Business Context and Reporting Period
This Form 8-K is a Current Report filed by OvaScience, Inc. on November 19, 2018. The filing serves as a supplement to the Definitive Proxy Statement regarding the proposed merger of Millendo Therapeutics, Inc. with and into a wholly-owned subsidiary of OvaScience (the "Millendo Transaction"). The report addresses two putative securities class actions filed by stockholders alleging false and misleading statements in the proxy materials. The filing aims to provide supplemental disclosures to avoid litigation delays and minimize defense costs, while explicitly denying any wrongdoing or admission of liability.
Key Financial Metrics
The filing text does not provide specific financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity for OvaScience or Millendo. This document focuses exclusively on legal proceedings, transaction governance, and disclosures related to the merger agreement.
Material Changes and Supplemental Disclosures
The filing revises and supplements the Definitive Proxy Statement with the following material updates:
- Board Deliberations: Clarified that on June 26, 2018, the OvaScience Board unanimously agreed to focus negotiations on Millendo due to the strength of its clinical programs. Key terms discussed included a 180-day lock-up period for Millendo shareholders and the removal of a break-up fee.
- Board Representation: Disclosed that on July 25, 2018, OvaScience designated Dr. John Howe, III, as the director who would remain on the combined company's board.
- Director Conflicts of Interest: Revealed that Richard Aldrich, OvaScience's Lead Independent Director, is a manager of Longwood Fund III GP LLC, which owned 1.56% of Millendo prior to the Pre-Closing Financing. Mr. Aldrich recused himself from the Business Development Committee's deliberations and did not participate in negotiating the financing terms. The Audit Committee approved Longwood Fund III's participation on October 30, 2018.
- Financial Projections Attribution: Corrected captions in the proxy statement to clarify that certain financial projections for Millendo were prepared by OvaScience, not by the financial advisor Ladenburg Thalmann.
Guidance, Risks, and Contingencies
Stockholder Litigation: Two class action lawsuits (Adlard v. OvaScience, Inc. and Wheby v. OvaScience, Inc.) have been filed in federal courts in Massachusetts and Delaware. Plaintiffs seek injunctions against the merger, rescission, and damages. OvaScience intends to defend these claims vigorously.
Transaction Risks: The filing includes a cautionary statement regarding forward-looking information. Key risks include the failure to obtain stockholder approval, uncertainties regarding the timing of consummation, potential delisting from Nasdaq, and the ability to accurately estimate operating and transaction expenses.
Management Commentary: Management asserts that the supplemental disclosures are made solely to eliminate the burden of litigation and avoid delays to the transaction closing, not because they believe the disclosures are legally required.
Investor Verification Checklist
- Verify the status of the two pending securities class actions (Adlard and Wheby) and any court rulings regarding the merger injunction.
- Review the Definitive Proxy Statement to understand the full context of the financial projections now attributed to OvaScience.
- Confirm the details of the Pre-Closing Financing and the specific role of Longwood Fund III in the transaction.
- Monitor the special meeting of stockholders scheduled for December 4, 2018, for the final vote on the Millendo Transaction.
- Check for any updates on the 180-day lock-up period for Millendo shareholders and the composition of the post-merger board of directors.