Freeline Therapeutics Holdings plc (Nasdaq: FRLN) today announced
that it has entered into a definitive agreement with a newly
established portfolio company of Syncona Ltd (LON: SYNC), a leading
life science investor focused on creating, building and scaling
global leaders in life science, to acquire Freeline in an all-cash
transaction. Under the agreement, the newly established portfolio
company will acquire all shares of Freeline not currently owned by
Syncona for $6.50 per American Depositary Share (ADS). This price
values Freeline’s entire issued share capital at approximately
$28.3 million and represents a 51% premium over the closing price
prior to the announcement of Syncona’s initial proposal on October
18. The acquisition is subject to the approval of Freeline’s
minority shareholders and is expected to close in the first quarter
of 2024.
In conjunction with the agreement,
Syncona is committing to provide Freeline with up to $15 million in
secured convertible debt financing to support operations and
continued advancement of FLT201, its gene therapy candidate in
Gaucher disease, through completion of the transaction.
Independent Directors Recommend
Minority Shareholders Vote to Approve TransactionA special
committee of the board of directors of Freeline (the "Special
Committee"), comprised entirely of independent directors, has
unanimously recommended that the minority shareholders vote in
favor of the acquisition. The Special Committee and management team
explored a range of strategic options, including potential
financing and M&A transactions, engaging with multiple
potential investors and third parties, before negotiating and
entering into a definitive agreement with Syncona.
“We conducted a thorough exploration
and review of our financing and strategic alternatives, taking into
account our need for further funding to enable operations to
continue beyond the near term. We are confident this negotiated
transaction for Syncona to acquire Freeline and support it as a
private entity is in the best interest of the company, as well as
shareholders, employees and ultimately patients,” said Julia P.
Gregory, an independent director and Chair of the Special
Committee.
“Our goal at Freeline is to bring life-changing gene therapies
to people with chronic debilitating diseases, starting with FLT201,
our highly differentiated AAV gene therapy candidate for Gaucher
disease,” said Michael Parini, Freeline’s Chief Executive Officer.
“Given the compelling data that we have seen from the first two
patients treated with FLT201, we are committed to advancing FLT201
as expeditiously as possible, and we believe we will be better
positioned to do that as a privately held, Syncona-backed company
than we could by continuing as a publicly traded company in the
current environment.”
“We are encouraged by the data from the FLT201 program and are
pleased with how Freeline is executing, but the company needs
further funding to continue to drive FLT201 through clinical
development,” said Chris Hollowood, CEO of Syncona Investment
Management Limited. “The challenging market conditions impacting
the biotech sector have presented a differentiated opportunity to
support the company as a private entity. We look forward to working
with the team to deliver on its next milestones.”
Terms of the Going-Private
TransactionIt is intended that the acquisition will be
implemented by means of a scheme of arrangement under Part 26 of
the UK Companies Act 2006, whereby the entire issued and to be
issued share capital of Freeline will be acquired by a newly
established Syncona portfolio company. The acquisition is
conditional on, among other things: (i) the approval by not less
than 75 percent in value of the Freeline shareholders present,
entitled to vote and voting, either in person or by proxy, at each
of the Court Meeting and the General Meeting; and (ii) the sanction
of the Scheme by the U.K. Court. Syncona will not be entitled to
vote at the Court Meeting. The acquisition does not require the
approval of Syncona’s shareholders.
If completed, the acquisition will
result in the company becoming a wholly owned Syncona portfolio
company, and its ADSs will no longer be listed on Nasdaq.
Further details of the acquisition
will be contained in the Scheme Document, which is intended to be
made available to Freeline shareholders along with notices of the
Court Meeting and General Meeting and the Forms of Proxy as
promptly as reasonably practicable following the date Freeline has
cleared comments received from the U.S. Securities and Exchange
Committee (“SEC”), if any, on such document.
Leerink Partners is acting as
exclusive financial advisor to the Special Committee, and Skadden,
Arps, Slate, Meagher & Flom LLP is acting as legal counsel to
the Special Committee. Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. is acting as US legal counsel to Syncona; and Simmons
& Simmons LLP is acting as UK legal counsel to Syncona.
Terms of the Convertible Debt
FinancingFreeline entered into a secured convertible loan
note in the aggregate amount of up to $15 million with Syncona (the
“Note”). The Note will bear interest at a rate of 12% annually and
will be capitalized monthly in arrears. The Note has a conversion
price of $6.50 per ADS, representing the take-private transaction
price, subject to adjustment and a repayment premium of 10% on the
principal outstanding. The Note will mature in November 2024,
unless prepaid or converted in accordance with its terms prior to
such date.
Freeline intends to use the proceeds
from the Note for working capital to continue its GALILEO-1 trial
for FLT201 in Gaucher disease, prepare for a potential
registrational trial, advance its GBA1-linked Parkinson’s disease
research program, and for general corporate purposes.
About Freeline
TherapeuticsFreeline is a clinical-stage biotechnology
company focused on developing transformative gene therapies for
chronic debilitating diseases. Freeline uses its proprietary,
rationally designed AAV vector and capsid (AAVS3), along with novel
promoters and transgenes, to deliver a functional copy of a
therapeutic gene into human liver cells, thereby expressing a
persistent functional level of the missing or dysfunctional protein
into a patient’s bloodstream. The company is currently advancing
FLT201, a highly differentiated gene therapy candidate that
delivers a novel transgene, in a Phase 1/2 clinical trial in people
with Gaucher disease type 1. Freeline has additional programs in
research, including one focused on GBA1-linked Parkinson’s disease
that leverages the same novel transgene as FLT201. Freeline is
headquartered in the UK and has operations in the United States.
For more information, visit www.freeline.life or connect with
Freeline on LinkedIn and X.
Important Notices
The City Code on Takeovers and
MergersThe City Code on Takeovers and Mergers does not
apply to the acquisition.
Further
InformationThe Company will furnish to the U.S. Securities
and Exchange Commission (the "SEC") a current report on Form 6-K
regarding the acquisition, which will include as an exhibit thereto
the Implementation Agreement. All parties desiring details
regarding the acquisition are urged to review these documents,
which will be available at the SEC's website
(http://www.sec.gov).
In connection with the acquisition,
the Company will prepare and mail a Schedule 13E-3 Transaction
Statement (the "Schedule 13E-3"). The Schedule 13E-3 will be filed
with the SEC. INVESTORS AND SHAREHOLDERS ARE URGED TO READ
CAREFULLY AND IN THEIR ENTIRETY THE SCHEDULE 13E-3 AND OTHER
MATERIALS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, AS THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, THE
ACQUISITION, AND RELATED MATTERS. In addition to receiving the
Schedule 13E-3 by mail, shareholders also will be able to obtain
these documents, as well as other filings containing information
about the Company, the acquisition, and related matters, without
charge from the SEC's website (http://www.sec.gov).
This press release is for information
purposes only and is not intended to and does not constitute, or
form any part of, an offer to sell or an invitation to purchase or
subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the acquisition or
otherwise. The acquisition will be made solely by the Scheme
Document, which will contain the full terms and conditions of the
acquisition, including details of how to vote in respect of the
Scheme. INVESTORS ARE ADVISED TO READ THE SCHEME DOCUMENT, AS IT
MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WHEN IT BECOMES
AVAILABLE CAREFULLY AND IN ITS ENTIRETY PRIOR TO MAKING ANY
DECISIONS WITH RESPECT TO THE ACQUISITION BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors may
obtain a free copy of the Scheme Document (when available) at the
Securities and Exchange Commission’s website at www.sec.gov, or
free of charge from Freeline at https://www.freeline.life or by
directing a request to Freeline at investor@freeline.life. Any
voting decision or response in relation to the acquisition should
be made solely on the basis of the Scheme Document.
This press release does not constitute
a prospectus or a prospectus equivalent document.
Syncona and Freeline, and their
respective directors and executive officers, may be deemed to be
participants in the solicitation of proxies in respect of the
transactions contemplated by the implementation agreement.
Information regarding Freeline’s directors and executive officers
is contained in Freeline’s Form 20-F for the year ended 31 December
2022, which is filed with the SEC. Additional information regarding
the participants in the solicitation of proxies in respect of the
transactions contemplated by the implementation agreement and a
description of their direct and indirect interests, by security
holdings or otherwise, will be contained in the Scheme Document and
other relevant materials to be filed with the SEC when they become
available.
Overseas
ShareholdersThe release, publication or distribution of
this press release in jurisdictions other than the United Kingdom
and the United States may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than
the United Kingdom or the United States (including Restricted
Jurisdictions) should inform themselves about, and observe, any
applicable legal or regulatory requirements. In particular, the
ability of persons who are not resident in the United Kingdom or
United States or who are subject to the laws of another
jurisdiction to vote their Freeline Shares in respect of the Scheme
at the Court Meeting, or to execute and deliver Forms of Proxy
appointing another to vote at the Court Meeting on their behalf,
may be affected by the laws of the relevant jurisdictions in which
they are located or to which they are subject. Any failure to
comply with applicable legal or regulatory requirements of any
jurisdiction may constitute a violation of securities laws in that
jurisdiction. This press release has been prepared for the purpose
of complying with English law and the information disclosed may not
be the same as that which would have been disclosed if this press
release had been prepared in accordance with the laws of
jurisdictions outside England.
Copies of this press release and any
formal documentation relating to the acquisition are not being, and
must not be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in or into or from any Restricted Jurisdiction
or any jurisdiction where to do so would constitute a violation of
the laws of such jurisdiction and persons receiving such documents
(including custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send them in or into or from any
Restricted Jurisdiction. Doing so may render invalid any related
purported vote in respect of acceptance of the acquisition.
Further details in relation to
Freeline Shareholders in overseas jurisdictions will be contained
in the Scheme Document.
Notice to U.S. Investors in
FreelineThe acquisition relates to the shares of a U.K.
company and is being made by means of a scheme of arrangement
provided for under Part 26 of the Companies Act and subject to the
proxy solicitation rules under the U.S. Exchange Act. The
acquisition, implemented by way of a scheme of arrangement, is not
subject to the tender offer rules under the U.S. Exchange Act. If,
in the future, Bidder exercises its right to implement the
acquisition by way of an Offer, subject to the terms of the
Implementation Agreement, the acquisition will be made in
compliance with applicable U.S. laws and regulations.
It may be difficult for U.S. Freeline
Shareholders and Freeline ADR Holders to enforce their rights and
any claim arising out of the U.S. federal securities laws, because
Freeline is located in a non-U.S. country, and some or all of its
officers and directors are residents of a non-U.S. country. U.S.
Freeline Shareholders and Freeline ADR Holders may not be able to
sue a non-U.S. company or its officers or directors in a non-U.S.
court for violations of the U.S. securities laws. Further, it may
be difficult to compel a non-U.S. company and its affiliates to
subject themselves to a U.S. court’s judgment.
U.S. Freeline Shareholders and
Freeline ADR Holders are urged to consult with legal, tax and
financial advisers in connection with making a decision regarding
the acquisition.
Forward-Looking
StatementsThis press release contains statements that
constitute “forward-looking statements” as that term is defined in
the United States Private Securities Litigation Reform Act of 1995,
including statements that express the opinions, expectations,
beliefs, plans, objectives, assumptions or projections of Freeline
Therapeutics Holdings plc (the “Company”) regarding future events
or future results, in contrast with statements that reflect
historical facts. All statements, other than historical facts,
including statements regarding the anticipated benefits of the
acquisition and the expected time of effectiveness of the
acquisition are forward-looking statements. In some cases, you can
identify such forward-looking statements by terminology such as
“anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,”
“project,” “expect,” “may,” “will,” “would,” “could” or “should,”
the negative of these terms or similar expressions. Forward-looking
statements are based on management’s current beliefs and
assumptions and on information currently available to the Company,
and you should not place undue reliance on such statements.
Forward-looking statements are subject to many risks and
uncertainties, including (1) the acquisition is subject to the
satisfaction or waiver of certain conditions, including the receipt
of requisite approvals by Freeline’s shareholders and the sanction
of the Scheme by the High Court of Justice in England and Wales,
which conditions may not be satisfied or waived; (2) uncertainties
as to the timing of the consummation of the acquisition and the
ability of each party to consummate the acquisition; (3) the risk
that the acquisition disrupts the parties’ current operations or
affects their ability to retain or recruit key employees; (4) the
possible diversion of management time on acquisition-related
issues; (5) litigation relating to the acquisition; (6) unexpected
costs, charges or expenses resulting from the acquisition; and (7)
potential adverse reactions or changes to business relationships
resulting from the announcement or completion of the acquisition.
Such risks and uncertainties may cause the statements to be
inaccurate and readers are cautioned not to place undue reliance on
such statements. The Company cannot guarantee that any
forward-looking statement will be realized. Should known or unknown
risks or uncertainties materialize or should underlying assumptions
prove inaccurate, actual results could vary materially from past
results and those anticipated, estimated, or projected. Investors
are cautioned not to put undue reliance on forward-looking
statements. A further list and description of risks, uncertainties,
and other matters can be found in the Company’s Annual Report on
Form 20-F for the fiscal year ended December 31, 2022, and in
subsequent reports on Form 6-K, in each case including in the
sections thereof captioned “Cautionary Statement Regarding
Forward-Looking Statements” and “Item 3.D. Risk factors.” Many of
these risks are outside of the Company’s control and could cause
its actual results to differ materially from those it thought would
occur. The forward-looking statements included in this press
release are made only as of the date hereof. The Company does not
undertake, and specifically declines, any obligation to update any
such statements or to publicly announce the results of any
revisions to any such statements to reflect future events or
developments, except as required by law. For further information,
please reference the Company’s reports and documents filed with the
U.S. Securities and Exchange Commission (the “SEC”). You may review
these documents by visiting EDGAR on the SEC website at
www.sec.gov.
Freeline Investor and Media
Contact:Naomi Aokinaomi.aoki@freeline.lifeSenior Vice
President, Head of Investor Relations & Corporate
Communications+ 1 617 283 4298
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