Adicet Bio, Inc. entered into a definitive merger agreement to acquire resTORbio, Inc. (NasdaqGS:TORC) in a reverse merger transaction for approximately $170 million on April 28, 2020. Under the terms of the merger agreement, stockholders of Adicet will receive shares of newly issued common stock of resTORbio. In connection with the merger, resTORbio will assume certain outstanding options and warrants of Adicet, subject to appropriate adjustment of the number and type of underlying shares and exercise price based on the exchange ratio formula in the agreement. The terms of the merger agreement contemplate that each holder of resTORbio as of immediately prior to the effective time shall be entitled to one contractual contingent value right issued by resTORbio for each share of resTORbio held by such holder, entitling CVR holders to receive net proceeds from the commercialization, if any, received from a third party commercial partner of the product candidate RTB101. Upon closing, the equity holders of Adicet will become the majority owners owning 75% of the combined entity while current equity holders of resTORbio are expected to own approximately 25% of the combined company, on a fully-diluted basis. Concurrently with the execution of the agreement, Adicet and resTORbio entered into a funding agreement with certain investors of Adicet pursuant to which the investors committed to fund up to an aggregate of $15 million into an escrow account, which will be used to subscribe for shares of resTORbio common stock in a concurrent private placement in connection with a private placement or public offering of resTORbio common stock for aggregate gross proceeds to resTORbio of at least $30 million. Upon completion of the merger, the combined company will operate under the name Adicet Bio and is expected to trade on the Nasdaq Global Market under a new ticker symbol to be determined.
The agreement provides each of resTORbio and Adicet with specified termination rights, and further provides that, upon termination of the agreement under specified circumstances, either party may be required to pay the other party a termination fee of $6.1 million. Chen Schor, Co-Founder, President and Chief Executive Officer of resTORbio, Inc., will serve as President and Chief Executive Officer of the combined company, Stewart Abbot will serve as Senior Vice President and Chief Operating and Scientific Officer, Francesco Galimi will serve as Senior Vice President and Chief Medical Officer, Lloyd Klickstein will serve as Chief Innovation Officer, Carrie Krehlik will serve as Senior Vice President and Chief Human Resource Officer and Joan Mannick will serve as Head of Infectious Diseases to oversee the clinical program conducted under the CVR. At closing, the combined Board of Directors is anticipated to consist of seven members, which will include five designated from Adicet, one designated from resTORbio and Chen Schor, President and Chief Executive Officer. Anil Singhal will serve as an advisor to the Board of Directors. The combined company will maintain offices in Menlo Park, California and Boston, Massachusetts.
The transaction is subject to approvals of stockholders of each of resTORbio and Adicet, termination of investor agreements, effectiveness of the Form S-4, entry into an exchange agent agreement with the exchange agent, execution of lock-up agreements, listing of new shares on stock exchange, funding transaction involving the deposit of approximately $15 million into an escrow account in accordance with the terms and conditions set forth in the funding agreement, having been consummated, written resignations dated as of the closing date and effective as of the closing executed by the officers and directors of resTORbio who are not to continue as officers or directors of resTORbio, Sarbanes-Oxley certification, amendment to certificate of incorporation, Adicet having received an opinion from Morrison & Foerster LLP to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code, and other customary closing conditions. The Board of resTORbio has approved the agreement and the related transactions, and has adopted resolutions recommending that the requisite stockholders of resTORbio approve the issuance of shares of resTORbio pursuant to the merger. The transaction has also been approved by the Board of Adicet. In connection with the execution of agreement, resTORbio and Adicet entered into stockholder support agreements with resTORbio's current directors and certain officers and resTORbio's largest stockholder, which collectively own an aggregate of approximately 24% stake in resTORbio, and certain of Adicet's current directors and officers and certain stockholders, which collectively own approximately 96% stake in Adicet, wherein each of the stockholders has agreed to vote or cause to be voted all of the shares of resTORbio and Adicet, respectively, in favor of the transaction. As of June 23, 2020, resTORbio announced that it is holding a special meeting of its stockholders on September 15, 2020 in order to obtain the stockholder approvals necessary to complete the merger and related matters. The transaction is expected to close in the second half of 2020.
JMP Securities LLC acted as financial advisor and fairness opinion provider and Andrew Goodman, Danielle Lauzon, Mitchell Bloom, Sarah Bock, Christopher Denn, Brian Fairchild, Janet Andolina, Jennifer Fay, Roger Cohen, Stephanie Philbin, Caroline Bullerjahn and Lily Xu of Goodwin Procter LLP acted as legal advisors to resTORbio. James M. Krenn, John A. de Groot and Steve Rowles of Morrison & Foerster LLP acted as legal advisor to Adicet. The Proxy Advisory Group, LLC acted as the information agent to resTORbio, and will receive a fee of $0.02 million for its services. resTORbio has agreed to pay JMP a transaction fee of $1.25 million, $0.25 million of which became payable upon the rendering of the opinion, and the remainder of which is contingent upon the completion of the merger.
Adicet Bio, Inc. completed the acquisition of resTORbio, Inc. (NasdaqGS:TORC) in a reverse merger transaction on September 15, 2020. In connection with the closing of the merger, resTORbio effected a 7:1 reverse split of its common stock. Post- merger and post- reverse split, Adicet has approximately 19,589,828 shares of common stock issued and outstanding with prior Adicet equityholders collectively owning approximately 75% of the combined company on a fully- diluted basis, and prior resTORbio equityholders collectively owning approximately 25% of the combined company on a fully- diluted basis. The new combined company will operate under the name Adicet Bio, Inc. or Adicet Therapeutics, Inc. and will commence trading on the Nasdaq Global Market under the ticker symbol "ACET" on September 16, 2020. Steve Dubin joined the Board of Directors of resulting issuer on closing.
Adicet Bio, Inc. completed the acquisition of resTORbio, Inc. in a reverse merger transaction.
September 14, 2020
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