Pathos AI Completes Acquisition of Rain Oncology

Rhea-AI Summary

Pathos AI, Inc. successfully completed the acquisition of Rain Oncology Inc. at $1.16 per share in cash plus one contingent value right per share. The tender offer saw 28,031,182 shares of Rain common stock tendered, representing approximately 77% of the outstanding shares. Following the merger, Rain became a wholly owned subsidiary of Pathos, and its shares ceased trading on Nasdaq.

Insights

Financial Analyst

The acquisition of Rain Oncology Inc. by Pathos AI, Inc. represents a significant consolidation within the biotechnology sector, specifically in the oncology space. This transaction, involving a cash payment and contingent value rights (CVRs), is likely to have a direct financial impact on both companies' valuations. The payment of $1.16 per share, while seemingly modest, needs to be assessed against Rain's pre-acquisition trading levels, cash reserves, debt profile and pipeline potential. The CVRs add a layer of complexity and potential value, as they are tied to future milestones which could include drug development progress, regulatory approvals, or sales targets.

For investors and stockholders, the immediate liquidity event is a certainty, but the CVRs represent a risk-reward scenario that hinges on Rain's future success under Pathos's umbrella. The market response to such mergers often reflects not only the immediate financial implications but also the strategic fit and the anticipated synergies. Investors will be keen to understand how Pathos plans to integrate Rain's assets and whether this acquisition can drive long-term growth beyond the immediate accretion to earnings.

Medical Research Analyst

From a medical research perspective, the acquisition of Rain by Pathos signifies a strategic move to bolster Pathos's portfolio in the oncology segment. The contingent value rights component is particularly intriguing, as it suggests that Rain's pipeline contains assets that could yield significant value upon reaching certain developmental milestones. For stakeholders with a focus on the scientific and medical implications, the nature of these milestones will be of great interest.

The success of oncology treatments in clinical trials and the subsequent approval by regulatory bodies like the FDA can drastically alter the market dynamics. Pathos’s acquisition, therefore, might be predicated on the belief that Rain's research could lead to breakthrough therapies. The future payments tied to the CVRs will be contingent upon achieving these milestones, which underscores the inherent uncertainty and high stakes involved in pharmaceutical research and development.

Market Research Analyst

Assessing the broader market implications, the acquisition of Rain by Pathos may signal a trend of consolidation in the biotech sector, particularly in areas with high growth potential like oncology. The cessation of trading of Rain's shares and the planned delisting from Nasdaq is a standard procedure following such mergers, indicating a transition from a public to a private entity within Pathos's corporate structure.

Analyzing the transaction from a market standpoint involves understanding the competitive landscape of oncology treatments and how this acquisition might alter Pathos's market position. It may provide Pathos with a competitive edge in terms of intellectual property, research talent and a more robust pipeline. The long-term market impact will largely depend on the successful integration of Rain's assets and the realization of the milestones associated with the CVRs.

Rain Stockholders to Receive $1.16 Per Share in Cash Plus Contingent Value Rights

CHICAGO--(BUSINESS WIRE)-- Pathos AI, Inc. (“Pathos”) today announced that it has, through its wholly owned subsidiary WK Merger Sub, Inc. (“Merger Sub”), successfully completed its tender offer to acquire all outstanding shares of the common stock of Rain Oncology Inc. (Nasdaq: RAIN) (“Rain”) for $1.16 per share in cash plus one contingent value right per share (each, a “CVR”), which CVR shall represent the right to receive potential payments pursuant to the terms and subject to the conditions of the Contingent Value Rights Agreement, dated as of January 26, 2024, by and among Pathos, Merger Sub, Equiniti Trust Company, LLC, and Fortis Advisors LLC.

The tender offer expired as scheduled at one minute after 11:59 p.m., Eastern Time, on January 25, 2024. As of the expiration of the tender offer, a total of 28,031,182 shares of Rain common stock had been validly tendered and not validly withdrawn from the tender offer, representing approximately 77% of the outstanding shares of Rain common stock. The conditions to the tender offer were satisfied and Merger Sub has accepted for payment and will promptly pay for all validly tendered shares.

Following the closing of the tender offer, Merger Sub merged with and into Rain (the “Merger”) and 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 (other than shares held in the treasury of Rain or owned, directly or indirectly, by Parent or its subsidiaries, or by any stockholder of Rain who was entitled to and properly demanded appraisal of such shares pursuant to Delaware law) were cancelled and converted into the right to receive the same $1.16 per share in cash plus one CVR per share. 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.

About Rain Oncology Inc.

Rain Oncology Inc. is a precision oncology company developing therapies that target oncogenic drivers to genetically select patients it believes will most likely benefit. Rain’s product candidate, milademetan, is a small molecule, oral inhibitor of the p53-MDM2 complex that reactivates p53.

About Pathos AI, Inc.

Pathos AI, Inc. is a clinical stage biotechnology company focused on re-engineering drug development. By leveraging the power of AI technologies, multimodal real-world data, and patient-derived biological models, Pathos brings precision medicines to market through partnership with biopharmaceutical companies. Additional information can be found at www.pathos.com.

Important Notices

Cautionary Note Regarding Forward-Looking Statements

This communication contains forward-looking statements within the meaning of U.S. federal securities laws, including, without limitation, statements regarding the payment and timing of payment of the offer consideration to former Rain common stockholders and the ability and timing of delisting of Rain’s common stock. Any forward-looking statements in this press release are based on current expectations and beliefs and are subject to a number of risks and uncertainties, including, but not limited to, the risk that the timing of the payment or delisting may be delayed. The words “estimates,” “expects,” “continues,” “intends,” “plans,” “anticipates,” “targets,” “may,” “will,” “would,” “could,” “should,” “potential,” “goal,” and “effort” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements are based on current plans, estimates and projections. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific. Rain cautions that a number of important factors, including those described in this communication, could cause actual results to differ materially from those contemplated in any forward-looking statements. Rain cautions investors not to place undue reliance on any forward-looking statements. Any forward-looking statements contained in this communication represent Rain’s views only as of the date hereof and should not be relied upon as representing its views as of any subsequent date. Rain disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240126877395/en/

LifeSci Advisors

Daniel Ferry

+1.617.430.7576

daniel@lifesciadvisors.com or ir@rainoncology.com

Source: Pathos AI, Inc.

FAQ

What was the acquisition price per share offered by Pathos AI, Inc. for Rain Oncology Inc.?

Pathos AI, Inc. offered $1.16 per share in cash plus one contingent value right per share for the acquisition of Rain Oncology Inc.

How many shares of Rain common stock were tendered in the acquisition?

A total of 28,031,182 shares of Rain common stock were tendered in the acquisition, representing approximately 77% of the outstanding shares.

What happened to Rain Oncology Inc. after the merger with Pathos AI, Inc.?

Following the merger, Rain became a wholly owned subsidiary of Pathos, and its shares ceased trading on Nasdaq.