On May 22, 2023, CohBar, Inc., a Delaware corporation ("CohBar"), Chimera MergeCo, Inc., a Delaware corporation and wholly owned subsidiary of CohBar ("Merger Sub"), and Morphogenesis, Inc., a Delaware corporation ("Morphogenesis"), entered into an Agreement and Plan of Merger, dated as of May 22, 2023 (the "Merger Agreement"), pursuant to which, among other matters and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Morphogenesis, with Morphogenesis continuing as a wholly owned subsidiary of CohBar and the surviving corporation of the merger (the "Merger") (Filing, 8-K, CohBar, MAY 22, 2023, View Source [SID1234631956]).
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Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, (a) each then-outstanding share of common stock, par value $0.001 per share, of Morphogenesis (the "Morphogenesis Common Stock") (other than shares held in treasury and Dissenting Shares (as defined in the Merger Agreement)) will be converted into and become exchangeable for a number of shares of common stock, par value $0.001 per share, of CohBar (the "CohBar Common Stock") calculated in accordance with the Merger Agreement (the "Exchange Ratio"), (b) each then-outstanding option to purchase Morphogenesis Common Stock will be assumed and converted by CohBar into an option to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement, and (c) each then-outstanding warrant to purchase shares of Morphogenesis Common Stock (the "Morphogenesis Warrants") will be converted into and exchangeable for a warrant of like tenor entitling the holder to purchase shares of CohBar Common Stock, subject to certain adjustments as set forth in the Merger Agreement. In addition to the foregoing, the Merger Agreement provides that, at the closing of the Merger, the corporate name of CohBar will be changed to "TuHURA Biosciences, Inc."
On a pro forma basis, including the Stock Dividend (as defined below) and, after taking into account the Financing (as defined and described below), pre-Merger Morphogenesis equityholders would own approximately 77% of the combined company, pre-Merger CohBar equityholders would own approximately 15% of the combined company, and the Investor (as defined below) would own approximately 9% of the combined company (excluding in each such case the effect of out-of-the-money options and warrants of CohBar that will remaining outstanding after the Merger). The Exchange Ratio will be equal to the quotient obtained by dividing (a) the Company Merger Shares by (b) the Company Outstanding Shares, as those terms are defined and further described in the Merger Agreement, which has the effect and purpose of determining the number of shares to be issued to pre-Merger Morphogenesis stockholders (or issuable to pre-Merger Morphogenesis option and warrant holders in respect of such options and warrants) based on the relative valuations and fully-diluted shares of each of CohBar and Morphogenesis as of immediately prior to the closing of the Merger. For purposes of calculating the Exchange Ratio, (i) shares of CohBar Common Stock underlying CohBar stock options and warrants outstanding as of immediately prior to the closing of the Merger with an exercise price per share of less than or equal to $2.00 (subject to adjustment pursuant to the Merger Agreement) will be deemed to be outstanding and (ii) all shares of Morphogenesis Common Stock underlying outstanding Morphogenesis preferred stock, stock options, and warrants will be deemed to be outstanding.
In connection with the Merger, CohBar will seek the approval of its stockholders to, among other things, (a) issue shares of CohBar Common Stock issuable in connection with the Merger under the rules of The Nasdaq Stock Market LLC ("Nasdaq"), (b) if deemed advisable, amend CohBar’s amended and restated certificate of incorporation (i) to increase the number of authorized shares of CohBar Common Stock and/or (ii) to effect a reverse stock split of CohBar Common Stock, (c) elect the post-closing directors of CohBar as contemplated by the Merger Agreement and (d) approve a new equity compensation plan in a form approved by CohBar and Morphogenesis ((a), (b) and (c), collectively, the "Required CohBar Stockholder Proposals" and (a), (b), (c) and (d), collectively, the "CohBar Stockholder Matters").
Each of CohBar and Morphogenesis has agreed to customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants relating to (1) obtaining the requisite approval of its respective stockholders, (2) non-solicitation of alternative acquisition proposals, (3) the conduct of its respective business during the period between the signing of the Merger Agreement and the closing of the Merger, (4) CohBar using commercially reasonable efforts to maintain the existing listing of the CohBar Common Stock on Nasdaq and cause the shares of CohBar Common Stock to be issued in connection with the Merger to be approved for listing on Nasdaq prior to the closing of the Merger, and (5) CohBar filing with the U.S. Securities and Exchange Commission (the "SEC") and causing to become effective a registration statement to register the shares of CohBar Common Stock to be issued in connection with the Merger (the "Registration Statement").
Consummation of the Merger is subject to certain closing conditions, including, among other things, (1) approval by the requisite CohBar stockholders of the Required CohBar Stockholder Proposals, (2) adoption and approval by the requisite Morphogenesis stockholders of the Merger Agreement and the transactions contemplated thereby, (3) Nasdaq’s approval of the listing of the common stock of the combined company, (4) the effectiveness of the Registration Statement, (5) the Parent Closing Cash (as defined in the Merger Agreement) being no less than $4,000,000, (6) the number of shares of Morphogenesis Common Stock issuable upon the exercise of the Morphogenesis Warrants as of immediately prior to the Effective Time being not more than 30,000,000 shares of Morphogenesis Common Stock, and (7) the holders of at least 60% of Morphogenesis fully diluted shares executing Lock-Up Agreements (as defined below). Each party’s obligation to consummate the Merger is also subject to other specified customary conditions, including regarding the accuracy of the representations and warranties of the other party, subject to the applicable materiality standard, and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be performed on or prior to the date of the closing of the Merger.
The Merger Agreement contains certain termination rights of each of CohBar and Morphogenesis. Upon termination of the Merger Agreement under specified circumstances, CohBar may be required to pay Morphogenesis a termination fee of $1 million or reimburse Morphogenesis’ expenses up to a maximum of $1.5 million, and Morphogenesis may be required to pay CohBar a termination fee of $3 million or reimburse CohBar’s expenses up to a maximum of $1.5 million.
At the effective time of the Merger (the "Effective Time"), the board of directors of CohBar (the "Board") is expected to consist of seven members, five of whom will be designated by Morphogenesis and two of whom will be designated by CohBar. At the Effective Time, the officers of Morphogenesis as of immediately prior to the Effective Time will become the officers of CohBar.
Financing Transaction
Concurrently with the execution and delivery of the Merger Agreement, CohBar entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with K & V Investment Two, LLC, a Florida limited liability company (the "Investor"). Pursuant to the Stock Purchase Agreement, CohBar will issue, subject to adjustments contained in the Stock Purchase Agreement, 7,500,000 shares of CohBar Common Stock for an aggregate purchase price of $15 million (the "Financing") immediately prior to the Effective Time (the "Initial Closing"). The consummation of the Financing is conditioned on the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement. In addition, pursuant to the Stock Purchase Agreement, CohBar has agreed to sell, at the election of the Investor within six months after the Initial Closing of the Financing and subject to the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement, an aggregate of 7,500,000 additional shares of CohBar Common Stock, subject to adjustments contained in the Stock Purchase Agreement, for an aggregate purchase price of up to $15 million at the same price per share as sold in connection with the Initial Closing.
The Financing is intended to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving a public offering. The Investor has the intent to acquire the shares of CohBar Common Stock for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends will be affixed to the shares of CohBar Common Stock issued in the Financing.
Registration Rights Agreement
At or prior to the Effective Time, pursuant to the Stock Purchase Agreement, CohBar will enter into a Registration Rights Agreement (the "Registration Rights Agreement") with the Investor and certain former holders of the Morphogenesis Warrants (collectively, the "Holders"), pursuant to which CohBar will be required to prepare and file a resale registration statement with the SEC within 45 business days following the closing of the Merger to register the resale of shares of CohBar Common Stock issued in the Financing and issuable upon the exercise of CohBar warrants that are received by the Holders in the Merger (the "Filing Deadline"). CohBar will use its commercially reasonable efforts to cause such resale registration statement to be declared effective by the SEC within 30 calendar days of the Filing Deadline (or within 60 calendar days if the SEC reviews the resale registration statement).
Pursuant to the Registration Rights Agreement, CohBar will agree, among other things, to indemnify each of the Holders, and, among others, their respective officers, directors, agents, partners, members, managers, stockholders, affiliates and employees of each of them, from certain liabilities and to pay all fees and expenses (excluding any legal fees of the Holders, and any underwriting discounts and selling commissions) incident to CohBar’s performance of or compliance with its obligations under the Registration Rights Agreement.
Support Agreements and Lock-Up Agreements
Concurrently with the execution of the Merger Agreement, (i) certain stockholders of Morphogenesis (solely in their respective capacities as Morphogenesis stockholders) have entered into support agreements with CohBar and Morphogenesis to vote all of their shares of Morphogenesis Common Stock in favor of the adoption and approval of the Merger Agreement and the transactions contemplated thereby and against any alternative acquisition proposals (the "Morphogenesis Support Agreements") and (ii) certain officers and directors of CohBar have entered into support agreements with CohBar and Morphogenesis to vote all of their shares of CohBar Common Stock in favor of the CohBar Stockholder Matters and against any alternative acquisition proposals (the "CohBar Support Agreements," and, together with the Morphogenesis Support Agreements, the "Support Agreements").
Concurrently with the execution of the Merger Agreement, certain stockholders of Morphogenesis representing approximately 36% of the fully-diluted Morphogenesis Common Stock have entered into lock-up agreements (the "Lock-Up Agreements"), pursuant to which, subject to specified exceptions, they have agreed not to transfer their shares of CohBar Common Stock during the 180-day period following the closing of the Merger. In addition, under the Merger Agreement, CohBar and Morphogenesis will use reasonable best efforts to have each of the persons that will serve as directors and executive officers of CohBar after the closing of the Merger execute and deliver a Lock-Up Agreement prior to the closing of the Merger.
Contingent Value Rights Agreement
At or prior to the Effective Time, CohBar will enter into a Contingent Value Rights Agreement (the "CVR Agreement") with a rights agent ("Rights Agent"), pursuant to which CohBar’s pre-Merger common stockholders and certain warrant holders of record as of the close of business on the business day immediately prior to the date of the closing of the Merger or such other date pursuant to the terms of the Merger Agreement (the "Record Date") will receive one contingent value right (each, a "CVR") for each outstanding share of CohBar Common Stock held by such stockholder (or, in the case of the warrants, each share of CohBar Common Stock for which such warrant is exercisable). The payment date for the CVRs will be three business days after the Effective Time, provided, that CohBar will make additional CVR distributions to certain CohBar warrant holders from time to time to the extent such warrant holders become entitled to the CVR in accordance with the terms of such warrants. Each CVR will entitle the holder thereof to receive certain cash payments from the net proceeds, if any, related to the disposition of CohBar’s legacy assets pursuant to any disposition agreement entered into within three years of the closing of the Merger.
The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs. In the event that no such proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement. There can be no assurance that any holders of CVRs will receive any payments with respect thereto.
The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or any other instrument and will not be registered with the SEC. The CVRs will not have any voting rights and will not represent any equity or ownership interest in CohBar or any of its affiliates. No interest will accrue on any amounts payable in respect of the CVRs.
Stock Dividend
As contemplated by the Merger Agreement, CohBar will make a dividend to the holders of CohBar Common Stock as of the Record Date equal to approximately 3.3 shares of CohBar Common Stock per each share of CohBar Common Stock issued and outstanding as of the Record Date (the "Stock Dividend"). The payment date for the Stock Dividend is anticipated to be either immediately prior to or immediately after the Effective Time.
The preceding summaries of the Merger Agreement, the Stock Purchase Agreement, the Registration Rights Agreement, the Support Agreements, the Lock-Up Agreements and the CVR Agreement do not purport to be complete and are qualified in their entirety by reference to the Merger Agreement, the Stock Purchase Agreement, the form of Registration Rights Agreement, the form of Morphogenesis Support Agreement, the form of CohBar Support Agreement, the form of Lock-Up Agreement and the form of CVR Agreement, which are filed as Exhibits 2.1, 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6, respectively, to this Current Report on Form 8-K and which are incorporated herein by reference. The Merger Agreement has been attached as an exhibit to this Current Report on Form 8-K to provide investors and securityholders with information regarding its terms. It is not intended to provide any other factual information about Morphogenesis or CohBar or to modify or supplement any factual disclosures about CohBar in its public reports filed with the SEC. The Merger Agreement includes representations, warranties and covenants of Morphogenesis, CohBar and Merger Sub made solely for the purpose of the Merger Agreement and solely for the benefit of the parties thereto in connection with the negotiated terms of the Merger Agreement. Investors should not rely on the representations, warranties and covenants in the Merger Agreement or any descriptions thereof as characterizations of the actual state of facts or conditions of Morphogenesis, CohBar or any of their respective affiliates. Moreover, certain of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to SEC filings or may have been used for purposes of allocating risk among the parties to the Merger Agreement, rather than establishing matters of fact.