Pathos AI, Inc. submitted a non-binding proposal to acquire Rain Oncology Inc. (NasdaqGS:RAIN) on October 24, 2023. Pathos AI, Inc. entered into a definitive merger agreement to acquire Rain Oncology Inc. (NasdaqGS:RAIN) from Boxer Capital LLC, BVF Partners L.P., Avanish Vellanki and others for $42.2 million on December 13, 2023. As reported, Pathos AI will acquire Rain for $1.16 in cash per share plus a non-tradeable contingent value right (a ?CVR?) for potential cash payments of up to approximately $0.17 per share. Pursuant and subject to the terms of the merger agreement, Pathos will commence a tender offer to acquire all outstanding shares of Rain for $1.16 in cash per share plus a CVR representing a contractual right to receive two potential contingent aggregate cash payments as follows: Cash CVR Payment: an aggregate amount equal to $5 million (up to approximately $0.14 per share), minus (A) certain expenses incurred related to pending or future litigation involving Rain and its directors or officers, minus (B) any shortfall in a target level of net cash, plus (C) any cash at closing in excess of the target net cash. Development CVR Payment: either (i) $1 million (approximately $0.03 per share) upon the first patient dosed in a clinical stage study conducted by Pathos using milademetan within five years of the closing of the merger or (ii) 80% of the net proceeds from any license or disposition of milademetan effected within two years of the closing of the merger. Pursuant and subject to the terms of the merger agreement, a subsidiary of Pathos will commence a tender offer to acquire all outstanding shares of Rain. Pathos AI expects to fund the purchase of the shares in the offer with the available cash on hand as of closing with a portion of said cash being received from 346 Short LLC pursuant to the Equity Commitment prior to the acceptance date. Pursuant to the commitment letter, 346 has agreed to contribute to Pathos AI at or prior to the Acceptance Time, directly or indirectly through one or more intermediaries, an aggregate amount of $25 million, which will be used to fund cash consideration and the merger consideration (exclusive of CVRs). Post acquisition, Rain will operate as a separate, wholly-owned subsidiary of Pathos. Rain Oncology will pay a termination fee of $1.5 million to Pathos, in case Rain Oncology terminates the transaction.

The closing of the tender offer is subject to certain conditions, including the tender of Rain shares representing at least one share more than 50% of the total number of outstanding shares of common stock as of immediately prior to consummation of the tender offer; the availability of at least $49.6 million of cash and cash equivalents, net certain liabilities at closing; and other customary conditions. The stockholders holding approximately 44.0% of the outstanding shares of Rain common stock have entered into support agreements with Pathos pursuant to which they have agreed to tender their shares in the tender offer. The Rain Board of Directors voted unanimously to approve the proposed offer. Rain?s board of directors has unanimously recommended that shareholders accept the offer. If the tender offer is successful, the transaction is expected to close in January 2024. On December 27, 2023, Pathos AI commenced the offer pursuant to the merger agreement. The offer will expire on January 25, 2024, unless the offer is extended. Leerink Partners is acting as exclusive financial advisor and fairness opinion provider and Ryan A. Murr, Branden C. Berns, Chris Trester and Robert Phillips of Gibson, Dunn & Crutcher LLP are acting as legal counsel to Rain. Mitchell S. Bloom, Robert Masella, Jean A. Lee, Daniel S. Karelitz, Sarah M. Bock, Timothy Holahan, Matt Wetzel, Tim Worden, Catherine McCarty, Shane Albright, Jacqueline Klosek, Alexander Varond, Brian H. Mukherjee, Robert H. Fitzgerald and Caroline H. Bullerjahn of Goodwin Procter LLP are acting as legal counsel to Pathos. Equiniti Trust Company, LLC acted as the depositary and paying agent for the offer. MacKenzie Partners, Inc. acted as information agent for the offer.

Pathos AI, Inc. completed the acquisition of Rain Oncology Inc. (NasdaqGS:RAIN) on January 26, 2024. The offer expired at one minute after 11:59 p.m., Eastern Time, on January 25, 2024. The Equiniti Trust Company, LLC and Fortis Advisors LLC advised Pathos AI that, as of the expiration of the Offer, a total of 28,031,182 Shares were validly tendered and not validly withdrawn, representing approximately 77% of the Shares outstanding as of the expiration of the Offer. As of the expiration of the Offer, the number of Shares validly tendered and not validly withdrawn pursuant to the Offer satisfied the Minimum Condition, and all other conditions to the Offer were satisfied. Promptly after the expiration of the Offer, Pathos AI accepted for payment all Shares that were validly tendered and not validly withdrawn pursuant to the Offer. All shares of Rain common stock that were not validly tendered and remained issued and outstanding immediately prior to the effective time of the merger were cancelled and converted into the right to receive the same consideration. As a result of the merger, Rain became a wholly owned subsidiary of Pathos. Shares of Rain common stock have ceased trading on Nasdaq and Pathos intends promptly to cause such shares to be delisted.