Business Context and Reporting Period
This Form 8-K, dated December 15, 2020, reports on events occurring on December 14, 2020. Anchiano Therapeutics Ltd. (the "Company") entered into a definitive Merger Agreement with Chemomab Ltd., a clinical-stage biotech company focused on fibrosis-related diseases. Upon closing, Chemomab will become a wholly-owned subsidiary of the Company, and the Company will change its name to Chemomab Therapeutics Ltd.
Key Financial Metrics and Transaction Terms
The filing details a reverse merger structure rather than standard operating financial results. Key financial terms include:
- Ownership Structure: Post-merger, former Chemomab securityholders are expected to own approximately 90% of the combined company, while former Anchiano securityholders will own approximately 10% (subject to adjustments based on net cash balance).
- Closing Financing (PIPE): The transaction is conditioned on a private investment in public equity (PIPE) of at least $30,000,000. This financing will dilute both existing shareholder groups on a pro-rata basis.
- Exchange Ratio: Chemomab ordinary shares will convert into American Depositary Shares (ADSs) of the Company based on a formula designed to achieve the 90/10 ownership split.
- Contingent Liability Warrant: Chemomab shareholders will receive a warrant exercisable for up to $1 million worth of ADSs (or up to 500,000 ADSs) if specific pre-closing contingent liability claims are paid within five years.
Material Changes and Governance
Significant changes to the Company's structure and leadership are anticipated upon closing:
- Leadership: Dr. Adi Mor (Chemomab) will serve as CEO and Chief Scientific Officer; Dr. Arnon Aharon (Chemomab) will serve as Chief Medical Officer.
- Board Composition: The board will initially consist of five directors: four designated by Chemomab and one by the Company.
- Corporate Name: The Company will be renamed Chemomab Therapeutics Ltd.
- Shareholder Support: Support agreements have been signed covering approximately 57% of Anchiano's outstanding shares and 83% of Chemomab's outstanding shares.
- Lock-Up Period: Certain shareholders of both entities have agreed to a 180-day lock-up period on share transfers following the effective time.
Guidance, Risks, and Contingencies
The filing contains extensive forward-looking statements regarding the merger's completion and the combined company's future operations. Key risks and contingencies include:
- Closing Conditions: The merger is subject to shareholder approvals from both companies, receipt of minimum cash proceeds from the PIPE financing, Nasdaq listing approval, and satisfaction of net cash requirements.
- Operational Risks: Risks include the ability to manage operating expenses, the timing of clinical trials for product candidates (CM-101 and RAS), regulatory approvals, and the need for additional capital.
- Investor Waivers: Existing investors (Shavit Capital and Clal Biotechnology) have waived price protection rights and agreed to exercise warrants upon closing as an inducement for the merger.
- Antitrust: The merger is not subject to antitrust approval.
Investor Verification Checklist
- Verify the final exchange ratio and ownership percentages once the Company's net cash balance at closing is determined.
- Confirm the successful closing of the $30 million PIPE financing, which is a mandatory condition for the merger.
- Review the upcoming proxy statement for detailed financial data and voting instructions.
- Monitor the status of shareholder approvals from both Anchiano and Chemomab.
- Assess the impact of the 180-day lock-up agreements on share liquidity post-closing.