On May 27, 2021 eFFECTOR Therapeutics, Inc. (eFFECTOR), a biopharmaceutical company focused on pioneering the development of selective translation regulation inhibitors (STRIs) for the treatment of cancer, and Locust Walk Acquisition Corp. (NASDAQ: LWAC), a blank-check company formed for the purpose of acquiring or merging with one or more businesses, reported they have entered into a definitive merger agreement (Press release, eFFECTOR Therapeutics, MAY 27, 2021, View Source [SID1234580695]). Upon closing of the transaction, anticipated to occur in the third quarter of 2021, the combined company will be named eFFECTOR Therapeutics, Inc. and will be led by Steve Worland, Ph.D., president and CEO. The combined company’s common stock is expected to be listed on the Nasdaq Capital Market under the ticker symbol "EFTR".
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"This milestone is the beginning of a significant new chapter in eFFECTOR’s history, as we build on our strong scientific foundation as leaders in the development of selective translation regulator inhibitors as a new class of therapies for cancer," said Dr. Worland. "We’re entering into this transaction to accelerate eFFECTOR’s growth with the goal of delivering a new class of medicines to help drive improved health outcomes for people with cancer. We are excited to be selected by the management and board of LWAC, whose members have vast experience as investors and operating executives in the biotechnology industry."
"After evaluating more than 90 biotech companies, eFFECTOR emerged as the best choice for our business combination," stated Chris Ehrlich, CEO and director of LWAC. "eFFECTOR is at the cutting-edge of targeting translation regulation, which has the potential to simultaneously address multiple drivers of cancer. We are confident that the highly experienced management team with a track record of pipeline advancement and business accomplishments are prepared to lead eFFECTOR as a publicly listed company. This transaction positions eFFECTOR to reach important value inflection points for our impressive list of stakeholders."
The transaction includes up to $175 million in trust at LWAC (less any redemptions by existing LWAC stockholders) and a concurrent, fully committed $60 million PIPE financing of common stock issued at $10.00 per share from new and existing leading healthcare investors including founding Series A investors Abingworth, SR One, The Column Group and U.S. Venture Partners, as well as Altitude Life Science Ventures, Sectoral Asset Management, Pfizer Ventures, Alexandria Venture Investments, BioMed Ventures and Osage University Partners.
Proceeds from the transaction are expected to provide eFFECTOR with the capital to further develop its pipeline, advancing it through multiple clinical milestones, including the following:
Report topline data from the randomized Phase 2b KICKSTART clinical trial of eFFECTOR’s lead product candidate, tomivorsertib, an oral small-molecule inhibitor of mitogen-activated protein kinases 1 and 2 (MNK) 1/2, in combination with pembrolizumab in metastatic non-small cell lung cancer (NSCLC), both in the frontline extension and frontline settings; this study is open for enrollment.
Initiate multiple Phase 2a expansion cohorts for zotatifin, a small-molecule inhibitor of eIF4A, in patients with breast cancer and NSCLC in the second half of 2021.
Support expansion of both tomivosertib and zotatifin into additional indications.
Key Transaction Terms
Upon the closing of the business combination, and assuming no redemptions of shares of LWAC by its public stockholders, eFFECTOR would be expected to have cash resources of approximately $210 million (less any redemptions), and a total enterprise valuation of $419 million.
The boards of directors of both eFFECTOR and LWAC have unanimously approved the proposed transaction, which is expected to be completed in the third quarter of 2021. The closing of the transaction is subject to approval of LWAC shareholders and the satisfaction or waiver of certain other customary closing conditions.
Additional information about the transaction will be provided in a Current Report on Form 8-K to be filed by LWAC with the Securities and Exchange Commission (SEC) and will be available on the SEC’s website at www.sec.gov. In addition, LWAC intends to file a registration statement on Form S-4 with the SEC, which will include a proxy statement/prospectus, and will file other documents regarding the proposed transaction with the SEC.
Advisors
Credit Suisse and Stifel are acting as lead PIPE placement agents, and Credit Suisse is also acting as capital markets advisor to eFFECTOR. Locust Walk Securities is also acting as PIPE placement agent. Latham & Watkins LLP is acting as legal counsel to eFFECTOR. Cantor Fitzgerald is acting as the lead capital markets advisor to LWAC. JMP Securities and Mizuho Securities are also acting as capital markets advisors to LWAC. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is serving as legal counsel to LWAC.
Investor Webcast
The management teams of eFFECTOR and LWAC will host a webcast today, Thursday, May 27 at 9:00 a.m. ET to provide a brief overview of eFFECTOR and the proposed transaction. The webcast can be accessed here: View Source