| Item 1.01 | Entry into a Material Definitive Agreement |
On February 14, 2022, Equillium, Inc., a Delaware corporation (the “Company”), Project JetFuel Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), Bioniz Therapeutics, Inc., a Delaware corporation (“Bioniz”), and Kevin Green, solely in his capacity as representative of the securityholders of Bioniz (the “Securityholders’ Representative”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). Concurrently with the execution of the Merger Agreement, Merger Sub merged with and into Bioniz (the “Merger”) whereupon the separate corporate existence of Merger Sub ceased, with Bioniz continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company.
As consideration for the Merger, the Company (a) issued an aggregate of 5,699,492 shares of the Company’s common stock (“Merger Shares”), and (b) agreed to make contingent payments up to an aggregate of $57.5 million based on the achievement of certain regulatory events for the Bioniz product candidates BNZ-1, BNZ-2, and BNZ-3 commencing on first U.S. approval, and up to an aggregate of $250 million based on the achievement of certain commercialization events for product candidate BNZ-1 as set forth in the Merger Agreement. The closing issuance of Merger Shares may be adjusted after the closing, pursuant to procedures set forth in the Merger Agreement, in connection with the finalization of transaction expenses, debt, net exercise taxes and working capital amounts at closing.
Each stock option of Bioniz (“Options”) that was outstanding and unexercised immediately prior to the effective time of the Merger (the “Effective Time”) was cancelled as of the Effective Time and represents a right to receive consideration as if the Options had been exercised prior to the Effective Time. Any amount payable to the holder of cancelled Options will be less the applicable exercise price and any applicable tax withholding.
The Merger Agreement contains customary representations, warranties and covenants and indemnification provisions. The Company has no affirmative diligence obligations with respect to further development and commercialization of Bioniz’s product candidates.
The Merger Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act.
The foregoing descriptions of the Merger Agreement is qualified in their entirety by reference to the full text of the Merger Agreement, a copy of which is filed, with confidential terms redacted, as Exhibit 2.1 hereto and is incorporated herein by reference.
The Merger Agreement has been attached to provide investors and stockholders with information regarding its terms. It is not intended to provide any other factual information about the Company, Bioniz or Merger Sub. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement have been made solely for the benefit of the parties to the Merger Agreement and are qualified by information in confidential disclosure schedules provided by Bioniz in connection with the signing of the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the Company and Bioniz rather than establishing matters as facts. Accordingly, the representations and warranties in the Merger Agreement should not be relied upon as characterizations of the actual state of facts about the Company or Bioniz.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
