Harmony Biosciences Holdings, Inc. — Form 8-K Summary
Reporting date: October 10, 2023, with the report signed October 11, 2023. The filing reports completion of Harmony’s acquisition of Zynerba Pharmaceuticals, Inc. pursuant to the August 14, 2023 Merger Agreement, as amended October 4, 2023.
Transaction and Business Context
- Harmony completed its tender offer for Zynerba and acquired Zynerba through a merger under Section 251(h) of the Delaware General Corporation Law.
- Zynerba survived the merger as a direct, wholly owned subsidiary of Harmony.
- The transaction relates to Zynerba’s Zygel (ZYN002) product candidate and its RECONNECT pivotal clinical trial.
- The tender offer expired at 5:00 p.m. New York time on October 10, 2023 and was not extended.
Transaction Consideration and Key Metrics
| Item | Amount or detail |
|---|---|
| Cash consideration per Zynerba share | $1.1059, subject to applicable withholding and without interest |
| Contingent value right | One CVR per share, with potential payments of up to approximately $2.5444 per CVR |
| Shares validly tendered | 28,236,148 shares, approximately 52.3% of issued and outstanding shares |
| Additional guaranteed deliveries | 1,072,940 shares, approximately 2.0% of shares outstanding, excluding shares already validly tendered |
| Maximum aggregate CVR milestones | $140 million, subject to achievement of specified milestones |
| CVR expiration | December 31, 2040 |
The filing does not provide Harmony’s or Zynerba’s revenue, profit, cash flow, margins, debt, liquidity, purchase accounting, or pro forma financial information.
Contingent Value Rights and Milestones
- Milestone 1: $15 million upon completion of the last patient’s last visit in the RECONNECT pivotal study by June 30, 2026.
- Milestone 2: $30 million if the pivotal study meets its primary endpoint with statistical significance by December 31, 2024; $20 million if achieved from January 1 through June 30, 2025; or $10 million if achieved on or after July 1, 2025.
- Milestone 3: $35 million upon FDA NDA approval for the product in the first indication.
- Milestone 4: $15 million upon FDA NDA approval for the product in the second indication.
- Milestone 5: $15 million upon worldwide cumulative net sales of at least $250 million, provided first-indication approval occurs by December 31, 2030.
- Milestone 6: $30 million upon worldwide cumulative net sales of at least $500 million, subject to the same first-indication approval condition.
Material Changes, Outlook, and Risks
- The transaction became effective on October 10, 2023, changing Zynerba from a public company into a wholly owned Harmony subsidiary.
- There can be no assurance that any CVR milestone will be achieved or that any contingent payment will become payable. The minimum CVR payment is zero.
- CVRs are contractual rights only, are generally nontransferable, are not equity interests, and have no voting or dividend rights or public trading market.
- Achievement of the milestones depends on clinical-trial execution, statistically significant results, regulatory approval, and future commercial sales.
- Zynerba equity awards were cancelled or converted into cash and/or contingent consideration according to their exercise prices and award terms. Awards with exercise prices equal to or above $2.71 were cancelled without consideration.
- The company issued a press release on October 11, 2023 regarding completion of the merger.
Financial Reporting and Items to Verify
- Audited financial statements of the acquired business, if required, will be filed by amendment within 71 calendar days after the filing deadline.
- Pro forma financial information reflecting the merger, if required, will also be filed by amendment within 71 calendar days.
- Verify the final number of shares and awards receiving cash consideration or CVRs, including shares submitted through guaranteed delivery procedures.
- Verify the accounting treatment, fair value, and future liability classification of the CVRs and other acquisition-related consideration.
- Monitor the RECONNECT pivotal study timeline, endpoint results, FDA submissions and approvals, and the conditions applicable to the sales-based milestones.