Business Context and Reporting Period
This Form 8-K, dated March 29, 2021, reports a material definitive agreement entered into by Millendo Therapeutics, Inc. (the "Registrant") and Tempest Therapeutics, Inc. ("Tempest"). The filing details a proposed merger where a Millendo subsidiary will merge with Tempest, with Tempest surviving as a wholly-owned subsidiary of Millendo. The transaction is structured as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
Key Financial Metrics and Transaction Terms
The filing does not provide historical revenue, profit, cash flow, or margin data for either company. Key financial terms of the transaction include:
- Ownership Structure: On a pro forma basis, pre-Merger Millendo shareholders will own approximately 18.5% of the combined company, while pre-Merger Tempest stockholders will own approximately 81.5%.
- Financing: Tempest has entered into agreements to raise approximately $30 million in gross proceeds prior to the Merger closing. Millendo's obligation to close is conditioned on the completion of at least $25 million of this financing.
- Exchange Ratio Adjustments: The exchange ratio will be adjusted if Millendo's net cash at closing is less than $15.3 million or greater than $18.7 million.
- Termination Fees: Millendo may be required to pay Tempest a termination fee of $1,400,000 or reimburse expenses up to $1,000,000. Tempest may be required to pay Millendo a termination fee of $2,800,000 or reimburse expenses up to $1,000,000.
Material Changes and Corporate Actions
The primary material change is the execution of the Merger Agreement. Additional corporate actions include:
- Reverse Stock Split: Millendo will seek stockholder approval to amend its certificate of incorporation to effect a reverse split of its common stock at a ratio between 1:10 and 1:15.
- Board Composition: Post-merger, the Millendo Board of Directors is expected to consist of seven members: six designated by Tempest and one by Millendo.
- Support Agreements: Stockholders holding approximately 87% of Tempest's capital stock and 16% of Millendo's common stock have entered into support agreements to vote in favor of the transaction.
- Lock-Up Agreements: Certain Tempest executives and stockholders have agreed not to transfer their shares for 180 days following the closing.
Guidance, Risks, and Conditions
The filing contains no financial guidance or management commentary regarding future operating results. The transaction is subject to several material conditions and risks:
- Closing Conditions: Approval by stockholders of both companies, Nasdaq listing approval, effectiveness of a registration statement, and the determination of Millendo's net cash.
- Forward-Looking Risks: Risks include failure to obtain stockholder approval, inability to complete financing, delays in closing, uncertainties regarding operating expenses, and potential adverse reactions to the transaction.
- Regulatory Filings: Millendo intends to file a registration statement on Form S-4 containing a proxy statement/prospectus, which investors are urged to review before voting.
Investor Verification Checklist
- Verify the final Exchange Ratio once Millendo's net cash at closing is determined.
- Confirm the successful completion of the $25 million minimum financing requirement.
- Review the upcoming Form S-4 proxy statement/prospectus for detailed risk factors and financial data.
- Monitor the outcome of the stockholder votes required for the Merger and the reverse stock split.
- Check for any superior proposals that could trigger termination rights under the Merger Agreement.