EFFECTOR THERAPEUTICS, INC. Item 2.01 Completion of Acquisition or Disposition of Assets. As described above, onAugust 24, 2021 , LWAC held the Special Meeting, at which the LWAC stockholders considered and adopted, among other matters, a proposal to approve the Merger Agreement and the Transactions. OnAugust 25, 2021 , the parties consummated the Business Combination. In connection with the Closing, the Company changed its name from Locust Walk Acquisition Corp. toeFFECTOR Therapeutics, Inc. In addition, in connection with the Closing, each share of LWAC Class A common stock was reclassified as common stock of the Company. Holders of 16,978,642 shares of LWAC Class A common stock sold in its initial public offering (the "Initial Shares") properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from LWAC's initial public offering, calculated as of two business days prior to the consummation of the business combination, which was approximately$10.00 per share, or$169,786,420 in the aggregate. As a result of the Business Combination, each share of Old eFFECTOR preferred stock and common stock was converted into the right to receive approximately 0.09657 shares of eFFECTOR's common stock, par value$0.0001 per share ("Common Stock") for an aggregate of 30,021,762 shares of Common Stock issued in the Business Combination. Former holders of shares of Old eFFECTOR common stock (including shares received as a result of the conversion of Old eFFECTOR preferred stock and the exercise of Old eFFECTOR warrants) will also be entitled to receive their pro rata share of up to 5,000,000 shares of Common stock if, on or prior toMay 26, 2023 , the closing share price of shares of Common Stock equals or exceeds$20.00 over at least 20 trading days within a 30-day trading period (the "Triggering Event") and, in respect of each former holder of Old eFFECTOR stock options, such holder continues to provide services to eFFECTOR or one of its subsidiaries at the time of such Triggering Event. The Earn-Out Shares will also be earned and issuable in the event of a change in control of eFFECTOR on or prior toMay 26, 2023 that results in the holders of Common Stock receiving a per-share price equal to or in excess of$20.00 . Additionally, the shares of LWAC Class B common stock held by Sponsor automatically converted into shares of Common Stock. In connection with the Closing, the Sponsor agreed to forfeit 1,000,000 shares of LWAC Class B common stock and as a result, the Sponsor received 3,511,250 shares of Common Stock upon conversion of the Class B common stock (of which 300,000 are subject to vesting if, on or prior toAugust 25, 2024 , the price of shares of Common Stock equals or exceeds$15.00 per share). Following the Closing, Sponsor holds an aggregate of 4,056,250 shares of Common Stock including the 3,511,250 shares received upon conversion of the Class B common stock and 545,000 shares of LWAC Class A common stock held prior to the Closing. Pursuant to subscription agreements entered into in connection with the Merger Agreement (collectively, the "Subscription Agreements"), certain investors agreed to subscribe for an aggregate of 6,070,003 newly-issued shares of Common Stock at a purchase price of$10.00 per share for an aggregate purchase price of$60.7 million (the "PIPE Investment "). At the Closing, eFFECTOR consummated thePIPE Investment . After giving effect to the Transactions, the redemption of Initial Shares as described above, and the consummation of thePIPE Investment , there are currently 40,669,373 shares of Common Stock issued and outstanding. In connection with the Closing, options to purchase shares of Old eFFECTOR common stock were converted into options to purchase an aggregate of 3,920,657 shares of Common Stock, with a weighted-average exercise price of$1.56 per share. The Common Stock and warrants commenced trading on the Nasdaq Capital Market ("Nasdaq") under the symbols "EFTR" and "EFTRW," respectively, onAugust 26, 2021 , subject to ongoing review of eFFECTOR's satisfaction of all listing criteria following the Business Combination. As noted above, an aggregate of$169.8 million was paid from the Company's trust account to holders that properly exercised their right to have Initial Shares redeemed, and the remaining balance immediately prior to the Closing of approximately$5.2 million remained in the trust account. The remaining amount in the trust account was used to pay expenses in connection with the Business Combination. -------------------------------------------------------------------------------- FORM 10 INFORMATION Item 2.01(f) of Form 8-K provides that if the predecessor registrant was a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as LWAC was immediately before the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. As a result of the consummation of the Business Combination, and as discussed below in Item 5.06 of this Report, the Company has ceased to be a shell company. Accordingly, the Company is providing the information below that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires. Cautionary Note Regarding Forward-Looking Statements This Report includes statements that express eFFECTOR's opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, "forward-looking statements." These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "seeks," "projects," "intends," "plans," "may" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Report (including in information that is incorporated by reference into this Report) and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the Transactions and the benefits of the Transactions, including results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which eFFECTOR operates. Such forward-looking statements are based on available current market material and management's expectations, beliefs and forecasts concerning future events impacting eFFECTOR. Factors that may impact such forward-looking statements include: • the results of eFFECTOR's clinical trials of its product candidates tomivosertib and zotatifin, which are in Phase 2 clinical development; • difficulties or delays in the commencement or completion, or termination or suspension, of eFFECTOR's current or planned clinical trials; • difficulties in enrolling patients in eFFECTOR's clinical trials, including as a result of the parti al clinical hold on its ongoing Phase 2b KICKSTART trial; • the impact of the COVID-19 pandemic on the financial condition and results of operations of eFFECTOR; • eFFECTOR's future capital needs following the Business Combination; • the ability of eFFECTOR to maintain an effective system of internal control over financial reporting; • the ability of eFFECTOR to maintain and protect its intellectual property; • eFFECTOR's reliance on single-source suppliers and third-party manufacturers; • litigation, complaints, product liability claims and/or adverse publicity; • privacy and data protection laws, privacy or data breaches, or the loss of data; • the ability of eFFECTOR to manage its growth effectively; • the ability of eFFECTOR to achieve and maintain profitability in the future; • the success of strategic relationships with third parties; • the ability of eFFECTOR to maintain the listing of the Common Stock and warrants of eFFECTOR on Nasdaq; • the ability of eFFECTOR to remediate existing and potential future material weaknesses in eFFECTOR's internal control over financial reporting and to maintain effective internal control over financial reporting, which, if unsuccessful, may result in material misstatements of eFFECTOR's consolidated financial statements or failure to meet periodic reporting obligations or impair access to the capital markets; • other factors detailed under the section titled "Risk Factors" beginning on page 36 of the Proxy Statement/Prospectus and incorporated herein by reference. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the "Risk Factors" section of the other documents filed by eFFECTOR from time to time with theSEC . The forward-looking statements contained in this Report and in any document incorporated by reference are based on current expectations and beliefs concerning future developments and their -------------------------------------------------------------------------------- potential effects on eFFECTOR. There can be no assurance that future developments affecting eFFECTOR will be those that eFFECTOR has anticipated. eFFECTOR undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Business eFFECTOR's business is described in the Proxy Statement/Prospectus in the section titled " Business of eFFECTOR " beginning on page 158, which is incorporated herein by reference. Risk Factors The risks associated with eFFECTOR's business are described in the Proxy Statement/Prospectus in the section titled " Risk Factors " beginning on page 36 and are incorporated herein by reference. A summary of the risks associated with eFFECTOR's business is also included on pages 24-26 of the Proxy Statement/Prospectus under the heading " Summary of Risk Factors " and are incorporated herein by reference. Financial Information The (i) audited financial statements of Old eFFECTOR as of and for the years endedDecember 31, 2020 and 2019 and (ii) unaudited condensed financial statements of Old eFFECTOR as ofMarch 31, 2021 and for the three months endedMarch 31, 2021 and 2020 are included in the Proxy Statement/Prospectus beginning on pages F-42 and F-69, respectively, of the Proxy Statement/Prospectus, which are incorporated herein by reference. The unaudited condensed financial information of Old eFFECTOR as of and for the three and six months endedJune 30, 2021 is set forth in Exhibit 99.1 hereto and is incorporated herein by reference. The unaudited pro forma condensed combined financial information of LWAC and Old eFFECTOR as of and for the six months endedJune 30, 2021 and for the year endedDecember 31, 2020 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference. Management ' s Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of the financial condition and results of operation of Old eFFECTOR as of and for the years endedDecember 31, 2020 and 2019 and for the three months endedMarch 31, 2021 is included in the Proxy Statement/Prospectus in the section titled " Management ' s Discussion and Analysis of Financial Condition and Results of Operations of eFFECTOR " beginning on page 202 of the Proxy Statement/Prospectus, which is incorporated herein by reference. Management's discussion and analysis of the financial condition and results of operations of Old eFFECTOR as of and for the three and six months endedJune 30, 2021 is set forth is set forth in Exhibit 99.2 hereto and is incorporated herein by reference. Quantitative and Qualitative Disclosures about Market Risk Management's discussion and analysis of the quantitative and qualitative disclosures about market risk is included in the Proxy Statement/Prospectus in the section titled " Management's Discussion and Analysis of Financial Condition and Results of Operations of eFFECTOR-Quantitative and Qualitative Disclosures about Market Risk " beginning on page 218, which is incorporated herein by reference. Properties Our headquarters are located at11120 Roselle Street , Suite A,San Diego, CA , where we lease approximately 3,501 square feet of office space. The lease for our headquarters expires onDecember 31, 2021 . We believe that our existing facilities are adequate for our near-term needs. We believe that suitable additional or alternative space would be available if required in the future on commercially reasonable terms. -------------------------------------------------------------------------------- Security Ownership of Certain Beneficial Owners and Management The following table sets forth the beneficial ownership of Common Stock following the consummation of the Business Combination and thePIPE Investment as ofAugust 25, 2021 by: • each person who is known to be the beneficial owner of more than 5% of shares of Common Stock; • each of eFFECTOR's current named executive officers and directors; and • all current executive officers and directors of eFFECTOR as a group. The beneficial ownership of common stock is based on 40,669,373 shares of common stock outstanding following the consummation of the Business Combination andPIPE Investment . Beneficial ownership is determined according to the rules of theSEC , which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Unless otherwise indicated, eFFECTOR believes that all persons named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them. Name and Address of Beneficial Owner Number of % of (1) Shares Ownership 5% Holders Entities affiliated withSR One Capital (2) 6,822,114 16.8 % Entities affiliated withU.S. Venture Partners (3) 4,822,114 11.9 %Abingworth Bioventures VI, L.P. (4) 4,822,114 11.9 %The Column Group II, LP (5) 4,309,329 10.6 %Locust Walk Sponsor, LLC (6) 4,237,917 10.4 % Entities affiliated withAltitude Life Sciences Ventures (7) 2,826,350 6.9 %New Emerging Medical Opportunities Fund III, L.P. (8) 2,822,744 7.1 % Pfizer Venture Investments (9) 2,243,850 5.5 % Directors and Executive OfficersStephen T. Worland , Ph.D. (10) 2,060,149 4.9 % Michael Byrnes 70,416 *Premal Patel , M.D., Ph.D. (11) 132,784 * Alana B. McNulty (12) 535,842 1.3 % Elizabeth P. Bhatt 9,047 * Chris Ehrlich (13) 143,202 * Brian M. Gallagher (4) 4,822,114 11.9 % Laurence Lasky, Ph.D. - -Jonathan D. Root , M.D. (3) 4,822,114 11.9 % John W. Smither (14) 48,284 * All directors and executive officers as a group (10 individuals) (15) 12,643,952 29.6 % * Less than one percent
(1) Unless otherwise noted, the business address of each of those listed in the
table above is
(2) Represents 4,822,114 shares held by
One Capital Fund ) and 2,000,000 shares held by SR One
Co-Invest
I, LLC (SR One
Co-Invest).
SR One Capital Partners I, LP (SR One Capital Partners ) is the general
partner of SR One Capital Fund . SR One
Co-Invest
I Manager, LLC (SR One
Co-Invest
Manager) is the managing member of SR One
Co-Invest.
SR One Capital Management, LLC (SR One Capital Management ) is the general
partner of SR One Capital Partners and the managing member of
--------------------------------------------------------------------------------
SR One
Co-Invest
Manager. Simeon George , M.D. is the managing member of SR One Capital
Management . By virtue of such relationships, Dr. George , SR One Capital
Partners , SR One Capital Management and SR One
Co-Invest
Manager may be deemed to have voting and investment power with respect to the
shares held by SR One Capital Fund and/or SR One
Co-Invest,
as applicable, and as a result may be deemed to have beneficial ownership of
such shares. Each of Dr. George , SR One Capital Partners , SR One Capital and
SR One
Co-Invest
Manager disclaims beneficial ownership of the shares held by SR One Capital
Fund and SR One
Co-Invest,
except to the extent of its or his pecuniary interest therein if any. The
address for SR One Capital Fund I Aggregator, LP and SR One
Co-Invest
I, LLC is 985 Old Eagle School Road , Suite 511, Wayne, PA 19087.
(3) Represents 4,672,628 shares held by
and 149,486 shares held by USVP X Affiliates, L.P. (AFF X, and together with
USVP X, the USVP X Funds). Presidio Management Group X, LLC (PMG X) is the
general partner of the USVP Funds has sole voting and dispositive power with
respect to the shares held by the USVP X Funds. Jonathan D. Root , a member of
our Board, is a managing member of PMG X with additional rights with respect
to the issuer's securities, and may be deemed to have sole voting and
dispositive power with respect to the shares. Casey M. Tansey is the sole
managing partner of PMG X and may be deemed to have sole dispositive power
and shared voting power over the reported shares. Each of the foregoing
persons disclaims beneficial ownership of shares held by the USVP X Funds,
except to the extent of any proportionate pecuniary interest therein. The
address for U.S. Venture Partners is 1460 El Camino Real, Suite 100, Menlo
Park, CA 94025.
(4)
the general partner of ABV VI. Abingworth General Partner VI LLP , an English
limited liability partnership, serves as the general partner of Abingworth
Bioventures VI GP LP . ABV VI (acting by its general partner Abingworth
Bioventures VI GP LP , acting by its general partner Abingworth General
Partner VI LLP ) has delegated to Abingworth LLP , an English limited liability
partnership, all investment and dispositive power over the securities held by
ABV VI. An investment committee of Abingworth LLP , comprised of Timothy
Haines , Kurt von Emster , Genghis Lloyd-Harris , Bali Muralidhar , Andrew
Sinclair and Brian Gallagher , a member of our Board, approves investment and
voting decisions by a specified majority vote, and no individual member has
the sole control or voting power over the securities held by ABV VI. Each of
Abingworth Bioventures VI GP LP , Abingworth General Partner VI LLP , Timothy
Haines , Kurt von Emster , Genghis Lloyd-Harris , Bali Muralidhar , Andrew
Sinclair and Brian Gallagher disclaims beneficial ownership of the securities
held by the ABV VI except to the extent of their proportionate pecuniary
interest therein. The address for ABV VI and each of the other entities and
individuals listed in this footnote is c/o Abingworth LLP , Princes House, 38
Jermyn Street , London, England SW1Y 6DN.
(5) Peter Svennilson and
Column Group II GP, LP , which is the general partner ofThe Column Group II, LP and may be deemed to have shared voting, investment and dispositive power with respect to these shares. Each individual managing partner disclaims beneficial ownership of these shares, except to the extent of their pecuniary interest in such shares. The principal address ofThe Column Group II, L.P. is1 Letterman Drive , Bldg D, Suite DM-900,San Francisco, California 94158.
(6) Represents 4,056,250 shares of Common Stock and warrants to purchase up to
181,667 shares of Common Stock. Locust Walk Partners, LLC is the manager of
Locust Walk Sponsor, LLC (LWAC Sponsor). Geoff Meyerson is the CEO &
Co-founder of Locust Walk Partners and may be deemed to have voting,
investment and dispositive power with respect to these shares. Mr. Meyerson
disclaims beneficial ownership of these securities, except to the extent of
his pecuniary interest therein. The business address of Locust Walk Partners,
LLC is 200 Clarendon Street , 51st Floor, Boston, MA 02116.
(7) Represents 1,413,175 shares by
and 1,413,175 shares held by Altitude Life Sciences Ventures Side Fund II,
L.P. David Maki is the managing member of Altitude Life Science Ventures II,
LLC , which is the general partner of each of Altitude Life Science Ventures
Fund II, L.P. and Altitude Life Science Ventures Side Fund II, L.P. , and
holds voting, investment and dispositive power with respect to these shares.
The address for the Altitude Life Science Ventures is 1014 Market Street ,
Suite 200, Kirkland, WA 98074.
--------------------------------------------------------------------------------
(8)
Emerging Medical Opportunities Fund III, L.P. (NEMO), has the sole right to
dispose of or vote the NEMO shares and is the owner of the general partner
(Sectoral GP III L.P. ) of Nemo. Sectoral Asset Management, Inc. and Stefan
Larson disclaim beneficial ownership of the NEMO shares. The mailing address
for NEMO is c/o Sectoral Asset Management Inc. at 1010 Sherbrooke St. West ,
#1610, Montreal, QC Canada H3A 2R7.
(9)
of Pfizer Inc., a publicly traded company (Pfizer). By virtue of the
relationship between Pfizer and Pfizer Ventures , Pfizer may be deemed to have
beneficial ownership of shares held by Pfizer Ventures . Pfizer's address is
235 East 42nd Street , New York, New York 10017.
(10) Represents 755,480 shares held by a family trust of
is a trustee and 1,304,669 shares underlying options to purchase shares of
Common Stock.
(11) Represents 123,932 shares underlying options to purchase shares of Common
Stock.
(12) Represents 485,062 shares underlying options to purchase shares of Common
Stock.
(13) Represents 142,168 shares of Common Stock held directly by LWAC Sponsor and
allocated to Mr. Ehrlich by Locust Walk Partners LLC (LWP), a member of LWAC
Sponsor, and 1,034 shares of Common Stock held directly by LWAC Sponsor and
allocated to Mr. Ehrlich's spouse by LWP.
(14) Represents 24,142 shares underlying options to purchase shares of Common
Stock.
(15) Represents 10,624,867 shares of Common stock and 2,019,085 options to
purchase shares of Common Stock.
Executive Officers and Directors eFFECTOR's directors and executive officers after the consummation of the Business Combination are described in the Proxy Statement/Prospectus in the section titled " Management After the Merger " beginning on page 260 and that information is incorporated herein by reference. Upon consummation of the Business Combination, each executive officer of LWAC ceased serving in such capacities, and each ofBrian G. Atwood ,Daniel Geffken ,Barbara A. Kosacz andCaroline M. Loewy ceased serving on LWAC's board of directors. Upon consummation of the Business Combination,Dr. Worland was appointed as eFFECTOR's President and Chief Executive Officer,Michael Byrnes was appointed as eFFECTOR's Chief Financial Officer and Secretary,Alana B. McNulty was appointed as eFFECTOR's Chief Business Officer andPremal Patel , M.D., Ph.D. was appointed as eFFECTOR's Chief Medical Officer. Upon consummation of the Business Combination,Elizabeth P. Bhatt ,Chris Ehrlich ,Brian M. Gallagher , Jr., Ph.D.,Laurence Lasky , Ph.D.,Jonathan D. Root , M.D.,John W. Smither andStephen T. Worland , Ph.D. were appointed as directors of eFFECTOR by the holders of Class B common stock of LWAC, to serve until the end of their respective terms and until their successors are elected and qualified, withDr. Gallagher appointed to serve as Chairman of the Board. Following the Business Combination, eFFECTOR's Board is divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the directors whose terms then expire will be eligible for reelection until the third annual meeting following reelection.Dr. Root andMr. Worland will serve as the initial Class I directors for a term expiring at the first annual meeting of the stockholders;Mr. Ehrlich ,Dr. Gallagher andMr. Smither will serve as the initial Class II directors for a term expiring at the second annual meeting of the stockholders; andMs. Bhatt andDr. Lasky will serve as the initial Class III directors for a term expiring at the third annual meeting of the stockholders. -------------------------------------------------------------------------------- Executive and Director Compensation The compensation of eFFECTOR's executive officers and directors is described in the Proxy Statement/Prospectus in the section titled " eFFECTOR ' s Executive and Director Compensation " beginning on page 265 and that information is incorporated herein by reference. Certain Relationships and Related Transactions Certain relationships and related party transactions of eFFECTOR are described in the Proxy Statement/Prospectus in the section titled " Certain Relationships and Related Transactions " beginning on page 277 and are incorporated herein by reference. Legal Proceedings eFFECTOR is not currently a party to any material legal proceedings. However, from time to time, eFFECTOR may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Regardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. Market Price of and Dividends on the Registrant ' s Common Equity and Related Stockholder Matters Market Information Shares of eFFECTOR's Common Stock and eFFECTOR's warrants commenced trading on Nasdaq under the symbols "EFTR" and "EFTRW," respectively, onAugust 26, 2021 , subject to ongoing review of eFFECTOR's satisfaction of all listing criteria following the Business Combination, in lieu of the Class A common stock, warrants and units of LWAC. LWAC's units ceased trading separately on Nasdaq onAugust 25, 2021 . Information respecting LWAC's Class A common stock, warrants and units and related stockholder matters are described in the Proxy Statement/Prospectus in the section titled " Trading Market and Dividends " on page 35 and such information is incorporated herein by reference. Holders As of the Closing and following the completion of the Transactions, including the redemption of Initial Shares as described above and the consummation of thePIPE Investment , the Company had 40,669,373 shares of Common Stock outstanding held of record by 88 holders, no shares of preferred stock outstanding, and 6,015,000 warrants outstanding held of record by two holders. Such amounts do . . .
© Edgar Online, source
