Business Context and Reporting Period
This Form 8-K, dated March 9, 2021, is filed by Anchiano Therapeutics Ltd. (the "Company") to provide supplemental disclosures regarding its proposed merger with Chemomab Ltd. The filing responds to five shareholder lawsuits challenging the merger, alleging omissions in the original proxy statement. The Company voluntarily supplemented disclosures to address claims regarding the history of strategic discussions, board deliberations, and financial analyses, while denying the legal merit of the allegations.
Key Financial Metrics and Valuation
The filing does not report standard operating financial metrics (revenue, profit, cash flow) for the Company or Chemomab. Instead, it provides valuation data used in the merger analysis:
- Chemomab Estimated Cash: Approximately $11.6 million (FY2020 ending balance).
- Implied Equity Value of Chemomab: Ranges from $538.3 million to $726.4 million based on a Discounted Cash Flow (DCF) analysis.
- DCF Assumptions: Terminal growth rates of 5.0% to 7.0%; discount rates of 10.0% to 12.0%.
- Comparable Company Enterprise Values: Ranged from $15.4 million (Galmed) to $1,518.4 million (NGM Biopharmaceuticals).
- Comparable Transaction Values: Ranged from $5.0 million to $500.0 million (excluding outliers).
Material Changes and Disclosures
The filing amends the Proxy Statement with the following specific details:
- Strategic Alternatives: Clarified that confidentiality agreements signed in July 2020 did not contain standstill or "don't ask, don't waive" provisions.
- Board Deliberations: Detailed the December 14, 2020 board meeting where legal counsel reviewed fiduciary duties and Oppenheimer delivered a fairness opinion on the exchange ratio. The board unanimously approved the merger and designated Mr. Cohen as a continuing director.
- Placement Agent: Disclosed that on March 9, 2021, the Company engaged Oppenheimer as its placement agent.
- Financial Analysis Updates: Added specific data points to the "Selected Public Companies Analyses" and "Selected Transactions Analysis" tables, and detailed the DCF methodology and resulting valuation range.
Outlook, Risks, and Contingencies
Legal Contingencies: Five separate shareholder complaints have been filed in federal courts in New York and Delaware. These actions allege violations of the Securities Exchange Act and breach of fiduciary duty, seeking injunctive relief and damages. The Company intends to defend these actions vigorously.
Merger Risks: Completion of the merger is subject to shareholder approval (scheduled for March 15, 2021), satisfaction of closing conditions, and execution of definitive agreements with existing Chemomab shareholders. Risks include failure to obtain approval, unexpected costs, and the need for additional capital to advance product candidates (CM-101 and RAS).
Forward-Looking Statements: The Company disclaims any obligation to update forward-looking statements regarding the merger's structure, timing, or completion.
Investor Verification Checklist
- Verify the status of the five pending shareholder lawsuits (Bispo, Jace, Daly, Ciccotelli, and Wilhelm actions) and any court rulings.
- Confirm the outcome of the Anchiano Special Meeting of shareholders scheduled for March 15, 2021.
- Review the full Proxy Statement and Prospectus for the complete Merger Agreement terms and risk factors.
- Assess the combined company's capital requirements for advancing product candidates CM-101 and RAS.
- Monitor the engagement of Oppenheimer as a placement agent for potential financing implications.