CPE News (4.28.2022) – Zymeworks Inc. (NYSE: ZYME) has confirmed an unsolicited, non-binding proposal from All Blue Falcons FZE and its affiliates to purchase the company for US $10.50 per share in cash.
As of February 24, 2022, Zyemeworks had 57,736,293 shares issued and outstanding. Zymeworks also had 8,581,961 common shares issuable pursuant to 8,581,961 pre-funded warrants, 4,094,697 common shares issuable pursuant to 4,094,697 exercisable outstanding stock options, 2,949,470 common shares issuable pursuant to 2,949,470 outstanding options that were not exercisable, and 253,703 outstanding restricted stock units.
The non-binding bid would value Zymeworks equity at US $606 million on a non-diluted basis and US $699 million on a fully diluted basis (stock options mostly are worthless).
All Blue Falcons FZE, together with its respective affiliated investment funds, directly or through their respective affiliated entities, collectively beneficially own 3,139,498 common shares, or approximately 5.44% of of Zymeworks outstanding common shares.
Dubai, United Arab Emirates based All Blue and its affiliates is a global investment firm that invests in and manages multiple alternative asset classes, including private equity, real estate and hedge funds.
All Blue Falcons letter to Zymeworks board of directors – April 28, 2022
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We believe that the Company has suffered from severe value erosion due to a number of serious missteps by an unfocused leadership with no clear strategy for improving performance. Over the past twelve months, stockholders have witnessed the Company miss a number of important deadlines publicly announced in press releases, endured poorly executed earnings calls and experienced confusing and damaging public messaging, all of which has led to a significant loss of credibility and investor confidence in the Company and its management team.
As a result of these and other problems, the Company’s financial performance has deteriorated so significantly that the management team (led by Kenneth Galbraith, who was recently appointed as CEO and Chairman of the Board) had to issue a press release in January 20223 disclosing the Company’s difficult financial position and immediate need to raise capital to continue operations. As a result, the Company’s stock price dropped by approximately 25% in the three trading sessions after the date of the press release4 and has decreased approximately 67.81% since the public announcement of Mr. Galbraith’s appointment as CEO and Chairman on January 5, 2022.5
On top of all of this, the Board (now led by Mr. Galbraith) recently authorized a public offering of the Company’s common shares, at $8.00 per share. The Company sold 11,035,000 common shares and pre-funded warrants to purchase up to 3,340,000 common shares in the public offering, which was completed in January 2022. We believe that the Board’s decision to pursue this highly dilutive equity offering in current volatile market conditions, in preference to other available alternatives for raising capital, was contrary to the best interests of the Company and its stockholders. In addition, the below-market offering price seems to indicate the Board’s own views as to the Company’s value.6 We have previously approached the Board privately to express our concerns about this questionable decision, but unfortunately our communications seem to have fallen on deaf ears.
As a result of these and other issues, the Company’s stock price has plummeted an astounding 87% since July 1, 2021.7 As a significant investor in the Company, we believe that Zymeworks stockholders deserve better than the consistent value destruction they have suffered during this relatively short period of time. We are confident that our all-cash proposal will not only deliver fair value to all stockholders, well in excess of what we expect the Company will be able to achieve on its current course, but will also provide them with a direct path to realizing an attractive premium and immediate liquidity for their shares, with far greater certainty, and without the risk of further value erosion, than if the Company remained a publicly traded company in this uncertain economic environment.
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We request that the Board promptly contact us to arrange for an opportunity to discuss our proposal. We stand ready to enter into an appropriate confidentiality agreement to commence our due diligence immediately. We are confident in our ability to move quickly and efficiently toward consummating a transaction. If the Board refuses to engage with us in good faith and in a timely fashion, we reserve our rights to take action to protect stockholder interests, including taking our proposal directly to Zymeworks’ stockholders.
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photo credit: Zymeworks
News Release
Zymeworks Confirms Receipt of Unsolicited, Non-Binding Proposal from All Blue Falcons
VANCOUVER, British Columbia & SEATTLE–(BUSINESS WIRE)–April 28, 2022–
Zymeworks Inc. (NYSE: ZYME), a clinical-stage biopharmaceutical company developing next generation multifunctional biotherapeutics, today confirmed it has received an unsolicited, non binding proposal from All Blue Falcons FZE (“ABF”) and its affiliates to purchase the Company for $10.50 per share in cash.
The Zymeworks board of directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Zymeworks shareholders. The board reminds shareholders that no formal offer has been made by ABF, and as such there is no need for Zymeworks shareholders to take any action at this time. If a formal offer is made, it will be reviewed by the board with its advisors, and a formal recommendation by the board will be made to shareholders in due course.
Advisors
Kingsdale Advisors is acting as strategic shareholder and communications advisor to Zymeworks. Blake, Cassels & Graydon LLP and Wilson Sonsini Goodrich & Rosati are acting as counsel to the Company.
About Zymeworks Inc.
Zymeworks is a clinical-stage biopharmaceutical company dedicated to the discovery, development and commercialization of next-generation multifunctional biotherapeutics. Zymeworks’ suite of therapeutic platforms and its fully integrated drug development engine enable precise engineering of highly differentiated product candidates. Zymeworks’ lead clinical candidate, zanidatamab, is a novel Azymetric™ HER2-targeted bispecific antibody currently being evaluated in multiple Phase 1, Phase 2, and pivotal clinical trials globally as a targeted treatment option for patients with solid tumors that express HER2. Zymeworks’ second clinical candidate, ZW49, is a novel bispecific HER2-targeted antibody-drug conjugate currently in Phase 1 clinical development and combines the unique design and antibody framework of zanidatamab with Zymeworks’ proprietary ZymeLink™ linker and cytotoxin. Zymeworks is also advancing a deep preclinical pipeline in oncology (including immuno-oncology agents) and other therapeutic areas. In addition, its therapeutic platforms are being leveraged through strategic partnerships with global biopharmaceutical companies. For more information on our ongoing clinical trials visit www.zymeworksclinicaltrials.com. For additional information about Zymeworks, visit www.zymeworks.com and follow @ZymeworksInc on Twitter.
Contacts
Investor Inquiries:
Jack Spinks
(604) 678-1388
ir@zymeworks.com
Media Inquiries:
Diana Papove
(604) 678-1388
media@zymeworks.com