ONCOGENEX PHARMACEUTICALS, INC. (NASDAQ:OGXI) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement. |
On January5, 2017, OncoGenex Pharmaceuticals, Inc. (OncoGenex),
Ash Acquisition Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of OncoGenex (Merger Sub 1), Ash Acquisition Sub
2, Inc., a Delaware corporation and a wholly owned subsidiary of
OncoGenex (Merger Sub 2 and together with Merger Sub 1, the
Merger Subs), and Achieve Life Science, Inc., a Delaware
corporation (Achieve), entered into an Agreement and Plan of
Merger and Reorganization (the Merger Agreement), to which, among
other things, and subject to approval by the stockholders of
OncoGenex and Achieve, Merger Sub 1 will merge with and into
Achieve (the First Merger), with Achieve becoming a wholly-owned
subsidiary of OncoGenex and the surviving corporation of the
First Merger (the Initial Surviving Corporation) and promptly
following the First Merger, the Initial Surviving Corporation
shall merge with and into Merger Sub 2 (the Second Merger and
together with the First Merger, the Merger) with Merger Sub 2
continuing as the surviving entity in the Second Merger as a
direct wholly owned subsidiary of OncoGenex. The First Merger and
the Second Merger, taken together, are intended to qualify as a
reorganization within the meaning of Section 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended. The surviving company
is expected to be renamed Achieve Life Sciences, Inc. and is
referred to herein as the Combined Company. The Merger is
expected to close mid-2017.
Subject to the terms and conditions of the Merger Agreement, at
the closing of the First Merger, each outstanding share of
Achieve common stock will be converted into the right to receive
approximately 4,242.8904 shares of common stock of OncoGenex,
subject to adjustment as provided in the Merger Agreement based
on increases or decreases in Achieves fully-diluted
capitalization, as well as the payment of cash in lieu of
fractional shares. Immediately following the effective time of
the Merger, OncoGenex equityholders are expected to own
approximately 25% of the outstanding capital stock of the
Combined Company on a fully diluted basis, and the Achieve
equityholders are expected to own approximately 75% of the
outstanding capital stock of the Combined Company on a fully
diluted basis.
Consummation of the Merger is subject to certain closing
conditions, including, among other things, approval by the
stockholders of OncoGenex and Achieve. The Merger Agreement
contains certain termination rights for both OncoGenex and
Achieve, and further provides that, upon termination of the
Merger Agreement under specified circumstances, either party may
be required to pay the other party a termination fee of $500,000.
In addition, the Merger Agreement provides that if either party
breaches certain covenants regarding alternative transactions to
those contemplated by the Merger Agreement, the breaching party
may be required to pay the other party a termination fee of
$1,000,000. In connection with certain terminations of the Merger
Agreement, either party may be required to pay the other partys
third party expenses up to $500,000.
At the effective time of the First Merger, the Board of Directors
of OncoGenex is expected to consist of seven members, three of
whom will be designated by OncoGenex and four of whom will be
designated by Achieve. Additionally, at the effective time of the
First Merger, Rick Stewart, the current Chairman of Achieve, is
expected to be the Chairman and Chief Executive Officer of the
Combined Company; Anthony Clarke, the current Chief Scientific
Officer of Achieve, is expected to be the Chief Scientific
Officer of the Combined Company; and John Bencich, the current
Chief Financial Officer of OncoGenex and Cindy Jacobs, the
current Chief Medical Officer of OncoGenex, are expected to
continue to serve the Combined Company in the same roles.
The preceding summary does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement,
which is filed as Exhibit 2.1, and which is incorporated herein
by reference.
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Support Agreements
In accordance with the terms of the Merger Agreement, (i)certain
officers and directors of OncoGenex, who collectively hold
approximately 1.2percent of the outstanding shares of OncoGenex
capital stock as of the close of business on January4, 2017, have
each entered into a support agreement with Achieve (the OncoGenex
Support Agreements), and (ii)certain officers, directors and
stockholders of Achieve, who collectively hold approximately
78percent of the outstanding shares of Achieve capital stock as
of the close of business on January4, 2017, have each entered
into a support agreement with OncoGenex (the Achieve Support
Agreements, together with the OncoGenex Support Agreements, the
Support Agreements). The Support Agreements include covenants as
to the voting of such shares in favor of approving the
transactions contemplated by the Merger Agreement and against
actions that could adversely affect the consummation of the
Merger.
The Support Agreements will terminate upon the earlier of the
consummation of the First Merger or the termination of the Merger
Agreement by its terms.
The foregoing description of the Support Agreements does not
purport to be complete and is qualified in its entirety by
reference to the forms of Support Agreements, which are attached
as Exhibits 10.1 and 10.2 to this current report on Form 8-K and
are incorporated herein by reference.
Lock-Up Agreements
Concurrently and in connection with the execution of the Merger
Agreement, (i)certain officers and directors of OncoGenex, who
collectively hold approximately 1.2percent of the outstanding
shares of OncoGenex capital stock as of the close of business on
January4, 2017 and (ii)certain officers, directors and
stockholders of Achieve, who collectively hold approximately
78percent of the outstanding shares of Achieve capital stock as
of the close of business on January4, 2017, have each entered
into lock-up agreements with OncoGenex, in substantially the form
of Exhibit 10.03 hereto (the Lock-Up Agreement), to which,
subject to certain exceptions, each stockholder will be subject
to a 180-day (the Lock-Up Period) lock-up on the
sale of shares of capital stock of OncoGenex, which Lock-Up
Period shall begin upon the consummation of the First
Merger.
The foregoing
description of the Lock-Up Agreement does not purport to be
complete and is qualified in its entirety by reference to the
form of Lock-Up Agreement, which is attached as Exhibit 10.3 to
this current report on Form 8-K and is incorporated herein by
reference.
Contingent
Value Rights Agreement
OncoGenex will
issue contingent value rights (each, a CVR and collectively, the
CVRs) to existing OncoGenex stockholders prior to the completion
of the First Merger.One CVR will be issued for each share of
OncoGenex common stock outstanding as of the record date for such
issuance.Each CVR will be a non-transferable right to potentially
receive certain cash, equity or other consideration received by
the Combined Company in the event the Combined Company receives
any such consideration during the five-year period after
consummation of the First Merger as a result of the achievement
of certain clinical milestones, regulatory milestones,
sales-based milestones and/or up-front payment milestones
relating to OncoGenexs apatorsen product candidate (the
Milestones), upon the terms and subject to the conditions set
forth in a contingent value rights agreement to be entered into
between OncoGenex, Achieve and an as of yet unidentified third
party, as rights agent (the CVR Agreement).The aggregate
consideration to be distributed to the holders of the CVRs, if
any, will be equal to 80% of the consideration received by the
Combined Company as a result of the achievement of the Milestones
less
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certain agreed to
offsets, as determined to the CVR Agreement. Under the CVR
Agreement, for a period of six months beginning in February 2017,
OncoGenex will use certain defined efforts to enter into an
agreement with a third party regarding the development and/or
commercialization of OncoGenexs apatorsen product. At the
expiration of this six-month period, if a third party has not
entered into a term sheet for the development or
commercialization of apatorsen, the Combined Company will no
longer be contractually required to pursue an agreement regarding
apatorsen and no consideration will be payable to the holders of
CVRs.
The foregoing
description of the CVR Agreement does not purport to be complete
and is qualified in its entirety by reference to the form of CVR
Agreement, which is attached as Exhibit 10.4 to this current
report on Form 8-K and is incorporated herein by
reference.
| Item5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
If approved, upon
completion of the First Merger, Scott Cormack, the Chief
Executive Officer of OncoGenex, will resign as the Chief
Executive Officer of the Combined Company, but is expected to
continue to serve on the Combined Companys board of
directors.
| Item5.03 |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On January5, 2017,
the Board of Directors of OncoGenex amended and restated the
Fifth Amended and Restated Bylaws of OncoGenex by adding a new
Section10 (the Bylaws), which provides that, unless OncoGenex
consents in writing to an alternative forum, any court located in
the State of Delaware shall be the sole and exclusive forum for
any and all internal corporate claims, including (i)any
derivative action or proceeding brought on behalf of OncoGenex,
(ii)any action asserting a claim of breach of fiduciary duty owed
by any stockholder, director, officer, employee or agent of
OncoGenex to OncoGenex or its stockholders, (iii)any action
asserting a claim to or under any provision of the Delaware
General Corporation Law or the OncoGenex certificate of
incorporation or bylaws, (iv)any action to interpret, apply,
enforce or determine the validity of the OncoGenex certificate of
incorporation or bylaws or (v)any action asserting a claim
governed by the internal affairs doctrine.
The foregoing
description of the Bylaws is qualified in its entirety by
reference to the Bylaws, a copy of which is filed as Exhibit 3.1
to this Current Report on Form 8-K and incorporated herein by
reference.
| Item8.01 | Other Events. |
On January5, 2017,
OncoGenex and Achieve announced the execution of the Merger
Agreement and related matters described in Item 1.01 above. A
copy of the joint news release and quotes regarding the Merger
are filed as Exhibits 99.1 and 99.2 to this current report on
Form 8-K and are incorporated herein by reference.
| Item9.01 | Financial Statements and Exhibits. |
Reference is made
to the Exhibit Index included with this Current Report on Form
8-K.
Important
Additional Information about the Proposed Merger
This communication
is being made in respect of the proposed merger involving
OncoGenex and Achieve. OncoGenex intends to file a registration
statement on Form S-4 with the SEC, which will
contain a joint
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proxy statement/prospectus and
other relevant materials, and plans to file with the SEC other
documents regarding the proposed transaction. The final joint
proxy statement/prospectus will be sent to the stockholders of
OncoGenex and Achieve. The joint proxy statement/prospectus will
contain information about OncoGenex, Achieve, the proposed merger
and related matters. Stockholders are urged to read
the joint proxy statement/prospectus (including any amendments or
supplements) and other documents filed with the SEC carefully in
their entirety when they become available, as they will contain
important information that stockholders should consider before
making a decision about the merger and related
matters.In addition to receiving the joint proxy
statement/prospectus and proxy card by mail, stockholders will
also be able to obtain the joint proxy statement/prospectus, as
well as other filings containing information about OncoGenex,
without charge, from the SECs website (http://www.sec.gov) or,
without charge, by directing a written request to:OncoGenex
Pharmaceuticals, Inc., 19820 North Creek Parkway,Suite 201,
Bothell, WA 98011, Attention: Investor Relations or to Achieve
Life Science, Inc., 30 Sunnyside Avenue, Mill Valley, CA 94941,
Attention: Rick Stewart.
This communication
shall not constitute an offer to sell or the solicitation of an
offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of
securities in connection with the proposed merger shall be made
except by means of a prospectus meeting the requirements of
Section10 of the Securities Act of 1933, as
amended.
Participants in
Solicitation
OncoGenex and its executive
officers and directors may be deemed to be participants in the
solicitation of proxies from OncoGenexs stockholders with respect
to the matters relating to the proposed merger. Achieve and its
officers and directors may also be deemed a participant in such
solicitation. Information regarding OncoGenexs executive officers
and directors is available in OncoGenexs proxy statement on
Schedule 14A, filed with the SEC on April21, 2016. Information
regarding any interest that OncoGenex, Achieve or any of the
executive officers or directors of OncoGenex or Achieve may have
in the transaction with Achieve will be set forth in the joint
proxy statement/prospectus that OncoGenex intends to file with
the SEC in connection with its stockholder vote on matters
relating to the proposed merger. Stockholders will be able to
obtain this information by reading the joint proxy
statement/prospectus when it becomes available.
Forward Looking
Statements
This report contains
forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995, including, but not limited to, statements regarding the
terms, timing, conditions to and anticipated completion of the
proposed merger; the expected ownership of the combined company
and the composition of the combined companys board of directors
and management team; the anticipated distribution to OncoGenex
stockholders of contingent value rights (CVRs) immediately prior
to the merger and the terms, timing and value of such CVRs; the
potential benefits and value of the proposed merger to the
OncoGenex and Achieve stockholders; the capitalization and
resources of the combined company; the sufficiency of the
combined organizations resources to fund the advancement of any
development program, the completion of any clinical trial or the
commercialization of any product in the United States or
elsewhere; the safety, efficacy and projected development
timeline and commercial potential of any product candidates; the
combined companys plans, objectives, expectations and intentions
with respect to future operations and products; and the
expectations regarding voting by the OncoGenex and Achieve
stockholders. All statements other than statements of historical
fact are statements that could be deemed forward-looking
statements. OncoGenex
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and/or Achieve may not
actually achieve the proposed merger, or any plans or product
development goals in a timely manner, if at all, or otherwise
carry out the intentions or meet the expectations or projections
disclosed in these forward-looking statements. These statements
are based on managements current expectations and beliefs and are
subject to a number of risks, uncertainties and assumptions that
could cause actual results to differ materially from those
described in the forward-looking statements, including, among
others, the failure of the OncoGenex or Achieve stockholders to
approve the transaction; the failure of either party to meet the
closing conditions of the transaction; delays in completing the
transaction and the risk that the transaction may not be
completed at all; the failure to realize the anticipated benefits
from the transaction or delay in realization thereof; the success
of the combined businesses; operating costs and business
disruption during the pendency of and following the proposed
merger; the risk that the CVRs may not be distributed prior to
the completion of the merger or at all or may not be paid out or
result in any value to OncoGenexs stockholders; general business
and economic conditions; the combined companys need for and
ability to obtain additional financing; and the risks associated
with the process of developing, obtaining regulatory approval for
and commercializing drug candidates that are safe and effective
for use as human therapeutics; and the other factors described in
our risk factors set forth in OncoGenexs filings with
theSecurities and Exchange Commissionfrom time to time, including
its Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. OncoGenex undertakes no obligation to update the
forward-looking statements contained herein or to reflect events
or circumstances occurring after the date hereof, other than as
may be required by applicable law.
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to the requirements of the
Securities Exchange Act of 1934, the registrant has caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| ONCOGENEX PHARMACEUTICALS, INC. | ||||||
| Date: January5, 2017 |
/s/ John Bencich |
|||||
|
John Bencich Chief Financial Officer |
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EXHIBIT
INDEX
|
ExhibitNo. |
Description |
|
| 2.1* |
Agreement and Plan of Merger and Reorganization, dated as of January5, 2017, by and among OncoGenex Pharmaceuticals, Inc., Ash Acquisition Sub, Inc., Ash Acquisition Sub 2, Inc. and Achieve Life Science, Inc. |
|
| 3.1 |
Sixth Amended and Restated Bylaws of OncoGenex Pharmaceuticals, Inc. |
|
| 10.1 |
Form of Support Agreement, by and between OncoGenex Pharmaceuticals, Inc. and certain directors, officers and stockholders of Achieve Life Science, Inc. |
|
| 10.2 |
Form of Support Agreement, by and between Achieve Life Science, Inc. and certain directors and officers of OncoGenex Pharmaceuticals, Inc. |
|
| 10.3 |
Form of Lock-Up Agreement, by and between OncoGenex Pharmaceuticals, Inc. and certain directors, officers and stockholders of Achieve Life Science, Inc. and OncoGenex Pharmaceuticals, Inc. |
|
| 10.4 |
Form of CVR Agreement, by and between OncoGenex Pharmaceuticals, Inc., Achieve Life Science, Inc. and a Rights Agent to be determined. |
|
| 99.1 | Press release dated January5, 2017. | |
| 99.2 | OncoGenex and Achieve Quotes Regarding the Merger. |
| * |
The schedules and exhibits to the Merger Agreement have been omitted |