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Item 1.01
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Entry into a Material Definitive Agreement.
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Acquisition Agreement
On July 16, 2021 we and our newly formed wholly owned subsidiary Brooklyn Acquisition Sub, Inc. entered into an Agreement and Plan of Acquisition, or
the Acquisition Agreement, with (a) Novellus LLC or Seller, a Delaware limited liability company, (b) Novellus, Inc. or Parent, a Delaware corporation that is the sole equity holder of Novellus Therapeutics Limited, or Novellus, and that, prior to
the closing under the Acquisition Agreement, was a wholly owned subsidiary of Seller and (c) the Sellers’ Representative named therein. Novellus is a pre-clinical stage biotechnology company organized under the laws of Ireland that is developing
engineered cellular medicines using its licensed, patented non-immunogenic mRNA, high-specificity gene editing, mutation-free and footprint-free cell reprogramming and serum-insensitive mRNA lipid delivery technologies.
The closing of the transaction contemplated by the Acquisition Agreement, or the Acquisition, was held contemporaneously with the execution and delivery
of the Acquisition Agreement. At the closing:
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We acquired all of the outstanding equity interests of Parent as the result of the merger of Brooklyn Acquisition Sub, Inc. with and into
Parent, following which Parent, as the surviving corporation, became our wholly owned subsidiary and Novellus became our indirectly owned subsidiary.
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We acquired 25.0% of the total outstanding equity interests of NoveCite, Inc., a Delaware corporation focused on bringing an allogeneic
mesenchymal stem cell (MSC) product to patients with acute respiratory distress syndrome (ARDS), including from COVID-19.
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We delivered consideration for the Acquisition totaling approximately $125,000,000, which consisted of (a) approximately $23,000,000 in cash and
(b) 7,022,230 shares, or the Shares, of our common stock, $0.005 par value per share, which under the terms of the Acquisition Agreement were valued at a total of $102,000,000, based on a price of $14.5253 per Share.
The Acquisition Agreement contains customary representations, warranties and certain indemnification provisions. A total of 740,766 of the Shares have
been placed in escrow for a period of up to 12 months in order to secure indemnification obligations to us under the Acquisition Agreement. The Acquisition Agreement also contains non-competition and non-solicitation provisions pursuant to which
the Seller has agreed not to engage in certain competitive activities for a period of five years following the closing, including customary restrictions relating to employees. No employees of Novellus or Parent prior to the Acquisition continued
their employment, or were otherwise engaged by us, following the Acquisition.
In connection with the Acquisition, the co-founders of Novellus entered into lock-up agreements with respect to 3,377,690 of the Shares received in
the Acquisition and our Chair of the Board of Directors and our Chief Executive Officer and President have entered into identical lock-up agreements with respect to their current holdings of our securities. Each lock-up agreement extends for a
period of three years, provided that up to 75% of the shares of common stock subject to the lock-up agreement may be released from the lock-up restrictions
earlier if the price of common stock on the NYSE American stock exchange exceeds specified thresholds. The lock-up agreements include customary exceptions for transfers during the applicable lock-up period.
We expect the Acquisition will advance our evolution into a platform company with a pipeline of next-generation engineered cellular, gene editing and
cytokine programs. In addition, the acquisition of Novellus builds on the exclusive license agreement dated as of April 26, 2021, or the License Agreement, that our wholly owned subsidiary Brooklyn ImmunoTherapeutics LLC entered into with Novellus
and Factor Bioscience Limited, which was described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 30, 2021. The completion of the acquisition of Novellus relieves Brooklyn ImmunoTherapeutics LLC from
potential obligations to pay Novellus certain upfront fees, clinical development milestone fees and post-registration royalties under the License Agreement. The agreement with Factor Bioscience Limited under the License Agreement, which grants
Brooklyn ImmunoTherapeutics LLC exclusive rights to develop certain next-generation mRNA gene editing and cell therapy products, remains unchanged.
Registration Rights Agreement
In connection with the Acquisition, on July 16, 2021, we entered into a registration rights agreement with Seller and recipients of the Shares, or the
Registration Rights Agreement, pursuant to which we agreed to file a registration statement with the Securities and Exchange Commission, covering the resale of 6,281,454 of the Shares. The Registration Rights Agreement terminates at such time as
the parties thereto may sell their Shares without restriction pursuant to Rule 144 under the Securities Act of 1933.
The foregoing descriptions of the Acquisition Agreement and the Registration Rights Agreement are qualified in their entirety by
reference to the full text of the Acquisition Agreement and the Registration Rights Agreement, which are attached to this report as Exhibit 10.1 and Exhibit 10.2, respectively, and each of which is incorporated herein by reference.