Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On April 1, 2021, Eloxx Pharmaceuticals, Inc., a Delaware corporation ("Eloxx"
or the "Company"), acquired Zikani Therapeutics, Inc., a Delaware corporation
("Zikani"), pursuant to that certain Agreement and Plan of Merger, dated April
1, 2021 (the "Merger Agreement"), by and among Eloxx, Delta Merger Sub
Acquisition Corporation, a Delaware corporation and direct, wholly owned
subsidiary of the Company ("Merger Sub"), and Zikani. Pursuant to the Merger
Agreement, Merger Sub was merged with and into Zikani, with Zikani surviving the
Merger as a wholly owned subsidiary of the Company (the "Merger"). The Eloxx
Board of Directors (the "Eloxx Board") has approved the Merger Agreement and the
related transactions. The consummation of the Merger was not subject to approval
of Eloxx's stockholders.
Under the terms of the Merger Agreement, in connection with the closing of the
Merger, Eloxx issued 7,596,810 shares of Eloxx common stock, $0.01 par value per
share ("Eloxx Common Stock"), in exchange for all of the issued and outstanding
equity interests of Zikani (the "Merger Consideration"). In addition to but
separate from the Merger Consideration, in connection with the Merger, Eloxx
issued restricted stock units under the Eloxx Pharmaceuticals, Inc. 2018 Equity
Incentive Plan (the "Equity Plan") to Sumit Aggarwal, Vijay Modur, Ph.D., Alan
Walts and certain other employees of Zakani covering 223,304, 174,643, 37,695
and 6,500 shares of Eloxx Common Stock, respectively, in respect of each
applicable individual's service as an officer or director of Eloxx (as
applicable) following the consummation of the Merger (the "Closing RSUs"). As a
condition of the grant of Closing RSUs, each of Mr. Aggarwal and Dr. Modur
executed a waiver of their rights to certain payments under a
previously-approved Zikani Management Carve-Out Plan, which payments would have
otherwise been part of the Merger Consideration.
The Merger Agreement contains customary representations, warranties and
covenants of Eloxx and Zikani. The representations and warranties contained in
the Merger Agreement did not survive the closing of the Merger.
Pursuant to the terms of the Merger Agreement, (i) Sumit Aggarwal, Zikani's
President and Chief Executive Officer, was appointed as the President and Chief
Executive Officer of Eloxx, (ii) Dr. Vijay Modur, Zikani's Chief Scientific and
Medical Officer, was appointed as the Head of Research and Development of Eloxx,
and (iii) Sumit Aggarwal, Alan Walts and Rajesh Parekh, each Zikani directors,
were appointed to the Eloxx Board.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
The Merger Agreement has been included to provide investors and security holders
with information regarding its terms. It is not intended to provide any other
factual information about Eloxx or Zikani. The Merger Agreement contains
representations, warranties and covenants that Eloxx or Zikani made to each
other as of specific dates. The assertions embodied in those representations,
warranties and covenants were made solely for purposes of the Merger Agreement
between Eloxx and Zikani and may be subject to important qualifications and
limitations agreed to by Eloxx and Zikani in connection with negotiating its
terms, including being qualified by confidential disclosures exchanged between
the parties in connection with the execution of the Merger Agreement. Moreover,
the representations and warranties may be subject to a contractual standard of
materiality that may be different from what may be viewed as material to
investors or securityholders, or may have been used for the purpose of
allocating risk between Eloxx and Zikani rather than establishing matters as
facts. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of the Merger
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
On April 1, 2021, Eloxx completed its acquisition of Zikani pursuant to the
terms of the Merger Agreement. The information contained in Item 1.01 of this
Current Report on Form 8-K regarding the acquisition of Zikani is incorporated
by reference into this Item 2.01.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report
on Form 8-K regarding the issuance of the Merger Consideration to former Zikani
stockholders is incorporated by reference into this Item 3.02. The Eloxx Common
Stock issued in the Merger was offered and sold in transactions exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance on Section 4(a)(2) thereof and Regulation D thereunder. Each
of the former Zikani stockholders that received the Merger Consideration are
"accredited investors," as defined in Regulation D.
The Eloxx Common Stock issued in the Merger has not been registered under the
Securities Act and such Eloxx Common Stock may not be offered or sold in the
United States absent registration or an exemption from registration under the
Securities Act and any applicable state securities laws. Neither this Current
Report on Form 8-K nor any of the exhibits attached hereto is an offer to sell
or the solicitation of an offer to buy shares of Eloxx Common Stock or any other
securities of Eloxx.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Eloxx Board of Directors
Effective as of the effective time of the Merger on April 1, 2021, each of
Martijn Kleijwegt, Silvia Noiman and Gregory C. Williams resigned from the Eloxx
Board. The resignations were not the result of any disagreements with Eloxx
relating to the Eloxx's operations, policies or practices.
Immediately following the effective time of the Merger on April 1, 2021,
pursuant to the terms of the Merger Agreement, each of Sumit Aggarwal, Alan
Walts and Rajesh Parekh were appointed to the Eloxx Board. Mr. Aggarwal, Dr.
Walts and Dr. Parekh will each serve until the Company's 2021 annual meeting of
stockholders, when they are expected to stand for re-election to the Eloxx Board
by a vote of the Company's stockholders. Dr. Walts was also appointed as a
member of the Audit Committee of the Eloxx Board.
Dr. Parekh and Dr. Walts will each be compensated in accordance with the
Company's standard compensation policies and practices for its non-employee
directors.
In addition, Dr. Walts was granted Closing RSUs as described above. The Closing
RSUs will vest in full on December 1, 2021 (generally subject to Dr. Walts'
continued service through such date). If Dr. Walts is terminated by the Company
due to his death or his "Disability" (as defined in the Equity Plan) prior to
December 1, 2021, the Closing RSUs will vest as of the date of such termination.
The Closing RSUs will also vest in full on the date of a "Corporate Transaction"
(as defined in the Equity Plan), subject to Dr. Walts' continuous service
through the date of such Corporate Transaction.
Mr. Aggarwal served as President and Chief Executive Officer of Zikani since
2019. Mr. Aggarwal joined Zikani in 2018 as Chief Financial Officer and Chief
Business Officer. Prior to joining Zikani, from 2015 to 2018, Mr. Aggarwal
served as acting President and Chief Financial Officer of Progenity, Inc., a
private genetic services company offering pre-natal genetic testing to OB/GYN.
He has also held leadership roles in healthcare and biotechnology at Adage
Capital and as an Associate Partner at McKinsey & Company in its healthcare
practice.
Dr. Parekh is a General Partner at Advent Life Sciences LLP, which he joined in
2006. During an academic career at Oxford University, he co-founded Oxford
GlycoSciences PLC, where he served as Chief Scientific Officer and Chief
Executive Officer from 1988 until its sale to Celltech Group PLC (now UCB SA) in
2003.
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Dr. Walts is a US-based Venture Partner with Advent Life Sciences, a position he
has held since January 2014. Dr. Walts serves as Executive Chairman and Director
of PIC Therapeutics (since 2016) and Artax Biopharma (since 2017). Dr. Walts is
also a founder, Director and Treasurer of The Termeer Foundation, a public
501(c)(3) organization founded in 2019. Dr. Walts has over 25 years of industry
experience at Genzyme in business development, business strategy, research and
development, general management, and venture capital. Prior to leaving Genzyme
in 2013, Dr. Walts most recently managed Genzyme's corporate venture fund,
Genzyme Ventures (now Sanofi Ventures).
Appointment of New President and Chief Executive Officer; Appointment of Head of
Research and Development
Effective as of the effective time of the Merger on April 1, 2021, and pursuant
to the Merger Agreement, (i) Sumit Aggarwal was appointed as the President and
Chief Executive Officer of the Company, and in connection therewith, the Company
and Mr. Aggarwal entered into an Employment Agreement effective as of April 1,
2021 (the "Aggarwal Employment Agreement"); and (ii) Vijay Modur, Ph.D. was
appointed the Company's Head of Research and Development, and in connection
therewith, the Company and Dr. Modur entered into an Employment Agreement
effective as of April 1, 2021 (the "Modur Employment Agreement" and, together
with the Aggarwal Employment Agreement, the "Employment Agreements").
Mr. Aggarwal and Dr. Modur each also executed a Confidentiality and
Non-Competition Agreement, the obligations of which will survive the termination
of the Employment Agreements.
Under the Employment Agreements, (i) Mr. Aggarwal will serve as the President
and Chief Executive Officer of the Company and will be appointed as a member of
the Eloxx Board and, so long as he continues to serve under the Aggarwal
Employment Agreement, will continue to be nominated by the Eloxx Board (or a
committee thereof) for re-election as a member of the Board at the expiration of
the then-current term; and (ii) Dr. Modur will serve as the Company's Head of
Research and Development.
Under the Employment Agreements, Mr. Aggarwal will receive an annual base salary
of $530,000 and Dr. Modur will receive an annual base salary of $425,000. Each
of Mr. Aggarwal and Dr. Modur will also be eligible for an annual bonus with a
target value equal to 50% and 40% of base salary, respectively (as applicable,
the "Target Bonus") and for an annual "stretch" bonus of an additional 50% and
25% of base salary, respectively, with such stretch bonus to be earned, if at
all, based upon achievement of performance goals and/or such other factors as
determined by the Board (or a committee thereof) in its discretion.
In addition, on April 1, 2021, each of Mr. Aggarwal and Dr. Modur was granted
the following equity awards under the Equity Plan: (i) an award of stock options
to purchase 1,423,238 shares and 711,619 shares of Eloxx Common Stock,
respectively, vesting with respect to one-fourth of the shares of Eloxx Common
Stock subject to such stock options on April 1, 2022, and vesting with respect
to the remaining three-fourths of the shares of Eloxx Common Stock subject to
. . .
Item 7.01 Regulation FD.
Eloxx prepared an investor presentation with respect to the Merger. A copy of
the investor presentation is furnished as Exhibit 99.1 to this Current Report on
Form 8-K. Such investor presentation shall not be deemed "filed" for any
purpose, including for the purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or otherwise subject to the
liabilities of that Section. The information in this Item 7.01, including
Exhibit 99.1 attached hereto, shall not be deemed incorporated by reference into
any filing under the Securities Act or the Exchange Act regardless of any
general incorporation language in such filing.
Item 8.01 Other Events.
In anticipation of the consummation of the Merger, the lenders under the Loan
and Security Agreement, dated as of January 30, 2019 (the "Credit Agreement"),
by and among Eloxx, Eloxx Pharmaceuticals Ltd. Silicon Valley Bank and SVP
Innovation Credit Fund VIII, L.P., consented to the Merger for purposes of the
Credit Agreement, and in connection therewith, the Credit Agreement was amended
to, among other things, provide that Zikani will be added as a co-borrower
thereunder.
On April 1, 2021, Eloxx issued a press release announcing the Merger. A copy of
the press release is attached hereto as Exhibit 99.2 and is incorporated herein
by reference.
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Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The financial statements required by this Item are not being filed with this
Current Report on Form 8-K. Such financial statements will be filed by an
amendment to this Current Report on Form 8-K not later than 71 days after the
date on which this Current Report on Form 8-K is required to be filed.
(b) Pro Forma Financial Information
The pro forma financial information required by this Item is not being filed
with this Current Report on Form 8-K. Such pro forma financial information will
be filed by an amendment to this Current Report on Form 8-K not later than 71
days after the date on which this Current Report on Form 8-K is required to be
filed.
(d) Exhibits.
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated April 1, 2021, by and among Eloxx
Pharmaceuticals, Inc., Delta Merger Sub Acquisition Corporation and
Zikani Therapeutics, Inc.*
10.1 Employment Agreement, dated as of April 1, 2021, by and between Sumit
Aggarwal and Eloxx Pharmaceuticals, Inc.
10.2 Employment Agreement, dated as of April 1, 2021, by and between Vijay
Modur and Eloxx Pharmaceuticals, Inc.
10.3 Separation Agreement and General Release, dated as of April 1, 2021, by
and between Gregory C. Williams and Eloxx Pharmaceuticals, Inc.
99.1 Investor Presentation
99.2 Press Release issued April 1, 2021
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation
S-K. Eloxx hereby agrees to furnish supplementally a copy of any of the
omitted schedules upon request by the U.S. Securities and Exchange
Commission.
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