majority of the Shares
outstanding as of immediately following the consummation of the Offer (the
"Minimum Tender Condition"). The Minimum Tender Condition may not be waived by
Purchaser without the prior written consent of the Company. The obligation of
Purchaser to consummate the Offer is also subject to the expiration of the
waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and other customary conditions. Consummation of the
Offer is not subject to a financing condition.
The Merger Agreement provides that at the Effective Time all outstanding options
to purchase Shares granted under a Company equity incentive plan, program or
arrangement (each such option, a "Company Stock Option"), that is outstanding
immediately prior to the Effective Time and that has an exercise price per Share
that is less than the Closing Amount, whether or not vested, will be cancelled
and converted into the right to receive (without interest) (x) an amount in cash
(less applicable withholding of taxes required by applicable law) equal to the
product of (A) the total number of Shares subject to such Company Stock Option
immediately prior to the Effective Time multiplied by (B) the excess, if any, of
the Closing Amount over the applicable exercise price per Share under such
Company Stock Option and (y) one (1) CVR for each Share subject to such Company
Stock Option immediately prior to the Effective Time (without regard to vesting)
(the "Option Consideration").
The Merger Agreement includes customary representations, warranties and
covenants of the Company, Parent and Purchaser. The Company has agreed to
operate its business in the ordinary course until the Effective Time. The
Company has also agreed not to solicit or initiate discussions with third
parties regarding other proposals for a strategic transaction involving the
Company. Parent and Purchaser have agreed to use reasonable best efforts to take
actions that may be required in order to obtain antitrust approval of the
proposed transaction, subject to certain limitations.
The Merger Agreement also includes customary termination provisions for both the
Company and Parent, subject, in certain circumstances, to the payment by the
Company of a termination fee of $30,000,000 million. The Company must pay Parent
the $30,000,000 million termination fee in the event that the Merger Agreement
is terminated by Parent following a change of recommendation by the board of
directors of the Company (the "Company Board") or if the Company terminates the
Merger Agreement to enter into an agreement with respect to a proposal from a
third party that is a superior alternative to Parent's, in each case, as is more
particularly described in the Merger Agreement. The Company must also pay Parent
the termination fee if the Merger Agreement is terminated in certain
circumstances, a third party has made another acquisition proposal to the
Company prior to the termination of the Merger Agreement, within twelve
(12) months following such termination, the Company enters into an agreement for
a business combination transaction and certain other conditions are satisfied.
The parties to the Merger Agreement are also entitled to specifically enforce
the terms and provisions of the Merger Agreement.
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The Company Board unanimously (i) determined that the Merger Agreement and the
transactions contemplated thereby are fair to, and in the best interests of, the
Company and its stockholders, (ii) approved, declared advisable and adopted the
Merger Agreement and (iii) resolved to recommend that the Company's stockholders
accept the Offer and tender their Shares pursuant to the Offer.
The foregoing summary of the principal terms of the Merger Agreement does not
purport to be complete and is qualified in its entirety by reference to the full
copy of the Merger Agreement filed as Exhibit 2.1 hereto and incorporated herein
by reference. The summary and the copy of the Merger Agreement are intended to
provide information regarding the terms of the Merger Agreement and are not
intended to modify or supplement any factual disclosures about the Company in
its public reports filed with the U.S. Securities and Exchange Commission
("SEC"). The assertions embodied in the representations and warranties included
in the Merger Agreement were made solely for purposes of the contract among the
Company, Purchaser and Parent and are subject to important qualifications and
limitations agreed to by the Company, Purchaser and Parent in connection with
the negotiated terms, including being qualified by confidential disclosures made
by each contracting party to the other for the purposes of allocating
contractual risk between them that differ from those applicable to investors.
Moreover, some of those representations and warranties may not be accurate or
complete as of any specified date, may be subject to a contractual standard of
materiality different from those generally applicable to the Company's SEC
filings or may have been used for purposes of allocating risk among the Company,
Purchaser and Parent rather than establishing matters as facts. Investors should
not rely on the representations and warranties or any description of them as
characterizations of the actual state of facts of the Company, Parent, Purchaser
or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations and warranties may change
after the date of the Merger Agreement, and this subsequent information may or
may not be fully reflected in public disclosures by the Company or Parent.
Tender and Support Agreements
On December 14, 2020, in connection with the execution and delivery of the
Merger Agreement, Asa Abeliovich, M.D., Ph.D., and stockholders affiliated with
Pontifax and Orbimed Private Investments (collectively, the "Support
Stockholders"), solely in their respective capacities as stockholders of the
Company, each entered into a tender and support agreement (collectively, the
"Tender and Support Agreements") with Parent and Purchaser. The Supporting
Stockholders collectively directly or indirectly own approximately 51% of the
outstanding Shares as of December 14, 2020.
Each Tender and Support Agreement provides that the applicable Support
Stockholder will tender all of the Shares held by such Support Stockholder (the
"Subject Shares") in the Offer. Each Tender and Support Agreement also provides
that, in connection with any meeting of stockholders of the Company, or any
. . .
Item 8.01 Other Events.
On December 15, 2020, the Company and Parent issued a joint press release
announcing the execution of the Merger Agreement. A copy of the joint press
release is attached as Exhibit 99.1 hereto and incorporated herein by reference.
*****
Additional Information and Where to Find It
The tender offer for Prevail Therapeutics Inc.'s ("Prevail Therapeutics")
outstanding common stock described in this Current Report on Form 8-K has not
yet commenced. This Current Report on Form 8-K is not a recommendation, an offer
to purchase or a solicitation of an offer to sell shares of Prevail Therapeutics
common stock. A solicitation and an offer to buy shares of Prevail Therapeutics
will be made only pursuant to an offer to purchase and related materials that
Eli Lilly and Company ("Eli Lilly") intends to file with the U.S. Securities and
Exchange Commission ("SEC"). At the time the tender offer is commenced, Eli
Lilly will file a Tender Offer Statement on Schedule TO with the SEC, and
following the commencement, Prevail Therapeutics will file a Solicitation/
Recommendation Statement on Schedule 14D-9 with respect to the tender offer.
Those materials will be made available to Prevail Therapeutics' stockholders at
no expense to them by the information agent for the tender offer, which will be
announced. In addition, those materials and all other documents filed by Eli
Lilly or caused to be filed by with the
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SEC will be available at no charge on the SEC's website at www.sec.gov. PREVAIL
THERAPEUTICS' STOCKHOLDERS AND OTHER INVESTORS ARE URGED TO READ THE TENDER
OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL
AND CERTAIN OTHER OFFER DOCUMENTS) AND THE SOLICITATION/ RECOMMENDATION
STATEMENT, AS MAY BE AMENDED FROM TIME TO TIME, AS THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER.
Prevail Therapeutics files annual, quarterly and current reports, proxy
statements and other information with the SEC. Prevail Therapeutics' filings
with the SEC are available to the public from commercial document-retrieval
services and at the website maintained by the SEC at www.sec.gov. Investors and
security holders may also obtain free copies of the documents filed with the SEC
by Prevail Therapeutics at www.prevailtherapeutics.com.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that are subject
to risks, uncertainties and other factors that could cause actual results to
differ materially from those implied by the forward-looking statements. All
statements other than statements of historical fact are statements that could be
deemed forward-looking statements, including all statements regarding the
intent, belief or current expectation of Prevail Therapeutics and members of its
senior management team and can typically be identified by words such as
"believe," "expect," "estimate," "predict," "target," "potential," "likely,"
"continue," "ongoing," "could," "should," "intend," "may," "might," "plan,"
"seek," "anticipate," "project" and similar expressions, as well as variations
or negatives of these words. Forward-looking statements include, without
limitation, statements regarding the business combination, similar transactions,
prospective performance, future plans, events, expectations, performance,
objectives and opportunities and the outlook for Prevail Therapeutics' business;
the commercial success of Prevail Therapeutics' products; the anticipated timing
of clinical data; the possibility of unfavorable results from clinical trials;
filings and approvals relating to the transaction; the expected timing of the
completion of the transaction; the ability to complete the transaction
considering the various closing conditions; and the accuracy of any assumptions
underlying any of the foregoing. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties and are cautioned not to place undue reliance on these
forward-looking statements. Actual results may differ materially from those
currently anticipated due to a number of risks and uncertainties. Risks and
uncertainties that could cause the actual results to differ from expectations
contemplated by forward-looking statements include: uncertainties as to the
timing of the tender offer and merger; uncertainties as to how many of Prevail
Therapeutics' stockholders will tender their stock in the offer; the possibility
that various closing conditions for the transaction may not be satisfied or
waived, including that a governmental entity may prohibit, delay or refuse to
grant approval for the consummation of the transaction; the occurrence of any
event, change or other circumstance that could give rise to the termination of
the merger agreement; the effects of the transaction (or the announcement
thereof) on relationships with associates, customers, other business partners or
governmental entities; transaction costs; the risk that the Merger will divert
management's attention from Prevail Therapeutics' ongoing business operations;
changes in Prevail Therapeutics' businesses during the period between now and
the closing; risks associated with litigation; and other risks and uncertainties
detailed from time to time in documents filed with the SEC by Prevail
Therapeutics, including current reports on Form 8-K, quarterly reports on Form
10-Q and annual reports on Form 10-K, as well as the Schedule 14D-9 to be filed
by Prevail Therapeutics. All forward-looking statements are based on information
currently available to Prevail Therapeutics, and Prevail Therapeutics assumes no
obligation to update any forward-looking statements.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of December 14, 2020, by
and among Prevail Therapeutics Inc., Eli Lilly and Company and
Tyto Acquisition Corporation (pursuant to Item 601(b)(2) of
Regulation S-K, the Company hereby agrees to supplementally
furnish to the SEC upon request any omitted schedule or exhibit
to the Agreement and Plan of Merger).
2.2 Tender and Support Agreement, dated December 14, 2020, by and
among Eli Lilly and Company, Tyto Acquisition Corporation,
OrbiMed Private Investments VI, LP.
2.3 Tender and Support Agreement, dated December 14, 2020, by and
among Eli Lilly and Company, Tyto Acquisition Corporation,
Pontifax (Cayman) V L.P., Pontifax (China) V L.P., Pontifax
(Israel) V L.P. and Pontifax Late Stage Fund L.P.
2.4 Tender and Support Agreement, dated December 14, 2020, by and
among Eli Lilly and Company, Tyto Acquisition Corporation and Asa
Abeliovich, M.D., Ph.D.
2.5 Form of Contingent Value Right Agreement, by and among Eli
Lilly and Company, Tyto Acquisition Corporation and a rights
agent mutually agreeable to Eli Lilly and Company and Prevail
Therapeutics Inc.
99.1 Joint Press Release, dated December 15, 2020, issued by Prevail
Therapeutics Inc. and Eli Lilly and Company.
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