On April 14, 2023 NKGen Biotech, Inc. ("NKGen"), a clinical-stage biotechnology company focused on the development and commercialization of innovative autologous, allogeneic and CAR-NK Natural Killer ("NK") cell therapeutics, and Graf Acquisition Corp. IV (NYSE: GFOR, GFOR.U, GFOR WS) ("Graf"), a New York Stock Exchange-listed special purpose acquisition company founded by serial SPAC founder James Graf, along with Sabrina McKee and Tony Kuznik, reported that they have entered into a definitive agreement (the "Merger Agreement") for a business combination(the "Business Combination") (Press release, NKMax America, APR 15, 2023, View Source [SID1234630088]). Upon the closing of the Business Combination, Graf will be renamed "NKGen Biotech, Inc." and is expected to be listed on the New York Stock Exchange, NYSE American or Nasdaq under the ticker symbol "NKGN".

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Using cell expansion and activation technology and cell therapy manufacturing expertise, NKGen believes it can ultimately expand natural killer cells at commercial scale while significantly enhancing cytotoxicity. NKGen’s lead product candidate, SNK01, is currently in a Phase 1 clinical trial in Mexico for the treatment of advanced Alzheimer’s disease and two Phase 1/2 trials in the United States for advanced refractory solid tumors as a monotherapy and in combination with other agents including checkpoint inhibitors and cell engagers. On October 17, 2022, NKGen’s Investigational New Drug Application for SNK02, an allogeneic cell therapy, received U.S. FDA clearance for initiation of clinical trials in refractory solid tumors.

NKGen, which is based in Santa Ana, CA, has been funded since its inception in 2017 primarily by its majority stockholder, NKMax Co., Ltd. ("NKMax"), a public company based in Korea led by its Chairman and CEO Sangwoo Park, who is also the Chairman of NKGen. NKMax funds and conducts much of the R&D activities supporting the intellectual property exclusively licensed by NKGen for all markets outside of Asia, including the United States and Europe. NKGen is led by CEO Paul Y. Song, M.D., who was the first employee of NKGen in 2017. NKGen has a 25,000 sq. ft. wholly-owned and commercially licensed cGMP facility in Santa Ana, CA.

Management Commentary

Paul Y. Song, M.D. CEO of NKGen, said, "The team at Graf fully understands and appreciates our novel NK cell therapy platform technology and our overall mission to help patients in real clinical need, especially those with neurodegenerative diseases. We believe that the Business Combination represents a key step in our overall growth strategy. We believe having access to the public markets will help enable us to fund our clinical development in advanced neurodegenerative diseases and support the launch of our off-the-shelf allogenic program in oncology", commented Dr. Song. "We are looking forward to highlighting our technology and the many key roles NK cells play in human health, and we expect to demonstrate how our portfolio of autologous (SNK01), allogeneic (SNK02) and CAR-NK products may be used not only for cancer, but for neurodegenerative and autoimmune diseases as well."

James Graf, CEO of Graf, said, "We are excited to partner with Sangwoo, Paul and the whole NKGen team to help realize their long-term potential. Graf has looked at numerous potential biotech companies and after reviewing NKGen’s science, differentiated manufacturing and cryopreservation technology, NKGen really stood out to our team. But what really resonated for us is NKGen’s commitment to developing treatments addressing unmet areas of neurodegenerative diseases."

Sangwoo Park, Founder and Executive Chairman of NKGen and Chairman and CEO of NKMax, added: "We are excited to take this next step in bringing potentially innovative treatments to patients who currently have limited options. The guiding force behind our company has always been focused on improving the lives of patients. The passion and commitment of the NKGen team to help realize this mission is the backbone of our company." Mr. Park further commented, "The Business Combination with Graf is an important step in our long-term strategy to become a leader in NK cell therapies. We expect that the combined business will potentially provide much needed capital to fund our clinical trials in neurodegenerative disease and cancer."

Transaction Overview

Pursuant to the Business Combination, NKGen is expected to have a pro forma enterprise value of at least $160 million, based on $145 million in pre-money equity value plus conversion to equity at closing of at least $15 million of outstanding private convertible securities and accrued interest. Graf and NKGen will pursue new PIPE funding prior to the closing of the Business Combination and NKMax will backstop up to $25 million cash funded at $10.00 per share pursuant to a backstop agreement. The Business Combination contemplates a minimum of $50 million of net transaction cash proceeds (the "Minimum Cash Condition"), which proceeds are expected to be used toward the funding of the combined company’s business and Phase II trials and operations through Q2 2025.

The Business Combination has been approved by the boards of directors of both NKGen and Graf, and by NKMax, and is expected to close in the Q3 2023. The closing is subject to approval by Graf stockholders and satisfaction or waiver of other customary closing conditions, including satisfying the Minimum Cash Condition, approval for listing of the shares of the combined company approved on the New York Stock Exchange, NYSE American or Nasdaq Stock Market, as mutually determined by Graf and NKGen.

Additional information about the proposed merger, including a copy of the Merger Agreement, will be provided in a Current Report on Form 8-K to be filed by Graf with the Securities and Exchange Commission ("SEC") and available at www.sec.gov.

Advisors

Cooley LLP is acting as legal advisor to NKGen and NKMax. White & Case LLP is acting as legal advisor to Graf.