Business Context and Reporting Period
This Form 8-K is a current report filed by OncoGenex Pharmaceuticals, Inc. on July 19, 2017, regarding its proposed merger with Achieve Life Sciences, Inc. The filing details an amendment to the Merger Agreement and provides supplemental information to the Proxy Statement/Prospectus/Information Statement filed on June 13, 2017.
Key Financial Metrics
The filing does not report current period revenue, profit, cash flow, margins, debt, or liquidity figures for either company. Instead, it discloses specific assumptions used in financial forecasts for the merger analysis:
- Apatorsen Partnership Milestones (OncoGenex): Assumed $5.0 million upon Phase 3 completion (2020), $12.0 million upon FDA approval (2021), and $8.0 million upon EMA approval (2021).
- Apatorsen Royalty Rates: Tiered structure ranging from 16% on sales up to $250 million to 22% on sales above $750 million.
- Contingent Value Rights (CVRs): One CVR to be issued for each share of OncoGenex common stock outstanding as of the July 27, 2017 record date, with issuance expected on July 31, 2017.
Material Changes Versus Prior Period
The primary material change is the extension of the termination date for the Merger Agreement. Previously, the agreement could be terminated if not consummated by July 31, 2017. On July 19, 2017, OncoGenex and Achieve mutually agreed to amend Section 9.1(b) to extend this deadline to August 31, 2017.
Guidance, Outlook, and Management Commentary
Management Structure: The filing confirms the planned executive leadership for the combined company: Mr. Stewart as CEO, Dr. Clarke as Chief Scientific Officer, Dr. Jacobs as Chief Medical Officer, and Mr. Bencich as CFO.
Financial Forecasts: OncoGenex provided MTS Securities with non-POS adjusted free cash flow projections consistent with net income projections. Achieve provided both POS adjusted and non-POS adjusted free cash flow projections consistent with their respective net income projections.
Risks and Contingencies: The merger remains subject to stockholder approval. The filing includes standard disclaimers that the communication is not an offer to sell securities and urges stockholders to read the final proxy statement carefully.
Important Facts for Investor Verification
- Verify the new merger termination deadline of August 31, 2017, as amended on July 19, 2017.
- Confirm the issuance of Contingent Value Rights (CVRs) to OncoGenex stockholders on July 31, 2017, based on the July 27, 2017 record date.
- Review the specific royalty rate tiers and milestone payment assumptions for the apatorsen partnership detailed in the financial forecasts.
- Examine the final Proxy Statement/Prospectus/Information Statement (filed June 13, 2017) for complete details on the merger terms and executive compensation.