Gracell Biotechnologies Announces Shareholders’ Approval of Merger Agreement

Rhea-AI Summary

Gracell Biotechnologies Inc. shareholders have approved the Agreement and Plan of Merger with AstraZeneca Treasury Limited and Grey Wolf Merger Sub, leading to Gracell becoming a private company and delisting from the Nasdaq Global Select Market.

Insights

Financial Analyst

The approval of the Merger Agreement by Gracell Biotechnologies' shareholders represents a significant corporate event, with notable implications for the company's financial structure and its investors. The overwhelming support for the merger, indicated by the 99.9% approval rate, underscores the confidence of the shareholders in the strategic direction proposed by the management. The transition of Gracell from a public entity to a private subsidiary will likely result in a more streamlined decision-making process, potentially accelerating product development and commercialization strategies.

However, for current investors, the cessation of public trading of Gracell's ADSs implies the loss of liquidity and the ability to trade shares on the open market. This could be a drawback for those who rely on the flexibility of public markets. Additionally, the termination of the ADS program may affect the valuation of the remaining shares, as they will no longer reflect the demand and supply dynamics of the stock exchange.

Market Research Analyst

The merger between Gracell Biotechnologies and AstraZeneca's subsidiary is indicative of ongoing consolidation in the biopharmaceutical industry, especially within the cell therapy segment. Such mergers and acquisitions are often pursued to enhance research and development capabilities, expand product pipelines and leverage synergies. For the broader market, this transaction may signal a trend towards integration, which could prompt competitors to seek similar strategic partnerships or mergers to bolster their market positions.

From a market perspective, the deal may also reflect AstraZeneca's commitment to expanding its portfolio in oncology and autoimmune treatments. This could potentially lead to increased competition in these therapeutic areas, influencing market dynamics and possibly driving innovation.

Legal Expert

The legal intricacies of the merger, involving a cross-border agreement between companies in China, the Cayman Islands and the United Kingdom, highlight the complex nature of international business transactions. The adherence to the Companies Act of the Cayman Islands and the execution of the Contingent Value Rights Agreement suggest that the deal has been structured to protect the interests of the shareholders post-merger. Such agreements typically address the shareholders' rights to receive additional benefits if certain predefined conditions are met after the merger, which can be a significant consideration for investors evaluating the fairness of the transaction.

Moreover, the legal transition of Gracell into a wholly owned subsidiary involves regulatory approvals and compliance with various jurisdictions, which must be meticulously navigated to ensure a smooth merger process. The successful execution of this merger could serve as a case study for similar transactions in the biopharmaceutical sector, illustrating the importance of thorough legal planning and shareholder engagement in cross-border mergers.

SAN DIEGO and SUZHOU, China and SHANGHAI, China, Feb. 20, 2024 (GLOBE NEWSWIRE) -- Gracell Biotechnologies Inc. (“Gracell” or the “Company”, NASDAQ: GRCL), a global clinical-stage biopharmaceutical company dedicated to developing innovative and highly efficacious cell therapies for the treatment of cancer and autoimmune disease, today announced that at an extraordinary general meeting of shareholders (the “EGM”) held on February 19, 2024, the Company’s shareholders voted in favor of the proposal to approve and authorize the execution, delivery and performance by the Company of the previously announced Agreement and Plan of Merger, dated as of December 23, 2023 (the “Merger Agreement”), by and among the Company, AstraZeneca Treasury Limited, a private limited company incorporated under the laws of England and Wales (“Parent”), and Grey Wolf Merger Sub, an exempted company with limited liability incorporated under the laws of the Cayman Islands and a wholly owned subsidiary of Parent (“Merger Sub”), the Plan of Merger required to be filed with the Registrar of Companies of the Cayman Islands (the “Plan of Merger”), and the other agreements or documents contemplated by the Merger Agreement or any document or instrument delivered in connection thereunder (the “Transaction Documents”) to which the Company is a party and the consummation of the transactions contemplated by the Merger Agreement (including the Merger) and the Contingent Value Rights Agreement, in the form attached as Exhibit B to the Merger Agreement, (collectively, the “Transactions”), upon the terms and subject to the conditions set forth therein. Pursuant to the Merger Agreement, in accordance with the applicable provisions of the Companies Act (As Revised) of the Cayman Islands, Merger Sub will merge with and into the Company at the effective time of the Merger, with the Company continuing as the surviving company and becoming a wholly owned subsidiary of the Parent (the “Merger”).

At least 458,283,333 of the Company’s total outstanding ordinary shares, par value of $0.0001 per share (“Ordinary Shares”), including Ordinary Shares represented by the Company’s American Depositary Shares (the “ADSs”), attended the EGM in person or by proxy. Each shareholder has one vote for each Ordinary Share. These shares represented approximately 94.8% of the total outstanding votes represented by the Company’s total Ordinary Shares outstanding at the close of business in the Cayman Islands on the record date of January 8, 2024. The Merger Agreement, the Plan of Merger and the Transactions, were approved by approximately 99.9% of the total votes cast at the EGM.

The Merger is expected to close on or around February 22, 2024, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement. If and when the Merger is completed, it would result in the Company becoming a private company and its ADSs would no longer be listed or traded on any stock exchange, including the Nasdaq Global Select Market, and the Company’s ADS program would be terminated.

About Gracell

Gracell is a global clinical-stage biopharmaceutical company dedicated to discovering and developing breakthrough cell therapies for the treatment of cancers and autoimmune diseases. Leveraging its innovative FasTCAR and TruUCAR technology platforms and SMART CART™ technology module, Gracell is developing a rich clinical-stage pipeline of multiple autologous and allogeneic product candidates with the potential to overcome major industry challenges that persist with conventional CAR-T therapies, including lengthy manufacturing time, suboptimal cell quality, high therapy cost, and lack of effective CAR-T therapies for solid tumors and autoimmune diseases. The lead candidate BCMA/CD19 dual-targeting FasTCAR-T GC012F is currently being evaluated in clinical studies for the treatment of multiple myeloma, B-NHL and SLE. For more information on Gracell, please visit www.gracellbio.com. Follow @GracellBio on LinkedIn.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this Form 6-K contain “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about the beliefs and expectations and statements relating to the proposed Transactions and the expected timing for the completion thereof, are forward-looking statements. The words “anticipate,” “look forward to,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including, but not limited to: the satisfaction of the conditions precedent to the consummation of the Transactions; the possibility that the milestone related to the contingent value right will not be achieved, even if the Transactions are consummated; unanticipated difficulties or expenditures relating to the Transactions; legal proceedings, judgments or settlements, including those that may be instituted against the Company, the Company’s board of directors and executive officers and others following the announcement of the Transactions; disruptions of current plans and operations caused by the announcement of the Transactions; potential difficulties in employee retention due to the announcement of the Transactions; and other risks and uncertainties and the factors discussed in the section entitled “Risk Factors” in the Company’s most recent annual report on Form 20-F, as well as discussions of potential risks, uncertainties, and other important factors in the Company’s subsequent filings with the Securities and Exchange Commission (the “SEC”). Any forward-looking statements contained in this Form 6-K speak only as of the date hereof. Except as may be required by law, neither the Company nor Parent undertakes any duty to update these forward-looking statements.

FAQ

What was approved by Gracell Biotechnologies Inc. shareholders at the extraordinary general meeting?

Gracell shareholders voted in favor of the proposal to approve and authorize the Merger Agreement with AstraZeneca Treasury Limited and Grey Wolf Merger Sub.

When is the expected closing date for the Merger?

The Merger is anticipated to close on or around February 22, 2024, subject to meeting the conditions set in the Merger Agreement.

What percentage of total votes cast approved the Merger Agreement at the EGM?

Approximately 99.9% of the total votes cast at the EGM approved the Merger Agreement.

What will happen to Gracell Biotechnologies Inc. if the Merger is completed?

Upon completion of the Merger, Gracell will become a private company, and its ADSs will no longer be listed or traded on any stock exchange.