Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under § 240.14a-12

Sierra Oncology, Inc.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


Table of Contents

Sierra Oncology, Inc.

1820 Gateway Drive, Suite 110

San Mateo, California 94404

To the Stockholders of Sierra Oncology, Inc.:

You are cordially invited to attend a special meeting of stockholders (which we refer to, together with any adjournment, postponement or other delay thereof, as the “special meeting”) of Sierra Oncology, Inc. (which we refer to as the “Company” or “Sierra Oncology”). The special meeting will be held on June 29, 2022, at 10:00 a.m., Pacific time. You may attend the special meeting via a live interactive webcast on the internet at www.virtualshareholdermeeting.com/SRRA2022SM. You will be able to listen to the special meeting live and vote online.

At the special meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated April 12, 2022, between GlaxoSmithKline plc (which we refer to as “GSK”), Orikum Acquisition Inc. (which we refer to as “Acquisition Sub”) and Sierra Oncology, as it may be amended from time to time (which we refer to as the “merger agreement”). We refer to the merger of Acquisition Sub (an indirect wholly owned subsidiary of GSK) with and into Sierra Oncology as the “merger.” At the special meeting, you will also be asked to consider and vote on (1) a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger; and (2) a proposal for the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

If the merger is completed, you will be entitled to receive $55.00 in cash, without interest and subject to any applicable withholding taxes, for each share of our common stock that you own (unless you have properly exercised your appraisal rights). This amount constitutes (1) a premium of approximately 39 percent to the closing price of our common stock on April 12, 2022, which was the last full trading day before public announcement of the transaction; and (2) a premium of approximately 63 percent to the volume-weighted average price (“VWAP”) of our common stock over the 30 trading days ending April 12, 2022.

Sierra Oncology’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, unanimously: (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Sierra Oncology and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

Sierra Oncology’s Board of Directors unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

The enclosed proxy statement provides detailed information about the special meeting, the merger agreement and the merger, and the other proposals to be considered at the special meeting. A copy of the merger agreement is attached as Annex A to the proxy statement.

The proxy statement also describes the actions and determinations of Sierra Oncology’s Board of Directors in connection with its evaluation of the merger agreement and the merger. Please read the proxy statement and its annexes, including the merger agreement, carefully and in their entirety, as they contain important information.

Even if you plan to attend the special meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy

 

1


Table of Contents

electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the special meeting and vote at the special meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote against the adoption of the merger agreement.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or be voted at the special meeting, and that will have the same effect as voting against the adoption of the merger agreement.

Your vote is very important, regardless of the number of shares that you own.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders in the US and Canada call toll-free: (877) 750-0510

Stockholders in other locations please call: +1 (412) 232-3651

Banks and brokers call collect: (212) 750-5833

On behalf of Sierra Oncology’s Board of Directors, thank you for your support.

Very truly yours,

 

LOGO

Stephen G. Dilly, MBBS, PhD
President and Chief Executive Officer

The accompanying proxy statement is dated May 16, 2022 and, together with the enclosed form of proxy card, is first being sent on or about May 18, 2022.

 

2


Table of Contents

LOGO

Sierra Oncology, Inc.

1820 Gateway Drive, Suite 110

San Mateo, California 94404

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 29, 2022

Notice is given that a special meeting of stockholders (which we refer to, together with any adjournment, postponement or other delay thereof, as the “special meeting”) of Sierra Oncology, Inc., a Delaware corporation (which we refer to as “Sierra Oncology”), will be held on June 29, 2022, at 10:00 a.m., Pacific time, for the following purposes:

 

  1.

To consider and vote on the proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time), dated April 12, 2022, between GlaxoSmithKline plc, Orikum Acquisition Inc. and Sierra Oncology, as it may be amended from time to time (which we refer to as the “merger agreement”);

 

  2.

To consider and vote on the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger of Orikum Acquisition Inc., an indirect wholly owned subsidiary of GlaxoSmithKline plc, with and into Sierra Oncology (which we refer to as the “merger”);

 

  3.

To consider and vote on any proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and

 

  4.

To transact any other business that may properly come before the special meeting.

The special meeting will be held by means of a live interactive webcast on the internet at www.virtualshareholdermeeting.com/SRRA2022SM. You will be able to listen to the special meeting live and vote online. The special meeting will begin promptly at 10:00 a.m., Pacific time. Online check-in will begin a few minutes prior to the special meeting. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares).

Only Sierra Oncology stockholders as of the close of business on May 11, 2022, are entitled to notice of, and to vote at, the special meeting.

Sierra Oncology’s Board of Directors unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

Sierra Oncology stockholders who do not vote in favor of the proposal to adopt the merger agreement will have the right to seek appraisal of the “fair value” of their shares of our common stock (exclusive of any elements of value arising from the accomplishment or expectation of the merger and together with interest (as described in the accompanying proxy statement) to be paid on the amount determined to be “fair value”) in lieu


Table of Contents

of receiving $55.00 per share in cash if the merger is completed, as determined in accordance with Section 262 of the Delaware General Corporation Law (which is referred to as the “DGCL”). To do so, a Sierra Oncology stockholder must properly demand appraisal before the vote is taken on the merger agreement and comply with all other requirements of the DGCL, including Section 262 of the DGCL, which are summarized in the accompanying proxy statement, and must meet certain other conditions. Section 262 of the DGCL is reproduced in its entirety in Annex B to the accompanying proxy statement and is incorporated in this notice by reference.

Even if you plan to attend the special meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the special meeting and vote at the special meeting, your vote will revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote against the adoption of the merger agreement.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or be voted at the special meeting, and that will have the same effect as voting against the adoption of the merger agreement.

 

By Order of the Board of Directors,

 

LOGO

 

Stephen G. Dilly, MBBS, PhD

President and Chief Executive Officer

 

Dated:

  May 16, 2022

 

San Mateo, CA

 

 

2


Table of Contents

IMPORTANT INFORMATION

Even if you plan to attend the special meeting, we encourage you to submit your proxy as promptly as possible: (1) over the internet; (2) by telephone; or (3) by signing and dating the enclosed proxy card (a prepaid reply envelope is provided for your convenience). You may revoke your proxy or change your vote at any time before your proxy is voted at the special meeting.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or be voted at the special meeting, and that will have the same effect as voting against the adoption of the merger agreement.

If you are a stockholder of record, voting at the special meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares in order to vote at the special meeting.

We encourage you to read the accompanying proxy statement and its annexes, including all documents incorporated by reference into the accompanying proxy statement, carefully and in their entirety. If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement, or need help voting your shares, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders in the US and Canada call toll-free: (877) 750-0510

Stockholders in other locations please call: +1 (412) 232-3651

Banks and brokers call collect: (212) 750-5833


Table of Contents

TABLE OF CONTENTS

 

SUMMARY

     1  

Introduction

     1  

Parties Involved in the Merger

     1  

Effect of the Merger

     2  

Per Share Price

     2  

The Special Meeting

     3  

Recommendation of the Sierra Oncology Board and Reasons for the Merger

     4  

Opinion of Lazard Frères & Co. LLC

     5  

Treatment of Equity Awards in the Merger

     5  

Treatment Warrants in the Merger

     6  

Employee Benefits

     6  

Interests of Sierra Oncology’s Directors and Executive Officers in the Merger

     7  

Appraisal Rights

     7  

Material U.S. Federal Income Tax Consequences of the Merger

     8  

Regulatory Approvals Required for the Merger

     9  

The Support Agreements

     9  

No Solicitation of Other Acquisition Proposals

     9  

Change in the Sierra Oncology Board’s Recommendation

     10  

Conditions to the Closing of the Merger

     10  

Termination of the Merger Agreement

     11  

Termination Fees and Remedies

     12  

Delisting and Deregistration of Our Common Stock

     13  

Effect on Sierra Oncology if the Merger is Not Completed

     13  

Litigation Relating to the Merger

     13  

QUESTIONS AND ANSWERS

     14  

FORWARD-LOOKING STATEMENTS

     24  

THE SPECIAL MEETING

     26  

Date, Time and Place

     26  

Purpose of the Special Meeting

     26  

Attending the Special Meeting

     26  

Record Date; Shares Entitled to Vote; Quorum

     26  

Vote Required; Abstentions and Broker Non-Votes

     27  

Shares Held by Sierra Oncology’s Directors and Executive Officers

     27  

Voting of Proxies

     27  

Revocability of Proxies

     28  

The Sierra Oncology Board’s Recommendation

     29  

Adjournment

     29  

Solicitation of Proxies

     29  

Anticipated Date of Completion of the Merger

     30  

Appraisal Rights

     30  

Other Matters

     30  

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 29, 2022

     31  

Householding of Special Meeting Materials

     31  

Questions and Additional Information

     31  

THE MERGER

     32  

Parties Involved in the Merger

     32  

Effect of the Merger

     32  

Effect on Sierra Oncology if the Merger is Not Completed

     33  

Per Share Price

     33  

Background of the Merger

     34  

Recommendation of the Sierra Oncology Board and Reasons for the Merger

     42  


Table of Contents

Opinion of Lazard Frères & Co. LLC

     46  

Certain Unaudited Prospective Financial Information

     53  

Interests of Sierra Oncology’s Directors and Executive Officers in the Merger

     56  

Closing and Effective Time of the Merger

     64  

Appraisal Rights

     64  

Accounting Treatment

     70  

Material U.S. Federal Income Tax Consequences of the Merger

     70  

Regulatory Approvals Required for the Merger

     73  

The Support Agreements

     74  

Treatment of Warrants in the Merger

     75  

Delisting and Deregistration of Our Common Stock

     75  

Litigation Relating to the Merger

     75  

PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

     77  

PROPOSAL 2: APPROVAL, ON A NON-BINDING, ADVISORY BASIS, OF CERTAIN MERGER-RELATED EXECUTIVE COMPENSATION

     78  

PROPOSAL 3: ADJOURNMENT OF THE SPECIAL MEETING

     79  

THE MERGER AGREEMENT

     80  

Closing and Effective Time of the Merger

     80  

Effects of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

     81  

Conversion of Shares

     81  

Payment Agent, Exchange Fund and Exchange and Payment Procedures

     82  

Representations and Warranties

     83  

Conduct of Business Pending the Merger

     87  

No Solicitation of Other Acquisition Proposals

     89  

The Sierra Oncology Board’s Recommendation; Board Recommendation Change

     91  

Stockholder Meeting

     93  

Employee Benefits

     93  

Efforts to Close the Merger

     94  

Indemnification and Insurance

     95  

Conditions to the Closing of the Merger

     96  

Termination of the Merger Agreement

     97  

Termination Fees and Remedies

     98  

Fees and Expenses

     99  

No Third Party Beneficiaries

     99  

Amendment and Waiver

     99  

Governing Law and Venue

     99  

Waiver of Jury Trial

     99  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     100  

FUTURE STOCKHOLDER PROPOSALS

     104  

WHERE YOU CAN FIND MORE INFORMATION

     105  

MISCELLANEOUS

     107  

ANNEX A—AGREEMENT AND PLAN OF MERGER

     A-1  

ANNEX B—Section 262 of the Delaware General Corporation Law

     B-1  

ANNEX C—Opinion of Lazard Frères & Co. LLC

     C-1  

ANNEX D—FORM OF SUPPORT AGREEMENT

     D-1  

 

ii


Table of Contents

SUMMARY

Except as otherwise specifically noted in this proxy statement, “Sierra Oncology,” “we,” “our,” “us” and similar words refer to Sierra Oncology, Inc., including, in certain cases, our subsidiaries. Throughout this proxy statement, the “Sierra Oncology Board” refers to Sierra Oncology’s Board of Directors. Throughout this proxy statement, we refer to GlaxoSmithKline plc as “GSK” and Orikum Acquisition Inc. as “Acquisition Sub.” In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated April 12, 2022, between GSK, Acquisition Sub and Sierra Oncology, as it may be amended from time to time, as the “merger agreement.”

This summary highlights selected information from this proxy statement related to the proposed merger of Acquisition Sub (an indirect wholly owned subsidiary of GSK) with and into Sierra Oncology. We refer to that transaction as the “merger.”

This proxy statement may not contain all of the information that is important to you. To understand the merger more fully and for a complete description of its legal terms, you should carefully read this proxy statement, including the annexes to this proxy statement and the other documents to which we refer in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.” A copy of the merger agreement is attached as Annex A to this proxy statement. We encourage you to read the merger agreement, which is the legal document that governs the merger, carefully and in its entirety.

Introduction

On April 12, 2022, Sierra Oncology agreed to be acquired by GSK. If the merger is completed, each outstanding share of Sierra Oncology’s common stock (which we refer to as our “common stock”) (subject to certain exceptions) will be converted into the right to receive $55.00 per share in cash.

Parties Involved in the Merger

Sierra Oncology, Inc.

Sierra Oncology is a late-stage biopharmaceutical company, on a mission to deliver targeted therapies that treat rare forms of cancer. Sierra’s main focus is the development and potential commercialization of momelotinib, an investigational agent for the treatment of myelofibrosis. In January 2022, Sierra Oncology announced positive topline results from its global Phase 3 clinical trial for patients with myelofibrosis who are symptomatic and anemic and previously treated with an approved JAK inhibitor called MOMENTUM. In addition to momelotinib, Sierra’s pipeline consists of two assets in Phase I, SRA515 and SRA737. SRA515 is a selective bromodomain-containing protein 4 (BRD4) bromodomain and extra-terminal domain (BET) inhibitor with a novel bivalent binding mode that inhibits both protein bromodomains, and SRA737 is a novel checkpoint kinase 1 (CHK1) inhibitor.

Our common stock is listed on Nasdaq under the symbol “SRRA.” Sierra Oncology’s corporate offices are located at 1820 Gateway Drive, Suite 110, San Mateo, California 94404, and its telephone number is (650) 376-8679.

GlaxoSmithKline plc

GSK is a global pharmaceuticals, vaccines and consumer healthcare business that develops and delivers medicines, vaccines, and consumer healthcare products that impact human health at scale. GSK’s operations span

 

1


Table of Contents

the value chain from identifying, researching, developing and testing ground-breaking discoveries, to regulatory approval, manufacturing and commercialization.

GSK’s common stock is listed on the New York Stock Exchange under the symbol “GSK.” GSK’s corporate offices are located at 980 Great West Road, Brentford, Middlesex TW8 9GS England, and its phone number is +44 20 8047 5000.

Orikum Acquisition Inc.

Acquisition Sub is an indirect wholly owned subsidiary of GSK and was formed on April 7, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Acquisition Sub has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the merger agreement. Upon completion of the merger, Acquisition Sub will cease to exist and Sierra Oncology will continue as the surviving corporation in the merger.

Acquisition Sub’s address is FMC Tower at Cira Center South, 2929 Walnut Street, Suite 1700, Philadelphia, PA 19104.

Effect of the Merger

Upon the terms and subject to the conditions of the merger agreement, and in accordance with the Delaware General Corporation Law (which we refer to as the “DGCL”), at the effective time of the merger: (1) Acquisition Sub will merge with and into Sierra Oncology; (2) the separate existence of Acquisition Sub will cease; and (3) Sierra Oncology will continue as the surviving corporation in the merger and as an indirect wholly owned subsidiary of GSK. Throughout this proxy statement, we use the term “surviving corporation” to refer to Sierra Oncology as the surviving corporation following the merger.

As a result of the merger, Sierra Oncology will cease to be a publicly traded company. If the merger is completed, you will not own any shares of capital stock of the surviving corporation as a result of the merger.

The time at which the merger becomes effective (which we refer to as the “effective time of the merger”) will occur upon the filing of a certificate of merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as Sierra Oncology, GSK and Acquisition Sub may agree and specify in the certificate of merger).

Per Share Price

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, each outstanding share of our common stock (other than shares of our common stock that are (1) held by Sierra Oncology as treasury stock, (2) owned by GSK or Acquisition Sub, (3) owned by any direct or indirect wholly owned subsidiary of GSK or Acquisition Sub as of immediately prior to the effective time of the merger or (4) held by stockholders who have properly and validly exercised their statutory rights of appraisal in accordance with Section 262 of the DGCL (which shares of our common stock we refer to collectively as the “excluded shares”)) will be cancelled and automatically converted into the right to receive $55.00 in cash, without interest and less any applicable withholding taxes. We refer to this amount as the “per share price.”

At or prior to the closing of the merger, GSK will cause a sufficient amount of cash to be deposited with a designated payment agent to pay the aggregate amount of the merger consideration. Once our stockholders have provided the payment agent with the documentation required by the payment agent, the payment agent will pay the stockholder the per share price in exchange for each share of our common stock held by that stockholder. For more information, see the section of this proxy statement captioned “The Merger Agreement—Payment Agent, Exchange Fund and Exchange and Payment Procedures.”

 

2


Table of Contents

After the merger is completed, you will have the right to receive the per share price for each share of our common stock that you own, but you will no longer have any rights as a stockholder (except that our stockholders who properly and validly exercise and perfect, and do not validly withdraw or otherwise lose, their appraisal rights will have the right to receive a payment for the “fair value” of their shares as determined pursuant to an appraisal proceeding as contemplated by the DGCL, as described in the section of this proxy statement captioned “The Merger—Appraisal Rights”).

The Special Meeting

Date, Time and Place

A special meeting of our stockholders will be held on June 29, 2022, at 10:00 a.m., Pacific time. You may attend the special meeting via a live interactive webcast on the internet at www.virtualshareholdermeeting.com/SRRA2022SM. We refer to the special meeting, and any adjournment, postponement or other delay of the special meeting, as the “special meeting.” You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). We elected to use a virtual meeting given the current health and travel implications of COVID-19 and our desire to promote the health and welfare of our stockholders, as well as our positive experiences with virtual meetings. Additionally, the virtual nature of the special meeting is generally designed to enable participation of and access by more of our stockholders while decreasing the cost of conducting the special meeting.

Purpose

At the special meeting, we will ask stockholders to consider and vote on proposals to: (1) adopt the merger agreement; (2) approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

Record Date; Shares Entitled to Vote

You are entitled to vote at the special meeting if you owned shares of our common stock as of the close of business on May 11, 2022 (which we refer to as the “record date”). For each share of our common stock that you owned as of the close of business on the record date, you will have one vote on each matter submitted for a vote at the special meeting.

Quorum

As of the record date, there were 24,419,349 shares of our common stock outstanding and entitled to vote at the special meeting. The holders of a majority of the voting power of the stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum for the purposes of holding the special meeting.

Required Vote

The proposals to be voted on at the special meeting require the following votes:

 

   

Proposal 1: Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the shares of our common stock outstanding as of the record date.

 

3


Table of Contents
   

Proposal 2: Approval of the proposal to approve the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger requires the affirmative vote of a majority of the votes cast for or against the proposal. This vote will be on a non-binding, advisory basis.

 

   

Proposal 3: Approval of the proposal to adjourn the special meeting to a later date or dates to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting requires the affirmative vote of a majority of the votes cast for or against the proposal.

Voting and Proxies

Any stockholder of record entitled to vote at the special meeting may vote in any of the following ways:

 

   

by proxy, by returning a signed and dated proxy card (a prepaid reply envelope is provided for your convenience);

 

   

by proxy, by granting a proxy electronically over the internet or by telephone (using the instructions found on the proxy card); or

 

   

by attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by (1) signing another proxy card with a later date and returning it prior to the special meeting; (2) submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy and by the appropriate deadline; (3) delivering a written notice of revocation to our Corporate Secretary; or (4) attending the special meeting and voting at the special meeting.

If you are a beneficial owner and hold your shares of our common stock in “street name” through a bank, broker or other nominee, you should instruct your bank, broker or other nominee on how you wish to vote your shares of our common stock using the instructions provided by your bank, broker or other nominee. Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote on routine matters, but not on non-routine matters. The proposals to be considered at the special meeting are all non-routine matters, and banks, brokers and other nominees cannot vote on these proposals without your instructions. Therefore, it is important that you cast your vote or instruct your bank, broker or nominee on how you wish to vote your shares.

If you hold your shares of our common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

Recommendation of the Sierra Oncology Board and Reasons for the Merger

The Sierra Oncology Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the Sierra Oncology Board and Reasons for the Merger,” unanimously: (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Sierra Oncology and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

The Sierra Oncology Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named

 

4


Table of Contents

executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

Opinion of Lazard Frères & Co. LLC

Lazard Frères & Co. LLC, which we refer to as “Lazard Frères”, and Lazard & Co., Limited, which we refer to collectively with Lazard Frères as “Lazard,” was retained by Sierra Oncology to act as its financial advisor and, in the case of Lazard Frères, to render to the Sierra Oncology Board a fairness opinion in connection with the merger. In connection with the merger, on April 11, 2022, Lazard Frères delivered to the Sierra Oncology Board an oral opinion, which was confirmed by delivery of a written opinion, dated April 12, 2022, to the effect that, as of April 12, 2022, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard Frères as set forth in its written opinion, the merger consideration to be paid to holders of shares of Sierra Oncology common stock (other than shares (i) held by holders who are entitled to and have properly and validly exercised and perfected a demand for appraisal of their shares (and who have not effectively withdrawn or lost their rights to appraisal), or (ii) held by Sierra Oncology as treasury stock, held by GSK, or Acquisition Sub or any other direct or indirect wholly owned subsidiary of GSK or Acquisition Sub (the holders described in clauses (i) and (ii), collectively, the “excluded holders”)) in the merger was fair, from a financial point of view, to such holders.

The full text of Lazard Frères’ written opinion, dated April 12, 2022, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard Frères in connection with its opinion, is attached to this proxy statement as Annex C and is incorporated by reference herein in its entirety. The foregoing summary of Lazard Frères’ opinion is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Lazard Frères’ opinion, this section and the summary of Lazard Frères’ opinion, as described in more detail in the section of this proxy statement captioned “The Merger—Opinion of Lazard Frères & Co. LLC”, in their entirety. Lazard’s engagement and Lazard Frères’ opinion were for the benefit of the Sierra Oncology Board (in its capacity as such), and Lazard Frères’ opinion was rendered to the Sierra Oncology Board in connection with its evaluation of the merger and addressed only the fairness as of the date of the opinion, from a financial point of view, to holders of shares of Sierra Oncology common stock (other than the excluded holders) of the merger consideration to be paid to such holders in the merger. Lazard Frères’ opinion was not intended to, and does not, constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or any matter relating thereto.

Treatment of Equity Awards in the Merger

At the effective time of the merger, all Sierra Oncology stock options (which we refer to as “Sierra options”)outstanding and unexercised as of immediately prior to the effective time of the merger will accelerate vesting in full and will be cancelled and converted into a right to receive an amount in cash, without interest, equal to the product of (1) the excess, if any, of the per share price less the exercise price per share of such option, and (2) the number of shares of our common stock then issuable upon exercise in full of such Sierra option. The number of shares of our common stock issuable for Sierra options subject to performance-based vesting with performance periods outstanding at the effective time will be deemed to be the number of shares issuable upon satisfaction of maximum achievement of performance criteria. The cash amount (less any required withholding and other taxes) will be paid to the applicable Sierra option holder following the effective time of the merger, in accordance with the terms of the merger agreement. Sierra options with an exercise price per share equal to or greater than the per share price will be cancelled without any cash payment therefore.

 

5


Table of Contents

Treatment of Warrants in the Merger

At the effective time of the merger and upon the terms and conditions set forth in the merger agreement, each warrant to purchase common stock of Sierra Oncology issued on January 31, 2020, and as amended on September 8, 2021 (the “Series A warrants”) that is outstanding as of immediately prior to the effective time of the merger will be cancelled and extinguished and represent only the right of the holder thereof to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the Black Scholes Value (as defined in such Series A warrant), which is calculated under the terms of the Series A warrants to be $45.98 per share of our common stock subject to the Series A warrants (which we refer to as the “Series A warrant consideration”).

At the effective time of the merger and upon the terms, each pre-funded warrant to purchase common stock of Sierra Oncology originally issued January 31, 2022 (the “pre-funded warrants” and together with the Series A warrants, the “Sierra warrants”) that is outstanding as of immediately prior to the effective time of the merger will be deemed exercised in full as a “cashless exercise” (as described in the pre-funded warrants) effective upon the effective time of the merger, in accordance with the terms of the pre-funded warrants, and the holder thereof shall be entitled to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the product obtained by multiplying (1) the amount of the per share price by (2) the number of shares of common stock deemed to be issuable upon exercise in full of the pre-funded warrant as a “cashless exercise” calculated in accordance with and subject to the terms and conditions of the pre-funded warrants.

At the effective time of the merger, any outstanding warrants to purchase common stock of Sierra Oncology with a per share exercise price greater than the per share price will be cancelled and extinguished without any cash payment in respect thereof.

Employee Benefits

Under the terms of the merger agreement, during the one-year period following the effective time of the merger, base compensation and target incentive compensation opportunities will not be decreased below the level applicable as of immediately prior to the effective time for any Sierra Oncology employee that continues to be an employee of GSK or one of its subsidiaries (including the surviving corporation) immediately following the effective time of the merger (which we refer to as a “continuing employee”). In addition, during the one-year period following the effective time of the merger (or until an earlier termination of employment for a particular continuing employee), the surviving corporation and its subsidiaries generally will:

 

   

maintain for the benefit of continuing employees the Sierra Oncology plans or arrangements providing for compensation or employee benefits, which we refer to as “Sierra plans” (other than the opportunity to participate in equity-based incentive compensation and post-employment welfare benefits (which we refer to as “excluded benefits”)) that are no less favorable in the aggregate to those in effect immediately prior to the effective time of the merger;

 

   

provide other compensation and employee benefit plans (other than the excluded benefits) to each continuing employee that are no less favorable in the aggregate to the compensation and benefits (other than the opportunity to participate in equity-based incentive compensation and individual employment agreements) provided to such continuing employee immediately prior to the effective time of the merger (which we refer to as “comparable plans”); or

 

   

provide some combination of Sierra plans and comparable plans such that each continuing employee receives compensation and benefits (other than excluded benefits) that are no less favorable in the aggregate to the compensation and benefits (other than excluded benefits) provided to such continuing employee immediately prior to the effective time.

 

6


Table of Contents

GSK will use commercially reasonable efforts to cause continuing employees generally to be granted service credit for service with us and our subsidiaries prior to the effective time of the merger, and with GSK, the surviving corporation and any of their subsidiaries on or after the effective time of the merger, for purposes of eligibility to participate, vesting and entitlement to benefits where length of service is relevant (including for vacation accrual and severance pay entitlement but not for purposes of equity-based benefits or post-employment welfare benefits).

For more information, see the section of this proxy statement captioned “The Merger Agreement—Employee Benefits.”

Interests of Sierra Oncology’s Directors and Executive Officers in the Merger

When considering the recommendation of the Sierra Oncology Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, your interests as a stockholder. In (1) evaluating and negotiating the merger agreement, (2) approving the merger agreement and the merger and (3) recommending that the merger agreement be adopted by our stockholders, the Sierra Oncology Board was aware of and considered these interests to the extent that they existed at the time, among other matters. These interests include the following:

 

   

For our executive officers and non-employee directors, the accelerated vesting of Sierra options, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Treatment of Equity-Based Awards.”

 

   

For certain of our directors and their affiliates who hold Series A warrants, the right to receive the Series A warrant consideration, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Treatment of Sierra Warrants.”

 

   

Eligibility of certain of our executive officers to receive enhanced severance payments and benefits under their severance agreements if, within 12 months after our change in control, Sierra Oncology terminates their employment with Sierra Oncology for a reason other than “cause,” death or “disability” or they resign for “good reason,” as described in more detail in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Executive Severance Agreements”.

 

   

The continued indemnification and insurance coverage for our directors and executive officers from the surviving corporation and GSK under the terms of the merger agreement, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Insurance and Indemnification of Directors and Executive Officers.”

Appraisal Rights

If the merger is consummated, our stockholders who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold such shares through the effective time of the merger; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL. This means that these stockholders will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of our common stock, exclusive of any elements of

 

7


Table of Contents

value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to stockholders seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (2) interest theretofore accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.

Only a stockholder of record may submit a demand for appraisal. To exercise appraisal rights, the stockholder of record must (1) submit a written demand for appraisal to Sierra Oncology before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold the subject shares of our common stock of record through the effective time of the merger; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of Sierra Oncology unless certain conditions are satisfied by the stockholders seeking appraisal, as described further below. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, a copy of which is attached as Annex B to this proxy statement. If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.

Material U.S. Federal Income Tax Consequences of the Merger

For U.S. federal income tax purposes, the receipt of cash by a U.S. Holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) in exchange for such U.S. Holder’s shares of our common stock in the merger generally will result in the recognition of gain or loss in an amount measured by the difference, if any, between the amount of cash that such U.S. Holder receives in the merger and such U.S. Holder’s adjusted tax basis in the shares of our common stock surrendered in the merger.

A Non-U.S. Holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of our common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States.

Both U.S. Holders and Non-U.S. Holders may also be potentially subject to backup withholding tax if they do not provide certain tax certifications, as described in more detail in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger—Information Reporting and Backup Withholding.”

 

8


Table of Contents

For more information, see the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.” Stockholders should consult their own tax advisors concerning the U.S. federal income tax consequences relating to the merger in light of their particular circumstances, as well as any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or non-U.S. taxing jurisdiction.

Regulatory Approvals Required for the Merger

Under the merger agreement, the merger cannot be completed until the waiting period (and any extensions thereof), if any, applicable to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (which we refer to as the “HSR Act”) has expired or otherwise been terminated, or all requisite consents pursuant thereto have been obtained.

The initial waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern time, on May 31, 2022.

The Support Agreements

In connection with entering to the merger agreement, on April 12, 2022, following the Sierra Oncology Board’s approval thereof, each of our directors and executive officers, together with certain funds affiliated with OrbiMed Advisors, LLC, Abingworth Management Limited, and Vivo Capital LLC that are affiliated with certain of our directors, in each case solely in their capacities as holders of Sierra Oncology common stock and other securities, have entered into support agreements (the “support agreements”) with GSK and Sierra Oncology. These support agreements obligate the applicable stockholders to vote their respective shares of Sierra Oncology’s common stock in favor of the adoption of the merger agreement and against the approval of any acquisition proposal. The support agreements terminate in certain circumstances, including if the merger agreement is terminated.

As of May 11, 2022, the support agreements cover approximately 27 percent of our common stock. For more information, please see the section of this proxy statement captioned “The Merger—The Support Agreements.”

No Solicitation of Other Acquisition Proposals

From the date of the merger agreement until either the termination of the merger agreement in accordance with its terms or the effective time of the merger, Sierra Oncology has agreed to cease and cause to be terminated any activities, discussions or negotiations conducted with any person and its representatives relating to an acquisition proposal.

Under the terms of the merger agreement, Sierra Oncology has agreed that it will not, and its subsidiaries, affiliates and any director, executive officer, outside legal counsel or affiliate of Sierra Oncology will not, and it will not authorize or direct any of its representatives to:

 

   

solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any acquisition proposal or any proposals that would reasonably be expected to lead to, an acquisition proposal;

 

   

furnish to any person (other than GSK, Acquisition Sub or any of their respective representatives) any non-public information relating to Sierra Oncology or any of its subsidiaries or afford to any person (other than GSK, Acquisition Sub or any of their respective representatives) access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Sierra Oncology or any of its subsidiaries, in any such case in connection with any acquisition proposal or with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, an acquisition proposal or the making of any proposal that would reasonably be expected to lead to an acquisition proposal;

 

9


Table of Contents
   

participate, or engage in discussions or negotiations, with any third person with respect to an acquisition proposal or with respect to any inquiries from third persons relating to the making of an acquisition proposal; or

 

   

enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an acquisition transaction, other than an acceptable confidentiality agreement (we refer to any of these as an “alternative acquisition agreement”).

However, prior to the adoption of the merger agreement by our stockholders, Sierra Oncology and the Sierra Oncology Board may, directly or indirectly through one or more of their representatives (including its financial advisor), subject to the execution of a confidentiality agreement, (1) participate or engage in discussions or negotiations with; or (2) (a) furnish any non-public information relating to Sierra Oncology or any of its subsidiaries to; or (b) afford access to the business, properties, assets, books, records or other non-public information or to any personnel of Sierra Oncology or any of its subsidiaries to any person or its representatives that has made, renewed or delivered to Sierra Oncology a written acquisition proposal after date of the merger agreement that was not solicited in breach of the applicable restrictions. Sierra Oncology may do this only if the Sierra Oncology Board has determined in good faith (after consultation with its financial advisor and outside legal counsel) that (1) such acquisition proposal either constitutes a superior proposal or is reasonably likely to lead to a superior proposal; and (2) the failure to take such actions would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law. For more information, see the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Acquisition Proposals.”

In addition, prior to the adoption of the merger agreement by our stockholders, Sierra Oncology may terminate the merger agreement in order to enter into an alternative acquisition agreement for a superior proposal if the Sierra Oncology Board determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties. Sierra Oncology is not entitled to terminate the merger agreement to enter into an agreement for a superior proposal (as described below) unless it complies with certain procedures in the merger agreement, including engaging in good faith negotiations with GSK during a specified period. If Sierra Oncology terminates the merger agreement in order to accept a superior proposal from a third party it must pay a termination fee to GSK. For more information, see the section of this proxy statement captioned “The Merger Agreement—The Sierra Oncology Board’s Recommendation; Board Recommendation Change.”

Change in the Sierra Oncology Board’s Recommendation

The Sierra Oncology Board may not withdraw its recommendation that our stockholders adopt the merger agreement or take certain similar actions other than, under certain circumstances, if it determines in good faith, after consultation with its financial advisor and outside legal counsel, that failure to do so would reasonably be expected to be inconsistent with the Sierra Oncology Board’s fiduciary duties pursuant to applicable law and the Sierra Oncology Board complies with the terms of the merger agreement.

Moreover, the Sierra Oncology Board cannot withdraw its recommendation that our stockholders adopt the merger agreement or take certain similar actions unless it complies with certain procedures in the merger agreement, including engaging in good faith negotiations with GSK during a specified period. If Sierra Oncology or GSK terminates the merger agreement under certain circumstances, including because the Sierra Oncology Board withdraws its recommendation that our stockholders adopt the merger agreement, then Sierra Oncology must pay to GSK a termination fee. For more information, see the section of this proxy statement captioned “The Merger Agreement—The Sierra Oncology Board’s Recommendation; Board Recommendation Change.”

Conditions to the Closing of the Merger

The obligations of GSK, Acquisition Sub and Sierra Oncology, as applicable, to consummate the merger are subject to the satisfaction or waiver of certain conditions, including the following:

 

   

the adoption of the merger agreement by the requisite affirmative vote of our stockholders;

 

10


Table of Contents
   

the expiration or termination of the waiting period (and any extensions thereof), if any, applicable to the merger pursuant to the HSR Act; and

 

   

the absence of any temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any court of competent jurisdiction, or legal or regulatory restraint or prohibition by any governmental authority of competent jurisdictions, or any law enacted, entered, enforced or applied to the merger, that, in each case, prevents or materially impairs the consummation of the merger.

In addition, the obligations of GSK and Acquisition Sub to consummate the merger are subject to the satisfaction or waiver of each of the following additional conditions, any of which may be waived exclusively by GSK:

 

   

the accuracy of the representations and warranties of Sierra Oncology in the merger agreement, subject to applicable materiality or other qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;

 

   

Sierra Oncology having performed and complied in all material respects with all covenants and obligations under the merger agreement required to be performed and complied with by it at or prior to the closing;

 

   

the absence of any Company Material Adverse Effect (as defined in the section of this proxy statement captioned “The Merger Agreement—Representations and Warranties”) having occurred after the date of the merger agreement; and

 

   

receipt by GSK and Acquisition Sub of a customary closing certificate of Sierra Oncology.

In addition, the obligations of Sierra Oncology to consummate the merger are subject to the satisfaction or waiver of each of the following additional conditions, any of which may be waived exclusively by Sierra Oncology:

 

   

the accuracy of the representations and warranties of GSK and Acquisition Sub in the merger agreement, subject to applicable materiality or other qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;

 

   

GSK and Acquisition Sub having performed and complied in all material respects with all covenants and obligations under the merger agreement required to be performed and complied by GSK and Acquisition Sub prior to the effective time of the merger; and

 

   

the receipt by Sierra Oncology of a customary closing certificate of GSK and Acquisition Sub.

Termination of the Merger Agreement

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the adoption of the merger agreement by our stockholders (except as otherwise provided in the merger agreement), in the following ways:

 

   

by mutual written agreement of Sierra Oncology and GSK;

 

   

by either Sierra Oncology or GSK if:

 

   

any permanent injunction or other judgment or order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the merger is in effect, or any action has been taken by any governmental authority of competent jurisdiction, that prevents or materially impairs the consummation of the merger and has become final and non-appealable or any law is enacted, entered, enforced or applied to the merger that prevents or

 

11


Table of Contents
 

materially impairs the consummation of the merger, except that the right to terminate the merger agreement will not be available to any party whose act or failure to act has been the primary cause or, or primarily resulted in, such injunction, judgement, order, restraint, prohibition or action be issued or in effect and becoming final and non-appealable or such law being issued, in effect, taken, enacted, entered, enforced or applied;

 

   

the merger has not been consummated by 11:59 p.m., New York City time, on October 10, 2022 (which we refer to as the “termination date”), except that a party may not terminate the merger agreement pursuant to this provision if such party’s action or failure to act constitutes a breach of the merger agreement and has been the primary cause of, or primarily resulted in the failure to satisfy the conditions to the closing of the merger or the failure to consummate the merger by the termination date; or

 

   

our stockholders do not adopt the merger agreement at the special meeting, except that a party may not terminate the merger agreement pursuant to this provision if such party’s action or failure to act constitutes a breach of the merger agreement has been the primary cause of, or primarily resulted in, the failure to obtain the approval of our stockholders at the special meeting;

 

   

by GSK:

 

   

if subject to a 30-day cure period, Sierra Oncology has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements in the merger agreement such that the related closing condition would not be satisfied;

 

   

prior to the adoption of the merger agreement by our stockholders if: (1) the Sierra Oncology Board has withdrawn its recommendation that our stockholders adopt the merger agreement; (2) Sierra Oncology has entered into an alternative acquisition agreement; or (3) a willful and material breach of Sierra Oncology’s non-solicitation restrictions in the merger agreement has occurred;

 

   

by Sierra Oncology:

 

   

if subject to a 30-day cure period, GSK or Acquisition Sub has breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements in the merger agreement such that the related closing condition would not be satisfied; or

 

   

prior to the adoption of the merger agreement by our stockholders if: (1) Sierra Oncology has received a superior proposal (as defined in the section of this proxy statement captioned “The Merger Agreement—No Solicitation of Other Acquisition Proposals”); (2) the Sierra Oncology Board has authorized Sierra Oncology to enter into an alternative acquisition agreement to consummate the acquisition transaction contemplated by that superior proposal; (3) Sierra Oncology has complied in all material respects with its covenants under the merger agreement with respect to such superior proposal; and (4)  concurrently with such termination, Sierra Oncology pays the applicable termination fee.

Termination Fees and Remedies

The merger agreement contains certain termination rights for Sierra Oncology and GSK. Upon valid termination of the merger agreement under specified circumstances, Sierra Oncology will be required to pay GSK (or its designee) a termination fee of $70,000,000. Specifically, this termination fee will be payable by Sierra Oncology to GSK if the merger agreement is terminated:

 

   

by GSK, if the Sierra Oncology Board changes its recommendation with respect to the merger;

 

   

by GSK, if a willful and material breach of Sierra Oncology’s non-solicitation restrictions in the merger agreement has occurred; or

 

   

by Sierra Oncology, if Sierra Oncology enters into an alternative acquisition agreement.

 

12


Table of Contents

The termination fee will also be payable in certain circumstances if:

 

   

the merger agreement is terminated (1) because the merger is not completed by the termination date and, at such time, the closing conditions related to the expiration or termination of the waiting period applicable to the merger pursuant to the HSR Act and the absence of any order, injunction, legal restraint or law that prevents or materially impairs the consummation of the merger are satisfied; (2) because of Sierra Oncology’s failure to obtain the required approval of our stockholders; or (3) subject to a 30-day cure period, because Sierra Oncology breaches or fails to perform in any material respect any of its covenants in a manner that would cause the related closing conditions to not be satisfied; and

 

   

prior to such termination (but after the date of the merger agreement) an acquisition proposal to acquire at least 50 percent of Sierra Oncology’s stock or assets is publicly announced or publicly disclosed by a third party (or, in the case of a termination because Sierra Oncology has breached its covenants, disclosed to the Sierra Oncology Board) and not withdrawn and within one year of such termination Sierra Oncology enters into a definitive agreement providing for, an acquisition transaction involving the acquisition of at least 50 percent of its stock or assets that is subsequently consummated.

The merger agreement also provides that Sierra Oncology, on one hand, or GSK and Acquisition Sub, on the other hand, may specifically enforce the obligations under the merger agreement.

Sierra Oncology is not required to pay GSK the termination fee on more than one occasion.

Delisting and Deregistration of Our Common Stock

If the merger is completed, our common stock will no longer be traded on the Nasdaq and will be deregistered under the Securities Exchange Act of 1934 (which we refer to as the “Exchange Act”). We will no longer be required to file periodic reports, current reports and proxy and information statements with the Securities and Exchange Commission (which we refer to as the “SEC”) on account of our common stock.

Effect on Sierra Oncology if the Merger is Not Completed

If the merger agreement is not adopted by our stockholders, or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of our common stock in connection with the merger. Instead: (1) Sierra Oncology will remain an independent public company; (2) our common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC.

Litigation Relating to the Merger

As of May 15, 2022, four complaints have been filed by purported Sierra Oncology stockholders against Sierra Oncology and the Sierra Oncology Board. The complaints assert, among other things, claims against all defendants under Sections 14(a) and 20(a) of the Exchange Act alleging that Sierra Oncology’s preliminary proxy statement is materially incomplete and misleading. The complaints seek corrective disclosures, to enjoin the merger and other relief.

Sierra Oncology believes that the claims are without merit. For a more detailed description of litigation in connections with the merger, see the section of this proxy statement captioned “The Merger—Litigation Relating to the Merger.”

 

13


Table of Contents

QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that are important to you. We encourage you to carefully read the more detailed information contained elsewhere in this proxy statement, including the annexes to this proxy statement and the other documents to which we refer in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.”

 

Q:

Why am I receiving these materials?

 

A:

On April 13, 2022, we announced that Sierra Oncology entered into the merger agreement. Under the merger agreement, GSK will acquire Sierra Oncology for $55.00 in cash per share of our common stock. In order to complete the merger, our stockholders holding a majority of all of our issued and outstanding common stock must vote to adopt the merger agreement at the special meeting. This approval is a condition to the consummation of the merger. See the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger.” The Sierra Oncology Board is furnishing this proxy statement and form of proxy card to the holders of shares of our common stock in connection with the solicitation of proxies of our stockholders to be voted at the special meeting.

This proxy statement, which you should read carefully, contains important information about the merger, the merger agreement, the special meeting and the matters to be voted on at the special meeting. The enclosed materials allow you to submit a proxy to vote your shares of our common stock without attending the special meeting and to ensure that your shares of our common stock are represented and voted at the special meeting.

Your vote is very important. Even if you plan to attend the special meeting, we encourage you to submit a proxy as soon as possible.

 

Q:

What is the proposed merger and what effects will it have on Sierra Oncology?

 

A:

The proposed merger is the acquisition of Sierra Oncology by GSK. If the proposal to adopt the merger agreement is approved by our stockholders and the other closing conditions under the merger agreement are satisfied or waived, Acquisition Sub will merge with and into Sierra Oncology, with Sierra Oncology continuing as the surviving corporation in the merger. As a result of the merger, Sierra Oncology will become an indirect wholly owned subsidiary of GSK, and our common stock will no longer be publicly traded and will be delisted from the Nasdaq. In addition, our common stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC.

 

Q:

What will I receive if the merger is completed?

 

A:

Upon completion of the merger, you will be entitled to receive $55.00 in cash, without interest and less any applicable withholding taxes, for each share of our common stock that you own, unless you have properly exercised, and not validly withdrawn or subsequently lost, your appraisal rights under the DGCL, and certain other conditions under the DGCL are satisfied. For example, if you own 100 shares of our common stock, you will receive $5,500.00 in cash in exchange for your shares of our common stock, without interest and less any applicable withholding taxes.

 

Q:

How does the per share price compare to the market price of Sierra Oncology’s common stock?

 

A:

This amount constitutes (1) a premium of approximately 39 percent to the closing price of our common stock on April 12, 2022, which was the last full trading day before public announcement of the transaction; and (2) a premium of approximately 63 percent to the VWAP of our common stock over the 30 trading days ending April 12, 2022.

 

14


Table of Contents
Q:

What will happen to Sierra Oncology warrants?

 

A:

At the effective time of the merger and upon the terms and conditions set forth in the merger agreement, each Series A warrant that is outstanding as of immediately prior to the effective time of the merger will be cancelled and extinguished and represent only the right of the holder thereof to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the Black Scholes Value (as defined in such Series A warrant), which is calculated under the terms of the Series A warrants to be $45.98 per share of our common stock subject to the Series A warrants.

At the effective time of the merger and upon the terms, each pre-funded warrant that is outstanding as of immediately prior to the effective time of the merger will be deemed exercised in full as a “cashless exercise” (as described in the pre-funded warrants) effective upon the effective time of the merger, in accordance with the terms of the pre-funded warrants, and the holder thereof shall be entitled to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the product obtained by multiplying (1) the amount of the per share price by (2) the number of shares of common stock deemed to be issuable upon exercise in full of the pre-funded warrant as a “cashless exercise” calculated in accordance with and subject to the terms and conditions of the pre-funded warrants.

At the effective time of the merger, any outstanding warrants to purchase common stock of Sierra Oncology with a per share exercise price greater than the per share price will be cancelled and extinguished without any cash payment in respect thereof.

 

Q:

What will happen to Sierra Oncology equity-based awards and Sierra options?

 

A:

Under the terms of the merger agreement, at the effective time of the merger all Sierra options that are outstanding and unexercised as of immediately prior to the effective time of the merger will accelerate vesting in full and will be cancelled and converted into a right to receive an amount in cash, without interest, equal to the product of (1) the excess, if any, of the per share price less the exercise price per share of such option, and (2) the number of shares of our common stock issuable upon exercise in full of such Sierra option. The number of shares of our common stock issuable for Sierra options subject to performance-based vesting that have performance periods outstanding at the effective time will be deemed to be the number of shares issuable upon satisfaction of maximum achievement of performance criteria. The cash payment amount (less any required withholding and other taxes) will be paid to the applicable Sierra option holder following the effective time of the merger, in accordance with the terms of the merger agreement. Sierra options with an exercise price per share equal to or greater than the per share price will be cancelled without any cash payment in respect thereof.

 

Q:

What am I being asked to vote on at the special meeting?

 

A:

You are being asked to vote on the following proposals:

 

   

to adopt the merger agreement pursuant to which Acquisition Sub will merge with and into Sierra Oncology and Sierra Oncology will become an indirect wholly owned subsidiary of GSK;

 

   

to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and

 

   

to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

 

Q:

When and where is the special meeting?

 

A:

The special meeting will take place on June 29, 2022, at 10:00 a.m., Pacific time. You may attend the special meeting via a live interactive webcast on the Internet at www.virtualshareholdermeeting.com/SRRA2022SM. You will be able to listen to the special meeting live and vote online. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares).

 

15


Table of Contents
Q:

Who is entitled to vote at the special meeting?

 

A:

All of our stockholders as of the close of business on May 11, 2022, which is the record date for the special meeting, are entitled to vote their shares of our common stock at the special meeting. As of the close of business on the record date, there were 24,419,349 shares of our common stock outstanding and entitled to vote at the special meeting. Each share of our common stock outstanding as of the record date is entitled to one vote per share on each matter properly brought before the special meeting.

 

Q:

What vote is required to approve the proposal to adopt the merger agreement?

 

A:

The affirmative vote of the holders of a majority of the shares of our common stock outstanding as of the record date is required to adopt the merger agreement.

The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote at the special meeting will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. Abstentions will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

Q:

What vote is required to approve (1) the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger; and (2) the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting?

 

A:

Approval of the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger requires the affirmative vote of a majority of the votes cast for or against on the proposal.

Approval of the proposal to adjourn the special meeting to a later date or dates to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting requires the affirmative vote of a majority of the votes cast for or against the proposal.

The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote at the special meeting will not have any effect on the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger, or the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting, except to the extent that such failure affects obtaining a quorum at the meeting. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will not have any effect on these proposals, except to the extent that such failure affects obtaining a quorum at the meeting. In all cases, abstentions will have no effect on these proposals.

 

Q:

What do I need to do now?

 

A:

We encourage you to read this proxy statement, the annexes to this proxy statement and the documents that we refer to in this proxy statement carefully and consider how the merger affects you. Then, even if you expect to attend the special meeting, please sign, date and return, as promptly as possible, the enclosed proxy card (a prepaid reply envelope is provided for your convenience), or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card), so that your shares can be voted at the special meeting. If you hold your shares in “street name,” please refer to the voting instruction form provided by your bank, broker or other nominee for information on how to vote your shares. Please do not send your stock certificates with your proxy card.

 

16


Table of Contents
Q:

How does the Sierra Oncology Board recommend that I vote?

 

A:

The Sierra Oncology Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger agreement is not adopted by our stockholders or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of our common stock at this time. Instead: (1) Sierra Oncology will remain an independent public company; (2) our common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC.

In specified circumstances in which the merger agreement is terminated, Sierra Oncology will be required to pay GSK (or its designee) a termination fee.

For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination Fees and Remedies.”

 

Q:

What is the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger?

 

A:

The compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger is certain compensation that is tied to or based on the merger and payable to certain of Sierra Oncology’s named executive officers pursuant to underlying plans and arrangements that are contractual in nature. Compensation that will or may become payable by GSK or its affiliates (including, following the consummation of the merger, the surviving corporation) to our named executive officers in connection with or following the merger is not subject to this advisory vote. For further information, see the section of this proxy statement captioned “Proposal 2: Approval, on a Non-Binding, Advisory Basis, of Certain Merger-Related Executive Compensation.”

 

Q:

Why am I being asked to cast a vote to approve the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger?

 

A:

Sierra Oncology is required to seek approval, on a non-binding, advisory basis, of compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger. Approval of the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger is not required to consummate the merger.

 

Q:

What will happen if Sierra Oncology’s stockholders do not approve the compensation that will or may become payable by Sierra Oncology to its named executive officers in connection with the merger?

 

A:

Approval of the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger is not a condition to consummation of the merger. This is an advisory vote and will not be binding on Sierra Oncology or GSK. The underlying plans and arrangements providing for such compensation are contractual in nature and are not, by their terms, subject to stockholder approval.

Accordingly, if the merger agreement is adopted by our stockholders and the merger is consummated, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger will or may be paid to Sierra Oncology’s named executive officers even if our stockholders do not approve such compensation.

 

17


Table of Contents
Q:

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:

If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, to be the “stockholder of record.” If you are a stockholder of record, this proxy statement and your proxy card have been sent directly to you by or on behalf of Sierra Oncology. As a stockholder of record, you may attend the special meeting and vote your shares at the special meeting using the control number on the enclosed proxy card.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of our common stock held in “street name.” If you are a beneficial owner of shares of our common stock held in “street name,” this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares at the special meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:

If my broker holds my shares in “street name,” will my broker vote my shares for me?

 

A:

No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the special meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares. Without instruction, your shares will not be counted for the purpose of obtaining a quorum or voted on the proposals, which will have the same effect as if you voted “AGAINST” adoption of the merger agreement, but will have no effect on the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger or the adjournment proposal, except to the extent affecting the obtaining of a quorum at the meeting.

 

Q:

How may I vote?

 

A:

If you are a stockholder of record (that is, if your shares of our common stock are registered in your name with American Stock Transfer & Trust Company, LLC, our transfer agent), there are four ways to vote:

 

   

by signing, dating and returning the enclosed proxy card (a prepaid reply envelope is provided for your convenience);

 

   

by visiting the internet address on your proxy card;

 

   

by calling the toll-free (within the U.S. or Canada) phone number on your proxy card; or

 

   

by attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.

The control number located on your proxy card is designed to verify your identity and allow you to vote your shares of our common stock and to confirm that your voting instructions have been properly recorded when voting electronically over the internet or by telephone. Although there is no charge for voting your shares, if you vote electronically over the internet or by telephone, you may incur costs such as internet access and telephone charges for which you will be responsible.

Even if you plan to attend the special meeting, you are strongly encouraged to vote your shares of our common stock by proxy. If you are a stockholder of record or if you obtain a “legal proxy” to vote shares that you beneficially own, you may still vote your shares of our common stock at the special meeting even if you have previously voted by proxy. If you attend the special meeting and vote at the special meeting, your vote will revoke any previously submitted proxy.

 

18


Table of Contents

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the internet or by telephone. To vote over the internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting instruction form provided by your bank, broker or nominee. However, because you are not the stockholder of record, you may not vote your shares at the special meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:

May I attend the special meeting and vote at the special meeting?

 

A:

Yes. You may attend the special meeting via a live interactive webcast on the internet at www.virtualshareholdermeeting.com/SRRA2022SM. You will be able to listen to the special meeting live and vote online. The special meeting will begin at 10:00 a.m., Pacific time, on June 29, 2022. Online check-in will begin a few minutes prior to the special meeting. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). As the special meeting is virtual, there will be no physical meeting location.

Even if you plan to attend the special meeting, to ensure that your shares will be represented at the special meeting, we encourage you to sign, date and return the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card). If you attend the special meeting and vote at the special meeting, your vote will revoke any proxy previously submitted.

If, as of the record date, you are a beneficial owner of shares held in “street name,” you may not vote your shares at the special meeting unless you provide a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting. Otherwise, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided by your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or voted at the meeting, which will have the same effect as voting against the adoption of the merger agreement.

 

Q:

Why did Sierra Oncology choose to hold a virtual special meeting?

 

A:

The Sierra Oncology Board decided to hold the special meeting virtually given the current health and travel implications of COVID-19 and our desire to promote the health and welfare of our stockholders, as well as our positive experiences with virtual meetings. Additionally, the virtual nature of the special meeting is generally designed to enable participation of and access by more of our stockholders while decreasing the cost of conducting the special meeting.

 

Q:

What is a proxy?

 

A:

A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of our common stock. The written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of our common stock is called a “proxy card.” You may follow the instructions on the proxy card to designate a proxy by telephone or by the Internet in the same manner as if you had signed, dated and returned a proxy card. Stephen Dilly, Christina Thomson, and Kevin Norrett, each with full powers of substitution and resubstitution, are the proxy holders for the special meeting.

 

19


Table of Contents
Q:

May I change my vote after I have mailed my signed and dated proxy card?

 

A:

Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:

 

   

signing another proxy card with a later date and returning it to us prior to the special meeting;

 

   

submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy and by the applicable deadline;

 

   

delivering a written notice of revocation to our Corporate Secretary prior to the special meeting; or

 

   

attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.

If you hold your shares of our common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

 

Q:

If a stockholder gives a proxy, how are the shares voted?

 

A:

Regardless of the method you choose to grant your proxy, the individuals named on the enclosed proxy card will vote your shares in the way that you direct.

If you sign and date your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted as recommended by the Sierra Oncology Board with respect to each proposal. This means that they will be voted: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

 

Q:

Should I send in my stock certificates now?

 

A:

No. After the merger is completed, any holders of physical stock certificates will receive a letter of transmittal containing instructions for how to send your stock certificates to the payment agent in order to receive the appropriate cash payment for the shares of our common stock represented by your stock certificates. Unless you are seeking appraisal, you should use the letter of transmittal to exchange your stock certificates for the cash payment to which you are entitled. Please do not send your stock certificates with your proxy card. If you hold your shares of our common stock in book-entry form, you will not receive a letter of transmittal. Instead the payment agent will pay you the appropriate portion of the merger consideration upon receipt of a customary “agent’s message” and any other items specified by the payment agent.

 

Q:

What happens if I sell or transfer my shares of common stock after the record date but before the special meeting?

 

A:

The record date for the special meeting is earlier than the date of the special meeting and the expected effective date of the merger. If you sell or transfer your shares of our common stock after the record date but before the special meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or transfer your shares and each of you notifies Sierra Oncology in writing of such special arrangements, you will transfer the right to receive the per share price with respect to such shares, if the merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the special meeting. Even if you sell or transfer your shares of our

 

20


Table of Contents
  common stock after the record date, we encourage you to sign, date and return the enclosed proxy card (a prepaid reply envelope is provided for your convenience) or grant your proxy electronically over the internet or by telephone (using the instructions found on the proxy card).

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Please sign, date and return (or grant your proxy electronically over the internet or by telephone for) each proxy card and voting instruction form that you receive to ensure that all of your shares are voted.

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction forms, if your shares are registered differently or are held in more than one account. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please vote all voting materials that you receive.

 

Q:

Where can I find the voting results of the special meeting?

 

A:

If available, Sierra Oncology may announce preliminary voting results at the conclusion of the special meeting. Sierra Oncology intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the special meeting. All reports that Sierra Oncology files with the SEC are publicly available when filed. See the section of this proxy statement captioned “Where You Can Find More Information.”

 

Q:

Will I be subject to U.S. federal income tax upon the exchange of common stock for cash pursuant to the merger?

 

A:

If you are a U.S. Holder, the exchange of our common stock for cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes, which generally will require a U.S. Holder to recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by such U.S. Holder in the merger and such U.S. Holder’s adjusted tax basis in the shares of our common stock surrendered in the merger.

A Non-U.S. Holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of our common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States.

Both U.S. Holders and Non-U.S. Holders may also potentially be subject to backup withholding tax if they do not provide certain tax certifications, as described in more detail in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger—Information Reporting and Backup Withholding.”

Because particular circumstances may differ, we recommend that you consult your own tax advisor to determine the U.S. federal income tax consequences relating to the merger in light of your own particular circumstances, as well as any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or foreign taxing jurisdiction. This discussion is provided for general information purposes only and does not constitute legal advice to any holder. A more complete description of material U.S. federal income tax consequences of the merger is provided in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”

 

Q:

When do you expect the merger to be completed?

 

A:

We currently expect to complete the merger in the third quarter of 2022 or before. However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.

 

21


Table of Contents
Q:

What governmental and regulatory approvals are required?

 

A:

Under the terms of the merger agreement, the merger cannot be completed until the waiting period applicable to the merger under the HSR Act has expired or been terminated.

The initial waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern time, on May 31, 2022.

 

Q:

Am I entitled to appraisal rights under the DGCL?

 

A:

If the merger is consummated, our stockholders who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold their shares of our common stock through the effective time of the merger; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements as described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal, will be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL. This means that such stockholders will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to each stockholder seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (2) interest theretofore accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL regarding appraisal rights, attached as Annex B to this proxy statement.

 

Q:

Do any of Sierra Oncology’s directors or officers have interests in the merger that may differ from those of Sierra Oncology stockholders generally?

 

A:

Yes. In considering the recommendation of the Sierra Oncology Board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. In: (1) evaluating and negotiating the merger agreement; (2) approving the merger agreement and the merger; and (3) unanimously recommending that the merger agreement be adopted by our stockholders, the Sierra Oncology Board was aware of and considered these interests to the extent that they existed at the time, among other matters. For more information, see the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger.”

 

22


Table of Contents
Q:

Who can help answer my questions?

 

A:

If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of the accompanying proxy statement or need help submitting your proxy or voting your shares of our common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders in the US and Canada call toll-free: (877) 750-0510

Stockholders in other locations please call: +1 (412) 232-3651

Banks and brokers call collect: (212) 750-5833

 

23


Table of Contents

FORWARD-LOOKING STATEMENTS

This proxy statement, the documents to which we refer you in this proxy statement and information included in oral statements or other written statements made or to be made by us or on our behalf contain “forward-looking statements” that do not directly or exclusively relate to historical facts, including, without limitation, statements relating to the completion of the merger. You can typically identify forward-looking statements by the use of forward-looking words, such as “may,” “should,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast” and other words of similar import. Our stockholders are cautioned that any forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent filings on Forms 10-K and 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

 

   

the inability to complete the merger due to the failure of our stockholders to adopt the merger agreement or the failure to satisfy the other conditions to the completion of the merger, including that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval;

 

   

the risk that the merger agreement may be terminated in circumstances that require us to pay a termination fee;

 

   

the outcome of any legal proceedings that may be instituted against us and others related to the merger agreement;

 

   

risks that the merger affects our current operations or our ability to retain or recruit employees;

 

   

the fact that receipt of the all-cash per share price will be a taxable transaction for U.S. federal income tax purposes;

 

   

the fact that, if the merger is completed, our stockholders will forgo the opportunity to realize the potential long-term value of the successful execution of Sierra Oncology’s current strategy as an independent company;

 

   

the possibility that Sierra Oncology could, at a later date, engage in unspecified transactions, including licensing, partnership, collaboration or other strategic transactions, including the acquisition of Sierra Oncology or some or all of Sierra Oncology’s assets by one or more as yet unknown purchasers;

 

   

the fact that under the terms of the merger agreement, Sierra Oncology is restrained from soliciting other acquisition proposals during the pendency of the merger;

 

   

the effect of the announcement or pendency of the merger on our business relationships, operating results and business generally, including risks related to the diversion of the attention of Sierra Oncology management or employees during the pendency of the merger;

 

   

the amount of the costs, fees, expenses and charges related to the merger agreement or the merger;

 

   

the risk that the proposed merger will not be consummated in a timely manner, exceeding the expected costs of the merger;

 

   

the risk that our stock price may fluctuate during the pendency of the merger and may decline significantly if the merger is not completed; and

 

   

risks related to obtaining the requisite stockholder approval to the merger.

Consequently, all of the forward-looking statements that we make in this proxy statement are qualified by the information contained or incorporated by reference in this proxy statement, including: (1) the information contained under this caption; and (2) information in our most recent filings on Form 10-K and Form 10-Q, including the information contained under the caption “Risk Factors,” and information in our consolidated financial statements and notes thereto. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.

 

24


Table of Contents

Except as required by applicable law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Our stockholders are advised to consult any future disclosures that we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

 

25


Table of Contents

THE SPECIAL MEETING

Date, Time and Place

We will hold the special meeting on June 29, 2022, at 10:00 a.m., Pacific time. You may attend the special meeting via a live interactive webcast on the Internet at www.virtualshareholdermeeting.com/SRRA2022SM. You will be able to listen to the special meeting live and vote online. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). We elected to use a virtual meeting given the current public health implications of COVID-19 and our desire to promote the health and welfare of our stockholders, as well as our positive experiences with virtual meetings. Additionally, the virtual nature of the special meeting is generally designed to enable participation of and access by more of our stockholders while decreasing the cost of conducting the special meeting.

If you encounter technical difficulties accessing the special meeting or during the special meeting, a support line will be available on the login page of the special meeting website.

Purpose of the Special Meeting

At the special meeting, we will ask stockholders to vote on proposals to (1) adopt the merger agreement; (2) approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

Attending the Special Meeting

The special meeting will begin at 10:00 a.m., Pacific time. Online check-in will begin a few minutes prior to the special meeting. We encourage you to access the meeting prior to the start time.

As the special meeting is virtual, there will be no physical meeting location. To attend the special meeting, log in at www.virtualshareholdermeeting.com/SRRA2022SM. You will need the control number found on your proxy card or voting instruction form in order to participate in the special meeting (including voting your shares). If you encounter technical difficulties accessing the special meeting or during the special meeting, a support line will be available on the login page of the special meeting website.

Once online access to the special meeting is open, shareholders may submit questions, if any, through the special meeting website. You will need the control number found on your proxy card or voting instruction form in order to submit questions. Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints.

Record Date; Shares Entitled to Vote; Quorum

Only our stockholders as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting. A list of stockholders of record entitled to vote at the special meeting will be available at our corporate offices located at 1820 Gateway Drive, Suite 110, San Mateo, California 94404, during regular business hours for a period of no less than 10 days before the special meeting and at the place of the special meeting during the meeting.

As of the record date, there were 24,419,349 shares of our common stock outstanding and entitled to vote at the special meeting. Each share of our common stock outstanding as of the close of business on the record date is entitled to one vote per share on each matter submitted for a vote at the special meeting.

 

26


Table of Contents

The holders of a majority of the voting power of the stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum for the purposes of holding the special meeting.

Vote Required; Abstentions and Broker Non-Votes

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the issued and outstanding shares of our common stock outstanding as of the record date. Adoption of the merger agreement by our stockholders is a condition to the closing of the merger.

Approval, on a non-binding, advisory basis, of the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger requires the affirmative vote of a majority of the votes cast for or against the proposal.

Approval of the proposal to adjourn the special meeting to a later date or dates to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting requires the affirmative vote of a majority of the votes cast for or against the proposal.

If a stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted: “AGAINST” the proposal to adopt the merger agreement and will have no effect on: (1) the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; or (2) the proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting. Abstentions will be counted as present for purposes of determining whether a quorum exists.

A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote your shares. We do not expect any “broker non-votes” at the special meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are broker non-votes, each broker non-vote will count as a vote “AGAINST” the proposal to adopt the merger agreement, but will have no effect on: (1) the proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; or (2) the proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting, except to the extent affecting the obtaining of a quorum at the meeting.

Shares Held by Sierra Oncology’s Directors and Executive Officers

As of the record date, our directors, executive officers and certain of their affiliated entities beneficially owned and were entitled to vote, in the aggregate, 6,643,558 shares of our common stock, representing approximately 27 percent of the shares of our common stock outstanding as of the record date. Our directors and executive officers and their affiliated entities have informed us that they intend to vote all of their shares of our common stock: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting. All of these individuals and their affiliated entities that hold Sierra Oncology securities are contractually obligated to vote in favor of the adoption of the merger agreement. For more information, please see the section of this proxy statement captioned “The Merger—The Support Agreements.”

Voting of Proxies

If your shares are registered in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, you may vote your shares by returning a signed and dated proxy card (a prepaid reply envelope

 

27


Table of Contents

is provided for your convenience), or you may vote at the special meeting using the control number located on the enclosed proxy card. Additionally, you may grant a proxy electronically over the internet or by telephone by following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone. Based on your proxy cards or internet and telephone proxy, the proxy holders will vote your shares according to your direction.

If you attend the special meeting and wish to vote at the special meeting, you will need the control number located on the enclosed proxy card. Beneficial owners of shares held in “street name” must also provide a “legal proxy” from their bank or broker in order to vote at the special meeting. You are encouraged to vote by proxy even if you plan to attend the special meeting. If you attend the special meeting and vote at the special meeting, your vote will revoke any previously submitted proxy.

All shares represented by properly signed and dated proxies received will, if received before the special meeting, be voted at the special meeting in accordance with the instructions of the stockholder. Properly signed and dated proxies that do not contain voting instructions will be voted: (1) “FOR” adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee. You may also attend the special meeting and vote at the special meeting if you have a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting. If available from your bank, broker or other nominee, you may vote over the internet or telephone through your bank, broker or other nominee by following the instructions on the voting instruction form provided by your bank, broker or other nominee. If you do not (1) return your bank’s, broker’s or other nominee’s voting instruction form; (2) vote over the internet or by telephone through your bank, broker or other nominee; or (3) attend the special meeting and vote at the special meeting with a “legal proxy” from your bank, broker or other nominee, your shares will not be counted for the purpose of obtaining a quorum or voted on the proposals and it will have the same effect as if you voted “AGAINST” the proposal to adopt the merger agreement. It will not, however, have any effect on the proposals (1) to approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; or (2) to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting, except to the extent affecting the obtaining of a quorum at the meeting.

Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:

 

   

signing another proxy card with a later date and returning it to us prior to the special meeting;

 

   

submitting a new proxy electronically over the internet or by telephone after the date of the earlier submitted proxy and by the applicable deadline;

 

   

delivering a written notice of revocation to our Corporate Secretary prior to the special meeting; or

 

   

attending the special meeting and voting at the special meeting using the control number on the enclosed proxy card.

If you have submitted a proxy, your attendance at the special meeting, in the absence of voting at the special meeting or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

 

28


Table of Contents

If you hold your shares of our common stock in “street name” through a bank, broker or other nominee, you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

Any adjournment, postponement or other delay of the special meeting, including for the purpose of soliciting additional proxies, will allow our stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned, postponed or delayed.

The Sierra Oncology Board’s Recommendation

The Sierra Oncology Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the Sierra Oncology Board and Reasons for the Merger,” has unanimously: (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Sierra Oncology and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

The Sierra Oncology Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

Adjournment

In addition to the proposals to (1) adopt the merger agreement and (2) approve, on a non-binding, advisory basis, the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger, our stockholders are also being asked to approve a proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional votes or proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to approve the merger agreement. If a quorum is not present, the chairperson of the special meeting or the stockholders entitled to vote at the special meeting, present in person or represented by proxy, may adjourn the special meeting, from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. The chairperson may also adjourn the meeting to another place, date or time, even if a quorum is present. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, our stockholders who have already submitted their proxies will be able to revoke them at any time before they are voted at the special meeting.

Solicitation of Proxies

The expense of soliciting proxies will be borne by Sierra Oncology. We have retained Innisfree M&A Incorporated, a professional proxy solicitation firm, to assist in the solicitation of proxies, and provide related advice and informational support during the solicitation process, for a fee of up to $25,000, plus reasonable out-of-pocket expenses. We will indemnify this firm against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares of our common stock for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax or over the internet. No additional compensation will be paid for such services.

 

29


Table of Contents

Anticipated Date of Completion of the Merger

We currently expect to complete the merger in the third quarter of 2022 or before. However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.

Appraisal Rights

If the merger is consummated, our stockholders who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold their shares through the effective time of the merger; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL. This means that such stockholders will be entitled to seek appraisal of their shares by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of our common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to each stockholder seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (2) interest theretofore accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.

Only a stockholder of record may submit a demand for appraisal. To exercise appraisal rights, the stockholder of record must (1) submit a written demand for appraisal to Sierra Oncology before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold the subject shares of our common stock of record through the effective time of the merger; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of Sierra Oncology unless certain conditions are satisfied by the stockholders seeking appraisal. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, a copy of which is attached as Annex B to this proxy statement. If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.

Other Matters

At this time, we know of no other matters to be voted on at the special meeting. If any other matters properly come before the special meeting, your shares of our common stock will be voted in accordance with the discretion of the appointed proxy holders.

 

30


Table of Contents

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 29, 2022

This proxy statement is available on the “Investor Relations” section of our website located at https://investor.sierraoncology.com/investor-relations/default.aspx.

Householding of Special Meeting Materials

We have adopted a procedure approved by the SEC called “householding.” Under this procedure, stockholders who have the same address and last name will receive only one copy of this proxy statement unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces printing costs, postage fees and the use of natural resources. Each stockholder who participates in householding will continue to be able to access or receive a separate proxy card upon request. If you wish to receive a separate set of our disclosure documents at this time, please notify us by sending a written request to Investor Relations, Sierra Oncology, Inc., 1820 Gateway Drive, Suite 110, San Mateo, California 94404 or by telephone at (650) 321-3000.

If you are a stockholder who has multiple accounts in your name or you share an address with other stockholders and would like to receive a single set of our disclosure documents for your household, you may notify your broker, if your shares are held in a brokerage account, or you may contact our Corporate Secretary using the contact method above, if you hold registered shares.

Questions and Additional Information

If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of this proxy statement or need help submitting your proxy or voting your shares of our common stock, please contact our proxy solicitor at:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders in the US and Canada call toll-free: (877) 750-0510

Stockholders in other locations please call: +1 (412) 232-3651

Banks and brokers call collect: (212) 750-5833

 

31


Table of Contents

THE MERGER

The rights and obligations of the parties to the merger agreement are governed by the specific terms and conditions of the merger agreement and not by any summary or other information provided in this proxy statement. Therefore, this discussion of the merger is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Annex A to this proxy statement and incorporated into this proxy statement by reference. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

Parties Involved in the Merger

Sierra Oncology, Inc.

Sierra Oncology is a late-stage biopharmaceutical company, on a mission to deliver targeted therapies that treat rare forms of cancer. Sierra’s main focus is the development and potential commercialization of momelotinib, an investigational agent for the treatment of myelofibrosis. In January 2022, Sierra Oncology announced positive topline results from its global Phase 3 clinical trial for patients with myelofibrosis who are symptomatic and anemic and previously treated with an approved JAK inhibitor called MOMENTUM. In addition to momelotinib, Sierra’s pipeline consists of two assets in Phase I, SRA515 and SRA737. SRA515 is a selective bromodomain-containing protein 4 (BRD4) bromodomain and extra-terminal domain (BET) inhibitor with a novel bivalent binding mode that inhibits both protein bromodomains, and SRA737 is a novel checkpoint kinase 1 (CHK1) inhibitor.

Our common stock is listed on Nasdaq under the symbol “SRRA.” Sierra’s corporate offices are located at 1820 Gateway Drive, Suite 110, San Mateo, California 94404, and its telephone number is (650) 376-8679.

GlaxoSmithKline plc

GSK is a global consumer healthcare and pharmaceuticals business that develops and delivers medicines, vaccines, and consumer healthcare products that impact human health at scale. GSK’s operations span the value chain from identifying, researching, developing and testing ground-breaking discoveries, to regulatory approval, manufacturing and commercialization.

GSK’s common stock is listed on the New York Stock Exchange under the symbol “GSK.” GSK’s corporate offices are located at 980 Great West Road, Brentford, Middlesex TW8 9GS England, and its phone number is +44 20 8047 5000.

Orikum Acquisition Inc.

Acquisition Sub is an indirect wholly owned subsidiary of GSK and was formed on April 7, 2022, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Acquisition Sub has not engaged in any business activities other than as incidental to its formation and in connection with the transactions contemplated by the merger agreement and arranging of the equity financing and any debt financing in connection with the merger. Upon completion of the merger, Acquisition Sub will cease to exist and Sierra Oncology will continue as the surviving corporation.

Acquisition Sub’s address is FMC Tower at Cira Center South, 2929 Walnut Street, Suite 1700, Philadelphia, PA 19104.

Effect of the Merger

Upon the terms and subject to the conditions of the merger agreement, and in accordance with the DGCL, at the effective time of the merger, (1) Acquisition Sub will merge with and into Sierra Oncology; (2) the separate

 

32


Table of Contents

existence of Acquisition Sub will cease; and (3) Sierra Oncology will continue as the surviving corporation in the merger and as an indirect wholly owned subsidiary of GSK.

As a result of the merger, Sierra Oncology will cease to be a publicly traded company, our common stock will be delisted from the Nasdaq and deregistered under the Exchange Act and Sierra Oncology will no longer file periodic reports with the SEC. If the merger is completed, you will not own any shares of capital stock of the surviving corporation.

The effective time of the merger will occur upon the filing of a certificate of merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as we, GSK and Acquisition Sub may agree and specify in such certificate of merger).

Effect on Sierra Oncology if the Merger is Not Completed

If the merger agreement is not adopted by our stockholders, or if the merger is not completed for any other reason, our stockholders will not receive any payment for their shares of our common stock in connection with the merger. Instead, (1) Sierra Oncology will remain an independent public company; (2) our common stock will continue to be listed and traded on the Nasdaq and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC. In addition, if the merger is not completed, we expect that: (1) our management will continue to operate the business as it is currently being operated; and (2) our stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which Sierra Oncology operates and adverse economic conditions.

Furthermore, if the merger is not completed, and depending on the circumstances that cause the merger not to be completed, the price of our common stock may decline significantly.

Accordingly, there can be no assurance as to the effect of the merger not being completed on the future value of your shares of our common stock. If the merger is not completed, the Sierra Oncology Board will continue to evaluate and review, among other things, Sierra Oncology’s business, operations, strategic direction and capitalization, and will make whatever changes it deems appropriate. If the merger agreement is not adopted by our stockholders or if the merger is not completed for any other reason, Sierra Oncology’s business, prospects or results of operation may be adversely impacted.

In specified circumstances in which the transaction is terminated, Sierra Oncology will be required to pay GSK (or its designee) the applicable termination fee.

Per Share Price

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger:

 

   

each share of our common stock that is (1) held by Sierra Oncology as treasury stock; (2) owned by GSK or Acquisition Sub; or (3) owned by any direct or indirect wholly owned subsidiary of GSK or Acquisition Sub as of immediately prior to the effective time of the merger will be cancelled and extinguished without any conversion thereof or consideration paid therefor; and

 

   

each share of our common stock that is issued and outstanding as of immediately prior to the effective time of the merger (other than the shares identified in the prior bullet and shares of our common stock held by our stockholders who have (1) neither voted in favor of the adoption of the merger agreement nor consented thereto in writing; and (2) properly and validly exercised their statutory rights of appraisal in respect of such shares in accordance with the DGCL) will be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to the per share price.

At or prior to the closing of the merger, GSK will cause a sufficient amount of cash to be deposited with a designated payment agent to pay the aggregate amount of the merger consideration. Once a stockholder has

 

33


Table of Contents

provided the payment agent with his, her or its stock certificates (or an affidavit of loss in lieu of a stock certificate) or customary agent’s message with respect to book-entry shares, appropriate letter of transmittal and other items specified by the payment agent, then the payment agent will pay the stockholder the per share price in exchange for each share of our common stock held by that stockholder. For more information, see the section of this proxy statement captioned “The Merger Agreement—Payment Agent, Exchange Fund and Exchange and Payment Procedures.”

After the merger is completed, each of our stockholders will have the right to receive the per share price for each share of our common stock that such stockholder owned, as described in the section of this proxy statement captioned “The Merger Agreement—Conversion of Shares,” but will no longer have any rights as a Sierra Oncology stockholder (except that our stockholders who properly and validly exercise and perfect, and do not validly withdraw or subsequently lose, their appraisal rights will have the right to receive payment for the “fair value” of their shares, determined pursuant to an appraisal proceeding contemplated by the DGCL as described in the section of this proxy statement captioned “—Appraisal Rights”).

Background of the Merger

The Sierra Oncology Board, together with Sierra Oncology management, regularly evaluates Sierra Oncology’s business strategy, short-term and long-term business objectives and financial needs with a view towards enhancing stockholder value and furthering Sierra Oncology’s mission to deliver targeted therapies that treat rare forms of cancer. As part of this evaluation, the Sierra Oncology Board has, from time to time, considered a variety of strategic alternatives. These have included, among others, (1) continued investment in the development, regulatory approval and commercialization of Sierra Oncology’s existing product candidates; (2) opportunities for strategic partnerships, collaborations and alliances or licensing arrangements with third parties with respect to the development and potential commercialization of product candidates, either by Sierra Oncology with respect to new product candidates or by third party pharmaceutical companies with respect to Sierra Oncology’s existing product candidates; (3) various capital raising alternatives, including private and public equity and debt financing transactions; and (4) various other financial and strategic alternatives, including a sale of Sierra Oncology or certain of its assets.

As part of its business strategy, Sierra Oncology’s management has from time to time engaged in discussions with participants in the pharmaceutical industry regarding opportunities for strategic partnerships with respect to the commercialization of momelotinib, in particular in jurisdictions outside of the United States. Sierra Oncology management regularly updates the Sierra Oncology Board on opportunities and significant discussions regarding potential strategic partnerships. Sierra Oncology and the counterparties have entered into confidentiality agreements to facilitate these discussions which have not included a “standstill” or other restriction on the counterparty’s ability to make public or private proposals to acquire Sierra Oncology.

In December 2021, Sierra Oncology engaged Lazard Frères & Co. LLC (which we refer to as “Lazard Frères”) and Lazard & Co., Limited (which we refer to collectively with Lazard Frères as “Lazard”) for Lazard to act as financial advisory investment banker to Sierra Oncology in connection with the possible sale of Sierra Oncology or another possible licensing, partnership or similar transaction involving Sierra Oncology’s product candidates. The Sierra Oncology Board approved the terms of the engagement. The Sierra Oncology Board determined to engage Lazard as financial advisor in connection with Sierra Oncology’s evaluation of potential strategic alternatives after considering Lazard’s qualifications, independence, expertise, international reputation, knowledge of the biopharmaceutical industry and experience acting as financial advisor in connection with similar partnership and strategic transactions. As part of the Sierra Oncology Board’s evaluation of strategic alternatives, Lazard had previously and from time-to-time reviewed with the Sierra Oncology Board its preliminary market and valuation perspectives with respect to Sierra Oncology and the biopharmaceutical industry generally, as well potential counterparties for a partnership or other strategic transaction involving Sierra Oncology.

 

34


Table of Contents

In January 2022, in order to facilitate the Sierra Oncology Board’s assistance and oversight of Sierra Oncology management in connection with the evaluation and pursuit of strategic transactions, the Sierra Oncology Board established two separate committees of the Sierra Oncology Board, one to review, evaluate and negotiate, on behalf of the Sierra Oncology Board, potential strategies which could include a merger, sale, business combination or other transaction (which we refer to as the “Strategic Transactions Committee”) and another to review, evaluate and negotiate, on behalf of the Sierra Oncology Board, one or more transactions involving the incurrence of debt and/or sale of equity securities by Sierra Oncology (which we refer to as the “Financing Committee”). The Strategic Transactions Committee and the Financing Committee were formed in light of (1) the potentially significant workload that could be involved in any decision by Sierra Oncology to evaluate applicable strategic or financing transactions; (2) the possibility that Sierra Oncology management may need feedback and direction on relatively short notice; and (3) the benefits and convenience of having a subset of directors oversee any process of considering applicable strategic alternatives. Gaurav Aggarwal, Mona Ashiya, Craig Collard, Georgia Erbez and Robert Pelzer were appointed by the Sierra Oncology Board as members of the Strategic Transactions Committee, and Andrew Allen, Jeffrey Cooper, Christy Oliger, Josh Richardson (who resigned from the Sierra Oncology Board on March 6, 2022) and Andrew Sinclair were appointed by the Sierra Oncology Board as members of the Financing Committee. The Sierra Oncology Board resolved that it would not effectuate a merger, sale, business combination or other transaction if it had not first been approved or recommended by the Strategic Transactions Committee, or effectuate a transaction involving the incurrence of debt and/or sale of equity securities by Sierra Oncology if it had not first been approved or recommended by the Financing Committee. It was understood that the full Board would continue to have an active role in the consideration of strategic alternatives. Representatives of Wilson Sonsini Goodrich & Rosati, P.C., Sierra Oncology’s outside counsel (which we refer to as “Wilson Sonsini”), reviewed with the Sierra Oncology Board its fiduciary duties in connection with these matters.

On January 25, 2022, Sierra Oncology announced that momelotinib achieved statistically significant benefit on symptoms, anemia and splenic size in the pivotal Phase 3 MOMENTUM study for myelofibrosis. Sierra Oncology further noted it planned to submit a New Drug Application (a “NDA”) with the US Food & Drug Administration for momelotinib in the second quarter of 2022.

Also on January 25, 2022, Sierra Oncology announced a proposed underwritten public offering of Sierra Oncology common stock and pre-funded warrants that ultimately raised $145.3 million. Sierra Oncology effected the offering to continue financing its preparation for the potential commercialization of momelotinib, clinical development of its other product candidates, research, clinical and process development and manufacturing of its product candidates, working capital, and capital expenditures and other general corporate purposes.

Following the announcement of the MOMENTUM clinical data for momelotinib, Sierra Oncology management met with various participants in the pharmaceutical industry with which it had been engaged in discussions regarding potential strategic partnerships with respect to the commercialization of momelotinib to update them on the results of the study.

On February 17, 2022, Nina Mojas, Senior Vice President of Oncology at GSK, emailed Stephen Dilly, Chief Executive Officer and President at Sierra Oncology, regarding a potential strategic partnership between GSK and Sierra Oncology.

On February 18, 2022, Sierra Oncology and GSK executed a confidentiality agreement to facilitate discussions and information sharing between the parties. This agreement did not include a “standstill” or other restriction on GSK’s ability to make public or private proposals to acquire Sierra Oncology.

On February 22, 2022, Dr. Dilly and Ms. Mojas met to discuss Sierra Oncology, momelotinib and opportunities for a potential strategic partnership between GSK and Sierra Oncology. As part of this discussion, Ms. Mojas inquired as to whether Sierra Oncology was for sale. Dr. Dilly responded that Sierra Oncology was not seeking a sale transaction at such time. Following the discussion, Ms. Mojas introduced Dr. Dilly to Ian

 

35


Table of Contents

Greenberg, Vice President & Head of Business Development, Global Pharmaceuticals Commercial Portfolio at GSK, via email, and Dr. Dilly introduced Ms. Mojas and Mr. Greenberg to Kevin Norrett, Chief Business Officer at Sierra Oncology, via email, to continue discussions regarding a potential strategic partnership.

On February 23, 2022, Mr. Norrett and Mr. Greenberg met to discuss opportunities for a potential strategic partnership between Sierra Oncology and GSK with respect to the commercialization of momelotinib by GSK in certain jurisdictions outside of the United States. In furtherance of continued discussions regarding a potential strategic partnership, Mr. Norrett and Mr. Greenberg outlined a plan for GSK to conduct a due diligence review of Sierra Oncology and momelotinib.

On March 1, 2022, Sierra Oncology granted representatives of GSK access to an electronic data room containing due diligence information regarding Sierra Oncology and momelotinib relevant to potential strategic partnership discussions.

On March 7, 2022, following an introduction by Ms. Mojas, Dr. Dilly met with Luke Miels, Chief Commercial Officer at GSK. During the discussion, Mr. Miels expressed interest in an acquisition of Sierra Oncology by GSK.

On March 8, 2022, Mr. Miels delivered to Dr. Dilly a non-binding proposal for GSK to acquire Sierra Oncology for $46.00 in cash per share of Sierra Oncology common stock, which we refer to as the “initial GSK proposal.” Dr. Dilly informed Mr. Miels of his personal view that he did not think the proposed acquisition price would be interesting to the Sierra Oncology Board, and Mr. Miels responded that he expected GSK would submit an increased proposal.

On March 10, 2022, the Strategic Transactions Committee met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Dr. Dilly updated the Strategic Transactions Committee on discussions with GSK and the receipt of the initial GSK proposal. Representatives of Lazard reviewed preliminary market and valuation perspectives with respect to Sierra Oncology. The Strategic Transactions Committee discussed next steps if Sierra Oncology were to receive an increased acquisition proposal from GSK, and the potential valuation at which an acquisition proposal would merit further exploration, including by commencing a process to solicit interest regarding a potential acquisition of Sierra Oncology from additional counterparties. Representatives of Lazard discussed various alternatives and considerations with respect to a potential outreach process, including additional potential acquirors that Sierra Oncology might consider engaging with based on those parties’ previous interest in a potential strategic partnership with Sierra Oncology, track record of transactions, ability to finance and consummate an acquisition, and likely interest and strategic rationale for a potential acquisition of Sierra Oncology, including the potential for synergies. Also discussed were the potential risks of an outreach process, including potential public disclosure leaks, management and employee distraction, and adverse impacts on Sierra Oncology business, and the increase in the likelihood of those risks in a wider private or public process relative to a more targeted outreach. The Strategic Transactions Committee directed management and Lazard to continue discussions and provide additional diligence information to GSK in connection with a potential acquisition, while also commencing a targeted outreach process to solicit interest from 10 additional potential acquirors designated by the Strategic Transactions Committee as expected to have the most likely interest and ability to consummate an acquisition, if GSK submitted a revised acquisition proposal for $50.00 or more per share of Sierra Oncology common stock. The Strategic Transactions Committee also directed Sierra Oncology management to continue to engage with other counterparties regarding potential strategic partnerships with respect to the commercialization of momelotinib.

On March 11, 2022, Mr. Miels delivered to Dr. Dilly a revised non-binding acquisition proposal for $51.00 in cash per share of Sierra Oncology common stock, which we refer to as the “revised GSK proposal.” Messrs. Dilly and Norrett updated the members of the Sierra Oncology Board on the receipt of the revised GSK proposal.

Between March 11, 2022 and March 15, 2022, in accordance with the directives of the Strategic Transactions Committee, representatives of Lazard and members of Sierra Oncology management commenced

 

36


Table of Contents

their outreach to the 10 potential additional acquirors designated by the Strategic Transactions Committee, several of which were engaged in discussions regarding a potential strategic partnership with Sierra Oncology and were already reviewing the MOMENTUM study data in connection with such discussions. Four of these ten counterparties declined to proceed with discussions regarding a potential acquisition of Sierra Oncology and did not enter into a confidentiality agreement. Representatives of Lazard and members of Sierra Oncology management engaged in discussions regarding a potential acquisition of Sierra Oncology with the remaining six counterparties, which we refer to as “Party A,” “Party B,” “Party C,” “Party D,” “Party E” and “Party F,” as described below. Party A, Party B and Party C had previously entered into confidentiality agreements with Sierra Oncology in connection with discussions regarding potential licensing, partnership and other strategic transactions, each of which did not include a “standstill” or other restriction on the counterparty’s ability to make public or private proposals to acquire Sierra Oncology.

Also on March 11, 2022, Dr. Dilly called a representative of Party B to discuss a potential acquisition of Sierra Oncology. Party B had been engaged in ongoing discussions and due diligence review with Sierra Oncology with respect to a potential licensing or partnership transaction. The representative of Party B indicated to Dr. Dilly that Party B would submit a proposal for an acquisition of Sierra Oncology.

On March 14, 2022, Party B delivered to Dr. Dilly and Mr. Norrett a non-binding proposal for Party B to acquire Sierra Oncology for $40.00 in cash per share of Sierra Oncology common stock, which we refer to as the “Party B proposal.”

Also on March 14, 2022, Mr. Norrett called a representative of Party C to discuss a potential acquisition of Sierra Oncology. The representative of Party C indicated to Mr. Norrett that Party C’s interest with respect to an acquisition of Sierra Oncology by Party C would be contingent on receiving additional clarity regarding anticipated regulatory approvals for momelotinib.

On March 16, 2022, the Strategic Transactions Committee met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Members of Sierra Oncology management and representatives of Lazard updated the Strategic Transactions Committee on the terms of the revised GSK proposal, as well as the results of Sierra Oncology’s outreach process to solicit interest from additional potential acquirors to date, including the receipt of the Party B proposal. The Strategic Transactions Committee also directed Sierra Oncology management and Lazard to continue the outreach process and discussions, including by providing management presentations and due diligence information to potentially interested acquirors, including to seek improved proposals from GSK and Party B. The Strategic Transactions Committee discussed considerations and risks with respect to a broader outreach process and likely interest from potential additional acquirors, and determined not to reach out to additional counterparties at such time. The Strategic Transactions Committee also determined to update the Sierra Oncology Board on the discussions with GSK and the results of Sierra Oncology’s outreach process to date and, as part of the Sierra Oncology Board’s consideration of these matters, requested that Lazard present to the Sierra Oncology Board a preliminary valuation analysis of Sierra Oncology.

Also on March 16, 2022, representatives of Lazard called representatives of Party B’s financial advisor to indicate to them that the value of Party B’s proposal was well below the value of another acquisition proposal received by Sierra Oncology and that Party B would need to provide substantially higher value in its proposal, but that Sierra Oncology would provide additional due diligence information to Party B in order to support an increased proposal.

On March 18, 2022, Sierra Oncology management met with representatives of Party A to provide a management presentation on Sierra Oncology’s business and product candidates.

Between March 18, 2022 and March 20, 2022, members of Sierra Oncology management and representatives of Lazard held multiple calls and conferences with representatives of GSK and its financial

 

37


Table of Contents

advisor, PJT Partners LP (“PJT”), to discuss the scope of GSK’s due diligence review of Sierra Oncology at that time.

On March 21, 2022, Sierra Oncology granted representatives of GSK, Party A and Party B and certain of their respective advisors access to an electronic data room containing due diligence information regarding Sierra Oncology and its product candidates relevant to potential acquisition discussions. Over the next 10 days, members of Sierra Oncology management and representatives of Lazard held discussion and meetings with representatives of GSK and other potentially interested acquirors regarding Sierra Oncology’s product candidates and pipeline, regulatory approvals and other relevant due diligence information.

On March 22, 2022, a representative of Party B called Dr. Dilly. Dr. Dilly re-iterated to the representative that the Party B proposal was not in a range that the Sierra Oncology Board believed would merit further exploration. The representative of Party B declined to submit an improved proposal and indicated that Party B would discontinue due diligence and discussions with respect to an acquisition of Sierra Oncology at that time, but would be interested in re-engaging if Sierra Oncology’s process did not result in a more attractive proposal.

Also on March 22, 2022, Sierra Oncology entered into a confidentiality agreement with Party D, which included a “standstill” provision restricting Party D from making public proposals with respect to the acquisition of Sierra Oncology without Sierra Oncology’s prior consent (but not restricting confidential proposals to the Sierra Oncology Board or Sierra Oncology’s chief executive officer), which restrictions terminated in accordance with their terms upon Sierra Oncology’s execution of the merger agreement.

On March 23, 2022, Sierra Oncology management met with representatives of Party D to provide a management presentation on Sierra Oncology’s business and product candidates.

Also on March 23, 2022, Sierra Oncology entered into a confidentiality agreement with Party E, which included a “standstill” provision restricting Party E from making public proposals with respect to the acquisition of Sierra Oncology without Sierra Oncology’s prior consent (but not restricting confidential proposals to the Sierra Oncology Board), which restrictions terminated in accordance with their terms upon Sierra Oncology’s execution of the merger agreement.

Also on March 23, 2022, Sierra Oncology granted representatives of Party E access to an electronic data room containing due diligence information regarding Sierra Oncology and its product candidates relevant to potential acquisition discussions.

On March 24, 2022, representatives of Party D called representatives of Lazard to indicate that they did not expect to participate in further discussions regarding an acquisition of Sierra Oncology, noting that they did not believe Party D could make an acquisition proposal at a valuation that Sierra Oncology would find attractive.

Also on March 24, 2022, the Sierra Oncology Board met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Members of Sierra Oncology management and representatives of Lazard updated the Sierra Oncology Board on the discussions with GSK and the terms of the revised GSK proposal, as well as the results of Sierra Oncology’s outreach process to solicit interest from additional potential acquirors to date. The Sierra Oncology Board reviewed with Sierra Oncology management various unaudited forward-looking financial information with respect to Sierra Oncology’s future financial performance and the underlying assumptions, including the Unaudited Prospective Financial Information. Representatives of Lazard presented their preliminary valuation analysis of Sierra Oncology relative to the revised GSK proposal. Following discussion, the Sierra Oncology Board directed members of Sierra Oncology management and Lazard to seek an increased proposal from GSK and also continue to provide management presentations and due diligence information to potentially interested acquirors that had already been contacted at that time. The Sierra Oncology Board discussed considerations and risks with respect to a broader outreach process and likely interest from potential additional acquirors, and determined not to reach out to additional counterparties at that time. It was the consensus of the Sierra Oncology Board that outreach to additional

 

38


Table of Contents

potential acquirors at such time was not likely to lead to an attractive acquisition proposal and would increase the risk of public disclosure leaks, management and employee distraction and adverse impacts on Sierra Oncology’s business. The Strategic Transactions Committee also directed Sierra Oncology management to continue to engage with other counterparties regarding potential strategic partnerships with respect to the commercialization of momelotinib.

On March 26, 2022, Dr. Dilly and Mr. Miels met to continue discussions regarding a potential acquisition of Sierra Oncology and GSK’s continued diligence. Dr. Dilly indicated to Mr. Miels that an increased acquisition proposal would be required from GSK for Sierra Oncology to provide more in-depth due diligence information. Mr. Miels requested further diligence information regarding Sierra Oncology’s momelotinib product pipeline and opportunities in order to support an increased proposal.

On March 28, 2022, representatives of Party D notified Dr. Dilly and Mr. Norrett that Party D was not interested in proceeding with further discussions regarding an acquisition of Sierra Oncology.

On March 29, 2022, Sierra Oncology and Party F began negotiating a confidentiality agreement. Sierra Oncology and Party F did not ultimately enter into a confidentiality agreement. A meeting between Sierra Oncology management and representatives of Party F for Sierra Oncology to provide a management presentation was scheduled for April 4, 2022, and subsequently rescheduled to April 6, 2022 at Party F’s request.

On March 30, 2022, Mr. Norrett met with representatives of GSK to provide additional due diligence information regarding anticipated regulatory approvals for momelotinib and Sierra Oncology’s product pipeline.

Also on March 30, 2022, representatives of Party A notified representatives of Lazard that Party A was not interested in proceeding with further discussions regarding an acquisition of Sierra Oncology.

Also on March 30, 2022, Mr. Norrett called a representative of Party C to provide additional due diligence information regarding anticipated regulatory approvals for momelotinib. The representative responded that Party C was not interested in proceeding with further discussions regarding an acquisition of Sierra Oncology.

On March 31, 2022, Sierra Oncology management met with representatives of Party E to provide a management presentation on Sierra Oncology’s business and product candidates.

Also on March 31, 2022, representatives of Lazard called representatives of PJT to discuss next steps with respect to GSK’s due diligence review and discussions regarding an acquisition of Sierra Oncology. Representatives of PJT indicated that GSK’s remaining due diligence review would be confirmatory in nature. Representatives of Lazard indicated that Sierra Oncology was expecting an increased proposal from GSK and representatives of PJT indicated that Mr. Miels would be calling Dr. Dilly.

On April 1, 2022, Mr. Miels called Dr. Dilly to discuss next steps with respect to GSK’s confirmatory due diligence review and discussions regarding an acquisition of Sierra Oncology. Mr. Miels and Dr. Dilly also discussed Sierra Oncology’s willingness to enter into an exclusivity arrangement with GSK. Dr. Dilly indicated that Sierra Oncology’s willingness to enter into exclusive negotiations with GSK would depend in part on the revised proposal from GSK. Mr. Miels indicated that GSK would be submitting a revised proposal the next day.

Also on April 1, 2022, representatives of Party E notified representatives of Lazard that Party E was not interested in proceeding with further discussions regarding an acquisition of Sierra Oncology

Also on April 1, 2022, Dr. Dilly met with a representative of a biopharmaceutical company, that we refer to as “Party G,” in connection with ongoing discussions between Sierra Oncology and Party G regarding opportunities for licensing, partnership and other strategic transactions. As part of the discussion, Dr. Dilly and the representative discussed on a preliminary basis the possibility of a business combination between Sierra Oncology and Party G, but deferred further discussion to a future date.

 

39


Table of Contents

On April 2, 2022, Mr. Miels delivered to Dr. Dilly a revised non-binding acquisition proposal for $55.00 in cash per share of Sierra Oncology common stock, which we refer to as the “last GSK proposal.” As part of the last GSK proposal, GSK requested that Sierra Oncology enter into an agreement to negotiate exclusively with GSK for two weeks. Dr. Dilly updated the members of the Sierra Oncology Board on the receipt of the last GSK proposal.

On April 3, 2022, the Sierra Oncology Board met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Members of Sierra Oncology management and representatives of Lazard updated the Sierra Oncology Board on the discussions with GSK and the terms of the last GSK proposal, including Sierra Oncology management’s view that GSK’s remaining due diligence review would be confirmatory in nature and that the last GSK proposal represented the highest value proposal GSK could offer at this time based on, among other things, the value of the synergies that GSK and Sierra Oncology management believed could be obtained in an acquisition. Members of Sierra Oncology management and representatives of Lazard also updated the Sierra Oncology Board on the results of Sierra Oncology’s outreach process to solicit interest from additional potential acquirors to date, including that a management presentation was scheduled with representatives of Party F and that discussions with potential counterparties to a strategic partnership transaction with respect to the commercialization of momelotinib were ongoing. It was the consensus of the Sierra Oncology Board that re-engagement with the other potential acquirors contacted during the process or outreach to additional potential acquirors at such time was not likely to lead to a superior acquisition proposal than the last GSK proposal, and might jeopardize the successful execution of a transaction with GSK based on the last GSK proposal. Following this discussion, the Sierra Oncology Board authorized Sierra Oncology to enter into exclusive negotiations with GSK for a period of seven days and directed Sierra Oncology management and representatives of Wilson Sonsini to negotiate the terms of an acquisition of Sierra Oncology with GSK on the basis of the last GSK proposal. Following this meeting, consistent with the directions of the Sierra Oncology Board, representatives of Lazard called representatives of PJT to indicate that Sierra Oncology would be prepared to provide confirmatory due diligence information and enter into exclusive negotiations with GSK for a period of seven days on the basis of the last GSK proposal.

On April 4, 2022, representatives of PJT called representatives of Lazard to accept Sierra Oncology’s proposal for a shortened exclusivity period.

On April 4, 2022, following negotiation of the terms, Sierra Oncology and GSK entered into an exclusivity agreement in which Sierra Oncology agreed to negotiate exclusively with GSK until 11:59 p.m. (pacific time) on April 11, 2022. The exclusivity period was not subsequently extended or renewed.

Also on April 4, 2022, Sierra Oncology contacted representatives of Party F to cancel their scheduled management presentation meeting. Sierra Oncology also cancelled the scheduled conferences with potential counterparties to a strategic partnership transaction with respect to the commercialization of momelotinib.

Also on April 4, 2022, Wilson Sonsini delivered an initial draft of the definitive agreement to Cleary Gottlieb Steen & Hamilton LLP, GSK’s outside counsel (which we refer to as “Cleary Gottlieb”) in connection with the merger. Between April 4, 2022 and April 12, 2022, representatives of Sierra Oncology and GSK and their respective legal advisors negotiated the terms of the merger agreement. Key terms of the merger agreement negotiated between the parties included (1) the structure of the acquisition, (2) the terms of the “no-shop” restrictions and the circumstances in which the Sierra Oncology Board could change its recommendation to its stockholders or negotiate or accept an alternative acquisition transaction, including the circumstances in which the merger agreement could be terminated; (3) the amount of the termination fee and the circumstances in which it would be payable; (4) the definition of “Material Adverse Effect” with respect to Sierra Oncology; (5) the conditions to each party’s obligation to complete the merger; (6) the parties’ commitments in connection with obtaining required regulatory approvals; (7) the interim operating covenants applicable to Sierra Oncology prior to the closing of the merger and related exceptions for matters such as employee hiring and compensation and entry into material contracts or transactions by Sierra Oncology; and (8) Sierra Oncology’s other representations,

 

40


Table of Contents

warranties and covenants in the merger agreement. Representatives of GSK also discussed with representatives of Sierra Oncology the possibility of entering into retention agreements with certain members of Sierra Oncology management following the completion of the merger to facilitate GSK’s integration and transition efforts with respect to Sierra Oncology’s business and product candidates, and potential related compensation arrangements. The Sierra Oncology Board was kept apprised of these discussions. GSK declined to enter into any retention or compensation agreements with members of Sierra Oncology management prior to the execution of the merger agreement.

Also beginning on April 4, 2022, representatives of GSK and its advisors, including Cleary Gottlieb, were provided access to additional legal and operational due diligence documents and information regarding Sierra Oncology in its electronic data room to support their continued due diligence review of Sierra Oncology. Between April 4, 2022 and April 12, 2022, members of GSK management and its advisors conducted confirmatory operational, regulatory, legal, financial, employment and other due diligence on Sierra Oncology, including reviews of Sierra Oncology’s product candidates and anticipated regulatory approvals, efforts in support of potential commercialization, intellectual property, commercial relationships and employment arrangements and employee benefit plans, and from time to time had discussions with members of Sierra Oncology management and its advisors regarding due diligence information and related matters.

On April 8, 2022, Cleary Gottlieb delivered an initial draft of the support agreement to Wilson Sonsini. GSK requested that each director and executive officer of Sierra Oncology, and each of their affiliates holding shares of our common stock (including certain funds affiliated with OrbiMed Advisors, LLC, Abingworth Management Limited, and Vivo Capital LLC that are affiliated with certain of Sierra Oncology’s directors) enter into agreements to support the merger. Between April 8, 2022 and April 12, 2022, representatives of Sierra Oncology, GSK and certain of the support agreement parties and their respective legal advisors negotiated the terms of the support agreement. Key terms of the support agreement negotiated between the parties included (1) the support required from the support agreement parties based on the structure of the acquisition; (2) the restrictions on transfer of Sierra Oncology’s securities by the support agreement parties prior to the completion of the merger and exceptions thereto; and (3) the support agreement parties’ other representations, warranties and covenants in the support agreements.

On April 10, 2022, the Sierra Oncology Board met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Members of management and representatives of Wilson Sonsini updated the Sierra Oncology Board on the negotiation of the merger agreement and support agreements. Representatives of Lazard reviewed Lazard’s financial analyses with respect to the merger, and confirmed their expectation that Lazard Frères would be in a position to deliver its opinion regarding the fairness of the merger consideration. The Sierra Oncology Board also reviewed with members of Sierra Oncology management and representatives of Lazard the results of Sierra Oncology’s outreach process to solicit interest from alternative potential acquirors; it was the consensus of the Sierra Oncology Board that re-engagement with the other potential acquirors contacted during the process or outreach to additional potential acquirors was not likely to lead to a superior acquisition proposal than the merger, could jeopardize the successful entry into an acquisition transaction with GSK at the per share price and could cause significant disruption to Sierra Oncology. Representatives of Wilson Sonsini reviewed with the Sierra Oncology Board their fiduciary duties. Representatives of Wilson Sonsini reviewed the key terms of the merger agreement and support agreements. The Sierra Oncology Board noted the customary relationship disclosures provided by Lazard regarding its relationship with GSK (which disclosures had been updated as of January 7, 2022); the Sierra Oncology Board of directors did not identify any concerns with these disclosures. The Sierra Oncology Board directed Sierra Oncology management and Wilson Sonsini to continue the negotiation of the merger agreement.

On April 11, 2022, the Sierra Oncology Board met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Members of management and representatives of Wilson Sonsini updated the Sierra Oncology Board on the negotiation of the merger agreement and support agreements. Representatives of Wilson Sonsini reviewed modifications to the terms of the merger agreement and support

 

41


Table of Contents

agreements since the meeting of the Sierra Oncology Board held the prior day. Representatives of Lazard Frères reviewed Lazard Frères’ financial analyses with respect to the merger. The representatives of Lazard Frères rendered the oral opinion of Lazard Frères, subsequently confirmed by delivery of a written opinion dated April 12, 2022, to the Sierra Oncology Board that, as of the date of such opinion and based upon and subject to the various matters, limitations, qualifications and assumptions set forth therein, the per share price (subject to applicable withholding of taxes) to be received by the holders of shares of Sierra Oncology common stock (other than Owned Company Shares and Dissenting Company Shares (as such terms are defined in the merger agreement), if applicable) pursuant to the merger is fair, from a financial point of view, to such holders. The Sierra Oncology Board directed Sierra Oncology management and Wilson Sonsini to finalize the merger agreement and related transaction documents.

On April 12, 2022, after market close, the Sierra Oncology Board met with Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. Members of management and representatives of Wilson Sonsini updated the Sierra Oncology Board on the negotiation of the merger agreement and support agreements. Representatives of Wilson Sonsini reviewed the final merger agreement and support agreement. Representatives of Lazard Frères confirmed that the oral opinion of Lazard Frères, previously provided on April 11, 2022 and subsequently confirmed by delivery of a written opinion dated April 12, 2022, to the Sierra Oncology Board that, as of the date of such opinion and based upon and subject to the various matters, limitations, qualifications and assumptions set forth therein, the per share price (subject to applicable withholding of taxes) to be received by the holders of shares of Sierra Oncology common stock (other than Owned Company Shares and Dissenting Company Shares (as such terms are defined in the merger agreement), if applicable) pursuant to the merger is fair, from a financial point of view, to such holders, was unchanged. The meeting of the Sierra Oncology Board was then adjourned, and the Strategic Transactions Committee met with the other members of the Sierra Oncology Board, Sierra Oncology management and representatives of Lazard and Wilson Sonsini in attendance. The Strategic Transactions Committee approved the merger agreement and the merger and recommended that the Sierra Oncology Board approve the merger agreement and the merger. The Sierra Oncology Board meeting then reconvened and the Sierra Oncology Board, upon consideration of the factors more fully described in the section of this proxy statement captioned “—Recommendation of the Sierra Oncology Board of Directors and Reasons for the Merger,” unanimously (1) determined that it is in the best interests of Sierra Oncology and Sierra Oncology stockholders, and declared it advisable, to enter into the merger agreement and consummate the merger upon the terms and subject to the conditions set forth in the merger agreement; (2) approved the execution and delivery of the merger agreement and the support agreement by Sierra Oncology, the performance by Sierra Oncology of its covenants and other obligations in the merger agreement and the support agreements, and the consummation of the merger and each of the other transactions contemplated by the merger agreement and the support agreements, respectively, upon the terms and conditions set forth therein; (3) directed the adoption of the merger agreement be submitted to a vote at a meeting of Sierra Oncology stockholders; and (4) recommended that Sierra Oncology stockholders vote in favor of the adoption of the merger agreement.

Later on April 12, 2022, following the meeting of the Sierra Oncology Board, Sierra Oncology and GSK executed the merger agreement. The support agreements were also executed.

On April 13, 2022, Sierra Oncology and GSK publicly announced the merger and the execution of the merger agreement and the support agreements.

Recommendation of the Sierra Oncology Board and Reasons for the Merger

Recommendation of the Sierra Oncology Board

The Sierra Oncology Board unanimously: (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Sierra Oncology and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

 

42


Table of Contents

The Sierra Oncology Board unanimously recommends that you vote: (1) “FOR” the adoption of the merger agreement; (2) “FOR” the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger; and (3) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting.

Reasons for the Merger

In evaluating the merger agreement and the merger, the Sierra Oncology Board consulted with Sierra Oncology management, as well as representatives of each of Lazard and Wilson Sonsini. In recommending that Sierra Oncology stockholders vote “FOR” the adoption of the merger agreement, the Sierra Oncology Board considered and analyzed a number of factors, including the following (which factors are not necessarily presented in order of relative importance). Based on these consultations, considerations and analyses, and the factors discussed below, the Sierra Oncology Board concluded that entering into the merger agreement with GSK was advisable and in the best interests of Sierra Oncology and our stockholders.

The Sierra Oncology Board believed that the following material factors and benefits supported its determination and recommendation:

 

   

Business, Financial Condition, Prospects and Execution Risks. The Sierra Oncology Board considered the current and historical financial condition and results of operations, competitive positioning, assets, business and prospects of Sierra Oncology, including certain unaudited forward-looking financial information with respect to Sierra Oncology’s future financial performance prepared by members of Sierra Oncology management and the execution risks and uncertainties associated with the development, regulatory approvals and commercialization of Sierra Oncology’s product candidates. The Sierra Oncology Board considered the potential opportunity to create value through continued execution of its business plan, and certain risks and uncertainties associated with Sierra Oncology and its business, including the risks and uncertainties inherent in the development of novel therapeutic treatments; risks and uncertainties regarding the receipt, timing and scope of regulatory approvals for momelotinib and Sierra Oncology’s other product candidates; risks related to effectively commercializing momelotinib and Sierra Oncology’s other product candidates; risks relating to Sierra Oncology’s ability to enter into and successfully execute on value-creating licensing, partnership and other strategic relationships with third parties with respect to product candidates; risks related to the manufacture and supply of Sierra Oncology’s products; competition from other hematology and oncology companies, some of which have substantially more financing resources than Sierra Oncology; factors affecting the revenues, operating costs and profitability of biopharmaceutical companies generally and other risk factors described in Sierra Oncology’s other filings with the SEC, as listed under the section titled “Where You Can Find More Information.” In connection with these matters and the evaluation of strategic alternatives, the Sierra Oncology Board considered the fact that Sierra Oncology had recently completed a public offering of common stock and pre-funded warrants that raised $145.3 million. The Sierra Oncology Board also noted the fact that Sierra Oncology has incurred net losses in every year since inception and anticipate that Sierra Oncology will continue to incur net losses for some time, and considered the risks and uncertainties related to the potential need for additional debt, equity financing or other financing in the future, as well as the potential impact of restrictions on Sierra Oncology’s operations, potential dilution of Sierra Oncology’s stockholders, or the loss of rights resulting from financing transactions.

 

   

Results of Strategic Review Process. The merger agreement was the result of an extensive strategic review process overseen by the Strategic Transactions Committee and the Sierra Oncology Board. The Sierra Oncology Board considered Sierra Oncology’s outreach process, with the assistance of Lazard, to identify whether other potential parties might be interested in pursuing an acquisition of Sierra Oncology on attractive terms, and to contact those parties believed to be most likely to have interest in pursuing such an acquisition; and considered the responses received from such contacted parties,

 

43


Table of Contents
 

including the fact that only Party B (in addition to GSK) submitted a proposal to acquire Sierra Oncology at a value of $40.00 per share of Sierra Oncology common stock. The Sierra Oncology Board, after consulting with Sierra Oncology management and Lazard, determined that further engagement with the other potential acquirors contacted during Sierra Oncology’s outreach process or engagement with additional potential acquirors was not likely to lead to a superior acquisition proposal than the merger, could jeopardize the successful entry into an acquisition transaction with GSK at the per share price and could cause significant disruption to Sierra Oncology. The Sierra Oncology Board also noted that Sierra Oncology had historically engaged in discussions with various participants in the biopharmaceutical industry regarding opportunities for strategic partnerships and collaborations with respect to the development and commercialization of product candidates, and that Sierra Oncology’s business and product candidates were well-known to various counterparties that could have made a proposal to acquire Sierra Oncology if such a transaction had been interesting or attractive to such counterparties.

 

   

Cash Consideration and Certainty of Value. The consideration to be received by our stockholders in the merger consists entirely of cash, which provides certainty of value measured against the ongoing business and financial execution risks of Sierra Oncology’s long-term operating plan. The receipt of cash consideration eliminates uncertainty and risk for our stockholders related to the continued execution of Sierra Oncology’s business. In that regard, the Sierra Oncology Board noted that Sierra Oncology’s stock price could be negatively impacted if we failed to meet investor expectations with respect to the development, regulatory approvals and commercialization of Sierra Oncology’s product candidates or results of operations.

 

   

Best Value Reasonably Obtainable. The belief of the Sierra Oncology Board that the per share merger consideration represents the best value reasonably obtainable for the shares of our common stock, taking into account the business, operations, prospects, business strategy, assets, liabilities and general financial condition of Sierra Oncology on a historical and prospective basis. In addition, the Sierra Oncology Board believed that, measured against the longer-term execution risks (described above), the per share merger consideration reflects a fair and favorable price for the shares of our common stock. The Sierra Oncology Board also noted Sierra Oncology management’s belief that the per share merger consideration represented the highest value proposal GSK could offer at this time based on, among other things, the value of the synergies that GSK and Sierra Oncology management believed could be obtained in an acquisition. The Sierra Oncology Board also considered that the per share merger consideration constitutes (1) a premium of approximately 39 percent to the closing price of our common stock on April 12, 2022, which was the last full trading day before announcement of the transaction; and (2) a premium of approximately 63 percent to the volume-weighted average price (“VWAP”) of our common stock over the 30 trading days ending April 12, 2022.

 

   

Potential Strategic Alternatives. The assessment of the Sierra Oncology Board that none of the possible alternatives to the merger (including the possibility of continuing to operate Sierra Oncology as an independent company, including the need for Sierra Oncology to pursue strategic partnerships and collaborations and capital raising transactions, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to Sierra Oncology’s stockholders of those alternatives and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for us to create greater value for our stockholders, taking into account execution risks as well as business, competitive, financial, industry, legal, market and regulatory risks.

 

   

Fairness Opinion of Lazard Frères. The oral opinion of Lazard Frères rendered to the Sierra Oncology Board, subsequently confirmed in writing, that, as of April 12, 2022, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard Frères as set forth in its written opinion, the merger consideration to be paid to holders of shares of Sierra Oncology common stock, subject to applicable withholding taxes, (other than the excluded holders) in the merger is fair, from a financial point of view, to such holders. The opinion is more fully described in the section of this proxy statement captioned “—Opinion of

 

44


Table of Contents
 

Lazard Frères & Co. LLC” and the full text of the opinion is attached as Annex C to this proxy statement.

 

   

Speed and Likelihood of Consummation. The Sierra Oncology Board considered the likelihood that the merger would be consummated, and the expected timing of the consummation of the merger, based on, among other things, (1) the limited conditions to each party’s obligation to consummate the merger, including the fact that there is no financing condition to GSK’s obligation to consummate the merger; (2) that there are not expected to be significant antitrust or other regulatory impediments, other than review pursuant to the HSR Act, to completing the merger, as further described in the section of this proxy statement captioned “—Regulatory Approvals”; (3) each party’s obligations in connection with obtaining required regulatory and other approvals and satisfying the conditions to the consummation of the merger; (4) the fact that Sierra Oncology stockholders (including certain funds affiliated with OrbiMed Advisors, LLC, Abingworth Management Limited, and Vivo Capital LLC that are affiliated with certain of Sierra Oncology’s directors) holding approximately 28% of the outstanding Sierra Oncology shares entered into support agreements committing to vote in favor of the adoption of the merger agreement; and (5) the business reputation, capabilities and financial condition of GSK, and the Sierra Oncology Board’s perception that GSK is willing to devote the resources necessary to complete the merger in an expeditious manner.

 

   

Negotiations with GSK and Terms of the Merger Agreement. The terms of the merger agreement, which was the product of arms’-length negotiations with the assistance of Sierra Oncology’s advisors. Certain provisions of the merger agreement that the Sierra Oncology Board considered important included, among others:

 

   

Sierra Oncology’s ability, under certain circumstances, to furnish information to, and conduct negotiations with, third parties regarding acquisition proposals.

 

   

The Sierra Oncology Board’s ability, under certain circumstances, to withdraw or modify its recommendation that our stockholders vote in favor of the adoption of the merger agreement.

 

   

The Sierra Oncology Board’s ability, under certain circumstances, to terminate the merger agreement to enter into an alternative acquisition agreement. In that regard, the Sierra Oncology Board believed that the termination fee payable by Sierra Oncology in such instance was reasonable, consistent with or below similar fees payable in comparable transactions, and not preclusive of other offers.

 

   

Appraisal Rights. The appraisal rights in connection with the merger available to our stockholders who timely and properly exercise such appraisal rights under the DGCL if certain conditions are met.

The Sierra Oncology Board also considered a number of uncertainties and risks concerning the merger, including the following (which are not listed in any relative order of importance):

 

   

No Stockholder Participation in Future Growth or Earnings. The nature of the merger as a cash transaction means that our stockholders will not participate in Sierra Oncology’s future earnings or growth and will not benefit from any appreciation in value of the surviving corporation.

 

   

No-Shop Restrictions. The restrictions in the merger agreement on Sierra Oncology’s ability to solicit competing proposals (subject to certain exceptions to allow the Sierra Oncology Board to exercise its fiduciary duties and to accept a superior proposal, and then only upon the payment of a termination fee).

 

   

Risk Associated with Failure to Consummate the Merger. The possibility that the merger might not be consummated, and if it is not consummated, that: (1) Sierra Oncology’s directors, senior management and other employees will have expended extensive time and effort and will have experienced significant distractions from their work on behalf of Sierra Oncology during the pendency of the merger; (2) Sierra Oncology will have incurred significant transaction and other costs; (3) Sierra

 

45


Table of Contents
 

Oncology’s continuing business relationships with business partners and employees may be adversely affected; (4) the trading price of our common stock could be adversely affected; (5) the other contractual and legal remedies available to Sierra Oncology in the event of the termination of the merger agreement may be insufficient, costly to pursue or both; and (6) the failure of the merger to be consummated could result in an adverse perception among Sierra Oncology’s existing and potential business partners, employees and investors about Sierra Oncology’s prospects.

 

   

Impact of Interim Restrictions on Sierra Oncology’s Business Pending the Completion of the Merger. The restrictions on the conduct of Sierra Oncology’s business prior to the consummation of the merger, which may delay or prevent it from undertaking strategic initiatives before the completion of the merger that, absent the merger agreement, Sierra Oncology might have pursued.

 

   

Effects of the Merger Announcement. The effects of the public announcement of the merger, including the: (1) effects on Sierra Oncology’s employees, operating results and stock price; (2) impact on Sierra Oncology’s ability to attract and retain key management, sales and marketing and technical personnel; and (3) potential for litigation in connection with the merger.

 

   

Termination Fee Payable by Sierra Oncology. The requirement that Sierra Oncology pay GSK the termination fee of $70,000,000 under certain circumstances following termination of the merger agreement, including if the Sierra Oncology Board terminates the merger agreement to accept a superior proposal. The Sierra Oncology Board considered the potentially discouraging impact that this termination fee could have on a third party’s interest in making a competing proposal to acquire Sierra Oncology.

 

   

Taxable Consideration. The receipt of cash in exchange for shares of our common stock in the merger will be a taxable transaction for U.S. federal income tax purposes.

 

   

Interests of Sierra Oncology’s Directors and Executive Officers. The interests that our directors and executive officers may have in the merger, which may be different from, or in addition to, those of our other stockholders.

This discussion is not meant to be exhaustive. Rather, it summarizes the material reasons and factors evaluated by the Sierra Oncology Board in its consideration of the merger. After considering these and other factors, the Sierra Oncology Board concluded that the potential benefits of entering into the merger agreement outweighed the uncertainties and risks. In light of the variety of factors considered by the Sierra Oncology Board and the complexity of these factors, the Sierra Oncology Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the foregoing factors in reaching its determination and recommendations. Moreover, each member of the Sierra Oncology Board applied his or her own personal business judgment to the process and may have assigned different relative weights to the different factors. The Sierra Oncology Board adopted and approved the merger agreement and the merger, and recommended that Sierra Oncology stockholders adopt the merger agreement, based upon the totality of the information presented to, and considered by, the Sierra Oncology Board.

Opinion of Lazard Frères & Co. LLC

Lazard was retained by Sierra Oncology to act as its financial advisor and, in the case of Lazard Frères, to render to the Sierra Oncology Board a fairness opinion in connection with the merger. In connection with the merger, on April 11, 2022, Lazard Frères delivered to the Sierra Oncology Board an oral opinion, which was confirmed by delivery of a written opinion, dated April 12, 2022, to the effect that, as of April 12, 2022, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard Frères as set forth in its written opinion, the merger consideration to be paid to holders of shares of Sierra Oncology common stock (other than shares held by the excluded holders) in the merger was fair, from a financial point of view, to such holders.

The full text of Lazard Frères’ written opinion, dated April 12, 2022, which sets forth the assumptions made, procedures followed, factors considered and qualifications and limitations on the review undertaken

 

46


Table of Contents

by Lazard Frères in connection with its opinion, is attached as Annex C to this proxy statement and is incorporated herein by reference. The summary of Lazard Frères’ opinion is qualified in its entirety by reference to the full text of the opinion and Sierra Oncology’s stockholders are encouraged to read the opinion carefully and in its entirety.

Lazard’s engagement and Lazard Frères’ opinion were provided for the benefit of the Sierra Oncology Board (in its capacity as such) and its opinion was rendered to the Sierra Oncology Board in connection with its evaluation of the merger, and addressed only the fairness, as of the date of the opinion, from a financial point of view, of the merger consideration to be paid to holders of shares of Sierra Oncology common stock (other than the excluded holders). Lazard Frères’ opinion is not intended to and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or any matter relating thereto.

Lazard Frères’ opinion was necessarily based on economic, monetary, market, and other conditions as in effect on, and the information made available to Lazard Frères as of the date of its opinion. Lazard Frères assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after such date. The current volatility and disruption in the credit and financial markets relating to, among others, the COVID-19 pandemic and Russia’s invasion of Ukraine, may have an effect on Sierra Oncology, and Lazard Frères did not express an opinion as to the effects of such volatility or such disruption on Sierra Oncology. Lazard Frères did not express any opinion as to the price at which shares may trade at any time subsequent to the announcement of the merger. Lazard Frères’ opinion did not address the relative merits of the merger as compared to any other transaction or business strategy in which Sierra Oncology might engage or the merits of the underlying decision by Sierra Oncology to engage in the merger.

In connection with its opinion, Lazard Frères:

 

   

reviewed the financial terms and conditions of the merger agreement;

 

   

reviewed certain publicly available historical business and financial information relating to Sierra Oncology;

 

   

reviewed various financial forecasts and other data provided to it by Sierra Oncology relating to the business of Sierra Oncology;

 

   

held discussions with members of Sierra Oncology’s senior management with respect to the businesses and prospects of Sierra Oncology;

 

   

reviewed public information with respect to certain other companies in lines of business Lazard Frères believed to be generally relevant in evaluating the businesses of Sierra Oncology;

 

   

reviewed the financial terms of certain business combinations involving companies in lines of business Lazard Frères believed to be generally relevant in evaluating the business of Sierra Oncology;

 

   

reviewed historical stock prices and trading volumes of shares of Sierra Oncology common stock; and

 

   

conducted such other financial studies, analyses and investigations as Lazard Frères deemed appropriate.

Lazard Frères assumed and relied upon the accuracy and completeness of the foregoing information, without independent verification of such information. Lazard Frères did not conduct any independent valuation or appraisal of any of the assets or liabilities (contingent or otherwise) of Sierra Oncology or concerning the solvency or fair value of Sierra Oncology, and Lazard Frères was not furnished with any such valuation or appraisal. With respect to the financial forecasts utilized in its analyses (referred to herein as Unaudited Prospective Financial Information), Lazard Frères assumed, with the consent of Sierra Oncology, that such forecasts were reasonably prepared on bases reflecting the best available estimates and judgments as to the future financial performance of Sierra Oncology. Lazard Frères relied, with the consent of Sierra Oncology, on the

 

47


Table of Contents

assessments of Sierra Oncology as to the validity of, and risks associated with, the product candidates of Sierra Oncology (including, without limitation, the timing and probability of successful development, testing and marketing of such product candidates and approval thereof by appropriate governmental authorities). Lazard Frères assumed no responsibility for and expressed no view as to any such forecasts or the assumptions on which they were based.

In rendering its opinion, Lazard Frères assumed, with the consent of Sierra Oncology, that the merger will be consummated on the terms described in the merger agreement, without any waiver or modification of any material terms or conditions. Lazard Frères also assumed, with the consent of Sierra Oncology, that obtaining the necessary governmental, regulatory or third party approvals and consents for the merger will not have an adverse effect on Sierra Oncology or the merger. Lazard Frères did not express any opinion as to any tax or other consequences that might result from the merger, nor did Lazard Frères’ opinion address any legal, tax, regulatory or accounting matters, as to which Lazard Frères understood that Sierra Oncology obtained such advice as it deemed necessary from qualified professionals. Lazard Frères expressed no view or opinion as to any terms or other aspects (other than the merger consideration to the extent expressly specified therein) of the merger, including, without limitation, the form or structure of the merger or any agreements or arrangements entered into in connection with, or contemplated by, the merger. In addition, Lazard Frères expressed no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the merger, or class of such persons, relative to the merger consideration or otherwise.

Summary of Lazard Frères’ Financial Analyses

The following is a summary of the material financial analyses performed by Lazard Frères in connection with its oral opinion and the preparation of its written opinion, dated April 12, 2022, to the Sierra Oncology Board. The summary of Lazard Frères’ analyses and reviews provided below is not a complete description of the analyses and reviews underlying Lazard Frères’ opinion. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of analysis and review and the application of those methods to particular circumstances, and, therefore, is not readily susceptible to summary description.

In arriving at its opinion, Lazard Frères did not draw in isolation conclusions from or with regard to any factor or analysis considered by it. Rather, Lazard Frères made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. Considering selected portions of its analyses and reviews in the summary set forth below, without considering its analyses and reviews as a whole, could create an incomplete or misleading view of the analyses and reviews underlying Lazard Frères’ opinion.

For purposes of its analyses and reviews, Lazard Frères considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Sierra Oncology. No company, business or transaction considered in Lazard Frères’ analyses and reviews is identical to Sierra Oncology or the merger, and an evaluation of the results of those analyses and reviews is not entirely mathematical. Rather, the analyses and reviews involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, businesses or transactions considered in Lazard Frères’ analyses and reviews. The estimates contained in Lazard Frères’ analyses and reviews and the ranges of valuations resulting from any particular analysis or review are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by Lazard Frères’ analyses and reviews. In addition, analyses and reviews relating to the value of companies, businesses or securities do not purport to be appraisals or to reflect the prices at which companies, businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, Lazard Frères’ analyses and reviews are inherently subject to substantial uncertainty.

 

48


Table of Contents

The summary of the analyses and reviews provided below includes information presented in tabular format. In order to fully understand Lazard Frères’ analyses and reviews, the tables must be read together with the full text of each summary. The tables alone do not constitute a complete description of Lazard Frères’ analyses and reviews. Considering the data in the tables below without considering the full description of its analyses and reviews, including the methodologies and assumptions underlying its analyses and reviews, could create a misleading or incomplete view of Lazard Frères’ analyses and reviews.

Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before the date of Lazard Frères’ opinion, and is not necessarily indicative of current market conditions.

Financial Analyses

Discounted Cash Flow Analysis

Using the Unaudited Prospective Financial Information provided to, and approved by Sierra Oncology for use by, Lazard Frères for the purposes of its financial analyses and fairness opinion, Lazard Frères performed a discounted cash flow analysis of Sierra Oncology.

A discounted cash flow analysis is a valuation methodology used to derive a valuation of a company by calculating the present value of the company’s estimated future cash flows. A company’s “estimated future cash flows” are its projected unlevered free cash flows, and “present value” refers to the value today or as of an assumed date of the future cash flows or amounts and is obtained by discounting the estimated future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, capital structure, income taxes, expected returns and other appropriate factors.

For purposes of this analysis, Lazard Frères calculated a range of enterprise values for Sierra Oncology by discounting to present value, utilizing discount rates ranging from 10.0% to 12.0%, chosen by Lazard Frères based upon its analysis of the weighted average cost of capital of Sierra Oncology and using the mid-year convention, (i) the estimated probability-adjusted, after-tax unlevered free cash flows to be generated by Sierra Oncology from March 31, 2022 through the end of terminal year of 2040; and (ii) a range of terminal values for Sierra Oncology.

The terminal values were derived by applying a negative terminal growth rate range of (50%) – (30%) to the estimated unlevered free cash flow for the terminal year to be generated by Sierra Oncology. The negative terminal growth rates used by Lazard Frères were estimated by Lazard Frères based on its professional judgment and experience, taking into account the Unaudited Prospective Financial Information.

Lazard Frères then added to the range of enterprise values the estimated net cash of Sierra Oncology at March 31, 2022 of approximately $271 million to derive a range of total equity values for Sierra Oncology. Lazard Frères then calculated a range of implied equity values per share by dividing such total equity values of Sierra Oncology by the number of fully diluted shares of Sierra Oncology common stock (approximately 32.7 million), as calculated based on information provided by Sierra Oncology with respect to dilutive securities outstanding as of April 8, 2022. The results of this analysis implied an equity value per share range of $38.05 to $43.45, rounded to the nearest $0.05.

Selected Public Companies Analysis

Using public filings and data sources, Lazard Frères reviewed and analyzed certain financial information, valuation multiples and market trading data related to selected comparable publicly traded biotechnology companies, the operations of which Lazard Frères believed, based on its experience with companies in the biotechnology industry and its professional judgment, to be generally relevant in analyzing Sierra Oncology’s operations for purposes of this analysis. Lazard Frères compared such information for the selected comparable companies to the corresponding information for Sierra Oncology.

 

49


Table of Contents

The companies in the biotechnology industry selected by Lazard Frères for this analysis were as follows:

 

   

Blueprint Medicines Corporation

 

   

Iovance Biotherapeutics, Inc.

 

   

ImmunoGen, Inc.

 

   

ADC Therapeutics SA

 

   

Karyopharm Therapeutics Inc.

 

   

Macrogenics, Inc.

 

   

CTI Biopharma Corp.

Lazard Frères selected the companies above because, among other things, the selected companies operate businesses similar in certain respects to the business of Sierra Oncology. However, none of the selected companies is identical to Sierra Oncology and certain of these companies may have characteristics that are materially different from those of Sierra Oncology. Based on its professional judgment and experience, Lazard Frères believes that purely quantitative analyses are not, in isolation, determinative in the context of the merger and that qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Sierra Oncology and the selected companies that could affect the public trading values of each company are also relevant.

For each of the selected companies above, Lazard Frères calculated the enterprise value of the selected company (calculated as the market capitalization, taking into account in-the-money options and other equity awards and convertible securities, plus the book value of debt, and preferred equity, less cash and cash equivalents, short term investments and long term investments, plus book value of minority interests) as of April 11, 2022, as a multiple of the probability-adjusted revenue estimates for 2026 from FactSet Research Systems, Wall Street research and public filings, referred to in this section as “EV/Probability-Adjusted FY+5 Revenue.” The results of this analysis are as follows:

 

     Enterprise Value /
Probability-Adjusted
FY+5 Revenue
 

75th Percentile

     2.1x  

Median

     1.5x  

Mean

     1.7x  

25th Percentile

     1.2x  

Using its professional judgment and experience, Lazard Frères then applied a range of multiples of estimated EV/Probability-Adjusted FY+5 Revenues, based on the 25th percentile and 75th percentile of the estimated EV/Probability-Adjusted FY+5 Revenue for the selected companies of 1.2x and 2.1x, respectively, to Sierra Oncology’s estimated probability-adjusted revenues for 2026, from the Prospective Unaudited Financial Information. The results of this analysis implied an equity value per share range of $27.05 to $37.65, rounded to the nearest $0.05.

Selected Precedent Transactions Analysis

Using public filings and other publicly available information, Lazard Frères reviewed and analyzed selected precedent transactions involving biotechnology companies that Lazard Frères viewed as generally relevant in evaluating the merger. In performing these analyses, Lazard Frères analyzed certain financial information and transaction multiples relating to companies in the selected transactions and compared such information to the corresponding information for the merger.

 

50


Table of Contents

Specifically, Lazard Frères reviewed five merger and acquisition transactions in the biotechnology industry announced since January 1, 2018, that Lazard Frères deemed relevant to consider in relation to Sierra Oncology and the merger. These transactions are listed below. Although none of the selected precedent transactions or the target companies in such transactions is directly comparable to the merger or to Sierra Oncology, all of the transactions were chosen because they involve transactions that, for the purposes of this analysis, may be considered similar to the merger and/or involve targets that, for the purposes of analysis, may be considered similar to Sierra Oncology.

 

Announcement Date  

Acquiror

 

Target

06/02/21

  MorphoSys AG   Constellation Pharmaceuticals, Inc.

03/04/21

  Amgen Inc.   Five Prime Therapeutics, Inc.

05/04/20

  A. Menarini—Industrie Farmaceutiche Riunite—S.R.L.   Stemline Therapeutics, Inc.

05/10/18

  Eli Lilly and Company   ARMO BioSciences, Inc.

01/31/18

  Seattle Genetics, Inc.   Cascadian Therapeutics, Inc.

Using data regarding the precedent transactions and the target companies available from public filings and other publicly available information, Lazard Frères examined the selected transactions with respect to the upfront consideration, as a multiple of the target company’s five-year forward probability-adjusted revenues (which are referred to in this section as “TV/Probability-Adjusted FY+5 Revenue”), as reflected in publicly available consensus estimates at the time of the transaction announcement. The results of this analysis are as follows:

 

     TV / Probability-Adjusted
FY+5 Revenue
 

75th Percentile

     2.7x  

Median

     1.6x  

Mean

     2.0x  

25th Percentile

     1.2x  

Using its professional judgment and experience, Lazard Frères then applied a range of TV/Probability-Adjusted FY+5 Revenue multiples for the selected precedent transactions based on the 25th percentile and 75th percentile of TV/FY+5 Revenue multiples, which ranged from 1.2x to 2.7x, to Sierra Oncology’s estimated revenues for 2026, from the Unaudited Prospective Financial Information. The results of this analysis implied an equity value per share range of $27.05 to $44.75, rounded to the nearest $0.05.

Other Analyses

The analyses and data described below were presented to the Sierra Oncology Board for informational purposes only and did not provide the basis for, and were not otherwise material to, the rendering of Lazard Frères’ opinion.

Premia Paid Analysis

Using information from public filings and other publicly available information, Lazard Frères analyzed the premia paid for acquisitions of publicly-traded companies in the biotechnology industry by strategic buyers with transaction equity values implied for the target company in the transaction based on the consideration payable at the closing of the selected transaction (excluding contingent value rights) ranging between $1 billion and $4 billion that have been announced since January 1, 2018. For each of the precedent transactions, Lazard Frères calculated the implied premia as a percentage based on the amount by which the per share consideration in each transaction exceeded the target company’s (i) closing share price on the last trading day upon which shares of Sierra Oncology traded on an unaffected basis, (ii) 30-day volume weighted average price based on trading days (“VWAP”) and (iii) 52-week high share price based on intraday prices.

 

51


Table of Contents

Based on its professional judgment and experience, Lazard Frères then (i) applied the 25th percentile and 75th percentile of the 1-day unaffected per share price premia for the selected companies of approximately 54% and 111%, respectively, to the 1-day unaffected price per share of Sierra Oncology common stock to calculate an implied equity value per share range of $59.05 to $80.90, rounded to the nearest $0.05, (ii) applied the 25th percentile and 75th percentile of the 30-day VWAP premia for the selected companies of approximately 59% and 123%, respectively, to the 30-day VWAP of the shares of Sierra Oncology common stock to calculate an implied equity value per share range of $53.20 to $74.60, rounded to the nearest $0.05, and (iii) applied the 25th percentile and 75th percentile of the 52-week intraday high premia for the selected companies of approximately (12)% and 37%, respectively, to the 52-week intraday high price of the shares of Sierra Oncology common stock to calculate an implied equity value per share range of $34.95 to $54.40, rounded to the nearest $0.05.

Research Analyst Price Targets

Lazard Frères reviewed selected equity research analyst price targets based on published, publicly available Wall Street equity research reports. Lazard Frères observed that such price targets ranged from $39.00 per share to $51.00 per share, with a median of $45.00 per share.

52-Week High/Low Trading Prices

Lazard Frères reviewed the range of trading prices of shares of Sierra Oncology common stock for the 52 weeks ended on April 11, 2022. Lazard Frères observed that, during such period, the intraday share price of the shares of Sierra Oncology common stock ranged from $14.90 per share to $39.70 per share, in each case rounded to the nearest $0.05.

Miscellaneous

The Company has agreed to pay Lazard an estimated transaction fee of approximately $44 million, payable upon the consummation of the merger, of which $2.0 million became payable upon delivery of the fairness opinion.

In addition, Sierra Oncology has agreed to reimburse Lazard for its reasonable out-of-pocket expenses incurred in connection with its engagement, including reasonable fees of counsel, and will indemnify Lazard and certain related persons against certain liabilities arising out of Lazard’s engagement. Lazard has in the two years prior to the delivery of Lazard Frères’ opinion on April 12, 2022 provided certain financial advisory services to GSK and certain of its affiliates, including advising GSK in connection with investor analysis, for which Lazard has received and expects to receive compensation in an amount less than $150,000 in the aggregate. Lazard, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, leveraged buyouts, and valuations for estate, corporate and other purposes. In addition, in the ordinary course, Lazard and its affiliates and employees may trade securities of Sierra Oncology, GSK and certain of their affiliates for their own accounts and for the accounts of their customers, may at any time hold a long or short position in such securities, and may also trade and hold securities on behalf of Sierra Oncology, GSK and certain of their respective affiliates. The issuance of Lazard Frères’ opinion was approved by the opinion committee of Lazard Frères.

Lazard is an internationally recognized investment banking firm providing a full range of financial advisory and other services. Lazard was selected to act as financial advisor to Sierra Oncology after considering Lazard’s qualifications, independence, expertise, international reputation, knowledge of the biopharmaceutical industry and experience acting as financial advisor in connection with similar partnership and strategic transactions.

Lazard Frères prepared these analyses solely for purposes of, and the analyses were delivered to the Sierra Oncology Board in connection with, the provision of its opinion to the Sierra Oncology Board as to the fairness,

 

52


Table of Contents

from a financial point of view, to the holders of shares of Sierra Oncology common stock (other than shares held by the excluded holders) of the merger consideration to be paid in the merger. Lazard Frères did not recommend any specific consideration to the Sierra Oncology Board or that any given consideration constituted the only appropriate consideration for the merger. Lazard Frères’ opinion was one of many factors considered by the Sierra Oncology Board, as described in more detail in the section of this proxy statement captioned “—Recommendation of the Sierra Oncology Board and the Reasons for the Merger.”

Certain Unaudited Prospective Financial Information

We do not, as a matter of course, make public projections as to our future financial performance, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, Sierra Oncology’s management regularly prepares and reviews with the Sierra Oncology Board estimates regarding the success and timing of the development of, regulatory filings and approvals for and the commercialization of our product candidates, as well as various partnership scenarios for the development and commercialization of our product candidates outside of the United States. In connection with our strategic planning process and the Sierra Oncology Board’s evaluation of strategic alternatives, as described further in the section of this proxy statement captioned “—Background of the Merger,” Sierra Oncology’s management prepared and reviewed with the Sierra Oncology Board various unaudited forward-looking financial information with respect to our future financial performance for fiscal years 2022 through 2040, including the Unaudited Prospective Financial Information summarized below.

The Unaudited Prospective Financial Information was prepared for internal use only and not for public disclosure and was provided to the Sierra Oncology Board for the purposes of considering, analyzing and evaluating the merger. The Unaudited Prospective Financial Information was also provided to, and approved by Sierra Oncology for use by, Lazard, Sierra Oncology’s financial advisor, for the purposes of Lazard Frères’ financial analyses and fairness opinion in connection with the merger (as described in more detail in the section of this proxy statement captioned “—Opinion of Lazard Frères & Co. LLC”). The Unaudited Prospective Financial Information includes estimates of Sierra Oncology’s financial performance on a probability-adjusted basis for purposes of Lazard Frères’ discounted free cash flow analysis and other financial analyses. These probability adjustments were reviewed by Sierra Oncology’s management and approved for Lazard Frères’ use by Sierra Oncology. With Sierra Oncology’s consent, Lazard Frères assumed that the Unaudited Prospective Financial Information was reasonably prepared on bases reflecting the best currently available estimates and judgments as to our future financial performance, and relied on Sierra Oncology’s assessments of as to the validity of, and risks associated with, our product candidates.

The Unaudited Prospective Financial Information was developed by Sierra Oncology’s management as estimates of our future financial performance as an independent company, without giving effect to the merger, including any impact of the negotiation or execution of the merger agreement or the merger, the expenses that have already and will be incurred in connection with completing the merger or any changes to Sierra Oncology’s operations or strategy that may be implemented during the pendency of or following the consummation of the merger. The Unaudited Prospective Financial Information also does not consider the effect of any failure of the merger to be completed; it should not be viewed as accurate or continuing in that context.

The Unaudited Prospective Financial Information was not prepared with a view toward public disclosure or complying with accounting principles generally accepted in the United States (which we refer to as “GAAP”). In addition, the Unaudited Prospective Financial Information was not prepared with a view toward complying with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. Neither our independent registered public accounting firm nor any other independent accountants have (1) compiled, reviewed, audited, examined or performed any procedures with respect to the Unaudited Prospective Financial Information; (2) expressed any opinion or any other form of assurance on such information or the achievability of the Unaudited Prospective Financial Information; or (3) assumed any responsibility for the Unaudited Prospective Financial Information.

 

53


Table of Contents

Because the Unaudited Prospective Financial Information reflects estimates and judgments, it is susceptible to sensitivities and assumptions, as well as multiple interpretations based on actual experience and business developments. The Unaudited Prospective Financial Information also covers multiple years, and such information by its nature becomes less predictive with each succeeding year. The Unaudited Prospective Financial Information is not, and should not be considered to be, a guarantee of future operating results. Further, the Unaudited Prospective Financial Information is not fact and should not be relied upon as being necessarily indicative of our future results.

Although the Unaudited Prospective Financial Information is presented with numerical specificity, it reflects numerous assumptions and estimates as to future events made and approved by Sierra Oncology’s management. The Unaudited Prospective Financial Information will be affected by, among other factors, our ability to achieve our goals for the development, regulatory approval and commercialization of our drug candidates on the timeline assumed for purposes of the Unaudited Prospective Financial Information. The Unaudited Prospective Financial Information reflects assumptions and uncertainties that are subject to change. Important factors that may affect actual results and cause the Unaudited Prospective Financial Information not to be achieved are described in various risk factors described in the sections of this proxy statement captioned “— Risk Factors” and “—Cautionary Statement Regarding Forward-Looking Statements,” and in our other filings with the SEC, as listed under the section titled “Where You Can Find More Information.” All of these factors are difficult to predict, and many of them are outside of our control. As a result, there can be no assurance that the Unaudited Prospective Financial Information will be realized, and actual results may be materially better or worse than those contained in the Unaudited Prospective Financial Information, whether or not the merger is consummated. The Unaudited Prospective Financial Information also reflects assumptions as to certain business decisions that are subject to change. The Unaudited Prospective Financial Information may differ from publicized analyst estimates and forecasts and does not consider any events or circumstances after the date that it was prepared, including the announcement of the entry into the merger agreement. The Unaudited Prospective Financial Information has not been updated or revised to reflect information or results after the date they were prepared or as of the date of this proxy statement. Except to the extent required by applicable federal securities laws, we do not intend to update or otherwise revise the Unaudited Prospective Financial Information to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events. Sierra Oncology has or may report results of operations for periods included in the Unaudited Prospective Financial Information that were or will be completed following the preparation of the Unaudited Prospective Financial Information. Stockholders and investors are urged to refer to Sierra Oncology’s periodic filings with the SEC for information on Sierra Oncology’s actual historical results.

Certain of the financial measures included in the Unaudited Prospective Financial Information are “non-GAAP financial measures.” These are financial performance measures that are not calculated in accordance with GAAP. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP. Financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction, such as the Unaudited Prospective Financial Information, are excluded from the definition of “non-GAAP financial measures” under applicable SEC rules and regulations. As a result, the Unaudited Prospective Financial Information is not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the Sierra Oncology Board or Lazard. Accordingly, no reconciliation of the financial measures included in the Unaudited Prospective Financial Information is provided in this proxy statement.

The Unaudited Prospective Financial Information constitutes forward-looking statements. By including the Unaudited Prospective Financial Information in this proxy statement, neither we nor any of our representatives

 

54


Table of Contents

has made or makes any representation to any person regarding our ultimate performance as compared to the information contained in the Unaudited Prospective Financial Information. Sierra Oncology has made no representation to GSK, in the merger agreement or otherwise, concerning the Unaudited Prospective Financial Information. The inclusion of the Unaudited Prospective Financial Information should not be regarded as an indication that the Sierra Oncology Board Sierra Oncology or any other person considered, or now considers, the Unaudited Prospective Financial Information to be predictive of actual future results. Further, the inclusion of the Unaudited Prospective Financial Information in this proxy statement does not constitute an admission or representation by Sierra Oncology that the information presented is material. The Unaudited Prospective Financial Information is included in this proxy statement solely to give our stockholders access to the information that was provided to the Sierra Oncology Board and Lazard. The Unaudited Prospective Financial Information is not included in this proxy statement in order to influence any Sierra Oncology stockholder to make any investment decision with respect to the merger, including whether or not to seek appraisal rights with respect to their shares.

The following table presents a summary of unaudited prospective financial information of Sierra Oncology as an independent company for fiscal years 2022 through 2040, as prepared and used as described above, which information is referred to as the “Unaudited Prospective Financial Information.” Sierra Oncology management made various judgments and assumptions when preparing the Unaudited Prospective Financial Information, including, among others (1) the commercial launch of momelotinib in 2023, the launch of SRA515 in 2027 and the launch of SRA737 in 2028, (2) revenue estimates in the United States based on various addressable patient, penetration, pricing and exclusivity assumptions, (3) the entry into partnerships for the commercialization of each product outside of the United States with various upfront, milestone and royalty payments assumptions, (4) cost of goods sold and sales and marketing expenses estimated on a product-by-product basis, (5) estimated royalty and milestone expenses payable by Sierra Oncology based on the terms of existing partnerships, (6) variable research and development expenses estimated based on the phase of each product’s development and launch, (7) corporate general and administrative expenses generally estimated to grow until momelotinib loss of exclusivity and (8) a marginal tax rate of 25% offset by Sierra Oncology’s estimated U.S. federal income tax net operating losses. The Unaudited Prospective Financial Information were prepared on a probability-adjusted basis.

 

    Fiscal year ended December 31,  
($ in millions)   2022E     2023E     2024E     2025E     2026E     2027E     2028E     2029E     2030E     2031E     2032E     2033E     2034E     2035E     2036E     2037E     2038E     2039E     2040E  

Total revenue (1)

  $ 5     $ 52     $ 168     $ 322     $ 469     $ 588     $ 623     $ 663     $ 752     $ 745     $ 777     $ 755     $ 780     $ 797     $ 458     $ 191     $ 195     $ 179     $ 120  

COGS (2)

  $ 2     $ 39     $ 29     $ 59     $ 138     $ 138     $ 236     $ 171     $ 178     $ 193     $ 194     $ 154     $ 145     $ 72     $ 40     $ 36     $ 29     $ 26     $ 13  

Gross profit (3)

  $ 3     $ 14     $ 139     $ 263     $ 332     $ 450     $ 387     $ 492     $ 573     $ 551     $ 582     $ 602     $ 635     $ 724     $ 418     $ 155     $ 166     $ 153     $ 107  

R&D (4)

  $ 105     $ 79     $ 72     $ 61     $ 19     $ 14     $ 10     $ 9     $ 8     $ 8     $ 7     $ 7     $ 6     $ 6     $ 2     $ 2     $ 2     $ 1     $ 1  

SG&A (5)

  $ 67     $ 65     $ 76     $ 91     $ 111     $ 123     $ 130     $ 138     $ 147     $ 155     $ 161     $ 168     $ 174     $ 181     $ 119     $ 75     $ 78     $ 75     $ 46  

EBIT (6)

  ($ 169   ($ 130   ($ 10   $ 111     $ 202     $ 313     $ 248     $ 345     $ 418     $ 388     $ 414     $ 427     $ 455     $ 537     $ 297     $ 78     $ 86     $ 77     $ 60  

Unlevered Free cash flow (7)

  ($ 114   ($ 132   ($ 17   $ 90     $ 180     $ 227     $ 178     $ 253     $ 307     $ 285     $ 305     $ 315     $ 338     $ 401     $ 255     $ 85     $ 64     $ 59     $ 50  

 

(1)

Total revenue is U.S. net product sales in addition to partnership payments, including upfront payment, development, regulatory and commercial milestones and royalties for the Company’s partnered assets. Upfront payments are amortized over the duration of partnership. Milestones and royalties are not amortized. Total revenue on a non-risk adjusted basis for each corresponding year above was estimated as follows: $6, $66, $211, $407, $592, $782, $886, $1,025, $1,247, $1,296, $1,381, $1,379, $1,449, $1,535, $1,127, $827, $859, $768, $404.

(2)

COGS is defined as product cost of goods sold plus estimated royalties and milestones payable by Sierra Oncology. COGS on a non-risk adjusted basis for each corresponding year above was estimated as follows: $4, $44, $52, $75, $172, $209, $338, $275, $280, $341, $321, $276, $269, $188, $157, $199, $156, $139, $63.

(3)

Gross profit is defined as total revenue net of cost of goods sold and estimated royalty and milestone expenses payable by Sierra Oncology. Gross profit on a non-risk adjusted basis for each corresponding year above was estimated as follows: $2, $22, $159, $332, $420, $573, $548, $750, $967, $954, $1,060, $1,102, $1,180, $1,347, $970, $629, $703, $629, $342.

(4)

R&D is defined as research and development expenses. R&D on a non-risk adjusted basis for each corresponding year above was estimated as follows: $108, $93, $99, $94, $54, $33, $24, $19, $22, $25, $20, $20, $15, $15, $10, $10, $10, $5, $5.

(5)

SG&A is defined as selling, general and administrative expenses. SG&A on a non-risk adjusted basis for each corresponding year above was estimated as follows: $67, $81, $95, $114, $143, $167, $187, $209, $230, $236, $242, $252, $263, $269, $190, $133, $141, $130, $97.

(6)

EBIT is defined as gross profit, minus research and development, minus selling, general, and administrative expenses. EBIT on a non-risk adjusted basis for each corresponding year above was estimated as follows: ($172), ($152), ($35), $124, $223, $373, $337, $523, $716, $693, $798, $830, $903, $1,063, $770, $486, $552, $493, $240.

(7)

Unlevered free cash flow is calculated as EBIT, minus income taxes, net of projected impact of net operating losses, plus depreciation and amortization, minus changes in net working capital, minus capital expenditures. Upfront payments are not amortized and are recorded in the year they are received.

 

55


Table of Contents

Interests of Sierra Oncology’s Directors and Executive Officers in the Merger

When considering the recommendation of the Sierra Oncology Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of our stockholders. Additionally, concurrently with the execution of the merger agreement, each of our directors and executive officers, together with certain funds affiliated with OrbiMed Advisors, LLC, Abingworth Management Limited, and Vivo Capital LLC that are affiliated with certain of our directors, in each case solely in their capacities as holders of our common stock and other Sierra Oncology securities (which we refer to as the “support agreement parties”), entered into the support agreements with GSK and Sierra Oncology. These support agreements obligate the applicable stockholders to vote their respective shares of Sierra Oncology’s common stock in favor of the adoption of the merger agreement and against the approval of any acquisition proposal. In (1) evaluating and negotiating the merger agreement; (2) approving the merger agreement and the merger; and (3) recommending that the merger agreement be adopted by our stockholders, the Sierra Oncology Board was aware of and considered these interests to the extent that they existed at the time, among other matters. These interests are more fully described below.

Insurance and Indemnification of Directors and Executive Officers

Pursuant to the terms of the merger agreement, directors and officers of Sierra Oncology will be entitled to certain ongoing indemnification and insurance coverage, including under directors’ and officers’ liability insurance policies. For more information, see the section of this proxy statement captioned “The Merger Agreement—Indemnification and Insurance.”

Treatment of Equity-Based Awards

Treatment of Sierra Options

As of March 31, 2022, there were outstanding Sierra options to purchase an aggregate of 5,236,309 shares of our common stock with an exercise price below the per share price (such options “in-the-money”), of which Sierra options to purchase an aggregate of 341,146 shares of our common stock were held by our current non-employee directors and of which Sierra options to purchase an aggregate of 1,948,691 shares of our common stock were held by our current executive officers. Other than the Sierra options, there are no other outstanding compensatory Sierra Oncology equity or equity-based awards.

Under the terms of the merger agreement, at the effective time of the merger all Sierra options that are outstanding and unexercised as of immediately prior to the effective time of the merger will accelerate vesting in full and will be cancelled and converted into a right to receive an amount in cash, without interest, equal to the product of (1) the excess, if any, of the per share price less the exercise price per share of such option, and (2) the number of shares of our common stock issuable upon exercise in full of such Sierra option. The number of shares of our common stock issuable for Sierra options subject to performance-based vesting that have performance periods outstanding at the effective time will be deemed to be the number of shares issuable upon satisfaction of maximum achievement of performance criteria. The cash payment amount (less any required withholding and other taxes) will be paid to the applicable Sierra option holder following the effective time of the merger, in accordance with the terms of the merger agreement. All Sierra options with an exercise price per share equal to or greater than the per share price will be cancelled without any cash payment in respect thereof.

 

56


Table of Contents

Equity Interests of Sierra Oncology’s Directors and Executive Officers

The following table sets forth the number of shares of our common stock directly held and the number of shares of our common stock subject to Sierra options with a per share exercise price less than the per share price, held by each of Sierra’s executive officers and non-employee directors and certain of their affiliates, assuming the following and such additional assumptions set forth in the footnotes to the table:

 

   

the Sierra options include those that would be outstanding as of March 31, 2022, calculated applying the acceleration of vesting that will apply pursuant to the terms of the merger and assuming continued service by the individual through such date;

 

   

that the values of these shares of our common stock and Sierra options is equal to the per share price of $55.00 (minus any applicable exercise price in the case of the in-the-money Sierra options); and

 

   

that none of the individuals exercises any of his or her Sierra options on or before March 31, 2022, and that no additional Sierra options are granted to any such individual on or before such date.

 

    Shares Held Directly (1)     In-the-Money Sierra Options (2)  

Name

  Number of
Shares (#)
    Value of
Shares ($)
    Number of
Shares Subject
to Option (#) (3)
    Value of Shares
Subject to
Option ($)
 

Stephen G. Dilly

    5,000       275,000       1,037,000       39,837,140  

Sukhi Jagpal

    0       0       229,000       8,596,579  

Barbara Klencke

    15,000       825,000       296,091       11,386,774  

Kevin Norrett

    0       0       195,700       7,663,509  

Christina Thomson

    0       0       190,900       7,358,673  

William Turner

    0       0       177,747       6,889,620  

Andrew Allen

    1,650       90,750       18,780       736,261  

Georgia Erbez

    0       0       18,000       670,365  

Craig Collard

    13,500       742,500       16,000       632,540  

Andrew Sinclair

    1,314,127  (4)      72,276,985       14,374       565,006  

Jeffrey H. Cooper

    0       0       25,436       989,777  

Christy Oliger

    0       0       18,000       670,365  

Mona Ashiya

    1,964,770  (5)      108,062,350       14,374       565,006  

Gaurav Aggarwal

    2,735,852  (6)      150,471,860       14,374       565,006  

Robert Pelzer

    0       0       24,061       933,375  

 

(1)

This number includes shares of Sierra Oncology common stock beneficially owned, excluding shares issuable upon exercise of Sierra options.

(2)

These columns include the number and value of shares of Sierra Oncology common stock subject to in-the-money Sierra options. The values shown in the below table are determined based on, for each share of Sierra Oncology common stock subject to a Sierra option, the excess of (i) the per share price, or $55.00, over (ii) the applicable per share exercise price.

(3)

This number includes shares subject to outstanding Sierra options, including Sierra options the vesting of which is expected to accelerate in the merger. The below table includes information regarding the number of shares and value of Sierra Oncology common stock subject to the portions of in-the-money Sierra options that are vested as of March 31, 2022 by their ordinary terms and the portions of in-the-money Sierra options the vesting of which will accelerate in connection with the merger assuming for this purpose that the merger closed on March 31, 2022. The values shown in the below table are determined based on, for each share of Sierra Oncology common stock subject to a Sierra option, the excess of (i) the per share price, or $55.00, over (ii) the applicable per share exercise price.

(4)

This number includes shares of common stock beneficially owned by entities affiliated with Abingworth Bioventures VII, LP, an affiliate of Dr. Sinclair.

(5)

This number includes shares of common stock beneficially owned by entities affiliated with OrbiMed Advisors LLC, an affiliate of Dr. Ashiya.

 

57


Table of Contents
(6)

This number includes shares of common stock beneficially owned by Vivo Opportunity Holdings, LP, an affiliate of Dr. Aggarwal.

For more information on securities of Sierra Oncology beneficially owned by Sierra’s directors and executive officers, please refer to the section of this proxy statement captioned “Security Ownership of Certain Beneficial Owners and Management”

 

     In-the-Money Sierra Options Vested as  of
March 31, 2022 Based on Ordinary

Vesting Schedule
     In-the-Money Sierra Options Unvested as of
March 31, 2022 that will Accelerate Vesting in
Connection with the Merger
 

Name

   Number of Shares
Subject to Option (#)
     Value of Shares
Subject to Option ($)
     Number of Shares
Subject to Option (#)
     Value of Shares Subject to
Option ($)
 

Stephen G. Dilly

     315,500        12,986,135        721,500        26,851,005  

Sukhi Jagpal

     71,097        2,955,297        157,903        5,641,282  

Barbara Klencke

     106,777        4,440,093        189,314        6,946,681  

Kevin Norrett

     54,758        2,336,942        140,942        5,326,567  

Christina Thomson

     51,142        2,144,921        139,758        5,213,752  

William Turner

     36,355        1,515,831        141,392        5,343,788  

Andrew Allen

     17,280        680,926        1,500        55,335  

Georgia Erbez

     4,500        167,591        13,500        502,774  

Craig Collard

     14,500        577,205        1,500        55,335  

Andrew Sinclair

     12,874        509,671        1,500        55,335  

Jeffrey H. Cooper

     23,936        934,442        1,500        55,335  

Christy Oliger

     4,500        167,591        13,500        502,774  

Mona Ashiya

     12,874        509,671        1,500        55,335  

Gaurav Aggarwal

     12,874        509,671        1,500        55,335  

Robert Pelzer

     22,561        878,040        1,500        55,335  

Treatment of Sierra Warrants

As of April 8, 2022, there were outstanding Series A warrants and pre-funded warrants to purchase an aggregate of 8,697,876 shares of our common stock, of which Series A warrants to purchase an aggregate of 4,204,122 shares of our common stock were held by certain affiliates of our non-employee directors.

Under the terms of the merger agreement and the terms of the Series A warrants, at the effective time of the merger, each Series A warrant to that is outstanding as of immediately prior to the effective time of the merger will be cancelled and extinguished and represent only the right of the holder thereof to receive an amount in cash, without interest, equal to the Black Scholes Value (as defined in such Series A warrant), which is calculated under the terms of the Series A warrants to be $45.98 per share of our common stock subject to the Series A warrants.

Warrants held by Affiliates of Sierra Oncology’s Directors

The following table sets forth the number of shares of our common stock subject to Series A warrants held by each of entities affiliated with OrbiMed Advisors, LLC, which is affiliated with Mona Ashiya, entities affiliated with Abingworth Management Limited which is affiliated with Andrew Sinclair, and entities affiliated with Vivo Capital LLC, which is affiliated with Gaurav Aggarwal. Dr. Ashiya, Dr. Sinclair and Dr. Aggarwal are non-employee directors of Sierra Oncology. The following table assumes the following and such additional assumptions set forth in the footnotes to the table:

 

   

the Sierra warrants include those that would be outstanding as of April 8, 2022 calculated without regard to any beneficial ownership limitation under the terms of the Series warrants;

 

   

the value of the Series A warrants to be received in connection with the merger is equal to the Black Scholes Value, as defined in the Series A warrant, which is calculated under the terms of the Series A warrants to be $45.98 per share of our common stock subject to the Series A warrants; and

 

58


Table of Contents
   

that none of the holders exercises any of his or her Sierra warrants on or before April 8, 2022, and that no additional Sierra warrants are acquired by any such individual or its affiliates on or before such date.

For more information on securities of Sierra Oncology beneficially owned by Sierra’s directors and executive officers, please refer to the section of this proxy statement captioned “Security Ownership of Certain Beneficial Owners and Management”

 

     Series A Warrants(1)  

Name

   Number of Shares Subject to
Warrant (#)
     Value of the Warrant ($)  

Entities affiliated with Abingworth Bioventures VII, LP.

     871,125        40,054,328  

Entities affiliated with OrbiMed Advisors LLC

     1,477,124        67,918,162  

Entities affiliated with Vivo Opportunity Fund holdings, L.P.

     1,855,873        85,333,041  

 

(1)

This number includes shares subject to outstanding Series A warrants.

Executive Severance Agreements

Stephen G. Dilly

On June 1, 2020, we entered into an employment agreement with Dr. Stephen Dilly, our chief executive officer. Under the terms of the agreement, if Dr. Dilly is terminated without “cause” or resigns for “good reason” (as such terms are defined in the employment agreement and described below) and such termination does not occur within the 12 month period following a “change of control” (as such term is defined in the employment agreement and described below), then, subject to his execution and non-revocation of a release of claims, Dr. Dilly will be entitled to receive (i) a lump sum payment equal to his base salary for 12 months as in effect as of the employment termination date, (ii) cash consideration in the form of monthly payments equal to his monthly cost to maintain his health plan coverage at the same level in effect as of his employment termination date for a period of up to 12 months following the termination date, and (iii) accelerated vesting of any unvested time-based equity awards that would otherwise vest within 12 months of the termination date.

If Dr. Dilly is terminated without cause or resigns for good reason within 12 months following a change of control, then, subject to his execution and non-revocation of a release of claims, Dr. Dilly would be entitled to (i) a lump sum payment equal to his base salary for 18 months, except his annual “base salary” for purposes of this calculation will be deemed to equal the sum of (A) his base salary as in effect as of the employment termination date and (B) the average of his actual annual bonuses paid for the last two fiscal years prior to the date of termination, with any pro-rated bonuses from an initial fiscal year of employment annualized for this purpose (or, if employed for only the most recently completed fiscal year or less, the amount set forth in the employment agreement), (ii) cash consideration in the form of monthly payments equal to his monthly cost to maintain his health plan coverage at the same level in effect as of his employment termination date, for a period of up to 18 months following the termination date, and (iii) full vesting of all outstanding equity or equity-based awards on the termination date; provided however that any equity or equity-based awards that vest based on the achievement of performance criteria will vest in accordance with the change of control provisions in the award agreements applicable to such equity or equity-based awards and, if there are no such change of control provisions in the applicable award agreements, such equity and equity-based awards will fully vest on the termination date. Further, upon the consummation of a change in control, the time-based Sierra options and the time-based portion of the performance-based Sierra options granted to Dr. Dilly will accelerate in full.

Other Executive Officers

We are party to employment agreements with Christina Thomson, Kevin Norrett, Barbara Klencke, William Turner and Sukhi Jagpal, which include the following severance terms.

Pursuant to the employment agreements, if the executive is terminated without “cause” (as defined in the employment agreement and described below) or resigns for “good reason” (as defined in the employment agreement and described below), then, subject to the executive’s execution and non-revocation of a release of

 

59


Table of Contents

claims, he or she will be entitled to receive (i) a continuation of his or her base salary in effect as of the employment termination date for a period of 12 months following the termination date (the “Executive Severance Period”), subject to the required payroll deductions and withholdings and paid on our normal payroll schedule, and (ii) cash consideration in the form of monthly payments equal to the executive’s monthly cost to maintain health plan coverage at the same level in effect as of his or her employment termination date through the earlier of (x) 12 months following the termination date or (y) the date that he or she becomes eligible for group health insurance coverage through a new employer.

If the executive is terminated without cause or resigns for good reason within 12 months following a “change of control” (as defined in the employment agreement and described below), then, subject to the executive’s execution and non-revocation of a release of claims, the Executive Severance Period will be increased to the applicable length of time indicated in the table below, and he or she will be entitled to receive (i) a continuation of his or her base salary for the increased Executive Severance Period, except that his or her annual “base salary” for purposes of this calculation will be deemed to equal the sum of (A) his or her base salary in effect as of the employment termination date and (B) the average of his or her actual annual bonuses paid for the last two years prior to the date of termination, with any pro-rated bonuses during an initial fiscal year of employment annualized for this purpose (or, if employed for only the most recently completed fiscal year or less, the amount set forth in the employment agreement) and (ii) cash consideration in the form of monthly payments equal to the executive’s monthly cost to maintain health plan coverage at the same level in effect as of his or her employment termination date for a period of up to the expiration of the increased Executive Severance Period. The increased Executive Severance Period is determined based on the executive’s years of service with our company, as set forth below:

 

Years of

Service

Completed

   Length of Severance
Period (in Months)
 

0

     13.5  

1

     14.4  

2

     15.3  

3

     16.2  

4

     17.1  

5

     18  

Additionally, if the executive is terminated without cause or resigns for good reason within 12 months following a change of control, he or she will be entitled to full vesting of all outstanding equity and equity-based awards, except that any equity and equity-based awards that vest based on the achievement of performance criteria shall vest in accordance with the change of control provisions in the applicable award agreement (or, if no such provisions exist, shall vest in full).

General Severance and Change in Control Benefit Matters

All severance and severance-related acceleration benefits described above are subject to the named executive officer’s execution and non-revocation of a release of claims in favor of us. Under the employment agreements, the named executive officers are also subject to covenants regarding confidentiality and prohibition on solicitation of our employees or independent contractors or the business of our customers or prospective customers for a period of one year following the termination of employment.

Under the employment agreements, in the event the severance payments and other benefits payable to an executive constitute “parachute payments” under Section 280G of the U.S. Internal Revenue Code and would be subject to the applicable excise tax, then the executive’s severance payments and benefits will be either (i) delivered in full or (ii) delivered to such lesser extent which would result in no portion of such payments or benefits being subject to the excise tax, whichever results in the receipt by executive on an after-tax basis of the greatest amount of benefits.

 

60


Table of Contents

Under the employment agreements, “cause” generally means: (i) conviction (including a guilty plea or plea of nolo contendere) of any felony or any other crime involving fraud, dishonesty or moral turpitude; (ii) commission or attempted commission of or participation in a fraud or act of dishonesty or misrepresentation against us that results (or could reasonably be expected to result) in material harm or injury to our business or reputation; (iii) material violation of any contract or agreement between the executive and us, or of any of our policies, or of any statutory duty the executive owes to us, including, for Dr. Dilly a violation of our code of conduct, which, with respect to Dr. Dilly, is not remedied within 30 business days of notice of such violation; (iv) conduct that constitutes gross insubordination, incompetence or habitual neglect of duties, or, for Dr. Dilly, gross insubordination, incompetence or habitual neglect of the specific lawful directives of the Sierra Oncology Board which are consistent with the scope of his duties and responsibilities, and that results in, or for executive officers other than Dr. Dilly, that results in or could reasonably be expected to have resulted in, material harm to our business or reputation, if not remedied within 30 days of notice; or (v) for Mr. Jagpal, any other conduct or circumstance that would amount to just cause at common law.

Under the employment agreements, “change of control” generally means: (i) a sale, lease, exclusive license or other disposition of all or substantially all of our assets; (ii) our consolidation or merger with or into any other corporation or other entity or person, or any other corporate reorganization, in which our stockholders immediately prior to such consolidation, merger or reorganization, own less than 50% of the outstanding voting power of the surviving entity following the consolidation, merger or reorganization; or (iii) any transaction (or series of related transactions involving a person or entity, or a group of affiliated persons or entities) in which in excess of 50% of our then-outstanding voting power is transferred, subject to certain exceptions.

Under the employment agreements, “good reason” generally means resignation of employment within 60 days (90 days for Dr. Dilly) after the occurrence of any of the following events that is not corrected within 30 days after we receive written notice that any of the following events have occurred: (i) without the executive’s written consent, a material diminution of the executive’s duties, position or responsibilities or, with respect to Dr. Dilly, title, provided, however, that a mere change in title or reporting relationship following a change of control will not by itself constitute good reason, and, for executive officers other than Mr. Dilly, the acquisition of Sierra Oncology and subsequent conversion to a division or unit of the acquiring entity will not by itself result in a diminution; (ii) without the executive’s written consent, a reduction in base salary or, with respect to Dr. Dilly, bonus opportunity, as in effect immediately prior to such reduction by more than 10%, unless such reduction is also applicable to all other senior executives (with respect to Dr. Dilly, such reduction to all other senior executives must be of no more than 15% to qualify for this exception); (iii) our material violation of any contract or agreement between the executive and us; or (iv) without the executive’s written consent, any requirement by us that the executive relocates to a work site located more than 50 miles from his or her principal place of employment as of the date of the executive’s employment agreement with us.

Impact of Corporate Transaction or Change in Control under Equity Plans

Our 2015 Equity Incentive Plan (“2015 Plan”) and our 2018 Equity Inducement Plan (“2018 Plan”), each provide that in the event of a “corporate transaction” as defined under the applicable plan, any or all outstanding awards may be assumed or replaced by the successor corporation, including through the substitution of equity awards or substantially similar consideration. In the event that the successor or acquiring corporation does not assume, convert, replace or substitute awards, then such awards will fully vest immediately prior to the corporate transaction, and either the award holder will be notified that such award will become fully exercisable, if applicable, for a specified period prior to the transaction and will then terminate upon the expiration of the specified period of time, or the award will be cancelled upon the occurrence of the corporate transaction in exchange for cash of equivalent value.

Our 2015 Plan provides that all awards granted to non-employee directors automatically accelerate vesting in full immediately prior to the consummation of a “corporate transaction.” The merger is a “corporate transaction” under the 2015 Plan and the 2018 Plan.

 

61


Table of Contents

Similarly, under our 2008 Stock Plan (“2008 Plan”), in the event of a merger or “change in control,” as defined under the 2008 Plan, each outstanding award will be assumed or substituted by the successor corporation or its parent or subsidiary, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate upon the expiration of the specified period of time. All awards granted under our 2008 Plan are fully vested.

Golden Parachute Compensation

In accordance with Item 402(t) of Regulation S-K, the table below sets forth the compensation that is based on or otherwise relates to the merger that may be paid or become payable to each of our named executive officers in connection with the merger. Please see the previous portions of this section for further information regarding this compensation with respect to certain of our executive officers.

The amounts indicated in the table below are estimates of the amounts that would be payable to our named executive officers assuming, solely for purposes of this table, that the merger was consummated on March 31, 2022, and in the case of each named executive officer, that the named executive officer’s employment is terminated by Sierra Oncology without cause or by the named executive officer for good reason, in each case, on that date. Sierra’s named executive officers will not receive pension, non-qualified deferred compensation, tax reimbursement or other perquisites or benefits in connection with the merger. The values in this table assume no reduction under the terms of the employment agreements for any payments that may constitute “parachute payments” under Section 280G of the U.S. Internal Revenue Code.

Some of the amounts set forth in the table would be payable solely by virtue of the consummation of the merger. In addition to the assumptions regarding the consummation date of the merger and the termination of employment, these estimates are based on certain other assumptions that are described in the footnotes accompanying the table below. Accordingly, the ultimate values to be received by a named executive officer in connection with the mergers may differ from the amounts set forth below.

 

Name

   Cash
($) (1)
     Equity
($) (2)
     Total
($)
 

Stephen Dilly

     1,691,271        39,837,140        41,528,411  

Barbara Klencke

     1,218,455        11,386,774        12,605,229  

Mark Kowalski (3)

     0        1,574,738        1,574,738  

 

(1)

The amounts listed in this column for Dr. Dilly and Dr. Klencke represent the “double-trigger” cash severance payments to which each of these named executive officers may become entitled under their employment agreements in the event of their involuntary termination within the twelve (12) month period following consummation of a “change in control” (which includes the merger), all as defined above and described in more detail in the section of this proxy statement captioned “—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Executive Severance Agreements.” The amounts listed in this column represent (i) the value of 18 months of base salary severance, determined under respective executive’s employment agreement, paid in a lump-sum for Dr. Dilly and as continued payments over 18 months following termination for Dr. Klencke, and (ii) the aggregate amount of monthly cash payments to continue the executive’s health insurance at the coverage level in effect at the termination date for a period of 18 months, as shown in the table below. In addition, amounts listed in this column, as reported in the table below under the column headed “Other”, represent lump sum cash payments that will become payable to Dr. Dilly and Dr. Klencke if they enter into non-competition agreements as currently contemplated, as described in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Employment and Non-Compete Arrangements Following the Merger.”

 

Name

   Salary
Severance ($)
     Aggregate Cash
Healthcare
Payment ($)
     Other ($)      Total ($)  

Stephen Dilly

     1,514,697        76,574        100,000        1,691,271  

Barbara Klencke

     1,158,762        54,693        5,000        1,218,455  

 

62


Table of Contents
(2)

Represents the dollar value of payments in cancellation of Sierra options in the merger, assuming, solely for purposes of this table, continued employment or other service of each named executive officer through the consummation of the merger. The values for each award in the table below represent the product of (x) the excess, if any, of $55.00 less the per share exercise price of the Sierra option, and (y) the number of shares of Sierra Oncology common stock issuable upon exercise in full of the Sierra options. The reported values include payments in cancellation of Sierra options that were unvested prior to the merger and were subject to “single-trigger” vesting acceleration, shown in the table below.

 

Name

   Number of Shares
Subject to Options
Accelerating (#)
     Per Share Value
of Options
Accelerating ($)
     Total ($)  

Stephen Dilly

     721,500        55.00        26,851,005  

Barbara Klencke

     189,314        55.00        6,946,681  

Mark Kowalski

     36,750        55.00        1,574,738  

 

(3)

On March 22, 2022, we entered into a transition agreement and release with Dr. Kowalski, our former Chief, Research and Early Development, pursuant to which his employment terminated on March 10, 2022. This agreement was entered into independently of the merger and for purposes of this table, we assume that none of the consideration received by Dr. Kowalski in connection with the transition agreement is contingent upon or related to the merger. Under the transition agreement, Dr. Kowalski received or is in the process of receiving a total severance payment of $474,986, representing twelve months base salary, less applicable withholdings, paid over twelve months from the termination date, plus a total of $17,290 to assist Dr. Kowalski’s out-of-pocket healthcare costs, at a rate of $1,330 per month, less applicable withholdings, for thirteen months from the termination date. Dr. Kowalski also entered into a consulting agreement with Sierra Oncology following the termination of his employment through June 30, 2023, pursuant to which he will be paid $400 per hour of consulting service provided. Under the transition agreement, Dr. Kowalski agreed to permanently forfeit the unvested portion of each time-based Sierra option as of the termination date. Dr. Kowalski’s performance-based Sierra options remain outstanding following his termination and will accelerate vesting and be cancelled in accordance with the merger agreement.

Employment and Non-Compete Arrangements Following the Merger

As of the date of this proxy statement, none of Sierra Oncology’s executive officers have (1) reached an understanding on potential employment or other retention terms with the surviving corporation or with GSK or Acquisition Sub; or (2) entered into any definitive agreements or arrangements regarding employment or other retention with the surviving corporation or with GSK or Acquisition Sub to be effective following the consummation of the merger. However, prior to the effective time of the merger, GSK or Acquisition Sub may have discussions regarding employment, compensation or other retention arrangements or terms and may enter into definitive agreements, or amendments to definitive agreements currently in effect, regarding employment, compensation, retention or other restrictive covenants with certain of Sierra Oncology’s employees to be effective as of the effective time of the merger. Certain currently contemplated arrangements are described below. However, the parties may choose to revise the terms of, or not enter into, these arrangements.

Stephen Dilly Non-Competition Agreement

It is currently expected that Dr. Dilly will enter into a non-competition agreement in favor of GSK which will become effective as of the closing, provided the closing occurs on or before March 1, 2023. Under the expected terms of this agreement, Dr. Dilly would receive a payment of $100,000 in exchange for the non-compete, which shall be paid to Dr. Dilly within five (5) business days of closing.

 

63


Table of Contents

Christina Thomson and Barbara Klencke Employment Agreement Amendments

It is currently expected that each of Ms. Thomson and Dr. Klencke’s employment agreements will be amended to extend the non-competition period required under such agreements to 18 months following their termination of employment. Their current employment agreements restrict competition through a period of 12 months following termination of employment for Ms. Thomson and during employment for Dr. Klencke. If entered into, the amendments will become effective as of the closing, provided the closing occurs on or before March 1, 2023. Under the expected term of the agreement, Ms. Thomson and Dr. Klencke each would receive a payment of $5,000 in exchange for the extended period, which would be paid to the applicable executive within five (5) business days of closing.

Closing and Effective Time of the Merger

The closing of the merger will take place (1) on a date that is as soon as possible, but no later than the second business day after the satisfaction or waiver (to the extent permitted under the merger agreement) of the last to be satisfied or waived of the closing conditions of the merger (described in the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger”), other than conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of each of such conditions; or (2) at such other time agreed to by Sierra Oncology, GSK and Acquisition Sub. On the closing date of the merger, the parties will file a certificate of merger with the Secretary of State of the State of Delaware as provided under the DGCL. The merger will become effective upon the filing and acceptance of such certificate of merger, or at a later time agreed to in writing by the parties and specified in such certificate of merger.

Appraisal Rights

If the merger is consummated, our stockholders who do not vote in favor of the adoption of the merger agreement, who properly demand an appraisal of their shares, who continuously hold their shares through the effective time of the merger, who otherwise comply with the procedures of Section 262 of the DGCL and who do not withdraw their demands or otherwise lose their rights to appraisal are entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL, which we refer to as “Section 262.” Unless the context requires otherwise, all references in Section 262 and in this summary to a “stockholder” or to a “holder of shares” are to a record holder of our common stock.

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex B and incorporated into this proxy statement by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that our stockholders exercise their appraisal rights under Section 262. Only a holder of record of shares of our common stock is entitled to demand appraisal of the shares registered in that holder’s name. A person having a beneficial interest in shares of our common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to demand an appraisal of such holder’s shares. If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee to ensure that appraisal rights are exercised. Stockholders should carefully review the full text of Section 262 as well as the information discussed below.

Under Section 262, if the merger is completed, holders of record of shares of our common stock who (1) submit a written demand for appraisal of such stockholder’s shares to Sierra Oncology prior to the vote on the adoption of the merger agreement; (2) do not vote in favor of the adoption of the merger agreement; (3) continuously are the record holders of such shares through the effective time of the merger; and (4) otherwise comply with the procedures and satisfy certain ownership thresholds set forth in Section 262 may be entitled to have their shares of our common stock appraised by the Delaware Court of Chancery and to receive payment in cash of

 

64


Table of Contents

the “fair value” of the shares of our common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the merger through the date of payment of the judgment. However, after an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine stockholders entitled to appraisal rights, will dismiss appraisal proceedings as to all of our stockholders who asserted appraisal rights unless (1) the total number of shares of our common stock for which appraisal rights have been pursued or perfected exceeds one percent of the outstanding shares of our common stock as measured in accordance with subsection (g) of Section 262; or (2) the value of the merger consideration in respect of such shares exceeds $1 million. We refer to these conditions as the “ownership thresholds.” Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the effective time of the merger through the date the judgment is paid at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation makes a voluntary cash payment to each stockholder seeking appraisal, interest will accrue thereafter only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (2) interest theretofore accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders of record as of the record date for notice of such meeting that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes Sierra Oncology’s notice to our stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 is attached to this proxy statement as Annex B. In connection with the merger, any holder of shares of our common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex B carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner may result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her or its appraisal rights will be entitled to receive the per share price described in the merger agreement without interest and less any applicable withholding taxes. Because of the complexity of the procedures for exercising the right to seek appraisal of shares of our common stock, Sierra Oncology believes that if a stockholder is considering exercising such rights, that stockholder should seek the advice of legal counsel.

Stockholders wishing to exercise the right to seek an appraisal of their shares of our common stock must do ALL of the following:

 

   

the stockholder must not vote in favor of the proposal to adopt the merger agreement;

 

   

the stockholder must deliver to Sierra Oncology a written demand for appraisal before the vote on the merger agreement at the special meeting;

 

   

the stockholder must continuously hold the shares from the date of making the demand through the effective time of the merger (a stockholder will lose appraisal rights if the stockholder transfers the shares before the effective time of the merger); and

 

   

a stockholder (or any person who is the beneficial owner of shares of our common stock held either in a voting trust or by a nominee on behalf of such person) or the surviving corporation must file a petition in the Delaware Court of Chancery demanding a determination of the value of the stock of all such stockholders within 120 days after the effective time of the merger (the surviving corporation is under no obligation to file any petition and has no intention of doing so).

In addition, after an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine stockholders entitled to appraisal rights, will dismiss appraisal proceedings as to all of our stockholders who asserted appraisal rights unless one of the ownership thresholds is met.

 

65


Table of Contents

Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, each of our stockholders who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement, abstain or not vote his, her or its shares.

Filing Written Demand

A stockholder wishing to exercise appraisal rights must deliver to Sierra Oncology, before the vote on the adoption of the merger agreement at the special meeting, a written demand for the appraisal of such stockholder’s shares. In addition, that stockholder must not vote or submit a proxy in favor of the adoption of the merger agreement. A vote in favor of the adoption of the merger agreement, in person at the special meeting or by proxy (whether by mail or via the Internet or telephone), will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal. A stockholder exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time of the merger. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement. Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the merger agreement. A proxy or vote against the adoption of the merger agreement will not constitute a demand. A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the merger agreement at the special meeting will constitute a waiver of appraisal rights.

Only a holder of record of shares of our common stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of our common stock should be executed by or on behalf of the holder of record and must reasonably inform Sierra Oncology of the identity of the holder and that the stockholder intends thereby to demand an appraisal of such stockholder’s shares. If the shares are owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner, and if such shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.

STOCKHOLDERS WHO HOLD THEIR SHARES IN “STREET NAME” BY A BANK, BROKER, TRUST OR OTHER NOMINEE AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER, TRUST OR OTHER NOMINEE, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER, TRUST OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER, TRUST OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.

 

66


Table of Contents

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

Sierra Oncology, Inc.

1820 Gateway Drive, Suite 110

San Mateo, California 94404

Attention: Corporate Secretary

At any time within 60 days after the effective date of the merger, any holder of shares of our common stock may withdraw his, her or its demand for appraisal and accept the per share price offered pursuant to the merger agreement, without interest and less any applicable withholding taxes, by delivering to Sierra Oncology, as the surviving corporation, a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time of the merger will require written approval of the surviving corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the merger consideration within 60 days after the effective time of the merger. If Sierra Oncology, as the surviving corporation, does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholder’s demand in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding with respect to a stockholder, the stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than, equal to or more than the per share price being offered pursuant to the merger agreement.

Notice by the Surviving Corporation

If the merger is completed, within 10 days after the effective time of the merger, the surviving corporation will notify each record holder of shares of our common stock who has properly made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the merger agreement, that the merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation or any holder of shares of our common stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 (or the beneficial owner of such shares) may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all dissenting stockholders entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to file a petition, and stockholders should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of our common stock. Accordingly, any holders of shares of our common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of our common stock within the time and in the manner prescribed in Section 262. The failure to file such a petition within the period specified in Section 262 could nullify a previous written demand for appraisal.

Within 120 days after the effective time of the merger, any holder of shares of our common stock who has complied with the requirements for an appraisal of such holder’s shares pursuant to Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to which Sierra Oncology has received demands for appraisal, and the aggregate number of holders of such shares. The surviving corporation

 

67


Table of Contents

must send this statement to the requesting stockholder within 10 days after receipt by the surviving corporation of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares of our common stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the surviving corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a stockholder of record.

If a petition for an appraisal is duly filed by a holder of shares of our common stock and a copy thereof is served upon the surviving corporation, the surviving corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. The Delaware Court of Chancery may order that notice of the time and place fixed for the hearing of such petition be given to the surviving corporation and all of the stockholders shown on the verified list at the addresses stated therein. Any such notice shall also be given by one or more publications at least one week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware or any other publication which the Delaware Court of Chancery deems advisable. The costs of any such notice are borne by the surviving corporation.

After notice to dissenting stockholders as required by the court, at the hearing on such petition, the Delaware Court of Chancery will determine the stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal for their shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings. If any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to such stockholder.

The Delaware Court of Chancery will dismiss appraisal proceedings as to all of our stockholders who assert appraisal rights unless (1) the total number of shares for which appraisal rights have been pursued and perfected exceeds one percent of the outstanding shares of our common stock as measured in accordance with subsection (g) of Section 262 or (2) the value of the merger consideration in respect of the shares for which appraisal rights have been pursued and perfected exceeds $1 million.

Determination of Fair Value

After the Delaware Court of Chancery determines the holders of our common stock entitled to appraisal, and that at least one of the ownership thresholds above has been satisfied in respect of our stockholders seeking appraisal rights, then the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of our common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. However, the surviving corporation has the right, at any time prior to the Delaware Court of Chancery’s entry of judgment in the proceedings, to make a voluntary cash payment to each stockholder seeking appraisal. If the surviving corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (1) the difference, if any, between the amount paid by the surviving corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery; and (2) interest accrued before such voluntary cash payment, unless paid at that time. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value

 

68


Table of Contents

by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and may not in any manner address, fair value under Section 262. Although Sierra Oncology believes that the per share price is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the per share price. Neither Sierra Oncology nor GSK anticipates offering more than the per share price to any stockholder exercising appraisal rights, and each of Sierra Oncology and GSK reserves the rights to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of our common stock is less than the per share price. If a petition for appraisal is not timely filed, or if neither of the ownership thresholds above has been satisfied in respect of our stockholders seeking appraisal rights, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal. In the absence of such determination or assessment, each party bears its own expenses.

If any stockholder who demands appraisal of his, her or its shares of our common stock under Section 262 fails to perfect, or loses or validly withdraws, such holder’s right to appraisal, the stockholder’s shares of our common stock will be deemed to have been converted at the effective time of the merger into the right to receive the per share price as provided in the merger agreement. A stockholder will fail to perfect, or effectively lose, such holder’s right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger, if neither of the ownership thresholds above has been satisfied in respect of our stockholders seeking appraisal rights or if the stockholder delivers to the surviving corporation a written withdrawal of such holder’s demand for appraisal and an acceptance of the per share price as provided in the merger agreement in accordance with Section 262.

From and after the effective time of the merger, no stockholder who has demanded appraisal rights in compliance with Section 262 will be entitled to vote such shares of our common stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger); provided, however, that if no petition for an appraisal is filed within the time provided in Section 262, if neither of the ownership thresholds above has been satisfied in respect of the stockholders seeking appraisal rights or if such stockholder delivers to the surviving corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger, either within 60 days after the effective date of the merger or thereafter with the written approval

 

69


Table of Contents

of the surviving corporation, then the right of such stockholder to an appraisal will cease. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however, that the foregoing shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger.

Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s statutory appraisal rights. In that event, you will be entitled to receive the per share price for your dissenting shares in accordance with the merger agreement, without interest and less any applicable withholding taxes. Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

Accounting Treatment

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion is a summary of material U.S. federal income tax consequences of the merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined below) whose shares of our common stock are converted into the right to receive cash pursuant to the merger. This discussion is based upon the U.S. Internal Revenue Code of 1986 (which we refer to as the “Code”), U.S. Treasury Regulations promulgated under the Code, court decisions, published positions of the U.S. Internal Revenue Service (which we refer to as the “IRS”) and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations, possibly with retroactive effect. This discussion is limited to holders who hold their shares of our common stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes).

This discussion is for general information only and does not address all of the tax consequences that may be relevant to holders in light of their particular circumstances. For example, this discussion does not address:

 

   

tax consequences that may be relevant to holders who may be subject to special treatment under U.S. federal income tax laws, such as financial institutions; tax-exempt organizations; S corporations, partnerships and any other entity or arrangement treated as a partnership or pass-through entity for U.S. federal income tax purposes; insurance companies; mutual funds; dealers in stocks and securities; traders in securities that elect to use the mark-to-market method of accounting for their securities; regulated investment companies; real estate investment trusts; entities subject to the U.S. anti-inversion rules; holders who hold their common stock as “qualified small business stock” for purposes of Sections 1045 and 1202 of the Code; Non-U.S. Holders that own (directly or by attribution) more than five percent of our common stock; or certain former citizens or long-term residents of the United States;

 

   

tax consequences to holders holding the shares as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;

 

   

tax consequences to holders who received their shares of our common stock in a compensatory transaction or pursuant to the exercise of options or warrants;

 

   

tax consequences to U.S. Holders whose “functional currency” is not the U.S. dollar;

 

   

tax consequences to holders who hold their common stock through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;

 

70


Table of Contents
   

tax consequences arising from the Medicare tax on net investment income;

 

   

tax consequences to holders subject to special tax accounting rules as a result of any item of gross income with respect to the shares of our common stock being taken into account in an “applicable financial statement” (as defined in the Code);

 

   

the U.S. federal estate, gift or alternative minimum tax consequences, if any;

 

   

any state, local or non-U.S. tax consequences; or

 

   

tax consequences to holders that do not vote in favor of the merger and who properly demand appraisal of their shares under Section 262 of the DGCL.

If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership or other pass-through entity for U.S. federal income tax purposes) is a beneficial owner of shares of our common stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares of our common stock and partners therein should consult their tax advisors regarding the consequences of the merger.

No ruling has been or will be obtained from the IRS regarding the U.S. federal income tax consequences of the merger described below. If the IRS contests a conclusion set forth herein, no assurance can be given that a holder would ultimately prevail in a final determination by a court.

THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY HOLDER. A HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES, AS WELL AS ANY CONSEQUENCES ARISING UNDER FEDERAL NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.

U.S. Holders

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of our common stock that is for U.S. federal income tax purposes:

 

   

an individual who is a citizen or resident of the United States;

 

   

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code; or (2) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person.

The receipt of cash by a U.S. Holder in exchange for shares of our common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder’s gain or loss will be equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the completion of the merger. A reduced tax rate on capital gain generally will apply to long-term capital gain of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. If a U.S. Holder acquired different blocks of shares of our common stock at different times and different prices, such holder must determine its adjusted tax basis and holding period separately with respect to each block of our common stock.

 

71


Table of Contents

Non-U.S. Holders

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of shares of our common stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.

Any gain realized by a Non-U.S. Holder pursuant to the merger generally will not be subject to U.S. federal income tax unless:

 

   

the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to the branch profits tax at a rate of 30 percent (or a lower rate under an applicable income tax treaty);

 

   

such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the completion of the merger, and certain other conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30 percent (or a lower rate under an applicable income tax treaty); or

Information Reporting and Backup Withholding

Information reporting and backup withholding (at a current rate of 24 percent) may apply to the proceeds received by a holder pursuant to the merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form); or (2) a Non-U.S. Holder that (a) provides a certification of such Non-U.S. Holder’s non-U.S. status on the appropriate series of IRS Form W-8 (or a substitute or successor form); or (b) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will generally be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, if the required information is timely furnished to the IRS.

A U.S. Holder may be required to retain records related to such holder’s common stock and file with its U.S. federal income tax return, for the taxable year that includes the Merger, a statement setting forth certain facts relating to the merger.

FATCA

Sections 1471 through 1474 of the Code, and the U.S. Treasury Regulations and administrative guidance issued thereunder (which we refer to as “FATCA”), impose a U.S. federal withholding tax of 30 percent on certain payments made to a “foreign financial institution” (as specially defined under these rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding certain U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or an exemption applies. FATCA also generally will impose a U.S. federal withholding tax of 30 percent on certain payments made to a non-financial foreign entity unless such entity provides the withholding agent a certification identifying certain direct and indirect U.S. owners of the entity or an exemption applies. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Under certain circumstances, a Non-U.S. Holder might be eligible for refunds or credits of such taxes.

 

72


Table of Contents

The U.S. Treasury Department has released proposed regulations which, if finalized in their present form, would eliminate the federal withholding tax of 30 percent applicable to the gross proceeds of a sale or other disposition of our common stock. In its preamble to such proposed regulations, the U.S. Treasury Department stated that taxpayers may generally rely on the proposed regulations until final regulations are issued.

Holders of our common stock are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on the disposition of our common stock pursuant to the merger.

Regulatory Approvals Required for the Merger

General Efforts

Under the merger agreement, GSK, Acquisition Sub and Sierra Oncology agreed to use reasonable best efforts to take, or cause to be taken, all actions, do, or cause to be done, all things and assist and cooperate with the other parties in doing, or causing to be done, all things necessary, proper or advisable under applicable law to consummate the merger, including: (1) obtaining all consents, waivers, approvals, orders and authorizations from governmental authorities; and (2) making all registrations, declarations and filings with governmental authorities, in each case that are necessary or advisable to consummate the merger.

HSR Act; Competition and Regulatory Laws

Under the HSR Act, the merger cannot be completed until GSK and Sierra Oncology file a Notification and Report Form with the Federal Trade Commission (which we refer to as the “FTC”) and the Antitrust Division of the Department of Justice (which we refer to as the “DOJ”), and the applicable waiting period has expired or been terminated. The parties filed a notification and report form with the FTC and DOJ on April 28, 2022. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period. The initial waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern time, on May 31, 2022.

Sierra Oncology and GSK have each agreed to cooperate reasonably with each other in connection with the making of filings with the FTC, the DOJ or the governmental authorities of any other applicable jurisdiction in which a filing is made pursuant to other antitrust laws or other laws that provide for review of the cross-border acquisition of any interest in or assets of a business (including for national security or defense reasons) (which we refer to, collectively, as “regulatory laws”). Sierra Oncology and GSK have each also agreed to (1) use its respective reasonable best efforts to supply (or cause the other to be supplied) with any additional information that reasonably may be required or requested by the FTC, the DOJ or the governmental authorities of any other applicable jurisdiction in which any such filing is made; and (2) use its respective reasonable best efforts to take all action necessary to, as soon as practicable, (a) cause the expiration or termination of the applicable waiting periods pursuant to the HSR Act and any other antitrust laws or other regulatory laws applicable to the merger, (b) obtain any required approvals, consents, and clearances pursuant to any antitrust laws applicable to the merger and to remove any court or regulatory orders under any regulatory laws impeding the ability to consummate the merger by the termination date (as defined in the section of this proxy statement captioned “The Merger Agreement—Termination of the Merger Agreement”), and (c) certify compliance with any request for additional information or documentary material from any governmental authority with respect to the merger pursuant to the HSR Act or other regulatory laws.

At any time before or after consummation of the merger, notwithstanding the termination of the waiting period under the HSR Act, the FTC or the DOJ could take such action under the antitrust laws (or the relevant authorities for filings made under other regulatory laws) as it deems necessary or desirable, including seeking to enjoin the completion of the merger, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or

 

73


Table of Contents

after the completion of the merger, and notwithstanding the termination of the waiting period under the HSR Act, any state could take such action under its antitrust laws as it deems necessary or desirable. Such action could include seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of Sierra Oncology or GSK. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

Other Regulatory Approvals

One or more governmental bodies may impose a condition, restriction, qualification, requirement or limitation when it grants the necessary approvals and consents to the merger. Third parties may also seek to intervene in the regulatory process or litigate to enjoin or overturn regulatory approvals, which actions could significantly impede or even preclude obtaining required regulatory approvals. There is currently no way to predict how long it will take to obtain all of the required regulatory approvals or whether such approvals will ultimately be obtained, and there may be a substantial period of time between the approval by our stockholders and the completion of the merger.

Although we expect that all required regulatory clearances and approvals will be obtained, we cannot assure you that these regulatory clearances and approvals will be timely obtained, obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions on the completion of the merger or require changes to the terms of the merger agreement. These conditions or changes could result in the conditions to the merger not being satisfied.

The Support Agreements

In connection with entering into the merger agreement, on April 12, 2022, following Sierra Oncology Board approval thereof, the support agreement parties, in each case solely in their capacities as holders of our common stock and other Sierra Oncology securities, entered into the support agreements with GSK and Sierra Oncology. As of May 11, 2022, the support agreements cover approximately 27 percent of our common stock.

Under the support agreements, the support agreement parties have agreed to vote all of their shares of our common stock (1) in favor of the adoption of the merger agreement and the approval of the merger; and (2) in favor of any adjournment, recess, delay or postponement recommended by Sierra Oncology (and not publicly opposed by GSK) with respect to any stockholder meeting with respect to the merger agreement, (3) against (a) the adoption or approval of any acquisition proposal; and (b) against any other proposed action, agreement or transaction involving Sierra Oncology that is intended, or would reasonably be expected, to prevent, materially impair or materially delay the consummation of the merger or the other transactions contemplated by the merger agreement, including any merger, consolidation or other business combination involving Sierra Oncology (other than the merger). The support agreement parties have also waived appraisal rights in connection with the merger, and have agreed not to raise certain legal challenges to the merger.

Pursuant to the support agreements, the support agreement parties have agreed not to, until the termination of the support agreements and subject to certain exceptions in the support agreements, (1) create or permit to exist any liens (other than certain permitted liens) on their shares of common stock, (2) transfer, sell (including short sell), assign, gift, hedge, pledge, grant a participation interest in, hypothecate or otherwise dispose of, or enter into any derivative agreements with respect to any of their shares of common stock, or grant any right or interest therein (or consent to do any of the foregoing), (3) grant or permit the grant of any proxy, power of attorney, or other authorization or consent in or with respect to any of their shares of common stock inconsistent with such stockholder’s obligations under the support agreement, (4) deposit or permit the deposit of any of their shares of common stock into a voting trust or enter into a support agreement or arrangement with respect to any of their shares of common stock or (5) take any other action that would in any way be reasonably expected to prevent or materially impair the stockholder’s ability to timely perform its obligations under the support agreement.

 

74


Table of Contents

The support agreements terminate automatically upon the earliest to occur of (1) the termination of the merger agreement in accordance with its terms, (2) the effective time of the merger, (3) the effectiveness of any amendment, modification or supplement to the merger agreement that decreases the per share price or changes the form of the consideration to be received by the holders of common stock in the merger, or (4) as to any stockholder, by mutual agreement with GSK, Sierra Oncology and the stockholder.

Treatment of Warrants in the Merger

At the effective time of the merger and upon the terms and conditions set forth in the merger agreement, each Series A warrant that is outstanding as of immediately prior to the effective time of the merger will be cancelled and extinguished and represent only the right of the holder thereof to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the Black Scholes Value (as defined in such Series A warrant), which is calculated under the terms of the Series A warrants to be

$45.98 per share of our common stock subject to the Series A warrants.

At the effective time of the merger and upon the terms, each pre-funded warrant that is outstanding as of immediately prior to the effective time of the merger will be deemed exercised in full as a “cashless exercise” (as described in the pre-funded warrants) effective upon the effective time of the merger, in accordance with the terms of the pre-funded warrants, and the holder thereof shall be entitled to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the product obtained by multiplying (1) the amount of the per share price by (2) the number of shares of common stock deemed to be issuable upon exercise in full of the pre-funded warrant as a “cashless exercise” calculated in accordance with and subject to the terms and conditions of the pre-funded warrants.

At the effective time of the merger, any outstanding warrants to purchase common stock of Sierra Oncology with a per share exercise price greater than the per share price will be cancelled and extinguished without any cash payment in respect thereof.

Delisting and Deregistration of Our Common Stock

If the merger is completed, our common stock will no longer be traded on the Nasdaq and will be deregistered under the Exchange Act. We will no longer be required to file periodic reports, current reports and proxy and information statements with the SEC on account of our common stock.

Litigation Relating to the Merger

On May 5, 2022, a lawsuit captioned O’Dell v. Sierra Oncology, Inc., et al., 1:22-cv-03647, was filed in the United States District Court for the Southern District of New York by a purported Sierra Oncology shareholder in connection with the proposed merger. The complaint names Sierra Oncology and members of the Sierra Oncology Board as defendants, and alleges that Sierra Oncology’s preliminary proxy statement is materially incomplete and misleading in violation of Sections 14(a) and 20(a) of the Exchange Act. The complaint seeks corrective disclosures, an injunction of the proposed merger, rescission or rescissory damages (if the merger is consummated), damages, and attorneys’ fees.

On May 9, 2022, a lawsuit captioned Arrow v. Sierra Oncology, Inc., et al., 3:22-cv-02742, was filed in the United States District Court for the Northern District of California by a purported Sierra Oncology shareholder in connection with the proposed merger. The complaint names Sierra Oncology and members of the Sierra Oncology Board as defendants, and alleges that Sierra Oncology’s preliminary proxy statement is materially incomplete and misleading in violation of Sections 14(a) and 20(a) of the Exchange Act. It also alleges that the proposed merger is unfair because certain directors and members of senior management will receive merger consideration for their stock options, restricted stock units, and other equity awards and certain members of senior management will receive severance packages should their employment be terminated under certain

 

75


Table of Contents

circumstances. The complaint seeks corrective disclosures, an injunction of the proposed merger, rescission or rescissory damages (if the merger is consummated), damages, and attorneys’ fees.

On May 12, 2022, two lawsuits captioned Bailey v. Sierra Oncology, Inc., et al., 1:22-cv-02785, and Baker v. Sierra Oncology, Inc., et al., 1:22-cv-02794, were filed in the United States District Court for the Eastern District of New York by purported Sierra Oncology shareholders in connection with the proposed merger. The complaints name Sierra Oncology and members of the Sierra Oncology Board as defendants, and alleges that Sierra Oncology’s preliminary proxy statement is materially incomplete and misleading in violation of Sections 14(a) and 20(a) of the Exchange Act. The complaints seek corrective disclosures, an injunction of the proposed merger, rescission or rescissory damages (if the merger is consummated), damages, and attorneys’ fees.

Sierra Oncology believes these lawsuits are without merit and intends to defend against them vigorously. There can be no assurance, however, with regard to the outcome.

 

76


Table of Contents

PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

We are asking you to approve the adoption of the merger agreement. For a summary of and detailed information regarding this proposal, see the information about the merger agreement throughout this proxy statement, including the information set forth in the sections of this proxy statement captioned “The Merger” and “The Merger Agreement.” A copy of the merger agreement is attached as Annex A to this proxy statement. You are urged to read the merger agreement carefully and in its entirety.

The Sierra Oncology Board unanimously recommends that you vote “FOR” this proposal.

 

77


Table of Contents

PROPOSAL 2: APPROVAL, ON A NON-BINDING, ADVISORY BASIS, OF CERTAIN

MERGER-RELATED EXECUTIVE COMPENSATION

Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that we provide stockholders with the opportunity to vote, on a non-binding, advisory basis, on the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger, as disclosed in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Golden Parachute Compensation,” including the additional disclosures referenced therein that otherwise are disclosed in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger.”

We are asking our stockholders to approve the compensation that will or may become payable by Sierra Oncology to our named executive officers in connection with the merger. These payments are set forth in the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Golden Parachute Compensation” and the accompanying footnotes and additional disclosures referenced therein. The various plans and arrangements pursuant to which these compensation payments may be made generally have previously formed part of Sierra Oncology’s overall compensation program for our named executive officers and previously have been disclosed to stockholders as part of the Compensation Discussion and Analysis and related sections of our annual proxy statements and/or on Form 8-K. These historical arrangements were adopted and approved by the Compensation Committee of the Sierra Oncology Board, which is composed solely of non-employee directors, and are believed to be reasonable and in line with marketplace norms.

Accordingly, we are seeking approval of the following resolution at the special meeting:

“RESOLVED, that the stockholders of Sierra Oncology, Inc. approve the compensation that will or may become payable to Sierra Oncology’s named executive officers in connection with the merger as disclosed pursuant to Item 402(t) of Regulation S-K in the section captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger—Golden Parachute Compensation” in Sierra Oncology’s proxy statement for the special meeting.”

Our stockholders should note that this proposal is not a condition to completion of the merger, and as a non-binding, advisory vote, the result will not be binding on Sierra Oncology, the Sierra Oncology Board or GSK. Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval. Accordingly, regardless of the outcome of the advisory vote, if the merger is consummated our named executive officers will be eligible to receive the compensation that is based on or that otherwise relates to the merger in accordance with the terms and conditions applicable to those payments.

The Sierra Oncology Board unanimously recommends that you vote “FOR” this proposal.

 

78


Table of Contents

PROPOSAL 3: ADJOURNMENT OF THE SPECIAL MEETING

We are asking you to approve a proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting. If stockholders approve this proposal, we can adjourn the special meeting and any adjourned session of the special meeting and use the additional time to solicit additional proxies, including soliciting proxies from stockholders that have previously returned properly signed proxies voting against adoption of the merger agreement. Among other things, approval of the adjournment proposal could mean that, even if we received proxies representing a sufficient number of votes against adoption of the merger agreement such that the proposal to adopt the merger agreement would be defeated, we could adjourn the special meeting without a vote on the adoption of the merger agreement and seek to convince the holders of those shares to change their votes to votes in favor of adoption of the merger agreement. Additionally, we may seek stockholder approval to adjourn the special meeting if a quorum is not present. Finally, the chairperson of the special meeting is permitted by our bylaws to adjourn the special meeting even if our stockholders have not approved the proposal to adjourn the special meeting.

The Sierra Oncology Board unanimously recommends that you vote “FOR” this proposal.

 

79


Table of Contents

THE MERGER AGREEMENT

The following summary describes the material provisions of the merger agreement. The descriptions of the merger agreement in this summary and elsewhere in this proxy statement are not complete and are qualified in their entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We encourage you to carefully read and consider the merger agreement, which is the legal document that governs the merger, and in its entirety because this summary may not contain all the information about the merger agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the merger agreement, and not by this summary or any other information contained in this proxy statement.

The representations, warranties, covenants and agreements described below and included in the merger agreement (1) were made only for purposes of the merger agreement and as of specific dates; (2) were made solely for the benefit of the parties to the merger agreement; (3) may be subject to important qualifications, limitations and supplemental information agreed to by Sierra Oncology, GSK and Acquisition Sub in connection with negotiating the terms of the merger agreement; and (4) may also be subject to a contractual standard of materiality different from those generally applicable to reports and documents filed with the SEC and in some cases were qualified by confidential matters disclosed to GSK and Acquisition Sub by Sierra Oncology in connection with the merger agreement. In addition, the representations and warranties may have been included in the merger agreement for the purpose of allocating contractual risk between Sierra Oncology and GSK and Acquisition Sub rather than to establish matters as facts, and may be subject to standards of materiality applicable to such parties that differ from those applicable to investors. Further, the representations and warranties were negotiated with the principal purpose of establishing the circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise. Our stockholders are not generally third-party beneficiaries under the merger agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of Sierra Oncology, GSK or Acquisition Sub or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement. None of the representations and warranties will survive the closing of the merger, and, therefore, they will have no legal effect under the merger agreement after the effective time of the merger. In addition, you should not rely on the covenants in the merger agreement as actual limitations on the respective businesses of Sierra Oncology, GSK and Acquisition Sub because the parties may take certain actions that are either expressly permitted in the confidential disclosure letter to the merger agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The merger agreement is described below, and included as Annex A, only to provide you with information regarding its terms and conditions, and not to provide you with any other factual information regarding Sierra Oncology, GSK, Acquisition Sub or their respective businesses. Accordingly, the representations, warranties, covenants and other agreements in the merger agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding Sierra Oncology and our business.

Closing and Effective Time of the Merger

The closing of the merger will take place (1) on a date that is as soon as possible, but no later than the second business day after the satisfaction or waiver of all of the conditions to closing of the merger, other than conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of each of such conditions; or (2) at such other time agreed to by Sierra Oncology, GSK and Acquisition Sub. On the closing date of the merger, the parties will file a certificate of merger with the Secretary of State of the State of Delaware as provided under the DGCL. The merger will become effective upon the filing and acceptance of that certificate of merger, or at a later time as may be agreed to in writing by the parties and specified in such certificate of merger.

 

80


Table of Contents

Effects of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

The merger agreement provides that, subject to the terms and conditions of the merger agreement, and in accordance with the DGCL, at the effective time of the merger: (1) Acquisition Sub will be merged with and into Sierra Oncology; (2) the separate existence of Acquisition Sub will cease; and (3) Sierra Oncology will continue as the surviving corporation in the merger and an indirect wholly owned subsidiary of GSK. From and after the effective time of the merger, all of the property, rights, privileges, powers and franchises of Sierra Oncology and Acquisition Sub will vest in the surviving corporation and all of the debts, liabilities and duties of Sierra Oncology and Acquisition Sub will become the debts, liabilities and duties of the surviving corporation.

At the effective time of the merger, the certificate of incorporation of Sierra Oncology as the surviving corporation will be amended and restated in its entirety to conform to the certificate of incorporation of Acquisition Sub as in effect immediately prior to the effective time of the merger, and the bylaws of Sierra Oncology as the surviving corporation will be amended and restated in its entirety to conform to the bylaws of Acquisition Sub, as in effect immediately prior to the effective time of the merger, in each case, until thereafter amended.

From and after the effective time of the merger, the parties will take all necessary actions so that the board of directors of the surviving corporation will consist of the directors of Acquisition Sub as of immediately prior to the effective time of the merger, to hold office in accordance with the certificate of incorporation and bylaws of the surviving corporation until their successors are duly elected or appointed and qualified, or until their resignation or removal. From and after the effective time of the merger, the parties will take all necessary actions so that the officers of Acquisition Sub as of immediately prior to the effective time of the merger will be the officers of the surviving corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the surviving corporation until their successors are duly appointed, or until their resignation or removal.

Conversion of Shares

Common Stock

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, each outstanding share of our common stock (other than shares: (1) held by Sierra Oncology as treasury stock; (2) owned by GSK or Acquisition Sub; (3) owned by any direct or indirect wholly owned subsidiary of GSK or Acquisition Sub; or (4) held by stockholders who have properly and validly exercised, and not withdrawn or otherwise lost, their appraisal rights under the DGCL) will be cancelled and automatically converted into the right to receive the per share price in cash, without interest and less any applicable withholding taxes (or, in the case of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and bond, if required) in accordance with the terms of the merger agreement).

At the effective time of the merger, each outstanding share of our common stock that is (1) held by Sierra Oncology as treasury stock, (2) owned by GSK or Acquisition Sub, or (3) owned by any direct or indirect wholly owned subsidiary of GSK or Acquisition Sub will be cancelled and extinguished without any payment therefor.

At the effective time of the merger, each share of our common stock of Acquisition Sub outstanding immediately prior to the effective time of the merger will be converted into one validly issued, fully paid and nonassessable share of our common stock of the surviving corporation and each certificate representing ownership of such shares of our common stock of Acquisition Sub will thereafter represent ownership of shares of our common stock of the surviving corporation.

 

81


Table of Contents

Equity Awards

The merger agreement provides that Sierra Oncology’s equity awards that are outstanding immediately prior to the effective time of the merger will be subject to the following treatment at the effective time of the merger:

Treatment of Sierra Options

At the effective time of the merger, each Sierra option that is outstanding and unexercised as of immediately prior to the effective time of the merger will accelerate vesting in full and will be cancelled and converted into a right to receive an amount in cash, without interest, equal to the product of (1) the excess, if any, of the per share price less the exercise price per share of such option, and (2) the number of shares of our common stock issuable upon exercise in full of such Sierra option. The number of shares of our common stock issuable for Sierra options subject to performance-based vesting for performance periods outstanding at the effective time will be deemed to be the number of shares issuable following satisfaction of maximum achievement of performance criteria. The cash payment amount (less any required withholding and other taxes) will be paid to the applicable Sierra option holder following the effective time of the merger, in accordance with the terms of the merger agreement. Sierra options with an exercise price per share equal to or greater than the per share price will be cancelled without any cash payment in respect thereof.

Sierra Warrants

At the effective time of the merger and upon the terms and conditions set forth in the merger agreement, each warrant to purchase common stock of Sierra Oncology issued on January 31, 2020, and as amended on September 8, 2021 (the “Series A warrants”) that is outstanding as of immediately prior to the effective time of the merger will be cancelled and extinguished and represent only the right of the holder thereof to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the Black Scholes Value (as defined in such Series A warrant), which is calculated under the terms of the Series A warrants to be $45.98 per share of our common stock subject to the Series A warrants (which we refer to as the “Series A warrant consideration”).

At the effective time of the merger, each pre-funded warrant to purchase common stock of Sierra Oncology originally issued January 31, 2022 (the “pre-funded warrants” and together with the Series A warrants, the “Sierra warrants”) that is outstanding as of immediately prior to the effective time of the merger will be deemed exercised in full as a “cashless exercise” (as described in the pre-funded warrants) effective upon the effective time of the merger, in accordance with the terms of the pre-funded warrants, and the holder thereof shall be entitled to receive an amount in cash (less any required withholding and other taxes), without interest, equal to the product obtained by multiplying (1) the amount of the per share price by (2) the number of shares of common stock deemed to be issuable upon exercise in full of the pre-funded warrant as a “cashless exercise” calculated in accordance with and subject to the terms and conditions of the pre-funded warrants.

At the effective time of the merger, any outstanding warrants to purchase common stock of Sierra Oncology with a per share exercise price greater than the per share price will be cancelled and extinguished without any cash payment in respect thereof.

Payment Agent, Exchange Fund and Exchange and Payment Procedures

Prior to the closing of the merger, GSK will appoint an agent reasonably acceptable to Sierra Oncology, which we refer to as the “payment agent,” to make payments of the merger consideration to our stockholders and warrant holders. At or prior to the closing of the merger, GSK will deposit (or cause to be deposited) with the payment agent cash that is sufficient in the aggregate to pay the aggregate amount of merger consideration to our stockholders and warrant holders in accordance with the merger agreement.

Promptly (and in any event within 3 business days) following the effective time of the merger, GSK and the surviving corporation will cause the payment agent to mail to each holder of record (as of immediately prior to

 

82


Table of Contents

the effective time of the merger) of a certificate that immediately prior to the effective time of the merger represented outstanding shares of our common stock (other than excluded shares), a letter of transmittal and instructions advising stockholders how to surrender stock certificates in exchange for merger consideration. Upon receipt of (1) surrendered certificates for cancellation (or an appropriate affidavit for lost, stolen or destroyed certificates, together with any required bond); and (2) a duly completed and validly executed letter of transmittal and such other documents as may be reasonably requested by the payment agent, the holder of such certificate will be entitled to receive an amount in cash equal to the product of (a) the aggregate number of shares of our common stock represented by such certificate and (b) the per share price. The amount of any per share price paid to our stockholders will not include interest and may be reduced by any applicable withholding taxes.

Notwithstanding the foregoing, any holder of shares of our common stock held in book-entry form (which we refer to as “uncertificated shares”) will not be required to deliver a certificate or an executed letter of transmittal (as both are described above) to the payment agent to receive the consideration payable in respect thereof. Each holder of record (as of immediately prior to the effective time of the merger) of uncertificated shares that immediately prior to the effective time of the merger represented an outstanding share of our common stock will, upon receipt of an “agent’s message” in customary form at the effective time of the merger, and any documents as may reasonably be requested by the payment agent, be entitled to receive, and the payment agent will pay and deliver as promptly as practicable, an amount in cash equal to the product of (1) the aggregate number of shares of our common stock represented by such holder’s transferred uncertificated shares; and (2) the per share price. The amount of consideration paid to such Sierra Oncology stockholders will not include interest and may be reduced by any applicable withholding taxes. Such uncertificated shares so surrendered will be cancelled.

If any cash deposited with the payment agent is not claimed within one year following the effective time of the merger, such cash will be returned to GSK upon demand, and any of our stockholders as of immediately prior to the merger who have not complied with the exchange procedures in the merger agreement will thereafter look only to GSK for satisfaction of payment of the merger consideration (subject to abandoned property law, escheat law or similar laws). None of the payment agent, GSK, the surviving corporation or any other party will be liable to any of our stockholders with respect to any cash amounts properly paid to a public official pursuant to any applicable abandoned property law, escheat law or similar laws.

The letter of transmittal will include instructions if a stockholder has lost a share certificate or if such certificate has been stolen or destroyed. In the event that any share certificates have been lost, stolen or destroyed, then the payment agent will issue the per share price to such holder upon the making by such holder of an affidavit for such lost, stolen or destroyed certificate. GSK or the payment agent may, in its discretion and as a condition precedent to the payment of the per share price, require such stockholder to deliver a bond in such amount as GSK or the payment agent may direct as indemnity against any claim that may be made against GSK, the surviving corporation or the payment agent with respect to such certificate.

Representations and Warranties

Some of the representations and warranties in the merger agreement made by Sierra Oncology are qualified as to “materiality” or “Company Material Adverse Effect.” For purposes of the merger agreement, “Company Material Adverse Effect” means, with respect to Sierra Oncology, any change, event, effect, development or occurrence (each, an “Effect”) that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, assets, financial condition or results of operations of Sierra Oncology and its subsidiaries, taken as a whole. None of the following Effects (by themselves or when aggregated) will be deemed to be or constitute a Company Material Adverse Effect or will be taken into account when determining whether a Company Material Adverse Effect has occurred or may, would or could occur (subject to the limitations set forth below):

 

   

changes in general economic conditions in the United States or any other country or region in the world, or changes in conditions in the global economy generally (except to the extent that such Effect

 

83


Table of Contents
 

has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

changes in conditions in the financial markets, credit markets or capital markets in the United States or any other country or region in the world, including (A) changes in monetary policy, interest rates or credit ratings in the United States or any other country or region of the world; (B) changes in exchange rates for the currencies of any country; or (C) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally on any securities exchange or over-the-counter market operating in the United States or any other country or region in the world (except, in each case, to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

changes in conditions in the industry or segments in which Sierra Oncology and its subsidiaries conducts business, including any supply chain disruptions or shortages (except to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

changes in regulatory, legislative or political conditions in the United States or any other country or region in the world (except to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

any outbreak of hostilities, civil unrest, civil disobedience, acts of war, sabotage, sanctions, cyberattack, terrorism or military actions (including any escalation or worsening of any of the foregoing) in the United States or any other country or region in the world, including an outbreak or escalation of hostilities involving the United States or any other governmental authority or the declaration by the United States or any other governmental authority of a national emergency or war (except to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wildfires or other natural disasters, weather conditions or other similar force majeure events (except to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

pandemics (including the COVID-19 pandemic), epidemics or contagious disease outbreaks (or escalation or worsening of any such events or occurrences, including, in each case, the response of governmental authorities) (except to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

any Effect resulting from the execution or announcement of the merger agreement (including the identity of GSK) or the pendency or consummation of the merger or the other transactions

 

84


Table of Contents
 

contemplated by the merger agreement, including the impact thereof on the relationships, contractual or otherwise, of Sierra Oncology and its subsidiaries with employees, suppliers, customers, partners, vendors, governmental authorities or any other third person (provided that the exception in this clause shall not apply to any representation or warranty that addresses the consequences resulting from the execution or announcement of the merger agreement or the pendency or consummation of the merger or the other transactions contemplated by the merger agreement);

 

   

any action taken or refrained from being taken, in each case to which GSK has expressly approved, consented to or requested in writing (including by email) that such action be taken or refrained from being taken following the date of the merger agreement;

 

   

changes or proposed changes in GAAP or other accounting standards or law (or the enforcement or interpretation of any of the foregoing) or changes in the regulatory accounting requirements applicable to any industry in which Sierra Oncology and its subsidiaries operate (except to the extent that such Effect has had or would reasonably be expected to have a disproportionate adverse effect on Sierra Oncology relative to other late-stage biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether a Company Material Adverse Effect has occurred);

 

   

changes in the price or trading volume of Sierra Oncology’s common stock, in each case in and of itself (it being understood that the cause of such change may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred unless otherwise excluded pursuant hereto); or

 

   

any failure, in and of itself, by Sierra Oncology and its subsidiaries to meet (A) any internal or analyst estimates or expectations of Sierra Oncology’s revenue, earnings or other financial performance or results of operations for any period; or (B) any internal budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that the cause of any such failure may be deemed to constitute, in and of itself, a Company Material Adverse Effect and may be taken into consideration when determining whether a Company Material Adverse Effect has occurred unless otherwise excluded pursuant hereto).

In the merger agreement, Sierra Oncology has made customary representations and warranties to GSK and Acquisition Sub that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement and the company disclosure letter to the merger agreement. These representations and warranties relate to, among other things:

 

   

organization and good standing;

 

   

corporate power and enforceability;

 

   

approval of the Sierra Oncology Board;

 

   

Sierra Oncology’s receipt of a fairness opinion;

 

   

compliance with anti-takeover laws;

 

   

the nature of the required approval of our stockholders;

 

   

non-contravention of certain agreements and laws;

 

   

requisite governmental approvals;

 

   

Sierra Oncology’s capitalization;

 

   

Sierra Oncology’s subsidiaries and their capitalization;

 

   

Sierra Oncology’s SEC reports;

 

   

Sierra Oncology’s financial statements, internal controls and indebtedness;

 

85


Table of Contents
   

no undisclosed liabilities;

 

   

absence of certain changes;

 

   

material contracts;

 

   

real property matters;

 

   

environmental matters;

 

   

intellectual property matters;

 

   

privacy, data protection and data security matters;

 

   

tax matters;

 

   

employee plans;

 

   

labor matters;

 

   

regulatory matters;

 

   

permits;

 

   

compliance with laws;

 

   

legal proceedings and orders;

 

   

insurance;

 

   

related party transactions; and

 

   

brokers.

Under the merger agreement, GSK and Acquisition Sub acknowledge that Sierra Oncology has not made any representations or warranties other than those expressly set forth in the merger agreement or the certificate delivered by Sierra Oncology pursuant to the merger agreement, and expressly disclaim reliance on any representation, warranty or other information regarding Sierra Oncology, other than those expressly set forth in the merger agreement, the support agreements or any certificate delivered by Sierra Oncology pursuant to the merger agreement.

In the merger agreement, GSK and Acquisition Sub have made customary representations and warranties to Sierra Oncology that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. These representations and warranties relate to, among other things:

 

   

organization and good standing;

 

   

power and enforceability;

 

   

non-contravention of certain agreements and laws;

 

   

requisite governmental approvals;

 

   

legal proceedings and orders;

 

   

ownership of Sierra Oncology capital stock;

 

   

brokers;

 

   

no GSK vote or approval required;

 

   

financial capability; and

 

   

absence of stockholder and management arrangements.

 

86


Table of Contents

Under the merger agreement, Sierra Oncology acknowledges that GSK and Acquisition Sub have not made any representations or warranties other than those expressly set forth in the merger agreement and expressly disclaims reliance on any representation, warranty or other information regarding GSK and Acquisition Sub, other than those expressly set forth in the merger agreement.

The representations and warranties contained in the merger agreement will not survive the consummation of the merger.

Conduct of Business Pending the Merger

Other than as contemplated by the merger agreement, set forth in the company disclosure letter to the merger agreement or approved by GSK, from the date of the merger agreement to the effective time of the merger (or termination of the merger agreement), Sierra Oncology agreed to:

 

   

maintain its existence in good standing pursuant to applicable law;

 

   

conduct its business and operations in the ordinary course of business; and

 

   

use its reasonable best efforts to (1) preserve intact in all material respects its assets, properties, contracts and business organizations; (2) keep available the services of its current officers and key employees; and (3) preserve in all material respects its current business relations.

Sierra Oncology has also agreed that it will not and will not permit any of its subsidiaries to:

 

   

amend or otherwise change the charter, bylaws or any other similar organizational document of Sierra Oncology or any of its subsidiaries;

 

   

propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

   

issue, sell, grant, pledge or deliver, or agree or commit to issue, sell, grant, pledge or deliver, any Sierra Oncology securities (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase, other instruments convertible or exchangeable or exercisable for Sierra Oncology securities or otherwise), except (1) for the issuance, delivery or sale of shares of our common stock pursuant to Sierra options or Sierra warrants in accordance with their terms as in effect as of the date of the merger agreement; or (2) as contemplated by the relevant sections of the merger agreement;

 

   

directly or indirectly acquire, repurchase or redeem any securities or offer to acquire, repurchase or redeem any securities, except for (1) pursuant to the terms and conditions of the Sierra options and Sierra warrants in accordance with their terms as in effect as of the date of the merger agreement; or (2) transactions between Sierra Oncology and any of its wholly owned subsidiaries;

 

   

acquire, directly or indirectly, (by merger, consolidation or acquisition of stock or assets) any equity interests in any other person or make any material investment in any other person (other than a wholly owned subsidiary of Sierra Oncology) or enter into any joint venture, partnership, limited liability company or similar arrangement with any person (other than Sierra Oncology or any of its wholly owned subsidiaries);

 

   

acquire, or agree to acquire fee ownership (or its jurisdictional equivalent) of any real property;

 

   

(i) adjust, split, subdivide, combine or reclassify any shares of its capital stock or other equity interests; (ii) declare, set aside, establish a record date for, authorize or pay any dividend or other distribution (whether in cash, shares or property or any combination thereof) in respect of any shares of capital stock or other equity or voting interest, or make any other actual, constructive or deemed distribution in respect of the shares of capital stock or other equity or voting interest, except for cash dividends made by any wholly owned subsidiary of Sierra Oncology to Sierra Oncology or one of its other wholly owned subsidiaries; (iii) pledge or encumber any shares of its capital stock or other equity or voting interest; or (iv) modify the terms of any shares of its capital stock or other equity or voting interest;

 

87


Table of Contents
   

(i) incur or assume any indebtedness or issue any debt securities, except (A) for loans or advances between wholly owned subsidiaries of Sierra Oncology or between Sierra Oncology and its wholly owned subsidiaries or (B) obligations incurred pursuant to business credit cards in the ordinary course of business; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person, except with respect to obligations of wholly owned subsidiaries of Sierra Oncology otherwise permitted under the merger agreement; (iii) make any loans, advances or capital contributions to, or investments in, any other person, except for loans or advances between wholly owned subsidiaries of Sierra Oncology or between Sierra Oncology and its wholly owned subsidiaries and capital contributions in wholly owned subsidiaries of Sierra Oncology; or (iv) mortgage, pledge or otherwise encumber any assets, tangible or intangible, or create any lien thereon (other than permitted liens);

 

   

except (a) in order to comply with applicable law, (b) as required pursuant to the existing terms of any Sierra Oncology benefit plan in effect on the date of the merger agreement, (c) as provided in the merger agreement or (d) as set forth in the Sierra Oncology disclosure schedule, (1) establish, adopt, enter into, terminate or amend, or take any action to accelerate the vesting of any compensation, or benefits under, any Sierra Oncology benefit plan; (2) grant to any service provider whose annual cash compensation exceeds $250,000 any increase in cash compensation, bonus or other benefits; (3) grant to any service provider, any new or increased change in control, retention, severance or termination pay; (4) enter into any employment, consulting, change in control, retention, severance or termination agreement with any service providers (other than employment agreements with newly-hired non-officer employees or consultants in the ordinary course of business and consistent with past practice or termination agreements to obtain a release of claims from terminating employees for without prior severance agreements, in each case, in an amount not to exceed, and otherwise in a manner and form consistent with disclosed severance practices; or (5) terminate any employee of Sierra Oncology or any of its subsidiaries with an annual cash compensation in excess of $250,000, other than terminations for cause;

 

   

acquire, sell, lease, license, sublicense, pledge, covenant not to sue or grant any release under, abandon, cancel, forfeit, dedicate to the public, fail to maintain, fail to prosecute, allow to lapse (other than any patent expiring at the end of its statutory term in relation to which no patent term extension or supplementary protection certificate is available, and other than abandoning, forfeiting, failing to maintain, failing to prosecute or allowing to lapse, in the ordinary course of business consistent with past practice, any intellectual property owned by Sierra Oncology or its subsidiaries that would not be material to Sierra Oncology and its subsidiaries taken as a whole) assign, transfer, disclose, intentionally create any lien on, or otherwise dispose of or grant any rights under any of Sierra Oncology’s or its subsidiaries’ intellectual property, or amend, renew, terminate, sublicense, assign or modify any license or other agreement entered into by Sierra Oncology or any of its subsidiaries with respect to any intellectual property licensed by Sierra Oncology or one of its subsidiaries pursuant to a material contract, other than the grant by Sierra Oncology or any of its subsidiaries of nonexclusive licenses to third party contractors, customers, distributors or service providers in the ordinary course of business consistent with past practice under Sierra Oncology’s or its subsidiaries’ intellectual property that is not material to Sierra Oncology and its subsidiaries taken as a whole;

 

   

disclose any trade secrets that are material to Sierra Oncology and its subsidiaries, taken as a whole, and contained in any of Sierra Oncology’s or its subsidiaries’ intellectual property to any third party, other than under confidentiality obligations binding on such third party;

 

   

initiate, settle, release, waive or compromise any pending or threatened legal proceeding, including any claim that provides for any injunctive or other non-monetary relief, except for the settlement of any legal proceedings (i) (1) solely for monetary damages in an amount that do not exceed $300,000 individually or $600,000 in the aggregate and (2) without an admission of guilt; or (ii) settled in compliance with the merger agreement;

 

   

except as required by GAAP, make any change in any of its accounting principles or practices;

 

88


Table of Contents
   

(i) make, rescind or change any material tax election; (ii) settle, consent to or compromise any material tax claim or assessment or surrender a right to a material tax refund; (iii) consent to any extension or waiver of any limitation period with respect to any material tax claim or assessment; (iv) make any material change to any accounting method or accounting period used for tax purposes that has a material effect on taxes; (v) file a material amended tax return; (vi) enter into a closing agreement with any governmental authority regarding any material tax liability or assessment or (vii) take any position on any material tax return that is inconsistent with past practice or positions taken in preparing or filing similar tax returns in prior periods;

 

   

incur, authorize or commit to incur any capital expenditures other than (A) expenditures that do not exceed $500,000 individually or $1,000,000 in the aggregate; or (B) in accordance with the capital budget of Sierra Oncology and its subsidiaries set forth on the company disclosure letter;

 

   

(A) amend or modify in any material respect, renew, waive any material rights under or terminate (other than renewal or termination in accordance with the terms of an existing material contract), any material contract; or (B) enter into any contract that would constitute a material contract if it were in effect on the date of the merger agreement;

 

   

maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice;

 

   

engage in any transaction with, or enter into any agreement, arrangement or understanding with, any affiliate of Sierra Oncology or other person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404;

 

   

effectuate a “plant closing,” “mass layoff” (each as defined in the United States Worker Adjustment and Retraining Notification Act) or other employee layoff event affecting in whole or in part any site of employment, facility, operating unit or employee;

 

   

adopt any stockholder rights plan or similar arrangement;

 

   

create any subsidiary of Sierra Oncology or enter into a new line of business; or

 

   

authorize, enter into or agree or commit to enter into a contract to take any of the foregoing prohibited actions.

No Solicitation of Other Acquisition Proposals

From the date of the merger agreement until either the termination of the merger agreement in accordance with its terms or the effective time of the merger, Sierra Oncology has agreed to cease and cause to be terminated any activities, discussions or negotiations conducted with any person and its representatives relating to an acquisition proposal.

Under the terms of the merger agreement, Sierra Oncology has agreed that it will not, and its subsidiaries, affiliates and any director, executive officer, outside legal counsel or affiliate of Sierra Oncology will not, and it will not authorize or permit any of its representatives to:

 

   

solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, any acquisition proposal or any proposals that would reasonably be expected to lead to, an acquisition proposal;

 

   

furnish to any person (other than GSK, Acquisition Sub or any of their respective representatives) any non-public information relating to Sierra Oncology or any of its subsidiaries or afford to any person (other than GSK, Acquisition Sub or any of their respective representatives) access to the business, properties, assets, books, records or other non-public information, or to any personnel, of Sierra Oncology or any of its subsidiaries, in any such case in connection with any acquisition proposal or with the intent to induce the making, submission or announcement of, or to knowingly encourage, facilitate or assist, an acquisition proposal or the making of any proposal that would reasonably be expected to lead to an acquisition proposal;

 

89


Table of Contents
   

participate, or engage in discussions or negotiations, with any third person with respect to an acquisition proposal or with respect to any inquiries from third persons relating to the making of an acquisition proposal; or

 

   

enter into any letter of intent, memorandum of understanding, merger agreement, acquisition agreement or other contract relating to an acquisition transaction, other than an acceptable confidentiality agreement (we refer to any of these as an “alternative acquisition agreement”)

However, prior to the adoption of the merger agreement by our stockholders, Sierra Oncology and the Sierra Oncology Board may, directly or indirectly through one or more of their representatives (including its financial advisor), subject to the execution of a confidentiality agreement, (1) participate or engage in discussions or negotiations with; or (2) (a) furnish any non-public information relating to Sierra Oncology or any of its subsidiaries to; or (b) afford access to the business, properties, assets, books, records or other non-public information or to any personnel, of Sierra Oncology or any of its subsidiaries to any person or its representatives that has made, renewed or delivered to Sierra Oncology a written acquisition proposal after date of the merger agreement that was not solicited in breach of the applicable restrictions. Sierra Oncology may do this only if the Sierra Oncology Board has determined in good faith (after consultation with its financial advisor and outside legal counsel) that (1) such acquisition proposal either constitutes a superior proposal or is reasonably likely to lead to a superior proposal; and (2) the failure to take such actions would reasonably be expected to be inconsistent with its fiduciary duties pursuant to applicable law.

During the period between the date of the merger agreement and the effective time of the merger, Sierra Oncology has agreed that it will promptly (and, in any event, within 24 hours from the receipt thereof) notify GSK in writing if any acquisition proposal, or inquiry or request that would reasonable be expected to lead to an acquisition proposal is received by, or any discussions or negotiations are sought to be initiated or continued with, the Company or any of its directors, executive officers, outside legal counsel, financial advisor or Affiliate of the Company, or to the knowledge of Sierra Oncology, any of its other representatives with respect to an acquisition proposal or any such inquiry or request. Such notice must include (1) the identity of the person or group making such acquisition proposal, inquiry, or request; and (2) a summary of the material terms and conditions thereof and, in writing, a copy thereof. Thereafter, Sierra Oncology must keep GSK reasonable informed, on a prompt basis, of the status and terms of, any other material developments regarding any acquisition proposal, inquiry or request (including any amendments thereto) and the status of any such discussions or negotiations, including by providing copies of all written materials received by Sierra Oncology or any of its representatives from the person or group making such acquisition proposal, inquiry or request or its representatives relating to such acquisition proposal, inquiry or request.

For purposes of this proxy statement and the merger agreement:

 

   

acquisition transaction” means any transaction or series of related transactions (other than the Merger) for:

 

  (1)

any direct or indirect purchase or other acquisition by any person or group (other than GSK or Acquisition Sub or any of their affiliates, or any group that includes GSK or Acquisition Sub or any of their affiliates), of securities representing more than 15 percent of the total outstanding voting power of the capital stock of Sierra Oncology after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any person or group that, if consummated in accordance with its terms, would result in such person or group beneficially owning more than 15 percent of the total outstanding voting power of the capital stock of Sierra Oncology or any of its subsidiaries after giving effect to the consummation of such tender offer or exchange offer;

 

  (2)

any direct or indirect license, purchase or other acquisition by any person or group (other than GSK or Acquisition Sub or any of their affiliates, or any group that includes GSK or Acquisition

 

90


Table of Contents
  Sub or any of their affiliates) of assets (including equity securities of the Sierra Oncology’s Subsidiaries) constituting or accounting for more than 15 percent of the fair market value of the consolidated assets of Sierra Oncology and its subsidiaries, taken as a whole (in each case, other than non-exclusive licenses of Sierra Oncology’s intellectual property by Sierra Oncology or its subsidiaries, in the ordinary course of business consistent with past practice for ordinary course commercial purposes); or

 

  (3)

any merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction involving Sierra Oncology or any of its subsidiaries pursuant to which any person or group (other than GSK or Acquisition Sub or any of their affiliates, or any group that includes GSK or Acquisition Sub or any of their affiliates) would (A) hold securities representing more than 15 percent of the total outstanding voting power of the capital stock of Sierra Oncology (or the surviving company) outstanding after giving effect to the consummation of such transaction or (B) acquire assets (including equity securities of Sierra Oncology’s subsidiaries) constituting or accounting for more than 15 percent of the fair market value of the consolidated assets of Sierra Oncology and its subsidiaries, taken as a whole.

superior proposal” means any written acquisition proposal on terms that the Sierra Oncology Board has determined in good faith (after consultation with its financial advisor and outside legal counsel) (i) would be more favorable to our stockholders (in their capacity as such) from a financial point of view than the merger (taking into account (A) any revisions to the merger agreement irrevocably committed to in writing by GSK prior to the time of such determination; and (B) those factors and matters deemed relevant in good faith by the Sierra Oncology Board, which factors may include the (1) identity of the person making the proposal and (2) legal, financial (including the financing terms), regulatory, timing and other aspects of such acquisition proposal) and (ii) would be reasonably likely to be consummated in accordance with the terms of such acquisition proposal. For purposes of the reference to an “acquisition proposal” in this definition, all references to “15 percent” in the definition of “acquisition transaction” will be deemed to be references to “50 percent.”

The Sierra Oncology Board’s Recommendation; Board Recommendation Change

The Sierra Oncology Board has recommended that the holders of shares of our common stock vote “FOR” the proposal to adopt the merger agreement. Under the merger agreement, except as set forth below, at no time after the date of the merger agreement may the Sierra Oncology Board (or a committee thereof):

 

   

withhold or withdraw (or amend, qualify or modify in a manner adverse to GSK), or publicly propose to withhold or withdraw (or amend, qualify or modify in a manner adverse to GSK) the Sierra Oncology Board recommendation;

 

   

adopt, approve, recommend or declare advisable an acquisition proposal, or publicly propose to do so;

 

   

fail to publicly reaffirm the Sierra Oncology Board recommendation within 10 business days of the occurrence of a material event or development and after GSK so requests in writing (or, if the special meeting is scheduled to be held within 10 business days, then within 1 business day after GSK so requests in writing) (it being understood that Sierra Oncology will not be obligated to affirm the Sierra Oncology Board recommendation more than once per publicly disclosed acquisition proposal or any material modification thereto);

 

   

take or fail to take any formal action or make or fail to make any recommendation in connection with a tender or exchange offer, other than a recommendation against such offer or the issuance of a “stop, look and listen” communication by the Sierra Oncology to our stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any substantially similar communication) (it being understood that the Sierra Oncology Board may refrain from taking a position with respect to an acquisition proposal until 5:30 p.m., Eastern time, on the 10th business day after the commencement of a tender or exchange offer in connection with such acquisition proposal without such delay being considered a violation of the merger agreement);

 

91


Table of Contents
   

fail to include the recommendation of the Sierra Oncology Board to adopt the merger agreement in the proxy statement (we refer to the actions described in these five bullets as a “Sierra Oncology Board recommendation change”); or

 

   

cause or permit Sierra Oncology or any of its subsidiaries to enter into an alternative acquisition agreement.

At any time prior to obtaining the requisite stockholder approval, the Sierra Oncology Board (or a committee thereof) may effect a Sierra Oncology Board recommendation change in response to an intervening event if and only if:

 

   

the Sierra Oncology Board determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties;

 

   

Sierra Oncology has provided prior written notice to GSK at least 4 business days in advance to the effect that the Sierra Oncology Board has (1) so determined; and (2) resolved to effect a Sierra Oncology Board recommendation change, which notice will describe the intervening event in reasonable detail; and

 

   

prior to effecting such Sierra Oncology Board recommendation change, Sierra Oncology and its representatives, until 5:00 p.m. at the end of such 4 business day period, have negotiated with GSK and its representatives in good faith (to the extent GSK requests to negotiate) to make such adjustments to the terms and conditions of the merger agreement and the transaction documents so that the Sierra Oncology Board no longer determines in good faith that the failure to make a Sierra Oncology Board recommendation change in response to such intervening event would reasonable be expected to be inconsistent with its fiduciary duties.

At any time prior to obtaining the requisite stockholder approval, if Sierra Oncology has received a written acquisition proposal that the Sierra Oncology Board has concluded in good faith (after consultation with its financial advisor and outside legal counsel) is a superior proposal, then the Sierra Oncology Board may (1) effect a Sierra Oncology Board recommendation change with respect to such superior proposal; or (2) authorize Sierra Oncology to terminate the merger agreement to enter into an alternative acquisition agreement with respect to such superior proposal, in each case if and only if:

 

   

the Sierra Oncology Board determines in good faith (after consultation with its financial advisor and outside legal counsel) that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties;

 

   

Sierra Oncology has complied in all material respects with its obligations pursuant to the merger agreement with respect to such acquisition proposal (and any prior acquisition proposal, proposal or inquire by the person or group making such acquisition proposal);

 

   

Sierra Oncology has provided prior written notice to GSK at least 4 business days in advance (which we refer to as the “notice period”) to the effect that the Sierra Oncology Board has (a) received a written acquisition proposal that has not been withdrawn; (b) concluded in good faith (after consultation with its financial advisor and outside legal counsel) that such acquisition proposal constitutes a superior proposal; and (c) resolved to effect a Sierra Oncology Board recommendation change or to terminate the merger agreement, which notice describes the basis for such Sierra Oncology Board recommendation change or termination, including the identity of the person or group making such acquisition proposal, the material terms of such acquisition proposal and include copies of all relevant documents relating to such acquisition proposal; and

 

   

prior to effecting such Sierra Oncology Board recommendation change or termination, Sierra Oncology and its representatives, until 5:00 p.m. on the last day of the notice period, have negotiated with GSK and its representatives in good faith (to the extent that GSK requests to negotiate) to make such

 

92


Table of Contents
 

adjustments to the terms and conditions of the merger agreement and the transaction documents so that such acquisition proposal would cease to constitute a superior proposal, it being understood that (i) in the event of any material revision, amendment, update or supplement to such acquisition proposal, Sierra Oncology will be required to deliver a new written notice to GSK and to comply with the requirements of the merger agreement with respect to such new written notice (with the “notice period” in respect of such new written notice being 2 business days); and (ii) at the end of the notice period, the Sierra Oncology Board must have in good faith (after consultation with its financial advisor and outside legal counsel) reaffirmed its determination that such acquisition proposal is a superior proposal.

For purposes of this proxy statement and the merger agreement, “intervening event” means any effect, or any material consequence of such effect occurring after the date of the merger agreement, that (i) as of the date of the merger agreement was not known or reasonably foreseeable, in each case based on facts known to the Sierra Oncology Board as of the date of the merger agreement; and (ii) does not relate to (A) an acquisition proposal, (B) any change in the price of our the common stock, in and of itself (it being understood that the cause of such change may be taken into consideration unless otherwise excluded pursuant hereto), (C) the fact that Sierra Oncology’s performance exceeds (x) any public estimates or expectations of the Sierra Oncology’s revenue, earnings or other financial performance or results of operations for any period; or (y) any internal budgets, plans, projections or forecasts of its revenues, earnings or other financial performance or results of operations (it being understood that the cause of such performance may be taken into consideration with respect to clauses (x) and (y) unless otherwise excluded pursuant hereto) or (D) the results of any clinical trials or the receipt of, or progress towards, regulatory approvals that have been applied for prior to the date of the merger agreement.

Stockholder Meeting

Sierra Oncology has agreed to take all action necessary to establish a record date for, duly call, give notice of, convene and hold the special meeting as promptly as reasonably practicable following the mailing of this proxy statement. Sierra Oncology is permitted to postpone or adjourn the special meeting in certain circumstances related to soliciting additional proxies or requirements of applicable law. Such postponement or adjournment not to exceed five business days at a time without the prior written connect of GSK (except as otherwise required to comply with applicable law).

Employee Benefits

From and after the effective time of the merger, and for so long as necessary in accordance with the terms thereof, the surviving corporation will honor all of our written severance arrangements contained in employment agreements and transition agreements and any individual service provider providers in effect as of the date of the merger agreement in the form we have provided to GSK (we refer to these arrangements as “severance agreements”), except that the surviving corporation is permitted to amend or terminate such severance agreements and other Sierra benefit plans in accordance with their terms.

As of the effective time of the merger, the surviving corporation or one of its subsidiaries will continue to employ all of our employees and all of the employees of our subsidiaries. For a period of one year following the effective time of the merger (or until an earlier termination of employment for a particular continuing employee), the surviving corporation and its subsidiaries generally will either (1) maintain for the benefit of continuing employees the Sierra plans or arrangements providing for compensation and employee benefits (which we refer to as “Sierra plans”) (other than the opportunity to participate in equity-based benefits and post-employment welfare benefits (the “excluded benefits”)) that are no less favorable in the aggregate to those in effect immediately prior to the effective time of the merger; (2) provide other compensation and benefits (other than excluded benefits) to each continuing employee that are no less favorable in the aggregate to the compensation and benefits (other than the opportunity to participate in equity-based benefits and individual employment agreements) provided to such continuing employee immediately prior to the effective time; or (3) provide some combination of Sierra plans and comparable plans such that each continuing employee receives compensation

 

93


Table of Contents

and benefits (other than excluded benefits) that are no less favorable in the aggregate to the compensation and benefits (other than excluded benefits) provided to such continuing employee immediately prior to the effective time. In each case, base compensation and target annual incentive compensation opportunities will not be decreased during the one-year period following the effective time of the merger below the level applicable as of immediately prior to the effective time for any continuing employee employed during that period.

GSK will use commercially reasonable efforts to cause continuing employees to be granted service credit for service with us and our subsidiaries prior to the effective time of the merger and with GSK, the surviving corporation and any of their subsidiaries on or after the effective time of the merger, for purposes of eligibility to participate, vesting and entitlement to benefits where length of service is relevant (including for vacation accrual but not for purposes of equity-based compensation or post-employment welfare benefits), except if such service credit would result in duplication of benefits. GSK will use commercially reasonable efforts to (1) permit continuing employees to participate immediately in any new compensation or benefit arrangements that replace Sierra plans (“new plans”) to the extent that coverage pursuant to any new plan replaces coverage pursuant to a comparable Sierra plan in which the continuing employee participates immediately prior to the effective time of the merger (“old plans”); (2) cause all waiting periods, pre-existing conditions or similar requirements to be waived for continuing employees and their covered dependents for purposes of new plans providing medical, dental, pharmaceutical, vision, disability or other welfare benefits; (3) cause any eligible expenses paid by a continuing employee and his or her covered dependents under a Sierra plan during the portion of the plan year of the old plan ending on the date the continuing employee’s participation in the corresponding new plan begins to be given credit with respect to any new benefit arrangement that replaces the applicable Sierra plan for purposes of satisfying the corresponding deductible, co-payments, coinsurance, offset and maximum out-of-pocket requirements for the applicable plan year; and (4) credit continuing employees for any unused balances in flexible spending accounts. Continuing employees will also receive credit for any accrued but unused vacation or paid time off as of immediately prior to the effective time of the merger, which will not be subject to accrual limits or other forfeiture and will not limit future accruals.

Efforts to Close the Merger

General

Under the merger agreement, GSK and Acquisition Sub, on the one hand, and Sierra Oncology, on the other hand, agreed to use their respective reasonable best efforts to (1) take (or cause to be taken) all actions; (2) do (or cause to be done) all things; and (3) assist and cooperate with the other parties in doing (or causing to be done) all things, in each case as are necessary, proper or advisable pursuant to applicable law or otherwise to consummate and make effective, no later than the termination date, the merger, including by using reasonable best efforts to:

 

   

cause the closing conditions to the merger to be satisfied no later than the termination date;

 

   

(1) seek to obtain all consents, waivers, approvals, orders and authorizations from governmental authorities; and (2) make all registrations, declarations and filings with governmental authorities, in each case that are necessary or advisable to consummate the merger;

 

   

(1) seek to obtain all consents, waivers and approvals; and (2) deliver all notifications, in each case pursuant to any material contracts in connection with the merger agreement and the consummation of the merger so as to seek to maintain and preserve the benefits to the surviving corporation of such material contracts as of and following the consummation of the merger; and

 

   

deliver all notification, documents, instruments and agreement necessary in connection with the treatment of the Sierra warrants as contemplated by the merger agreement.

Notwithstanding the foregoing, under the merger agreement, without the prior written consent of GSK, neither Sierra Oncology nor any of its subsidiaries will agree to the payment of a consent fee, “profit sharing”

 

94


Table of Contents

payment or other consideration (including increased or accelerated payments), or the provision of additional security (including a guaranty), in connection with the merger, including in connection with obtaining any consent pursuant to any material contract.

HSR Act; Competition and Regulatory Laws

Sierra Oncology and GSK have each agreed to cooperate reasonably with each other in connection with the making of filings with the FTC, the DOJ or the governmental authorities of any other applicable jurisdiction in which a filing is made pursuant to regulatory laws. Sierra Oncology and GSK have also each agreed to (1) use its respective reasonable best efforts to supply (or cause the other to be supplied) with any additional information that reasonably may be required or requested by the FTC, the DOJ or the governmental authorities of any other applicable jurisdiction in which any such filing is made; and (2) use its respective reasonable best efforts to take all action necessary to, as soon as practicable, (a) cause the expiration or termination of the applicable waiting periods pursuant to the HSR Act and any other antitrust laws and regulatory laws applicable to the merger, (b) obtain any required approvals, consents, and clearances pursuant to any antitrust laws applicable to the merger and to remove any court or regulatory orders under any regulatory laws impeding the ability to consummate the merger by the termination date, and (c) certify compliance with any request for additional information or documentary material from any governmental authority with respect to the merger pursuant to the HSR Act or other regulatory laws. The initial waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern time, on May 31, 2022.

Indemnification and Insurance

The merger agreement provides that the surviving corporation and its subsidiaries will, for a period of six years after the effective time of the merger, honor and fulfill, in all respects, the obligations of Sierra Oncology and its subsidiaries pursuant to any indemnification agreements entered into prior to the effective time of the merger between Sierra Oncology and any of its subsidiaries, on the one hand, and any of their respective current or former directors, officers or employees (and any person who becomes a director, officer or employee of Sierra Oncology or any of its subsidiaries prior to the effective time of the merger), on the other hand (we refer to such persons collectively as the “indemnified persons”) set forth on the company disclosure letter or that use the same form in all material respects as the form of indemnification agreement filed with Sierra’s SEC reports. In addition, under the merger agreement, during the period commencing at the effective time of the merger and ending on the sixth anniversary of the effective time of the merger, the surviving corporation and its subsidiaries will (and GSK will cause the surviving corporation and its subsidiaries to) cause the certificates of incorporation, bylaws or other similar organizational documents of the surviving corporation and its subsidiaries to contain provisions with respect to indemnification, exculpation and the advancement of expenses that are at least as favorable as the indemnification, exculpation and advancement of expenses provisions set forth in the charter, the bylaws and the other similar organizational documents of the subsidiaries of Sierra, as applicable, as of the date of the merger agreement. During such six-year period or such period in which an indemnified person is asserting a claim for indemnification pursuant to the merger agreement, whichever is longer, such provisions may not be repealed, amended or otherwise modified in any manner adverse to any applicable indemnified persons except as required by applicable law.

Furthermore, during the period commencing at the effective time of the merger and ending on the sixth anniversary of the effective time of the merger, the surviving corporation has agreed to (and GSK has agreed to cause the surviving corporation to) indemnify and hold harmless, in accordance with provisions set forth in the charter, the bylaws or the other similar organizational documents of the subsidiaries of Sierra, as applicable, as of the date of the merger agreement, or pursuant to any indemnification agreements with Sierra Oncology or any of its subsidiaries in effect as of the date of the merger agreement, each indemnified person from and against any costs, fees and expenses (including attorneys’ fees and investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement or compromise in connection with any legal proceeding, whether civil, criminal, administrative or investigative, to the extent that such legal proceeding arises, directly or

 

95


Table of Contents

indirectly, out of or pertains, directly or indirectly, to (1) any action or omission, or alleged action or omission, in such indemnified person’s capacity as a director, officer, employee or agent of Sierra or any of its subsidiaries or other affiliates (regardless of whether such action or omission, or alleged action or omission, occurred prior to, at or after the effective time of the merger); and (2) the merger, as well as any actions taken by Sierra, GSK or Merger Sub with respect to the merger (including any disposition of assets of the surviving corporation or any of its subsidiaries that is alleged to have rendered the surviving corporation or any of its subsidiaries insolvent).

Furthermore, if, at any time prior to the sixth anniversary of the effective time of the merger, any indemnified person delivers to GSK a written notice asserting a claim for indemnification pursuant to the merger agreement, then the claim asserted in such notice will survive the sixth anniversary of the effective time of the merger until such claim is fully and finally resolved. In connection with any legal proceeding of the type contemplated by the merger agreement, (A) the surviving corporation will have the right to control the defense thereof after the effective time of the merger; (B) to the extent required in the applicable organizational documents or pursuant to any indemnification agreements with Sierra Oncology or any of its subsidiaries in effect as of the date of the merger agreement, (1) the fees and expenses of any counsel retained by any indemnified person in connection with such legal proceeding will be paid by the surviving corporation; and (2) upon receipt of an undertaking by or on behalf of such indemnified person to repay any amount if it is ultimately determined that such indemnified person is not entitled to indemnification, the surviving corporation will advance all reasonable fees and expenses (including reasonable fees and expenses of counsel) as incurred by an indemnified person in the defense of such legal proceeding, whether or not the surviving corporation elects to control the defense of any such legal proceeding; and (C) no indemnified person will be liable for any settlement of such legal proceeding effected without his or her prior written consent (unless such settlement relates only to monetary damages for which the surviving corporation is entirely responsible).

During the period commencing at the effective time of the merger and ending on the sixth anniversary thereof, the surviving corporation will (and GSK will cause the surviving corporation to) maintain in effect the directors’ and officers’ insurance in respect of acts or omissions occurring at or prior to the effective time of the merger on terms (including with respect to coverage, conditions, retentions, limits and amounts) that are equivalent to those of the directors’ and officers’ insurance in effect prior to the effective of the merger, subject to certain annual premium maximums described in the merger agreement. In lieu of the foregoing, prior to the effective time of the merger, Sierra Oncology may purchase a prepaid “tail” policy with respect to the directors’ and officers’ insurance. The surviving corporation will (and GSK will cause the surviving corporation to) maintain the tail policy in full force and effect and continue to honor its obligations thereunder for so long as the tail policy is in full force and effect.

For more information, refer to the section of this proxy statement captioned “The Merger—Interests of Sierra Oncology’s Directors and Executive Officers in the Merger.”

Conditions to the Closing of the Merger

The obligations of GSK, Acquisition Sub and Sierra Oncology, as applicable, to consummate the merger are subject to the satisfaction or waiver of certain conditions, including the following:

 

   

the adoption of the merger agreement by the requisite affirmative vote of our stockholders;

 

   

the expiration or termination of the waiting period (and any extensions thereof), if any, applicable to the merger pursuant to the HSR Act; and

 

   

the absence of any temporary restraining order, preliminary or permanent injunction or other judgment or order issued by any court of competent jurisdiction, or legal or regulatory restraint or prohibition by any governmental authority of competent jurisdictions, or any law enacted, entered, enforced or applied to the merger, that, in each case, prevents or materially impairs the consummation of the merger.

 

96


Table of Contents

In addition, the obligations of GSK and Acquisition Sub to consummate the merger are subject to the satisfaction or waiver of each of the following additional conditions, any of which may be waived exclusively by GSK:

 

   

the accuracy of the representations and warranties of Sierra Oncology in the merger agreement, subject to applicable materiality or other qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;

 

   

Sierra Oncology having performed and complied in all material respects with all covenants and obligations under the merger agreement required to be performed and complied with by it at or prior to the closing;

 

   

the absence of any Company Material Adverse Effect (as defined in the section of this proxy statement captioned “The Merger Agreement—Representations and Warranties”) having occurred after the date of the merger agreement; and

 

   

receipt by GSK and Acquisition Sub of a customary closing certificate of Sierra Oncology.

Termination of the Merger Agreement

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the adoption of the merger agreement by our stockholders (except as otherwise provided in the merger agreement), in the following ways:

 

   

by mutual written agreement of Sierra Oncology and GSK;

 

   

by either Sierra Oncology or GSK if:

 

   

any permanent injunction or other judgment or order issued by any court of competent jurisdiction or other legal or regulatory restraint or prohibition preventing the consummation of the merger is in effect, or any action has been taken by any governmental authority of competent jurisdiction, that prevents or materially impairs the consummation of the merger and has become final and non-appealable or any law is enacted, entered, enforced or applied to the merger that prevents or materially impairs the consummation of the merger, except that the right to terminate the merger agreement will not be available to any party whose act or failure to act has been the primary cause or, or primarily resulted in, such injunction, judgement, order, restraint, prohibition or action be issued or in effect and becoming final and non-appealable or such law being issued, in effect, taken, enacted, entered, enforced or applied;

 

   

the merger has not been consummated by 11:59 p.m., New York City time, on October 10, 2022 (which we refer to as the “termination date”), except that a party may not terminate the merger agreement pursuant to this provision if such party’s action or failure to act constitutes a breach of the merger agreement and has been the primary cause of, or primarily resulted in the failure to satisfy the conditions to the closing of the merger or the failure to consummate the merger by the termination date; or

 

   

our stockholders do not adopt the merger agreement at the special meeting, except that a party may not terminate the merger agreement pursuant to this provision if such party’s action or failure to act constitutes a breach of the merger agreement has been the primary cause of, or primarily resulted in, the failure to obtain the approval of our stockholders at the special meeting;

 

   

by GSK:

 

   

if subject to a 30-day cure period, Sierra Oncology has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements in the merger agreement such that the related closing condition would not be satisfied;

 

   

prior to the adoption of the merger agreement by our stockholders if: (1) the Sierra Oncology Board has withdrawn its recommendation that our stockholders adopt the merger agreement; (2) Sierra

 

97


Table of Contents
 

Oncology has entered into an alternative acquisition agreement; or (3) a willful and material breach of Sierra Oncology‘s non-solicitation restrictions in the merger agreement has occurred;

 

   

by Sierra Oncology:

 

   

if subject to a 30-day cure period, GSK or Acquisition Sub has breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements in the merger agreement such that the related closing condition would not be satisfied; or

 

   

prior to the adoption of the merger agreement by our stockholders if: (1) Sierra Oncology has received a superior proposal; (2) the Sierra Oncology Board has authorized Sierra Oncology to enter into an alternative acquisition agreement to consummate the acquisition transaction contemplated by that superior proposal; (3) Sierra Oncology has complied in all material respects with its covenants under the merger agreement with respect to such superior proposal; and (4) concurrently with such termination, Sierra Oncology pays the applicable termination fee.

In the event that the merger agreement is terminated pursuant to the termination rights above, the merger agreement will be of no further force or effect without liability of any party or their representatives to the other parties, as applicable, except certain sections of the merger agreement will survive the termination of the merger agreement, in each case in accordance with their respective terms. Notwithstanding the previous sentence, nothing in the merger agreement will relieve any party from any liability for fraud or any willful breach of the merger agreement prior to the termination of the merger agreement. Furthermore, no termination of the merger agreement will affect the rights or obligations of any party pursuant to the confidentiality agreement, which rights, obligations and agreements will survive the valid termination of the merger agreement in accordance with their respective terms.

Termination Fees and Remedies

The merger agreement contains certain termination rights for Sierra Oncology and GSK. Upon valid termination of the merger agreement under specified circumstances, Sierra Oncology will be required to pay GSK (or its designee) a termination fee of $70,000,000. Specifically, this termination fee will be payable by Sierra Oncology to GSK if the merger agreement is terminated:

 

   

by GSK, if the Sierra Oncology Board changes its recommendation with respect to the merger;

 

   

by GSK, if a willful and material breach of Sierra Oncology’s non-solicitation restrictions in the merger agreement has occurred; or

 

   

by Sierra Oncology, if Sierra Oncology enters into an alternative acquisition agreement.

The termination fee will also be payable in certain circumstances if:

 

   

the merger agreement is terminated (1) because the merger is not completed by the termination date and, at such time, the closing conditions related to the expiration or termination of the waiting period applicable to the merger pursuant to the HSR Act and the absence of any order, injunction, legal restraint or law that prevents or materially impairs the consummation of the merger are satisfied; (2) because of Sierra Oncology’s failure to obtain the required approval of our stockholders; or (3) subject to a 30-day cure period, because Sierra Oncology breaches or fails to perform in any material respect any of its covenants in a manner that would cause the related closing conditions to not be satisfied; and

 

   

prior to such termination (but after the date of the merger agreement) an acquisition proposal to acquire at least 50 percent of Sierra Oncology’s stock or assets is publicly announced or publicly disclosed by a third party (or, in the case of a termination because Sierra Oncology has breached its covenants, disclosed to the Sierra Oncology Board) and not withdrawn and within one year of such termination Sierra Oncology enters into a definitive agreement providing for, an acquisition transaction involving the acquisition of at least 50 percent of its stock or assets that is subsequently consummated.

 

98


Table of Contents

The merger agreement also provides that Sierra Oncology, on one hand, or GSK and Acquisition Sub, on the other hand, may specifically enforce the obligations under the merger agreement.

Sierra Oncology is not required to pay GSK the termination fee on more than one occasion.

GSK’s receipt of the termination fee payable by Sierra Oncology, to the extent owed, will be the sole and exclusive remedy of GSK, Acquisition Sub and their respective representatives against Sierra Oncology and their representatives in respect of the merger agreement, the transaction documents, the transactions contemplated by the merger agreement or the transaction documents, the termination of the merger agreement or the failure to consummate the merger agreement. Upon payment of the termination fee, none of Sierra Oncology nor its representatives will have any further liability or obligation to GSK, Acquisition Sub, or any of their respective representatives or any other person relating to or arising out of the merger agreement, the transaction documents, the transactions contemplated by the merger agreement or the transaction documents, or for any matter forming the basis of such termination.

Fees and Expenses

Except in specified circumstances, whether or not the merger is completed, Sierra Oncology, on the one hand, and GSK and Acquisition Sub, on the other hand, are each responsible for all of their respective costs and expenses incurred in connection with the merger agreement and the merger.

No Third Party Beneficiaries

The merger agreement is binding upon and inures solely to the benefit of each party thereto, and nothing in the merger agreement, express or implied, is intended to or will confer upon any other person any rights or remedies, except (1) as set forth in or contemplated by the merger agreement; and (2) from and after the effective time of the merger, the rights of the holders of shares of our common stock, Sierra options, and Sierra warrants to receive the merger consideration.

Amendment and Waiver

Subject to applicable law, the merger agreement may be amended or waived in writing by the parties. However, after adoption of the merger agreement by stockholders, no amendment that requires further approval by such stockholders pursuant to the DGCL may be made without such approval.

At any time prior to the effective time of the merger, any party may extend the time for the performance of any of the obligations or other acts of the other parties, waive any inaccuracies in the representations and warranties in the merger agreement or waive compliance with any of the agreements or conditions contained in provisions of the merger agreement (subject to compliance with applicable law). Any agreement by a party to any such extension or waiver will be valid only if set forth in an instrument in writing signed by such party. Any delay in exercising any right pursuant to the merger agreement will not constitute a waiver of such right.

Governing Law and Venue

The merger agreement is governed by Delaware law. The venue for disputes relating to the merger agreement is the Delaware Court of Chancery of the State of Delaware or, to the extent that the Delaware Court of Chancery of the State of Delaware does not have jurisdiction, federal or state court in the State of Delaware.

Waiver of Jury Trial

Each of the parties irrevocably waived any and all right to trial by jury in any action arising out of or relating to the merger agreement.

 

99


Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership of our common stock as of March 31, 2022, as to (1) each of our named executive officers; (2) each of our directors and nominees for director; (3) all of our executive officers and directors as a group; and (4) each person, or group of affiliated persons, who beneficially owned more than five percent of our common stock, who is known by us to beneficially own more than five percent of our outstanding common stock.

Percentage ownership of our common stock is based on 23,800,409 shares of our common stock outstanding on March 31, 2022. We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities, and the information is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. We have deemed all shares of common stock subject to options or other convertible securities held by that person or entity that are currently exercisable or that will become exercisable within 60 days of March 31, 2022 to be outstanding and to be beneficially owned by the person or entity holding the option for the purpose of computing the percentage ownership of that person or entity but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person or entity. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Sierra Oncology, Inc., 1820 Gateway Drive, Suite 110, San Mateo, CA 94404.

 

Name of Beneficial Owner

   Beneficial Ownership  
   Number      Percent  

5% Stockholders:

     

Entities affiliated with Vivo Capital, LLC (1)

     3,329,511        13.99

Entities affiliated with Longitude Capital (2)

     3,616,896        14.31

Entities affiliated with OrbiMed Advisors LLC (3)

     3,441,894        13.62

Entities affiliated with Abingworth Bioventures VII, LP (4)

     2,199,126        8.91

Gilead Sciences, Inc. (5)

     1,450,566        5.91

Entities affiliated with Frazier Healthcare VI, L.P. (6)

     2,366,853        9.94

Entities affiliated with Adage Capital Partners, LP (7)

     1,230,468        5.17

Entities affiliated with Rock Springs Capital Management (8)

     2,661,918        10.53

Directors and Named Executive Officers:

     

Stephen G. Dilly (9)

     346,000        1.43

Barbara Klencke (10)

     165,618        *  

Sukhi Jagpal (11)

     96,219        *  

Robert E. Pelzer (12)

     25,827        *  

Gaurav Aggarwal (13)

     2,749,726        11.55

Andrew Allen (14)

     21,805        *  

Mona Ashiya (15)

     3,455,768        13.66

Craig A. Collard (16)

     29,000        *  

Jeffrey H. Cooper (17)

     27,502        *  

Georgia L. Erbez (18)

     5,500        *  

Christy J. Oliger (19)

     5,500        *  

Andrew Sinclair (20)

     2,199,126        8.91

All executive officers and directors as a group (15 persons) (21)

     9,283,882        37.78

 

*

Represents beneficial ownership of less than one percent.

(1)

Based solely on a Schedule 13G/A filed on February 11, 2022 these shares represent (i) 161,712 shares of common stock held by Vivo Ventures Fund VII, L.P. and Vivo Ventures VII Affiliates Fund, L.P., (ii) 431,947 shares of common stock held by Vivo Capital Fund IX, L.P. and (iii) 2,735,852 shares of common

 

100


Table of Contents
  stock held by Vivo Opportunity Fund Holdings, L.P. Vivo Ventures VII, LLC is the general partner of Vivo Ventures Fund VII, L.P. and Vivo Ventures VII Affiliates Fund, L.P. The voting members of Vivo Ventures VII, LLC are Frank Kung, Edgar Engleman and Shan Fu, none of whom has individual voting or investment power with respect to these shares and each of whom disclaims beneficial ownership of such shares. Vivo Capital IX, LLC is the general partner of Vivo Capital Fund IX, L.P. The voting members of Vivo Capital IX, LLC are Frank Kung, Edgar Engleman, Shan Fu, Hongbo Lu, Mahendra Shah, Jack Nielsen and Michael Chang, none of whom has individual voting or investment power with respect to these shares and each of whom disclaims beneficial ownership of such shares. Vivo Opportunity, LLC is the general partner of Vivo Opportunity Fund Holdings, L.P. The voting members of Vivo Opportunity, LLC are Gaurav Aggarwal, Hongbo Lu, Kevin Dai, Frank Kung, and Michael Chang, none of whom has individual voting or investment power with respect to these shares and each of whom disclaims beneficial ownership of such shares. Excludes shares underlying Series A warrants, as the exercise of each is subject to a beneficial ownership limitation of 9.99% of the Company’s outstanding shares of common stock and advance notice of intent to exercise such warrants.
(2)

Based solely on a Schedule 13D/A filed on February 4, 2022, these shares represent (i) 1,964,771 shares of common stock held by Longitude Venture Partners III, L.P. (“LVP III”); (ii) 1,477,125 shares of Common Stock issuable upon the exercise of Series A warrants held of record by LVPIII which are exercisable within 60 days of March 31, 2022; and 175,000 shares of common stock held by Longitude Prime Fund, L.P. (“LPF”). Longitude Capital Partners III, LLC (“LCP III”) is the general partner of LVP III and may be deemed to have voting, investment and dispositive power with respect to the securities held by LVP III. Longitude Prime Partners, LLC (“LPP”) is the general partner of LPF and may be deemed to have voting, investment and dispositive power with respect to the securities held by LPF. Patrick G. Enright and Juliet Tammenoms Bakker are the managing members of LCP III and LPP. Each of LCP III, LPP, Patrick G. Enright and, Juliet Tammenoms Bakker disclaim beneficial ownership over such securities except to the extent of their respective pecuniary interest therein.

(3)

Based on a Schedule 13D/A filed on March 15, 2022, these shares represent (i) 1,511,362 shares of common stock held by OrbiMed Private Investments VII, L.P. (“OPI VII”); (ii) 1,136,250 shares of common stock issuable upon the exercise of Series A warrants held of record by OPI VII which are exercisable within 60 days of March 31, 2022; (iii) 226,704 shares of common stock held by OrbiMed Genesis Master Fund, L.P. (“Genesis”), (iv) 170,437 shares of common stock issuable upon the exercise of Series A warrants held of record by Genesis which are exercisable within 60 days of March 31, 2022, (v) 226,704 shares of common stock held by OrbiMed Partners Master Fund Limited (“OPM”), and (vi) 170,437 shares of common stock issuable upon the exercise of Series A warrants held of record by OPM which are exercisable within 60 days of March 31, 2022. OrbiMed Capital GP VII LLC (“GP VII”) is the general partner of OPI VII. OrbiMed Advisors LLC (“OrbiMed Advisors”) is the managing member of GP VII. OrbiMed Global Genesis GP LLC (“Genesis GP”) is the general partner of Genesis and OrbiMed Advisors is the managing member of Genesis GP. OrbiMed Capital LLC (“OrbiMed Capital”) is the investment manager of OPM and OrbiMed Capital is a relying advisor of OrbiMed Advisors. OrbiMed Advisors and OrbiMed Capital exercise investment and voting power through a management committee comprised of Carl Gordon, Sven H. Borho, and W. Carter Neild. By virtue of such relationships, (a) GP VII and OrbiMed Advisors may be deemed to have voting and investment power with respect to the securities held by OPI VII and as a result may be deemed to have beneficial ownership of such securities, (b) Genesis GP and OrbiMed Advisors may be deemed to have voting power and investment power over the securities held by Genesis and as a result, may be deemed to have beneficial ownership over such securities, and (c) OrbiMed Capital may be deemed to have voting power and investment power over the securities held by OPM and as a result, may be deemed to have beneficial ownership over such securities. Each of GP VII, Genesis GP, OrbiMed Advisors, OrbiMed Capital, Mona Ashiya, Messrs. Borho, Neild, and Gordon disclaims beneficial ownership of the shares held by OPI VII, Genesis, and OPM, as applicable, except to the extent of its, his or her pecuniary interest therein, if any. The address of the entities affiliated with OrbiMed Advisors LLC is 601 Lexington Avenue, 54th Floor, New York, New York 10022.

(4)

Based on a Schedule 13D/A filed on March 21, 2022, consisting of (i) 1,314,127 shares of common stock held directly by Abingworth Bioventures VII, LP (“ABV VII”), (ii) 13,874 shares of common stock issuable

 

101


Table of Contents
  upon the exercise of stock options issued to Dr. Sinclair, a member of our Board of Directors and a Partner of Abingworth, to purchase common stock that are exercisable with 60 days of March 31, 2022, (iii) an aggregate of 871,125 shares of common stock issuable upon the exercise of Series A warrants held by ABV VII. Abingworth Bioventures VII GP LP, a Scottish limited partnership, serves as the general partner of ABV VII. Abingworth General Partner VII LLP, an English limited liability partnership (together with Abingworth Bioventures VII GP LP, the “General Partners”), serves as the general partner of Abingworth Bioventures VII GP LP. ABV VII (acting by its general partner Abingworth Bioventures VII GP LP, acting by its general partner Abingworth General Partner VII LLP) has delegated to Abingworth LLP all investment and dispositive power over the securities held by ABV VII. An investment committee of Abingworth LLP approves investment and voting decisions by a majority vote, and no individual member has the sole control or voting power over the securities held by ABV VII. The address of Abingworth Bioventures VII, LP is 38 Jermyn Street, London, United Kingdom, SW1Y6DN.
(5)

Based on a Schedule 13G/A filed on February 10, 2022. Securities are held by Gilead Sciences, Inc (Gilead). Represents (i) 725,283 shares of common stock and (ii) 725,283 shares of common stock issuable upon the exercise of a warrant (the “Warrant”), representing the underlying common shares. In March 2022, the Company issued 725,283 shares of common stock to Gilead in connection with the exercise of the Warrant. The address of Gilead is 333 Lakeside Drive, Foster City, California 94404.

(6)

Based on a Schedule 13G/A filed on March 29, 2022. Consists of (i) 522,663 shares of common stock held directly by Frazier Life Sciences VIII, L.P. FHM Life Sciences VIII, L.P. is the general partner of Frazier Life Sciences VIII, L.P. and FHM Life Sciences VIII, L.L.C. is the general partner of FHM Life Sciences VIII, L.P. James N. Topper and Patrick J. Heron are the sole members of FHM Life Sciences VIII, L.L.C. and therefore share voting and investment power over the shares held by Frazier Life Sciences VIII, L.P.; (ii) 54,655 shares of common stock held directly by Frazier Healthcare VI, L.P. FHM VI, L.P. is the general partner of Frazier Healthcare VI, L.P. and FHM VI, L.L.C. is the general partner of FHM VI, L.P. James N. Topper, Patrick J. Heron, Alan Frazier, Nader Naini and Nathan Every are the members of FHM VI, L.L.C. and therefore share voting and investment power over the shares held by Frazier Healthcare VI, L.P.; and (iii) 1,789,535 shares of common stock held directly by Frazier Life Sciences Public Fund, L.P. FHMLSP, L.P. is the general partner of Frazier Life Sciences Public Fund, L.P. and FHMLSP, L.L.C. is the general partner of FHMLSP, L.P. Patrick J. Heron, James N. Topper, Albert Cha and James Brush are the members of FHMLSP, L.L.C. and therefore share voting and investment power over the shares held by Frazier Life Sciences Public Fund, L.P.

(7)

Based on the Schedule 13G/A filed on February 10, 2022 by Adage Capital Partners, LP (ACP). Represents 1,230,468 shares of common stock owned by ACP. Adage Capital Partners GP (ACPGP), LLC is the general partner of ACP. Adage Capital Advisors, LLC (ACA) is the managing member of ACPGP and a general partner of ACP. Robert Atchinson and Phillip Gross are managing members of ACA and ACPGP and a general partners of ACP. The address of Adage Capital Partners is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02116.

(8)

Based on the Schedule 13G/A filed on February 15, 2022 by Rock Spring Capital Management LP (“RSCM”). Represents (i) 1,106,500 shares of common stock owned by Rock Springs Capital Master Fund LP (the “Master Fund”) as of December 31, 2021 and (ii) 78,293 shares of common stock owned by Four Pines Master Fund LP (“Four Pines”) as of December 31, 2021. RSCM serves as the investment manager to each of the Master Fund and Four Pines. Rock Springs Capital LLC serves as the general partner of RSCM. The address of Rock Springs Capital Management LP is 650 South Exeter St., Suite 1070, Baltimore, MD 21202.

(9)

Represents (i) 5,000 shares of common stock and (ii) 341,000 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(10)

Represents (i) 10,000 shares of common stock, (ii) 5,000 shares of common stock held by Dr. Klencke’s spouse, and (iii) 150,618 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(11)

Represents 96,219 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

 

102


Table of Contents
(12)

Represents 25,827 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(13)

Represents (i) 2,735,852 shares of common stock held by Vivo Opportunity Fund Holdings, LP, and (ii) 13,874 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022. Excludes 1,455,384 shares of common stock underlying Series A warrants held by Vivo Opportunity Fund Holdings, L.P., as the exercise of the warrants is subject to a beneficial ownership limitation of 9.99% of the Company’s outstanding shares of common stock and advance notice of intent to exercise such warrants. Dr. Aggarwal is a managing member of Vivo Opportunity, LLC, which is the general partner of Vivo Opportunity Fund Holdings, L.P. Dr. Aggarwal may be deemed to share voting and dispositive power over the securities held by Vivo Opportunity Fund Holdings, L.P. with four other managing members of Vivo Opportunity, LLC. Dr. Aggarwal disclaims beneficial ownership over such securities except to the extent of his pecuniary interest therein.

(14)

Represents (i) 1,650 shares of common stock and (ii) 20,155 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(15)

Represents (i) 1,964,770 shares of common stock held by the entities affiliated with OrbiMed Advisors LLC as described in footnote 3 above, (ii) warrants to purchase 1,477,124 shares of Series A Preferred Stock held by the entities affiliated with OrbiMed Advisors LLC and (iii) 13,874 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022. Dr. Ashiya is an employee of OrbiMed Advisors LLC and is obligated to transfer any shares issued pursuant to any equity grants made to her by us, or the economic benefits thereof, to OrbiMed Advisors LLC and certain of its related entities. As such, Dr. Ashiya disclaims beneficial ownership of the securities reported herein for purposes of Rule 16a-1(a) under the Exchange Act, except to the extent of her pecuniary interest therein, if any.

(16)

Represents (i) 13,500 shares of common stock, and (ii) 15,500 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(17)

Represents 27,502 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(18)

Represents 5,500 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(19)

Represents 5,500 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

(20)

Represents (i) 1,314,127 shares of common stock held by ABV VII, (ii) warrants to purchase 871,125 shares of Series A Preferred Stock held by ABV VII and (ii) 13,874 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022. By virtue of the relationships described in footnote 4 above, Dr. Sinclair may be deemed to share beneficial ownership in the shares held by ABV VII. Dr. Sinclair disclaims beneficial ownership of the shares referred to in footnote 4 above except to the extent of his pecuniary interest therein.

(21)

Represents (i) 6,702,694 shares of common stock, (ii) warrants to purchase 4,033,685 shares of Series A Preferred Stock and (iii) 873,732 shares underlying options to purchase common stock that are exercisable within 60 days of March 31, 2022.

 

103


Table of Contents

FUTURE STOCKHOLDER PROPOSALS

If the merger is completed, we will have no public stockholders and there will be no public participation in any future meetings of our stockholders. However, if the merger is not completed, our stockholders will continue to be entitled to attend and participate in stockholder meetings.

Sierra Oncology will hold an annual meeting of stockholders in 2022 only if the merger has not already been completed.

Stockholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at our 2022 annual meeting of stockholders, if held, pursuant to Rule 14a-8 of the Exchange Act must have submitted the proposal to us no later than December 24, 2021.

Sierra’s bylaws establish an advance notice procedure with regard to specified stockholder proposals to be considered at an annual meeting of stockholders. To be timely for our 2022 annual meeting of stockholders, our Corporate Secretary must have received the required written notice at our principal executive offices not earlier than the close of business on February 23, 2022, and not later than the close of business on March 25, 2022 provided, however, that in the event that the date of our 2022 annual meeting of stockholders is more than thirty (30) days before or more than sixty (60) days after the anniversary date of our 2021 annual meeting of stockholders, notice by the stockholder to be timely must be so delivered (A) no earlier than the close of business on the one hundred and fifth (105th) day prior to the 2022 annual meeting of stockholders and (B) no later than the close of business on the later of the seventy-fifth (75th) day prior to the 2022 annual meeting of stockholders or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Sierra.

 

104


Table of Contents

WHERE YOU CAN FIND MORE INFORMATION

Sierra Oncology files annual, quarterly and current reports, proxy statements and other information with the SEC.

The SEC allows us to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information contained in this proxy statement or incorporated by reference subsequent to the date of this proxy statement. This proxy statement incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and our financial condition and are incorporated by reference into this proxy statement.

The following Sierra Oncology filings with the SEC are incorporated by reference:

 

   

Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed on March 10, 2022, as amended by Amendment No. 1 on Form 10-K/A to the Annual Report for the fiscal year ended December 31, 2021, filed on April 29, 2022;

 

   

Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, filed on May 6, 2022; and

 

   

Current Reports on Form 8-K filed on March 23, 2022 and April 13, 2022.

Notwithstanding the above, information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this proxy statement.

We also incorporate by reference into this proxy statement additional documents that we may file with the SEC between the date of this proxy statement and the earlier of the date of the special meeting or the termination of the merger agreement. These documents include annual, quarterly and current reports, proxy statements and other information.

These SEC filings are also available to the public from commercial document retrieval services and at www.sec.gov.

You may obtain any of the documents that we file with the SEC, without charge, by requesting them in writing from us at the following address:

Sierra Oncology, Inc.

1820 Gateway Drive, Suite 110

San Mateo, California 94404

Attention: Investor Relations

If you would like to request documents from us, please do so as soon as possible to receive them before the special meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt method. Please note that all of our documents that we file with the SEC are also promptly available through the “Investor Relations” section of our website, https://investor.sierraoncology.com/investor-relations/default.aspx. The information included on our website is not incorporated by reference into this proxy statement. The website addresses, and the website addresses included in any documents incorporated by reference in this proxy statement, are not intended to function as hyperlinks, and the information contained on such websites and on the SEC’s website is not incorporated by reference in this proxy statement and you should not consider it a part of this proxy statement.

 

105


Table of Contents

If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of this proxy statement or need help voting your shares of our common stock, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders in the US and Canada call toll-free: (877) 750-0510

Stockholders in other locations please call: +1 (412) 232-3651

Banks and brokers call collect: (212) 750-5833

 

106


Table of Contents

MISCELLANEOUS

Sierra Oncology has supplied all information relating to Sierra Oncology, and GSK has supplied, and Sierra Oncology has not independently verified, all of the information relating to GSK and Acquisition Sub contained in this proxy statement.

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT IN VOTING YOUR SHARES OF OUR COMMON STOCK AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED MAY 16, 2022. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE (OR AS OF AN EARLIER DATE IF SO INDICATED IN THIS PROXY STATEMENT), AND THE SENDING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY. THIS PROXY STATEMENT DOES NOT CONSTITUTE A SOLICITATION OF A PROXY IN ANY JURISDICTION WHERE, OR TO OR FROM ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE A PROXY SOLICITATION.

 

107


Table of Contents

ANNEX A

AGREEMENT AND PLAN OF MERGER

between

GLAXOSMITHKLINE PLC,

ORIKUM ACQUISITION INC.

and

SIERRA ONCOLOGY, INC.

Dated APRIL 12, 2022


Table of Contents

TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS & INTERPRETATIONS

     A-2  

1.1

  Certain Definitions      A-2  

1.2

  Additional Definitions      A-13  

1.3

  Certain Interpretations      A-14  

1.4

  Company Disclosure Letter      A-16  

ARTICLE II THE MERGER

     A-17  

2.1

  The Merger      A-17  

2.2

  The Effective Time      A-17  

2.3

  The Closing      A-17  

2.4

  Effect of the Merger      A-17  

2.5

  Certificate of Incorporation and Bylaws      A-17  

2.6

  Directors and Officers of the Surviving Corporation      A-17  

2.7

  Effect on Capital Stock      A-18  

2.8

  Equity Awards      A-19  

2.9

  Effect on Company Warrants      A-19  

2.10

  Exchange of Certificates      A-20  

2.11

  No Further Ownership Rights in Company Common Stock      A-22  

2.12

  Lost, Stolen or Destroyed Certificates      A-22  

2.13

  Required Withholding      A-22  

2.14

  Future Dividends or Distributions      A-22  

2.15

  Necessary Further Actions      A-22  

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     A-23  

3.1

  Organization; Good Standing      A-23  

3.2

  Corporate Power; Enforceability      A-23  

3.3

  Company Board Approval; Fairness Opinion; Anti-Takeover Laws      A-23  

3.4

  Requisite Stockholder Approval      A-24  

3.5

  Non-Contravention      A-24  

3.6

  Requisite Governmental Approvals      A-24  

3.7

  Company Capitalization      A-25  

3.8

  Subsidiaries      A-26  

3.9

  Company SEC Reports      A-26  

3.10

  Company Financial Statements; Internal Controls; Indebtedness      A-27  

3.11

  No Undisclosed Liabilities      A-28  

3.12

  Absence of Certain Changes.      A-28  

3.13

  Material Contracts      A-28  

3.14

  Real Property      A-30  

3.15

  Environmental Matters      A-31  

3.16

  Intellectual Property      A-31  

3.17

  Privacy, Data Protection and Data Security      A-32  

3.18

  Tax Matters      A-33  

3.19

  Employee Plans      A-35  

3.20

  Labor Matters      A-36  

3.21

  Regulatory Matters      A-36  

3.22

  Compliance with Laws      A-38  

3.23

  Legal Proceedings; Orders      A-38  

3.24

  Insurance      A-38  

 

A-i


Table of Contents

3.25

  Related Person Transactions      A-39  

3.26

  Brokers      A-39  

3.27

  Exclusivity of Representations and Warranties      A-39  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB

     A-40  

4.1

  Organization; Good Standing      A-40  

4.2

  Power; Enforceability      A-40  

4.3

  Non-Contravention      A-40  

4.4

  Requisite Governmental Approvals      A-41  

4.5

  Legal Proceedings; Orders      A-41  

4.6

  Ownership of Company Capital Stock      A-41  

4.7

  Brokers      A-41  

4.8

  No Parent Vote or Approval Required      A-41  

4.9

  Financial Capability      A-41  

4.10

  Absence of Stockholder and Management Arrangements      A-42  

4.11

  Exclusivity of Representations and Warranties      A-42  

ARTICLE V INTERIM OPERATIONS OF THE COMPANY

     A-43  

5.1

  Affirmative Obligations      A-43  

5.2

  Forbearance Covenants      A-43  

5.3

  No Solicitation of Acquisition Proposals      A-45  

5.4

  No Control of the Other Party’s Business      A-49  

ARTICLE VI ADDITIONAL COVENANTS

     A-49  

6.1

  Efforts; Required Action and Forbearance      A-49  

6.2

  Regulatory Filings      A-50  

6.3

  Proxy Statement and Other Required SEC Filings      A-51  

6.4

  Company Stockholder Meeting      A-53  

6.5

  Anti-Takeover Laws      A-53  

6.6

  Access      A-53  

6.7

  Section 16(b) Exemption      A-54  

6.8

  Directors’ and Officers’ Exculpation, Indemnification and Insurance      A-54  

6.9

  Employee Matters      A-56  

6.10

  Obligations of Acquisition Sub      A-58  

6.11

  Notification of Certain Matters      A-58  

6.12

  Public Statements and Disclosure      A-58  

6.13

  Transaction Litigation      A-59  

6.14

  Stock Exchange Delisting; Deregistration      A-59  

6.15

  Additional Agreements      A-59  

6.16

  Parent Vote at Acquisition Sub      A-59  

6.17

  Payoff Letters      A-59  

6.18

  Regulatory Matters      A-60  

6.19

  Director Resignations      A-60  

ARTICLE VII CONDITIONS TO THE MERGER

     A-60  

7.1

  Conditions to Each Party’s Obligations to Effect the Merger      A-60  

7.2

  Conditions to the Obligations of Parent and Acquisition Sub      A-61  

7.3

  Conditions to the Company’s Obligations to Effect the Merger      A-62  

7.4

  Frustration of Closing Conditions      A-62  

 

A-ii


Table of Contents

ARTICLE VIII TERMINATION

     A-62  

8.1

  Termination      A-62  

8.2

  Manner and Notice of Termination; Effect of Termination      A-64  

8.3

  Fees and Expenses      A-64  

ARTICLE IX GENERAL PROVISIONS

     A-66  

9.1

  Survival of Representations, Warranties and Covenants      A-66  

9.2

  Notices      A-66  

9.3

  Amendment      A-67  

9.4

  Extension; Waiver      A-67  

9.5

  Assignment      A-67  

9.6

  Confidentiality      A-68  

9.7

  Entire Agreement      A-68  

9.8

  Third Party Beneficiaries      A-68  

9.9

  Severability      A-68  

9.10

  Remedies      A-68  

9.11

  Governing Law      A-69  

9.12

  Consent to Jurisdiction      A-69  

9.13

  WAIVER OF JURY TRIAL      A-69  

9.14

  Counterparts      A-70  

9.15

  No Limitation      A-70  

EXHIBITS

 

Exhibit A   Form of Certificate of Incorporation of the Surviving Corporation
Exhibit B   Form of Bylaws of the Surviving Corporation

 

A-iii


Table of Contents

AGREEMENT AND PLAN OF MERGER

This agreement and plan of merger (this “Agreement”) is dated April 12, 2022, between GlaxoSmithKline plc, a public limited company organized under the laws of England and Wales (“Parent”), Orikum Acquisition Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Parent (“Acquisition Sub”), and Sierra Oncology, Inc., a Delaware corporation (the “Company”). Each of Parent, Acquisition Sub and the Company are sometimes referred to as a “Party.” All capitalized terms that are used in this Agreement have the meanings given to them in Article I.

RECITALS

A. Parent desires to acquire the Company on the terms and subject to the conditions set forth in this Agreement.

B. The Company Board has (i) determined that it is in the best interests of the Company and its stockholders, and declared it advisable, to enter into this Agreement providing for the merger of Acquisition Sub with and into the Company (the “Merger”) in accordance with the General Corporation Law of the State of Delaware (the “DGCL”) upon the terms and subject to the conditions set forth in this Agreement; (ii) approved the execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and other obligations in this Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in this Agreement; (iii) directed that the adoption of this Agreement be submitted to a vote of the Company Stockholders; and (iv) recommended the Company Stockholders vote in favor of the adoption of this Agreement and the approval of the Merger in accordance with the DGCL.

C. The board of directors of Acquisition Sub has (i) declared it advisable to enter into this Agreement; (ii) approved the execution and delivery of this Agreement, the performance of its covenants and other obligations under this Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in this Agreement herein; (iii) directed that the adoption of this Agreement be submitted to a vote of GlaxoSmithKline LLC in its capacity as Acquisition Sub’s sole stockholder; and (iv) recommended GlaxoSmithKline LLC (in its capacity as sole stockholder of Acquisition Sub) vote in favor of the adoption of this Agreement and the approval of the Merger in accordance with the DGCL.

D. Parent has approved the execution and delivery of this Agreement and the performance of its covenants and other obligations under this Agreement, and the consummation of the Merger upon the terms and subject to the conditions set forth in this Agreement.

E. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent’s and Acquisition Sub’s willingness to enter into this Agreement, each of the directors and executive officers of the Company, and certain of their Affiliates, are entering into a Support Agreement (the “Support Agreements”) pursuant to which the stockholders of the Company party thereto, among other things, agree to vote their shares in favor of the Merger.


Table of Contents

AGREEMENT

The Parties therefore agree as follows:

ARTICLE I

DEFINITIONS & INTERPRETATIONS

1.1 Certain Definitions. For all purposes of this Agreement, the following capitalized terms have the following respective meanings:

(a) “Acceptable Confidentiality Agreement” means a customary confidentiality agreement (whether in effect as of the execution of this Agreement or executed after the execution of this Agreement) (i) containing terms no less restrictive in any material respect to the counterparty than those contained in the Confidentiality Agreement (except for such changes necessary in order for such Party to be able to comply with its obligations under this Agreement) and (ii) that does not prohibit the Company from providing any information to Parent in accordance with, or otherwise complying with, Section 5.3, it being understood that such confidentiality agreement need not contain any “standstill” or similar provisions or otherwise prohibit the making of any Acquisition Proposal. If the provisions of such confidentiality agreement are less restrictive in any material respect to the counterparty than the terms of the Confidentiality Agreement (other than because of the absence of a “standstill” or similar provisions or other prohibition on the making of any Acquisition Proposal) or would prohibit the Company from providing any information to Parent in accordance with, and otherwise complying with, Section 5.3, then such confidentiality agreement will be deemed to be an Acceptable Confidentiality Agreement if the Company amends such confidentiality agreement so as to make the provisions of such confidentiality agreement at least as restrictive in all material respects as the provisions of such the Confidentiality Agreement or not prohibit the Company from providing any information to Parent in accordance with, and otherwise complying with, Section 5.3, as applicable.

(b) “Acquisition Proposal” means any offer or proposal (other than an offer or proposal by Parent or Acquisition Sub, or any Group that includes Parent or Acquisition Sub or any of their Affiliates) to the Company or the Company Board to engage in an Acquisition Transaction.

(c) “Acquisition Transaction” means any transaction or series of related transactions (other than the Merger) for:

(i) any direct or indirect purchase or other acquisition by any Person or Group (other than Parent or Acquisition Sub or any of their Affiliates, or any Group that includes Parent or Acquisition Sub or any of their Affiliates), of securities representing more than 15 percent of the total outstanding voting power of the capital stock of the Company after giving effect to the consummation of such purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person or Group that, if consummated in accordance with its terms, would result in such Person or Group beneficially owning more than 15 percent of the total outstanding voting power of the capital stock of the Company or any of its Subsidiaries after giving effect to the consummation of such tender offer or exchange offer;

(ii) any direct or indirect license, purchase or other acquisition by any Person or Group (other than Parent or Acquisition Sub or any of their Affiliates, or any Group that includes Parent or Acquisition Sub or any of their Affiliates) of assets (including equity securities of the Company’s Subsidiaries) constituting or accounting for more than 15 percent of the fair market value of the consolidated assets of the Company and its Subsidiaries, taken as a whole (in each case, other than non-exclusive licenses of Company Intellectual Property by the Company or its Subsidiaries, in the ordinary course of business consistent with past practice for ordinary course commercial purposes); or

(iii) any merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction involving the Company or any of its Subsidiaries pursuant to which any Person or

 

A-2


Table of Contents

Group (other than Parent or Acquisition Sub or any of their Affiliates, or any Group that includes Parent or Acquisition Sub or any of their Affiliates)