On June 29, 2023 Immunome (Nasdaq: IMNM), a biopharmaceutical company utilizing a proprietary human memory B-cell platform to discover and develop antibody therapeutics to improve patient care, and Morphimmune, a private biotechnology company focused on developing targeted oncology therapeutics, reported that they have entered into a definitive merger agreement (Press release, Immunome, JUN 29, 2023, View Source [SID1234632974]).

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The Boards of Directors of both companies have approved the all-stock transaction. The combined company, which will operate as Immunome and retain the same ticker symbol, will be headquartered in Seattle, WA and will maintain cost-efficient research lab facilities in Exton, PA and West Lafayette, IN.

Clay B. Siegall, Ph.D., who was appointed CEO and President of Morphimmune earlier this year, will serve as the CEO, President, and Chairman of the Board of Directors of Immunome.

Dr. Siegall previously served as the CEO and President of Seagen, Inc., which he co-founded in July 1997. Under his nearly 25 years of leadership, Seagen became an industry leader in ADC therapeutics, earned FDA approvals for four cancer therapies, and grew to over $2 billion in annual revenue. During his tenure, he raised well over $1 billion of financing for Seagen from public and private markets and oversaw the company’s acquisition of Cascadian Therapeutics. In March of 2023, Pfizer, Inc. agreed to purchase Seagen for $43 billion.

"Clay Siegall’s track record of drug development and shareholder value creation is exceptional, and we are honored to have him serve as Chairman and CEO after the merger closes," said Michael Rapp, Immunome Board Chairman. "By building on the accomplishments of Purnanand Sarma and the Immunome team, Clay will be positioned to develop best-in-class targeted cancer therapies across multiple modalities."

The companies also announced an oversubscribed private placement investment of $125 million with participation from Enavate Sciences, EcoR1 Capital, Redmile Group, Janus Henderson Investors, Avidity Partners, Woodline Partners LP, and other leading institutional investors. In connection with the PIPE, James P. Boylan, Chief Executive Officer of Enavate Sciences, will be appointed to the Board of Directors of Immunome. Both the merger and private placement are expected to close by the end of Q4 2023.

The investment will be used to continue development of the lead assets in Immunome’s combined pipeline, to continue to advance the company’s platforms, and for general working capital purposes. The combined pipeline includes a novel anti-IL-38 mAb derived from Immunome’s discovery engine, as well as a folate receptor-targeted TLR7 agonist (FA-TLR7a) and FAP-targeted radioligand (177Lu-FAP). The company expects to submit three INDs within 18 months following the closing, including the anti-IL-38 program, which is now slated for submission in Q1 2024. Additionally, the company will be well-positioned to explore opportunities for strategic in-licensing and further acquisitions.

"This is the first step in establishing a preeminent oncology company," said Dr. Siegall. "Combining Morphimmune’s Targeted Effector Platform with Immunome’s Discovery Engine will enable us to pursue novel targets and modalities, unlocking substantial synergistic value."

"Given the quality of our science, the expertise of our combined leadership team, and the strengthened cash position, I am extremely enthusiastic about our potential to reduce the suffering and loss of life caused by cancer."

"We founded Morphimmune to realize the extraordinary potential of Professor Philip S. Low’s scientific vision, which builds on decades of work at Purdue University. Our subsequent investments in the company, our engagement with Clay Siegall as CEO and now the anticipated merger are evidence of that potential," said Isaac Barchas, Morphimmune Founding Board Chairman and Research Bridge Partners Co-Founder and CEO. Barchas will serve on Immunome’s Board of Directors following the merger.

About the Proposed Transaction

Immunome will acquire Morphimmune through a reverse subsidiary merger that is intended to be a tax-free reorganization. Stockholders of Morphimmune will receive common stock of Immunome based on a fixed exchange ratio applicable to the specific class and series of Morphimmune capital stock and outstanding options to acquire Morphimmune common stock will be assumed by Immunome. At the effective time of the merger, prior to giving effect to the private placement, securityholders of Immunome will own approximately 55% of the combined company and securityholders of Morphimmune will own approximately 45% of the combined company on a fully diluted basis, excluding out-of-the-money securities and the inducement grant to Dr. Siegall discussed below. The closing of the transaction is subject to customary closing conditions, including the effectiveness of the registration statement on Form S-4 to be filed by Immunome, and the receipt of required stockholder approvals from Immunome and Morphimmune stockholders. In conjunction with execution of the merger agreement, Dr. Siegall entered into an employment agreement with Immunome that will become effective upon closing. In connection with the entry into the employment agreement, the Immunome Board of Directors approved a stock option grant to Dr. Siegall as an inducement material to Dr. Siegall entering into employment with Immunome in accordance with Nasdaq Listing Rule 5635(c)(4). The stock option provides for the purchase of up to 2,137,080 shares of Immunome common stock at a price of $5.91 per share, the closing price per share of Immunome common stock as reported by Nasdaq on June 28, 2023, the date of grant, and vests over four years, with 25 percent of the shares vesting on the first anniversary of closing of the merger, and the remainder vesting ratably at the end of each subsequent month thereafter, subject to Dr. Siegall’s continued employment with Immunome through the applicable vesting dates.

Stockholders of Immunome holding approximately 20% of the voting stock of Immunome executed voting and support agreements pursuant to which they agreed to vote in favor of the issuance of shares in the merger and related matters and stockholders of Morphimmune holding approximately 70% of the voting stock of Morphimmune executed voting and support agreements pursuant to which they agreed to vote in favor of the adoption of the merger agreement and the merger and other related matters.

Following the proposed merger, the board of directors of the combined company will be comprised of seven members: two selected by Morphimmune, who will initially be Dr. Siegall and Mr. Barchas; one selected by Immunome, who will initially be Philip Wagenheim; and four additional independent directors, to be mutually agreed, one of whom will initially be Mr. Boylan.

Stifel is serving as financial advisor and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is serving as legal counsel to Immunome. TD Cowen is serving as financial advisor and Cooley LLP is serving as legal counsel to Morphimmune.

In connection with the private placement, TD Cowen and SVB Securities are serving as placement agents, and Wedbush Securities Inc. is serving as a strategic advisor.