On February 14, 2023 Sesen Bio, Inc. (Nasdaq: SESN) and Carisma Therapeutics Inc. (Carisma), a privately-held, clinical stage biopharmaceutical company focused on discovering and developing innovative immunotherapies, reported that the companies have reached a voting and support agreement (the "Support Agreement") with Bradley L. Radoff and Michael Torok (together with their respective affiliates, the "Investor Group") (Press release, Sesen Bio, FEB 14, 2023, View Source [SID1234627211]). The Investor Group, which beneficially owns approximately 8.7% of Sesen Bio’s outstanding common stock, has committed to vote its shares in support of the pending merger.

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In connection with the Support Agreement, Sesen Bio and Carisma have further amended the previously amended merger agreement announced on December 29, 2022, which has been unanimously approved by the Boards of Directors of both companies:

Increased the one-time special cash dividend expected to be paid to Sesen Bio stockholders to $75 million, $0.36 per share1. This represents an increase from the expected special cash dividend of approximately $70 million, approximately $0.34 per share, under the first amendment to the merger agreement, and an increase from the up to $25 million special cash dividend under the terms of the original merger agreement;

Extended the period of time for payments under the Contingent Value Right ("CVR") related to any potential proceeds from the sale of Vicineum and Sesen Bio’s other legacy assets to March 31, 2027, from December 31, 2023, under the previous terms. Under the CVR, Sesen Bio stockholders remain entitled to any proceeds from the potential milestone payment under the Roche Asset Purchase Agreement; and

Michael Torok will join the Carisma Board of Directors upon closing of the merger as the only Sesen Bio representative.

Dr. Jay Duker, Chair of the Sesen Bio Board of Directors, said, "We appreciate Mr. Radoff’s and Mr. Torok’s constructive engagement. Our discussions with our stockholders over the last several weeks have enabled valuable changes to the merger agreement that benefit all stockholders, including the significantly increased expected special cash dividend of $75 million and an enhanced CVR. We are confident that the merger with Carisma maximizes value for all Sesen Bio stockholders, and we are pleased Mr. Radoff and Mr. Torok will support the pending transaction. We look forward to expeditiously closing the merger by the end of the quarter."

1 Based on basic outstanding shares including unvested RSUs.

Steven Kelly, President and Chief Executive Officer of Carisma, added, "We are excited to reach this agreement with Sesen Bio and Messrs. Radoff and Torok. The merger provides significant funding for Carisma’s R&D pipeline to advance our revolutionary proprietary cell therapy platform. We are confident the combined company will be well positioned to create significant value for stockholders."

Mr. Torok, on behalf of the Investor Group, said, "We are pleased that our extensive engagement with Sesen Bio and its representatives has helped unlock additional value for Sesen Bio’s stockholders. We believe the amended merger terms represent the most value maximizing path for stockholders. We are excited about the long-term value potential of the Carisma platform, and I look forward to joining the Carisma Board."

Carisma’s previously announced approximately $30 million financing remains committed and is expected to close concurrently with the pending merger.

The issuance of the special cash dividend and CVR remain contingent on the closing of the pending transaction, which is expected to occur in the first quarter of 2023, subject to approval by Sesen Bio stockholders and other customary closing conditions.

Following completion of the incremental financing from Carisma’s key investors and subsequent completion of the merger, Sesen Bio stockholders are expected to own 24.2% of the pro forma company consistent with the exchange ratio formula set forth in the original merger agreement, dated September 20, 2022.

The Sesen Bio Board unanimously recommends that stockholders vote "FOR" each of the proposals listed on the WHITE proxy card enclosed with the previously mailed definitive proxy statement / prospectus. As previously disclosed, the special meeting of stockholders will be held exclusively via live webcast on March 2, 2023, at 10:00 a.m. Eastern Time. Sesen Bio stockholders of record as of January 17, 2023, will be entitled to vote at the meeting.

The complete Support Agreement, which includes other customary provisions, will be filed as an exhibit to a Form 8-K to be filed by the Company with the U.S. Securities and Exchange Commission.

SVB Securities is acting as exclusive financial advisor to Sesen Bio for the transaction and Hogan Lovells US LLP is serving as its legal counsel. Evercore is serving as lead financial advisor to Carisma for the transaction and BofA Securities, Inc. is also serving as financial advisor to Carisma for the transaction. Wilmer Cutler Pickering Hale and Dorr LLP is serving as legal counsel to Carisma. BofA Securities, Inc. and Evercore are serving as co-placement agents for Carisma’s concurrent financing and Shearman & Sterling LLP is serving as the placement agents’ legal counsel. Olshan Frome Wolosky LLP is serving as legal counsel to the Investor Group.