| Item 1.01. | Entry into a Material Definitive Agreement. |
Merger Agreement
On February 2, 2021, Veracyte, Inc., a Delaware corporation (“Veracyte”), entered into an Agreement and Plan of Merger (“Merger Agreement”) with Delight Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Veracyte (“Delight Merger Sub I”), Delight Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Veracyte (“Delight Merger Sub II”), Decipher Biosciences, Inc., a Delaware corporation (“Decipher”), and Fortis Advisors LLC, solely in its capacity as the stockholders’ agent. Decipher is a commercial-stage precision oncology company, with a focus in urologic oncology specific to prostate and bladder cancers.
Pursuant to the terms of the Merger Agreement, Delight Merger Sub I will merge with and into Decipher and Decipher shall survive and become a wholly owned subsidiary of Veracyte (the “First Merger”). Promptly following consummation of the First Merger, Decipher will merge with and into Delight Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of Veracyte (together, the “Merger”).
Under terms of the Merger Agreement, Decipher Biosciences will become a wholly owned subsidiary of Veracyte. At the effective time of the Merger (the “Closing”), Veracyte will pay $600 million to Decipher security holders, consisting of $250 million in cash and $350 million in stock consideration, subject to customary purchase price adjustments for cash, unpaid indebtedness, unpaid transaction expenses and the aggregate exercise prices of all Decipher options. The number of Veracyte shares issued at the Closing shall be based on an agreed price of $54.30 per share, resulting in a maximum issuance of 6.4 million common shares. However, without changing the total consideration paid at the Closing, Veracyte has the option, at its sole discretion, until no later than the earlier of March 15, 2021 and the fourth business day following the closing of any potential equity financing, to substitute cash in lieu of shares in any amount up to the entire stock portion of the consideration, or $350 million. Veracyte has agreed to register the stock consideration, if any, on a Registration Statement on Form S-4 to be filed by March 1, 2021
The Merger Agreement contains customary representations, warranties, covenants and agreements of Decipher and Veracyte. The Closing is anticipated to occur by May 2021 and is subject to customary closing conditions, including approval by the Decipher stockholders and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Merger Agreement also provides customary termination rights to each of the parties.
Tina S. Nova, Ph.D., the President and Chief Executive Officer of Decipher, was previously a member of Veracyte’s board of directors. In addition, Robert S. Epstein, MD MS is a member of each of the Veracyte and Decipher board of directors. In connection with Veracyte submitting a proposal to acquire Decipher, Dr. Nova and Dr. Epstein recused themselves from participating in the process for considering the proposal and all negotiations as directors of Veracyte, and in Dr. Epstein’s case, as a director of, Decipher, in order to avoid any appearance of a conflict of interest.
The foregoing description of the Merger Agreement is included to provide you with information regarding its terms. It does not purport to be a complete description of the terms of the Merger Agreement and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which will be filed with Veracyte’s Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2021, and as an exhibit to the Registration Statement on Form S-4 to be filed by Veracyte in connection with the Merger, if applicable.
Stockholder Agreements
Concurrently with the execution and delivery of the Merger Agreement, certain stockholders of Decipher, and certain of their affiliates have entered into stockholder agreements with Veracyte (the “Stockholder Agreements”), pursuant to which such persons and entities have agreed to vote their respective shares of capital stock of Decipher for the approval and adoption of the Merger Agreement, the Merger and the other transactions contemplated thereby, and against any alternative transactions.
The persons and entities signing the Stockholder Agreements currently beneficially own an aggregate of approximately 73% of the outstanding Decipher capital stock, on an as-converted to common stock basis. A copy of the form of Stockholder Agreement will be filed as an exhibit to the Registration Statement on Form S-4 if filed by Veracyte in connection with the Merger.
Press Release
On February 3, 2021, Veracyte issued a press release announcing the execution of the Merger Agreement (the “Merger Press Release”). The Merger Press Release is being filed as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 2.02. | Results of Operations and Financial Condition. |
On February 3, 2021, Veracyte issued a press release furnished as Exhibit 99.2 to this Current Report on Form 8-K (the “Financial Announcement Press Release” and, together with the Merger Press Release, the “Press Releases”) that, among other things, announced certain preliminary financial and operating results for the fourth quarter and year ended December 31, 2020, including that Veracyte expects to report that it generated total revenue of between $34.0 million and $35.0 million, and that its product and testing volume was between 13,000 and 13,200 tests, in each case for the fourth quarter of 2020. Veracyte also expects to report total revenue of between $117.0 million and $118.0 million and product and testing volume of between 44,400 and 44,600 tests for the full year ended December 31, 2020. In addition, Veracyte expects to report cash and cash equivalents of between $345.0 million and $350.0 million as of December 31, 2020.
