Sesen Bio Board Believes the Pending Merger
with Carisma is the Most Value-Maximizing Option for
Stockholders
Reiterates Support from Several of Sesen Bio’s
Largest Stockholders and Two Leading Independent Proxy Advisors
Sesen Bio Board Unanimously Recommends All
Stockholders Vote “FOR” Transaction Ahead of March 2, 2023 Special
Meeting of Stockholders
Sesen Bio (Nasdaq: SESN) today reported operating results
for the fourth quarter and full year ended December 31, 2022, and
provided a business update.
Business Update
- On February 13, 2023, following extensive engagement with
Sesen Bio stockholders, Sesen Bio and Carisma Therapeutics, Inc.
(“Carisma”) further amended the previously amended merger agreement
announced on December 29, 2022. The terms of the amended merger
agreement include:
- An increase of the one-time special cash dividend expected to
be paid to Sesen Bio stockholders to $75.0 million, or
approximately $0.36 per share1. This represents an increase from
the expected special cash dividend of approximately $70.0 million,
or approximately $0.34 per share1, under the first amendment to the
merger agreement, and an increase from the up to $25.0 million
special cash dividend under the terms of the original merger
agreement dated September 20, 2022.
- An extension of the period of time for payments under the
Contingent Value Rights related to any potential proceeds from the
sale of Vicineum and Sesen Bio’s other legacy assets to March 31,
2027, from December 31, 2023 under the previous terms. This is in
addition to any potential proceeds from the milestone payment under
the Roche Asset Purchase Agreement.
- Michael Torok, one of Sesen Bio’s largest stockholders, will
join the Carisma Board of Directors upon closing of the merger as
the sole Sesen Bio representative.
The go-forward company will focus on the
development of Carisma’s chimeric antigen receptor macrophage
(CAR-M) therapies, which are believed to be the only therapies of
their kind with demonstrated proof of mechanism and safety data in
clinical trials. The combined company is expected to operate under
the name “Carisma Therapeutics, Inc.” and trade on Nasdaq under the
ticker symbol “CARM”.
- On February 16, 2023 and February 17, 2023, leading
independent proxy advisors Institutional Shareholder Services
(“ISS”) and Glass, Lewis & Co. (“Glass Lewis”), respectively,
recommended Sesen Bio stockholders vote “FOR” all proposals at the
March 2, 2023 Special Meeting of Stockholders. The positive
recommendations from ISS and Glass Lewis build on the support
received from several of Sesen Bio’s largest stockholders for the
merger with Carisma, including Bradley L. Radoff, Michael Torok and
their affiliates, as well as BML Investment Partners, L.P., who
together beneficially own approximately 12.8% of Sesen Bio’s
outstanding common stock.
- On January 31, 2023, the United States District Court for
the Southern District of New York issued an order granting final
approval of the settlement of the consolidated shareholder class
action captioned In re Sesen Bio, Inc. Securities Litigation,
Master File No. 1:21-cv-07025-AKH (the “Securities Litigation”).
This follows the November 8, 2022 grant of final approval by the
United States District Court for the District of Massachusetts of
the settlement of the previously disclosed consolidated derivative
lawsuits captioned In re Sesen Bio, Inc. Derivative Litigation,
Lead Case No. 1:21-cv-11538, the derivative lawsuit captioned Tang
v. Sesen Bio, Inc., et al., Case No. 2281-cv-00135 and other
potential related derivative claims (collectively, the “Derivative
Litigation”).
- On February 24, 2023, Sesen Bio received a determination
from Nasdaq’s Office of General Counsel that the Nasdaq Hearings
Panel (the “Panel”) had granted the Company an exception from the
Company’s non-compliance with the $1.00 bid price requirement to
complete the proposed merger with Carisma by March 10, 2023.
Pursuant to Nasdaq Listing Rule 5110(a), the Company must
demonstrate compliance with all initial listing requirements of
Nasdaq upon closing of the proposed merger with Carisma. Sesen Bio
was scheduled for a hearing with the Panel on March 16, 2023,
following receipt of notice from Nasdaq’s Listing Qualifications
Department on January 25, 2023 that the Company’s common stock is
subject to delisting based upon non-compliance with the $1.00 bid
price requirement. In the event the Company fails to establish
compliance with the initial listing standards by March 10, 2023,
its common stock will be delisted from Nasdaq, unless granted an
additional exception by the Panel.
1: Based on basic outstanding shares including unvested
restricted stock units
Fourth Quarter 2022 Financial Results
- Cash Position: Cash, cash equivalents and marketable
securities were $166.9 million as of December 31, 2022, compared to
cash and cash equivalents of $162.6 million as of December 31,
2021.
- R&D Expenses: Research and development expenses were
$1.0 million for the three months ended December 31, 2022, compared
to $7.0 million for the three months ended December 31, 2021.
Research and development expenses were $38.6 million for the year
ended December 31, 2022, compared to $25.3 million for the year
ended December 31, 2021. The increase of $13.3 million was
primarily driven by the expense of prepaid balances related to
consumables and manufacturing reservations, as the balances were
deemed to have no future value due to the strategic decision to
voluntarily pause further development of Vicineum in the United
States ($25.2 million). Additionally, employee-related compensation
increased, primarily due to the retention programs implemented in
the fourth quarter of 2021 and third quarter of 2022 ($1.0
million). The increase was partially offset by decreased costs
associated with manufacturing ($8.9 million), clinical and
manufacturing related consulting fees ($2.3 million) and other
individually immaterial research and development costs ($0.2
million), driven by the strategic decision to voluntarily pause
further development of Vicineum in the United States in the third
quarter of 2022. Additionally, one-time regulatory milestone
payments ($1.5 million) related to the filing of the biologics
license application (BLA) to the United States Food and Drug
Administration (the “FDA”) for Vicineum and a marketing
authorization application (MAA) to the European Medicines Agency
(EMA) for Vysyneum were made in 2021.
- G&A Expenses: General and administrative expenses
were $7.1 million for the three months ended December 31, 2022,
compared to $8.6 million for the three months ended December 31,
2021. General and administrative expenses were $39.8 million for
the year ended December 31, 2022, compared to $29.4 million for the
year ended December 31, 2021. The increase of $10.4 million was
primarily due to an increase in legal expense ($13.1 million)
driven by the settlements of the Securities Litigation and
Derivative Litigation net of expected insurance recovery ($8.2
million) and the Company’s assessment of strategic alternatives
($3.8 million). Additionally, there were increases in legal fees
for the Securities Litigation and Derivative Litigation counseling
($0.6 million), general business counseling ($0.3 million), and
other legal expenses ($0.2 million). The Company also incurred $1.2
million in connection with the fairness opinions related to the
proposed merger with Carisma and increases in other individually
immaterial expenses ($0.2 million). This was partially offset by
decreases in marketing and commercial expenses ($4.1 million),
driven by preparation for the commercial launch of Vicineum prior
to the receipt of the complete response letter (the “CRL”) from the
FDA in August 2021.
- Restructuring Charges: Restructuring charges were $0.8
million for the three months ended December 31, 2022, compared to a
de minimis amount for the three months ended December 31, 2021.
Restructuring expenses were $11.8 million for the year ended
December 31, 2022, compared to $5.5 million for the year ended
December 31, 2021. The expenses for the year ended December 31,
2022 consisted of severance and other employee-related costs ($7.0
million) and termination of certain contracts and other associated
costs ($4.8 million) following the decision to pause further
development of Vicineum in the United States. The expenses for the
year ended December 31, 2021, consisted of severance and other
employee-related costs ($2.8 million) and termination of certain
contracts ($2.7 million) following the receipt of the CRL in August
2021.
- Non-Cash Related Expenses:
- The intangibles impairment charge for the year ended December
31, 2022 was $27.8 million. Due to the strategic decision to
voluntarily pause further development of Vicineum in the United
States during the second quarter of 2022, the Company completed its
impairment testing and concluded that the carrying value of its
intangible asset of Vicineum European Union rights of $14.7 million
and Goodwill of $13.1 million were fully impaired and written off
during the second quarter of 2022. The intangible impairment charge
for the year ended December 31, 2021 was $31.7 million. In light of
the CRL, the Company performed an interim impairment test, which
concluded that the carrying value of its intangible asset of
Vicineum United States rights of $31.7 million was fully impaired
during the third quarter of 2021.
- The non-cash change in fair value of contingent consideration
of $52.0 million for the year ended December 31, 2022 was driven by
the Company’s strategic decision to voluntarily pause further
development of Vicineum in the United States and the Company’s
conclusion that it no longer expects to owe any related future
earnout and milestone payments. The decision was based on a
thorough reassessment of Vicineum following discussions with the
FDA, which had implications for the size, timeline and costs for an
additional Phase 3 clinical trial of Vicineum for the treatment of
non-muscle invasive bladder cancer. The change in fair value of
contingent consideration was $56.8 million for the year ended
December 31, 2021. This was primarily due to management's
assessment of a lower probability of regulatory approval following
the receipt of a CRL in August 2021, in which the FDA determined
that it could not approve the BLA for Vicineum in its present
form.
- Income Tax Benefit: For the year ended December 31,
2022, the Company recorded a benefit from income taxes of $3.9
million. In the second quarter of 2022, the Company determined that
the fair value of the Vicineum European Union in-process research
and development asset was zero, which resulted in an impairment
charge of $14.7 million. In connection with this impairment charge,
in the second quarter of 2022, the Company wrote-down the
associated deferred tax liability by $3.9 million as a benefit. For
the year ended December 31, 2021, the Company recorded a benefit
from income taxes of $8.3 million. In the third quarter of 2021,
the Company determined that the fair value of the Vicineum United
States in-process research and development asset was zero, which
resulted in an impairment charge of $31.7 million. In connection
with this impairment charge, in the third quarter of 2021, the
Company wrote-down the associated deferred tax liability by $8.6
million as a benefit. This was partially offset by $0.3 million in
taxes paid related to the Qilu License Agreement.
- Net (Loss) Income: Net loss was $7.6 million, or $0.04
per basic and diluted share, for the fourth quarter of 2022,
compared to net income of $8.9 million, or $0.04 per basic and
diluted share, for the same period in 2021. Net loss was $19.9
million, or $0.10 per basic and diluted share, for the year ended
December 31, 2022, compared to $0.3 million, or $0.00 per basic and
per diluted share, for the year ended December 31, 2021. The
increase in net loss was primarily due to an increase in operating
expense ($30.8 million) and a decrease in income tax benefit ($4.4
million), which were offset by an increase in license and related
revenue ($13.5 million). The revenue increase was primarily driven
by the execution of the asset purchase agreement with F.
Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively,
“Roche”) for EBI-031 and all other IL-6 antagonist monoclonal
antibody technology in 2022 ($40.0 million), partially offset by
the milestones achieved by Roche ($20.0 million), Qilu
Pharmaceutical Co., Ltd., the Company’s former partner in the
Greater China region ($5.0 million), and Hikma Pharmaceuticals LLC,
the Company’s former partner in the Middle East and North Africa
region ($1.5 million) in 2021. Additionally, interest income
increased ($1.8 million) primarily due to higher yield earned on
the Company’s investment account during 2022.
About Sesen Bio
Sesen Bio, Inc. is a late-stage clinical company that previously
focused on advancing targeted fusion protein therapeutics for the
treatment of patients with cancer. Sesen Bio’s most advanced
product candidate, Vicineum™, also known as VB4-845, is a locally
administered targeted fusion protein composed of an anti-epithelial
cell adhesion molecule antibody fragment tethered to a truncated
form of Pseudomonas exotoxin A for the treatment of non-muscle
invasive bladder cancer. On July 15, 2022, Sesen Bio made the
strategic decision to voluntarily pause further development of
Vicineum in the United States. The decision was based on a thorough
reassessment of Vicineum, which included the incremental
development timeline and associated costs for an additional Phase 3
clinical trial, following Sesen Bio’s discussions with the United
States Food and Drug Administration. Sesen Bio has turned its
primary focus to consummating a strategic transaction with the goal
of maximizing stockholder value. Additionally, Sesen Bio is seeking
a partner for the further development of Vicineum. For more
information, please visit the Company’s website at
www.sesenbio.com.
Cautionary Note on Forward-Looking Statements
Any statements in this press release about future expectations,
plans and prospects for Sesen Bio, Inc. (Sesen Bio), CARISMA
Therapeutics Inc. (Carisma) or the combined company, Sesen Bio’s,
Carisma’s or the combined company’s strategy or future operations,
and other statements containing the words “anticipate,” “believe,”
“contemplate,” “expect,” “intend,” “may,” “plan,” “predict,”
“target,” “potential,” “possible,” “will,” “would,” “could,”
“should,” “continue,” and similar expressions, constitute
forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995. For example, statements
concerning Sesen Bio’s ability to find a partner for the further
development of Vicineum, the proposed transaction, the concurrent
financing, the contingent value rights and other matters, including
without limitation: statements relating to the satisfaction of the
conditions to and consummation of the proposed transaction, the
expected timing of the consummation of the proposed transaction,
the expected ownership percentages of the combined company, Sesen
Bio’s and Carisma’s respective businesses, the strategy of the
combined company, future operations, advancement of the combined
company’s product candidates and product pipeline, clinical
development of the combined company’s product candidates, including
expectations regarding timing of initiation and results of clinical
trials of the combined company, the ability of Sesen Bio to remain
listed on the Nasdaq Stock Market, the completion of the concurrent
financing, the receipt of any payments under the contingent value
rights, and the amount and timing of distributions to be made to
Sesen Bio stockholders, if any, in connection with any potential
dissolution or liquidation scenario are forward-looking statements.
Actual results may differ materially from those indicated by such
forward-looking statements as a result of various important
factors, including without limitation: (i) the risk that the
conditions to the closing of the proposed transaction are not
satisfied, including the failure to obtain stockholder approval of
matters related to the proposed transaction in a timely manner or
at all; (ii) uncertainties as to the timing of the consummation of
the proposed transaction and the ability of each of Sesen Bio and
Carisma to consummate the proposed transaction, including
completing the concurrent financing; (iii) risks related to Sesen
Bio’s ability to correctly estimate its expected net cash at
closing and Sesen Bio’s and Carisma’s ability to correctly estimate
and manage their respective operating expenses and expenses
associated with the proposed transaction; (iv) risks related to
Sesen Bio’s continued listing on the Nasdaq Stock Market until
closing of the proposed transaction; (v) the risk that as a result
of adjustments to the exchange ratio, Sesen Bio stockholders or
Carisma stockholders could own less of the combined company than is
currently anticipated; (vi) the risk that the conditions to payment
under the contingent value rights will not be met and that the
contingent value rights may otherwise never deliver any value to
Sesen Bio stockholders; (vii) risks associated with the possible
failure to realize certain anticipated benefits of the proposed
transaction, including with respect to future financial and
operating results; (viii) uncertainties regarding the impact any
delay in the closing would have on the anticipated cash resources
of the combined company upon closing and other events and
unanticipated spending and costs that could reduce the combined
company’s cash resources; (ix) the effect of uncertainties related
to the actions of activist stockholders, which could make it more
difficult to obtain the approval of Sesen Bio stockholders with
respect to the transaction related proposals and result in Sesen
Bio incurring significant fees and other expenses, including for
third-party advisors; (x) the occurrence of any event, change or
other circumstance or condition that could give rise to the
termination of the merger agreement, as amended; (xi) the effect of
the announcement, pendency or completion of the merger on Sesen
Bio’s or Carisma’s business relationships, operating results and
business generally; (xii) costs related to the merger; (xiii) the
outcome of any legal proceedings instituted against Sesen Bio,
Carisma or any of their respective directors or officers related to
the merger agreement or the transactions contemplated thereby;
(xiv) the ability of Sesen Bio or Carisma to protect their
respective intellectual property rights; (xv) competitive responses
to the proposed transaction and changes in expected or existing
competition; (xvi) the success and timing of regulatory submissions
and pre-clinical and clinical trials; (xvii) regulatory
requirements or developments; (xviii) changes to clinical trial
designs and regulatory pathways; (xix) changes in capital resource
requirements; (xx) risks related to the inability of the combined
company to obtain sufficient additional capital to continue to
advance its product candidates and its preclinical programs; (xxi)
legislative, regulatory, political and economic developments; and
(xxii) other factors discussed in the “Risk Factors” section of
Sesen Bio’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and other reports filed with the Securities and Exchange
Commission (SEC). In addition, the forward-looking statements
included in this press release represent Sesen Bio’s and Carisma’s
views as of the date hereof. Sesen Bio and Carisma anticipate that
subsequent events and developments will cause the respective
company’s views to change. However, while Sesen Bio may elect to
update these forward-looking statements at some point in the
future, Sesen Bio specifically disclaims any obligation to do so,
except as required under applicable law. These forward-looking
statements should not be relied upon as representing Sesen Bio’s
views as of any date subsequent to the date hereof.
Important Additional Information
In connection with the proposed transaction between Carisma and
Sesen Bio, Sesen Bio filed with the SEC a registration statement on
Form S-4 (as amended, the registration statement) that includes a
proxy statement of Sesen Bio and also constitutes a prospectus of
Sesen Bio with respect to shares of Sesen Bio common stock to be
issued in the proposed transaction (proxy statement/prospectus), as
amended by the supplement Sesen Bio filed with the SEC on February
16, 2023 (supplement). The definitive proxy statement/prospectus
was first mailed to Sesen Bio stockholders on or about January 24,
2023, and the supplement was first mailed to Sesen Bio stockholders
on or about February 17, 2023. Sesen Bio may also file other
relevant documents regarding the proposed transaction with the SEC.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THESE MATERIALS,
INCLUDING THE REGISTRATION STATEMENT, THE DEFINITIVE PROXY
STATEMENT/PROSPECTUS, THE SUPPLEMENT AND ALL OTHER RELEVANT
DOCUMENTS THAT ARE OR WILL BE FILED WITH THE SEC IN CONNECTION WITH
THE PROPOSED TRANSACTION, INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
TO THESE MATERIALS, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE
PROPOSED TRANSACTION. Investors and security holders are able to
obtain the definitive proxy statement/prospectus and other
documents that are filed or will be filed by Sesen Bio with the SEC
free of charge from the SEC’s website at www.sec.gov or from Sesen
Bio at the SEC Filings section of www.sesenbio.com.
No Offer or Solicitation
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended. Subject to certain exceptions to be
approved by the relevant regulators or certain facts to be
ascertained, a public offer will not be made directly or
indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by use
of the mails or by any means or instrumentality (including without
limitation, facsimile transmission, telephone or internet) of
interstate or foreign commerce, or any facility of a national
securities exchange, of any such jurisdiction.
Participants in the Solicitation
Sesen Bio and Carisma and their respective directors, executive
officers and other members of management may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information about Sesen Bio’s directors and
executive officers is available in Sesen Bio’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2021, its
definitive proxy statement dated April 28, 2022 for its 2022 Annual
Meeting of Stockholders and its Current Report on Form 8-K filed
with the SEC on August 31, 2022. Other information regarding the
participants in the proxy solicitation and a description of their
interests in the proposed transaction, by security holdings or
otherwise, is included in the definitive proxy statement/prospectus
and other relevant materials that are or will be filed with the SEC
regarding the proposed transaction. Investors should read the
definitive proxy statement/prospectus carefully before making any
voting or investment decisions. You may obtain free copies of these
documents from Sesen Bio or the SEC’s website as indicated
above.
SESEN BIO, INC. CONSOLIDATED BALANCE SHEETS (In
thousands, except share and per share data) December
31, 2022 December 31, 2021 Assets Current assets:
Cash and cash equivalents
$
112,553
$
162,636
Short term marketable securities
54,366
-
Restricted cash
21,000
-
Accounts receivable
-
21,011
Other receivables
825
3,482
Prepaid expenses and other current assets
400
18,476
Total current assets
189,144
205,605
Non-current assets: Restricted cash
30
20
Property and equipment, net
-
43
Intangible assets
-
14,700
Goodwill
-
13,064
Long term prepaid expenses
-
7,192
Other assets
-
123
Total non-current assets
30
35,142
Total Assets
$
189,174
$
240,747
Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable
$
1,233
$
2,853
Accrued expenses
29,636
8,255
Other current liabilities
115
460
Total current liabilities
30,984
11,568
Non-current liabilities: Contingent consideration
-
52,000
Deferred tax liability
-
3,969
Deferred revenue
-
1,500
Total non-current liabilities
-
57,469
Total Liabilities
30,984
69,037
Stockholders’ Equity: Preferred stock, $0.001 par value per
share; 5,000,000 shares authorized at December 31, 2022 and 2021;
no shares issued and outstanding at December 31, 2022 and 2021
-
-
Common stock, $0.001 par value per share; 400,000,000 shares
authorized at December 31, 2022 and 2021; 202,759,043 and
199,463,645 shares issued and outstanding at December 31, 2022 and
2021, respectively
202
199
Additional paid-in capital
494,675
487,768
Other comprehensive loss
(546
)
-
Accumulated deficit
(336,141
)
(316,257
)
Total Stockholders’ Equity
158,190
171,710
Total Liabilities and Stockholders’ Equity
$
189,174
$
240,747
SESEN BIO, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data) Three Months
EndedDecember 31, Twelve Months EndedDecember 31,
2022
2021
2022
2021
Revenue: License and related revenue
$
-
$
20,000
$
40,000
$
26,544
Total revenue
$
-
$
20,000
$
40,000
$
26,544
Operating expenses: Research and development
$
958
$
7,039
$
38,594
$
25,312
General and administrative
7,082
8,597
39,787
29,393
Restructuring charge
817
6
11,764
5,528
Intangibles impairment charge
-
-
27,764
31,700
Change in fair value of contingent consideration
-
(4,600
)
(52,000
)
(56,840
)
Total operating expenses
$
8,857
$
11,042
$
65,909
$
35,093
(Loss) Income from Operations
$
(8,857
)
$
8,958
$
(25,909
)
$
(8,549
)
Interest income
1,384
3
1,854
17
Other income (expense), net
(100
)
(18
)
296
(77
)
(Loss) Income Before Taxes
$
(7,573
)
$
8,944
$
(23,759
)
$
(8,609
)
Benefit from income taxes
-
-
3,875
8,273
Net (Loss) Income After Taxes
$
(7,573
)
$
8,944
$
(19,884
)
$
(336
)
Deemed Dividend
$
-
$
-
$
-
$
-
Net (loss) income attributable to common stockholders -
basic and diluted
$
(7,573
)
$
8,944
$
(19,884
)
$
(336
)
Net (loss) income per common share - basic and diluted
$
(0.04
)
$
0.04
$
(0.10
)
$
(0.00
)
Weighted-average common shares outstanding - basic and diluted
202,758
199,464
200,546
182,323
SESEN BIO, INC. CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME (In thousands, except per share
data) Three Months EndedDecember 31, Twelve
Months EndedDecember 31,
2022
2021
2022
2021
Net (loss) income
$
(7,573
)
$
8,944
$
(19,884
)
$
(336
)
Unrealized loss on marketable securities
311
-
546
-
Total comprehensive (loss) income
$
(7,884
)
$
8,944
$
(20,430
)
$
(336
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230228005287/en/
Investors: Erin Clark, Vice President, Corporate Strategy
& Investor Relations ir@sesenbio.com
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