Leap Therapeutics Enters Agreement to Acquire Macrocure (MCUR)

August 29, 2016 8:53 AM EDT

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Leap Therapeutics, Inc. and Macrocure Ltd. (Nasdaq: MCUR) announced the signing of a definitive merger agreement. Under the terms of the agreement, Macrocure will become a wholly owned subsidiary of Leap, and Leap will become a public company. In connection with the transaction, Leap will apply to have the shares of the combined entity listed for trading on NASDAQ upon completion of the merger.

Under the terms of the agreement, Macrocure shareholders will exchange their Macrocure shares for newly issued shares of Leap common stock. In addition, existing Leap investors, including entities affiliated with HealthCare Ventures, have committed to invest an additional $10 million at the closing of the transaction. On a pro forma basis, after giving effect to the merger and the investment, Macrocure equity holders are expected collectively to own approximately 31.8%, and Leap equity holders are expected collectively to own approximately 68.2%, of the combined company, subject to certain possible adjustments based on Macrocure's net cash level at closing. Existing Leap shareholders will receive the right to a royalty, under certain circumstances, based on future net sales. The combined company is expected to have a minimum of $30 million of cash at closing to finance future operations.

"The combination with Macrocure positions our organization as a leading immuno-oncology company with sufficient capital to advance our pipeline of first-in-class monoclonal antibodies through significant value-creating events," commented Christopher K. Mirabelli, PhD, CEO of Leap. "Importantly, we anticipate achieving substantial clinical milestones over the course of 2016 and 2017. We plan to present data and initiate randomized studies for DKN-01, our lead development candidate, which has demonstrated clinical activity in esophageal cancer and cholangiocarcinoma when combined with chemotherapy; and we expect to report data from a repeat-dose study of TRX518, a novel GITR agonist monoclonal antibody which is believed to enhance an immune anti-tumor response."

"After careful review of many alternatives, the executive team and Board of Directors of Macrocure believe this transaction provides great potential for our shareholders," said Nissim Mashiach, President and Chief Executive Officer of Macrocure Ltd. "Leap Therapeutics has a maturing pipeline of novel drug candidates focused on key immuno-oncology targets that are designed to provide new and valuable treatment options for patients suffering from aggressive cancers. Furthermore, Leap's experienced management team has a track record relating to public and private companies and drug development success."

The executive team of Leap Therapeutics will remain in their positions in the combined entity that will be based out of Leap Therapeutics' current corporate office in Cambridge, Massachusetts. The combined entity's leadership team will consist of Christopher K. Mirabelli, PhD, who will serve as Chief Executive Officer and Chairman of the Board of Directors, Augustine Lawlor as Chief Operating Officer, and Douglas E. Onsi as Chief Financial Officer. At the closing, two Macrocure designated individuals, including Nissim Mashiach, will join Leap's Board of Directors.

The Board of Directors of both companies have unanimously approved the proposed merger. Macrocure's shareholders who hold approximately 51% of Macrocure's voting shares, have entered into agreements in support of the proposed transaction. While these agreements assure the approval of the merger, all Macrocure shareholders will be asked to vote on the merger at a meeting of shareholders. Additionally, entities affiliated with HealthCare Ventures and Eli Lilly, which own all of Leap's outstanding voting shares, have entered into agreements in support of the proposed transaction. The transaction is expected to close near year-end, subject to shareholder approval and other customary closing conditions which are set forth in the merger agreement.

Raymond James is serving as exclusive financial advisor to Macrocure Ltd.

Leap expects to file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission to register the shares of common stock to be issued in the merger. The registration statement will contain more detailed information about the transaction, as well as information about the respective companies. In addition, Macrocure expects to file a current report on Form 6-K shortly regarding the transaction. Macrocure also will be mailing a proxy statement to its shareholders, which will be filed on a current report on Form 6-K and attached as an appendix to Leap's Form S-4 registration statement.



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