Item 1.01 Entry into a Material Definitive Agreement
CSR Agreement
On the Closing Date, Menlo and American Stock Transfer & Trust Company, LLC
entered into a Contingent Stock Rights Agreement (the "CSR Agreement") governing
the terms of the contingent stock rights (the "CSRs") received by Foamix's
shareholders. Pursuant to the CSR Agreement, each CSR will become convertible
upon the occurrence of the following triggering events (and upon certain
triggering events will entitle its holder to receive from Menlo a number of
shares of Menlo common stock, par value $0.0001 per share (the "Menlo Common
Stock")):
(A) If the top-line primary endpoint results of one or both of the Phase III
double-blinded, placebo-controlled trials for the treatment of pruritus
associated with prurigo nodularis, referenced by Protocol Numbers MTI-105
(United States) and MTI-106 (Europe) (each, a "Phase III PN Trial") (the
"Efficacy Determination") reports that Serlopitant Significance (as defined
in the Merger Agreement) was achieved in both Phase III PN Trials on or
before May 31, 2020, then each CSR will be terminated and the holders thereof
will not be entitled to additional shares of Menlo Common Stock;
(B) If the Efficacy Determination reports that (1) Serlopitant Significance was
achieved in only one Phase III PN Trial on or before May 31, 2020 and (2)
Serlopitant Significance was not achieved or has not been determined on or
before May 31, 2020 in the other Phase III PN Trial, then each CSR will be
converted into 0.6815 shares of Menlo Common Stock, resulting in an effective
exchange ratio in the Merger of 1.2739 shares of Menlo Common Stock for each
Foamix Share (as defined below); and
(C) If the Efficacy Determination reports that Serlopitant Significance was not
achieved in either of the Phase III PN Trials or the Efficacy Determination
has not been delivered on or before May 31, 2020, then each CSR will be
converted into 1.2082 shares of Menlo Common Stock, resulting in an effective
exchange ratio in the Merger of 1.8006 shares of Menlo Common Stock for each
Foamix Share.
No fractional shares of Menlo Common Stock will be issued upon the conversion of
the CSRs, and former Foamix shareholders will receive cash in lieu of fractional
shares, as specified in the CSR Agreement.
If the CSRs become convertible, each person holding a Foamix restricted stock
unit award immediately prior to the Effective Time (as defined below) will get
additional Menlo restricted stock unit awards based on the additional shares
that each Foamix Share will get upon conversion of a CSR. Similarly, if the CSRs
become convertible post-closing, then the Menlo board of directors (the "Board")
will make equitable adjustments to the exercise price per share of and the
number of shares of Menlo common stock that are subject to Menlo options that
were issued in exchange for Foamix options on the Closing Date. Each Foamix
warrant assumed by Menlo on the Closing Date will become exercisable for (in
addition to the number of Menlo shares issuable based on the Exchange Ratio (as
defined in Item 2.01 below) multiplied by the number of Foamix Shares underlying
the warrant immediately prior to the Closing Date) one CSR for each Foamix share
that the holder of such Foamix warrant would have been entitled to receive had
such Foamix warrant been exercised prior to the Closing Date.
The CSRs are not transferable except under certain limited circumstances, will
not be evidenced by a certificate or other instruments and will not be
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets
The disclosures under the Introductory Note are incorporated herein by
reference.
At the effective time of the Merger (the "Effective Time"), each ordinary share,
par value NIS 0.16 per share, of Foamix ("Foamix Shares") issued and outstanding
immediately prior to the Effective Time was deemed transferred under Israeli law
to the Company in exchange for the right to receive (i) 0.5924 (the "Exchange
Ratio") of a share of Menlo Common Stock and (ii) one CSR, which is subject to
the terms and conditions of the CSR Agreement described above (collectively, the
"Merger Consideration"). No fractional shares of Menlo Common Stock were issued
in the Merger, and former Foamix shareholders are entitled to receive cash in
lieu of any such fractional shares.
Also, at the Effective Time, each Foamix option and Foamix restricted stock unit
award that was outstanding immediately prior to the Effective Time was assumed
by the Company. Each Foamix restricted stock unit award was converted into a
restricted stock unit award relating to Menlo Common Stock (an "Adjusted RSU
Award") and has the same terms and conditions as applied to the Foamix
restricted stock unit award immediately prior to the Effective Time. The
Adjusted RSU Award will settle in the number of shares of Menlo Common Stock
equal to the product obtained by multiplying (i) the number of Foamix Shares
subject to the Foamix restricted stock unit award immediately prior to the
Effective Time by (ii) the Exchange Ratio. Additionally, at the Effective Time,
each Foamix option was converted into an option to purchase Menlo Common Stock
(an "Adjusted Option") with the same terms and conditions as applied to the
Foamix option immediately prior to the Effective Time; however, the Adjusted
Option covers a number of shares of Menlo Common Stock equal to the product of
(i) the number of Foamix Shares subject to the Foamix option immediately prior
to the Effective Time and (ii) the Exchange Ratio, and has an exercise price per
share equal to the quotient of (i) the exercise price per Foamix Share subject
to such Foamix option immediately prior to the Effective Time divided by (ii)
the Exchange Ratio.
Also, at the Effective Time, each warrant to purchase Foamix Shares has been
assumed by the Company and converted into a warrant that upon its exercise will
entitle the holder to receive such number of shares of Menlo Common Stock and
CSRs that the holder of such warrant would have been entitled to receive had
such warrant been exercised prior to the Effective Time (each such warrant, a
"Menlo Warrant"). Promptly following the conversion of each CSR into shares of
Menlo Common Stock or alternatively the termination of the CSRs, in each case in
accordance with the terms of the CSR Agreement, each Menlo Warrant will be
amended and restated in accordance with its terms to reflect that such warrant
will no longer be exercisable for CSRs but instead will entitle the holder to
receive upon the exercise of such warrant, such number of additional shares of
Menlo Common Stock, if any, that the CSRs which the holder was entitled to
receive upon exercise of the Menlo Warrant would have converted had they been
issued to such holder prior to the date on which the CSRs converted into shares
of Menlo Common Stock.
Upon completion of the Merger, approximately 36.6 million shares of Menlo Common
Stock were issued by the Company as consideration for the Merger in respect of
issued and outstanding Foamix Shares and immediately after completion of the
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off- Balance Sheet Arrangement of a Registrant
The information included under the heading "Credit Facility" in Item 1.01 of
this Current Report on Form 8-K is incorporated herein by reference.
Item 3.03 Material Modification to the Rights of Security Holders
The information set forth in Items 2.01 and 5.01 of this Current Report on Form
8-K is incorporated by reference into this Item 3.03.
Item 5.01 Changes in Control of Registrant
The information set forth in the Introductory Note and Item 2.01 of this Current
Report on Form 8-K is incorporated by reference into this Item 5.01.
In accordance with the Merger Agreement, on March 9, 2020, immediately prior to
the Effective Time, each of the directors of the Company, other than Elisabeth
Sandoval, resigned from the Board. Following such resignations and effective as
of the Effective Time, Steve Basta was reappointed as a director of the Company
and the following individuals, all of whom were directors of Foamix prior to the
Merger, were appointed to the Board: Sharon Barbari and Rex Bright, as directors
whose terms expire at the Company's 2020 annual meeting of stockholders; David
Domzalski and Stanley Hirsch, as directors whose terms will expire at the
Company's 2021 annual meeting of stockholders; and Anthony Bruno, as a director
whose term will expire at the Company's 2022 annual meeting of stockholders. Mr.
Basta's and Ms. Sandoval's term will expire at the Company's 2022 annual meeting
of stockholders.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignations of Executive Officers and Directors of the Company
In accordance with the Merger Agreement, on March 9, 2020, immediately prior to
the Effective Time, (i) Mr. Basta resigned as President, Chief Executive Officer
and Principal Executive Officer, (ii) Kristine Ball resigned as Senior Vice
President, Corporate Strategy, Chief Financial Officer and Principal Financial
and Accounting Officer, (iii) Paul Kwon resigned as Chief Scientific Officer,
and (iv) Paul Berns, Ted Ebel, David McGirr and Scott Whitcup resigned from the
Board and any respective committee of the Board to which they belonged, which
resignations were not the result of any disagreements with the Company relating
to the Company's operations, policies or practices.
Appointment of Certain Officers of the Company
In accordance with the Merger Agreement, on March 9, 2020, the Board appointed
the following officers of the Company, effective immediately after the Effective
Time:
David Domzalski (age 53) is the Company's Chief Executive Officer and also
serves as a director. From July 2017 until the Closing Date, Mr. Domzalski
served as the Chief Executive Officer of Foamix. He also served as a director of
Foamix beginning in January 2018. Mr. Domzalski's tenure with Foamix began in
April 2014 and previously served as President of its U.S. subsidiary.
Previously, Mr. Domzalski was the Vice President of Sales and Marketing at LEO
Pharm Inc. from 2009 to 2013. Mr. Domzalski holds a B.A. in economics and
political science from Muhlenberg College, Allentown, Pennsylvania.
Ilan Hadar (age 50) is the Company's Chief Financial Officer. From February 2014
until the Closing Date, Mr. Hadar served as the Chief Financial Officer of
Foamix. He also served as Foamix's Israel Country Manager beginning in July
2017. Mr. Hadar holds a B.A. in business administration and economics and an
M.B.A. from The Hebrew University of Jerusalem.
Mutya Harsch (age 45) is the Company's General Counsel and Chief Legal Officer.
From January 2019 until the Closing Date, Ms. Harsch served as the General
Counsel and Chief Legal Officer of Foamix. She previously served as Foamix's
General Counsel and Senior Vice President of Legal Affairs from January 2018 to
January 2019. Ms. Harsch has over 19 years of legal experience, previously
holding positions as Special Counsel, Mergers & Acquisitions at Cooley LLP from
2015 to 2017 and as a corporate lawyer at Davis Polk & Wardwell from 2005 to
2015. Ms. Harsch received her J.D. and B.A. from the University of California at
Berkeley.
Iain Stuart, Ph.D. (age 47) is the Company's Chief Scientific Officer. From
January 2019 until the Closing Date, Dr. Stuart served as the Chief Scientific
Officer of Foamix. Dr. Stuart previously served as Foamix's Senior Vice
President of Research & Development from August 2017 to January 2019 and as Vice
President of Clinical Development from October 2016 to 2017. Prior to joining
Foamix, Dr. Stuart held several positions, including Vice President of Medical
Strategy and Scientific Affairs at LEO Pharma, Inc. from 2008 to 2016. Dr.
Stuart holds a Ph.D. from Glasgow Caledonian University in Scotland.
Matthew Wiley (age 48) is the Company's Chief Commercial Officer. From November
2018 until the Closing Date, Mr. Wiley served as the Chief Commercial Officer of
Foamix. Mr. Wiley has more than 20 years of commercial experience across a broad
range of specialty pharmaceutical categories. Prior to joining Foamix, Mr. Wiley
held several positions of increasing responsibility at Jazz Pharmaceuticals from
2012 to 2018, including as Vice President of Marketing and Business Unit Lead
for the company's sleep disorder portfolio. He holds a B.A. in English from
Syracuse University.
Appointment of Non-Employee Directors of the Company
In accordance with the Merger Agreement, on March 9, 2020, effective immediately
after the Effective Time, the following individuals were appointed to the Board
as non-employee directors:
Stanley Hirsch, D.Phil. (age 62) served as a director of Foamix from February
2005 until the Closing Date and as its chairman since May 2016. Dr. Hirsch has
over 30 years of experience in executive positions, including director of
business development for a privately held group of healthcare companies. He has
also served as general manager of two diagnostics development companies. Dr.
Hirsch has served as Chief Executive Officer of FuturaGene Ltd. and its
predecessor company, CBD Technologies Ltd., since 1995, and has also held the
position of General Manager of Portman Pharmaceutical Industries. Since the
acquisition of FuturaGene Plc by Suzano Pulp and Paper, a Brazilian industrial
public corporation in July 2010, he has held a position equivalent to a vice
president at Suzano. Dr. Hirsch currently serves as chairman of the board of
directors of OWC Pharmaceutical Research Corp, a position he has held since July
2017. Dr. Hirsch holds a D. Phil. in Cell Biology and Immunology from Oxford
University, England.
Rex Bright (age 79) served as a director of Foamix from September 2014 until the
Closing Date. Mr. Bright is currently retired, but previously held chief
executive officer positions in the health care industry for over 20 years. Mr.
Bright was the co-founder and Chief Executive Officer of SkinMedica, a specialty
pharmaceutical business that was later acquired by Allergan in 2012. Mr. Bright
also held executive positions for Johnson & Johnson and GlaxoSmithKline. Mr.
Bright previously served as a director of RestorGenex Corporation until 2016
when the company was acquired. Mr. Bright holds a B.A. in Business
Administration and Marketing from Drury University.
Anthony Bruno (age 63) served as a director of Foamix from November 2018 until
the Closing Date. Mr. Bruno also served as a strategic advisor to Foamix from
2014 until August 2018. Mr. Bruno is currently retired. He previously served as
a strategic consultant to various healthcare-focused investment funds from 2011
to January 2018 and was employed at Warner Chilcott from 2000 to 2011, most
recently as Executive Vice President, with responsibility for all business
development activities including product acquisitions and divestitures as well
as licensing agreements. Mr. Bruno also spent 16 years at Warner Lambert,
holding several positions of increasing strategic responsibility. Mr. Bruno
began his legal career as an associate with Shearman & Sterling. Mr. Bruno holds
a B.A. in Political Science from Syracuse University, and a J.D. from The George
Washington University Law School.
. . .
Item 8.01. Other Events.
Tax Rulings
Under applicable tax laws of Israel, any consideration to Foamix's shareholders
and beneficiaries of equity-based compensation is subject to withholding tax
obligations.
On March 5, 2020, Foamix obtained a ruling from the Israeli tax authority under
which all shareholders, registered and others, other than shareholders and
beneficiaries of equity-based compensation, that beneficially own 5% or more of
Foamix's share capital shall be exempt from any Israeli tax withholding, with no
further action required by them. The consideration to the owners of equity based
compensation is or shall be governed by a separate customary tax ruling(s).
On March 8, 2020, Foamix obtained a ruling from the Israeli tax authority under
which all non-Israeli equity award holders shall be exempt from any Israeli tax
withholding on their consideration subject to the completion of a tax
declaration form, as provided in the tax ruling.
On March 9, 2020, Foamix obtained a ruling from the Israeli tax authority under
which two shareholders that beneficially own more than 5% of Foamix's share
capital, shall be exempt from any Israeli tax withholding on their
consideration.
Press Release
On March 9, 2020, the Company issued a press release announcing the completion
of the Merger. A copy of the press release is attached hereto as Exhibit 99.1.
Change of Address of Principal Executive Office
The Company has changed its principal executive office address to 520 U.S.
Highway 22, Suite 204, Bridgewater, New Jersey 08807.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The required financial statements for the transaction described in Item 1.01 of
this Current Report on Form 8-K will be filed as soon as practicable and no
later than the required filing date.
(b) Pro Forma Financial Information
The required pro forma financial information for the transaction described in
Item 1.01 of this Current Report on Form 8-K will be filed as soon as
practicable and no later than the required filing date.
(d) Exhibits
The following exhibits are filed herewith.
Exhibit No. Description
4.1 Form of Warrant, by and among Menlo Therapeutics Inc. and certain
warrant holders of Foamix Pharmaceuticals Ltd.
10.1 Contingent Stock Rights Agreement, dated as of March 9, 2020, by and
between Menlo Therapeutics Inc. and American Stock Transfer & Trust
Company, LLC.
99.1 Press release, dated March 9, 2020
© Edgar Online, source Glimpses