Kinnate Biopharma Inc. Enters into Agreement to be Acquired by XOMA Corporation for Between $2.3352 and $2.5879 Per Share in Cash, Plus One Contingent Value Right per Share
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Insights
The proposed acquisition of Kinnate Biopharma by XOMA Corporation is a significant event with potential implications for shareholder value and the strategic positioning of both companies in the precision oncology market. The offer price range, including the base cash price and the additional contingent value, reflects a nuanced approach to valuing Kinnate's pipeline, particularly the investigational pan-RAF inhibitor, exarafenib. The contingent value right mechanism is notable, as it aligns the interests of Kinnate shareholders with the future success of the drug's development and potential disposition.
From a financial perspective, the merger's structure, which includes a tender offer and support agreements from key Kinnate shareholders, suggests a strong likelihood of completion. However, the stipulation of having at least $120 million of cash (net of various costs) at closing is a critical condition that merits attention. This requirement ensures that XOMA retains a robust balance sheet post-acquisition, which is crucial for funding ongoing research and development efforts.
The unanimous approval of the agreement by the Special Committee and the Board, following a thorough review, indicates a strong endorsement of the transaction's terms. Investors should consider the short-term liquidity event this acquisition represents, as well as the long-term potential value creation from the successful development and commercialization of Kinnate's assets.
In the context of the broader biopharmaceutical sector, mergers and acquisitions are often strategic moves to consolidate expertise, expand pipelines and gain access to new technologies. The acquisition of Kinnate by XOMA can be seen as a strategic endeavor to enhance XOMA's portfolio within the precision oncology space. Kinnate's focus on targeted therapies for genomically defined cancers complements XOMA's existing capabilities, potentially leading to a more diverse and competitive product offering.
Market reaction to such mergers typically hinges on the perceived synergies and the ability of the acquiring company to integrate the new assets effectively. Investors and industry observers will be closely monitoring the progress of exarafenib, as its success is likely to be a significant driver of future value for the combined entity. Additionally, the transaction could signal further consolidation in the oncology sector, as companies strive to strengthen their positions in a highly competitive market.
The inclusion of contingent value rights (CVRs) in this merger agreement is a sophisticated legal mechanism designed to bridge valuation gaps and provide Kinnate shareholders with potential future upside related to specific assets. CVRs are complex instruments that require careful structuring to ensure clarity in terms of triggers, payouts and timelines. The legal stipulation that Kinnate shareholders will receive 85% of the net proceeds from the disposition of certain assets within a specified timeframe introduces a layer of financial complexity and legal oversight.
Furthermore, the tender offer process and the requirement for a majority of outstanding shares to be tendered are standard legal procedures in acquisitions. However, the support agreements from Kinnate's officers, directors and key shareholders, who collectively hold a significant portion of the common stock, are instrumental in reducing the uncertainty around achieving this condition. The legal counsel's role in advising on these matters is critical to ensuring regulatory compliance and the protection of shareholder interests.
SAN FRANCISCO and SAN DIEGO, Feb. 16, 2024 (GLOBE NEWSWIRE) -- Kinnate Biopharma Inc. (Nasdaq: KNTE) (“Kinnate” or the “Company”), a clinical-stage precision oncology company, today announced it has entered into a definitive merger agreement (the "Merger Agreement") whereby XOMA Corporation ("XOMA") will acquire Kinnate for a price per share of Kinnate common stock ("Kinnate common stock") of between
Following a thorough review process conducted by a special committee of disinterested and independent members (the “Special Committee”) of Kinnate’s Board of Directors (the “Board”), with the assistance of the Special Committee’s legal and financial advisors, all disinterested and independent members of the Board unanimously determined that the acquisition by XOMA is in the best interests of all Kinnate shareholders, and has, following the unanimous recommendation of the Special Committee, approved the Merger Agreement and related transactions.
Pursuant and subject to the terms of the Merger Agreement, a wholly owned subsidiary of XOMA will commence a tender offer (the "Offer") by March 4, 2024 to acquire all outstanding shares of Kinnate common stock. Closing of the Offer is subject to certain conditions, including the tender of Kinnate common stock representing at least a majority of the total number of outstanding shares, the availability of at least
Advisors
Leerink Partners is acting as lead financial advisor and Wilson Sonsini Goodrich & Rosati is acting as legal counsel to Kinnate. Lazard is also acting as a financial advisor to Kinnate.
About Kinnate Biopharma Inc.
Kinnate Biopharma Inc. is a clinical-stage precision oncology company founded with a mission to inspire hope in those battling cancer by expanding on the promise of targeted therapies. The Company concentrates its efforts on addressing known oncogenic drivers for which there are currently no approved targeted therapies and to overcome the limitations associated with existing cancer therapies, such as non-responsiveness or the development of acquired and intrinsic resistance.
The Company’s lead product candidates are investigational pan-RAF inhibitor, exarafenib, which targets cancers with BRAF and NRAS-driven alterations, and investigational FGFR inhibitor, KIN-3248, which is designed for cancers with FGFR2 and FGFR3 alterations. The Company also has early-stage programs, including a c-MET inhibitor that targets resistant variants and a brain penetrant CDK4 selective program. For more information, visit Kinnate.com and follow the company on LinkedIn to learn about its most recent initiatives.
Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements include, without limitation, those regarding Kinnate’s intention to consummate the merger transaction and other transactions contemplated by the Merger Agreement, the potential disposition of exarafenib or other Kinnate assets and the potential receipt of additional cash by holders of contingent value rights, XOMA’s intention to commence and complete the Offer, Kinnate shareholders’ intention to tender their shares of Kinnate common stock in the Offer and the expected timing of and closing conditions to the merger transaction. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “potential” and similar expressions are also intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends. Such expectations and projections may never materialize or may prove to be incorrect. These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors, including, among other things: implementation of our strategic plan may be unsuccessful, cause disruptions or create unintended consequences; operating as a clinical-stage biopharmaceutical company with a limited operating history; the timing, progress and results of ongoing and planned preclinical studies and clinical trials for our current product candidates; that continued dose escalation in our clinical trials could increase the risk of the occurrence of adverse events; the potential for future clinical trial results to differ from initial results or from our preclinical studies; our ability to timely enroll a sufficient number of patients in our clinical trials; our ability to raise additional capital to finance our operations; our ability to discover, advance through the preclinical and clinical development of, obtain regulatory approval for and commercialize our product candidates; the novel approach we are taking to discover and develop drugs; our ability to timely file and obtain approval of IND applications for our planned clinical trials; competition in our industry; regulatory and legal developments in the United States and other countries; our ability to attract, hire and retain highly skilled executive officers and employees; our ability to protect our intellectual property; reliance on third parties to conduct our ongoing and planned preclinical studies and clinical trials, and to manufacture our product candidates; general economic and market conditions; and other risks. These and other risks, uncertainties, assumptions and other factors are further described under the heading “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 that we have filed with the Securities and Exchange Commission (the “SEC”), as well as in our subsequent filings we make with the SEC. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. Investors should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our forward-looking statements speak only as of the date of this release, and except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason in the future.
Additional Information and Where to Find It
The Offer described in this release has not yet commenced, and this release is neither a recommendation, nor an offer to purchase nor a solicitation of an offer to sell any shares of the common stock of Kinnate or any other securities. On the commencement date of the Offer, a tender offer statement on Schedule TO, including an offer to purchase, a letter of transmittal and related documents, will be filed with the SEC by XOMA and its acquisition subsidiary, and a Solicitation/Recommendation Statement on Schedule 14D-9 will be filed with the SEC by Kinnate. The Offer to purchase the outstanding shares of the common stock of Kinnate will only be made pursuant to the offer to purchase, the letter of transmittal and related documents filed as a part of the Schedule TO. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE TENDER OFFER MATERIALS (INCLUDING THE OFFER TO PURCHASE, A LETTER OF TRANSMITTAL AND RELATED DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 REGARDING THE OFFER, AS THEY MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT INVESTORS AND SECURITY HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. Investors and security holders may obtain a free copy of these statements (when available) and other documents filed with the SEC at the website maintained by the SEC at www.sec.gov or by directing such requests to the information agent for the Offer, which will be named in the tender offer statement. Investors and security holders may also obtain, at no charge, the documents filed or furnished to the SEC by Kinnate under the “SEC Filings” subsection of the “Financial Information” section of the Company’s website at https://investors.kinnate.com/.
Company Contact:
Investors@kinnate.com
FAQ
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