ANGN Angion Biomedica Corporation

1.The following new disclosure under a section titled “Legal Proceedings” is added to page 18 of the proxy statement/prospectus/information statement right after the section titled “Anticipated Accounting Treatment”:

Legal Proceedings (see page 134)

 

A lawsuit was filed in the United States District Court for the Eastern District of New York on February 17, 2023 by a purported stockholder of Angion in connection with the Merger. The lawsuit is captioned Klein v. Angion Biomedica Corp., et al., No. 1:23-cv-01313 (E.D.N.Y.) (the “Klein Complaint”). The Klein Complaint named as defendants Angion and the members of the Angion Board. The Klein Complaint alleged claims for breaches of fiduciary duty against the members of the Angion Board, aiding and abetting breaches of fiduciary duty against Angion, violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the members of the Angion Board. The plaintiff contended that the registration statement on Form S-4 filed on February 13, 2023 omitted or misrepresented material information regarding the Merger, rendering the Registration Statement false and misleading. The Klein Complaint sought injunctive and declaratory relief, as well as damages. On February 21, 2023, the plaintiff filed a notice of voluntary dismissal of the Klein Complaint.

 

Thereafter, between February 23 and May 18, 2023, Angion received eight demands from purported stockholders of Angion making substantially similar claims as in the Klein Complaint regarding the disclosures in the Registration Statement related to the Merger. In addition, on or about April 19, 2023, Angion received a books and records demand under 8 Del. C § 220, seeking certain documents and information related to the Merger (the “Records Request”, and collectively, the “Demands”).

 

Additional lawsuits may be filed against Angion, Merger Sub, Elicio, and/or the Angion Board, and additional demands may be received in connection with the Merger and the proxy statement/prospectus/information statement, or the Klein Complaint described above may be refiled. The defendants dispute the allegations in the Demands. For additional information about the Demands, see page 134 in the section entitled “Legal Proceedings.”

2.The following disclosure is inserted after the first full paragraph under the risk factor titled “[l]awsuits have been filed, and additional lawsuits may be filed, relating to the Merger. An adverse ruling in any such lawsuit may prevent the Merger from being consummated,” on page 21 of the proxy statement/prospectus/information statement:

Additionally, between February 23 and May 18, 2023, Angion received the Demands making substantially similar claims as in the Klein Complaint regarding the disclosures in the Registration Statement related to the Merger. In addition, on or about April 19, 2023, Angion received the Records Request, seeking certain documents and information related to the Merger.

 

Additional lawsuits may be filed against Angion, Merger Sub, Elicio and/or the Angion Board, and additional demands may be received in connection with the Merger and the proxy statement/prospectus/information statement, or the Klein Complaint described above may be refiled. The defendants dispute the allegations in the Demands. For additional information about the complaints, see page 134 in the section entitled “Legal Proceedings.”

 

3.The following disclosure replaces the seventh full paragraph on page 100 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

On July 18, 2022, the Angion Board held a videoconference meeting, with representatives of Angion’s management and representatives of Cooley attending, to conduct a review of the value creation timelines for Angion’s current assets and to discuss strategic options for Angion, as well as its likely cash runway under such scenarios. The strategic options the Angion Board considered were remaining as a standalone company, dissolving Angion and distributing remaining cash to stockholders, and sale of the company, including through a reverse merger, sale to another company and sale to a private investor. The Angion Board discussed its fiduciary duties in connection with the evaluation of the strategic options available to Angion. The Angion Board considered the benefits and risks of the various strategic alternatives, including the likelihood of finding a counterparty for a transaction, and the timeline and costs associated with such strategic options, such as the six months to a year (plus additional time to resolve any potential litigation) it would take to dissolve the Company, wind down its business, run a third-party process for a sale of its assets, and distribute its cash, given that the Company was projected to have less than $30 million in cash by the end of 2023. The Angion Board also discussed steps to preserve and extend its cash runway.

4.The following disclosure replaces the ninth full paragraph on page 103 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

On October 28, 2022, Angion received a non-binding indication of interest from Elicio (the “Elicio Initial Proposal”). Elicio proposed a reverse merger with a post-closing ownership split of 67.74% for Elicio and 32.23% for Angion based on respective valuations of $105 million and $50 million and assuming Angion’s cash balance at closing is $35 million, which would be adjusted for Angion’s actual net cash at closing. Elicio’s non-binding indication of interest also indicated its intention to proceed with a capital raise in the near-term to fund its operations. Elicio also proposed that the combined entity’s board of directors would have nine directors, with six directors selected by Elicio and three selected by Angion and/or investors in the planned capital raise.

 

5.The following disclosure replaces the sixth full paragraph on page 104 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

On November 28, 2022, Elicio submitted a non-binding term sheet (the November 28 Term Sheet) that reflected a post-closing ownership split of 69.5% for Elicio and 30.5% for Angion equity holders on a fully diluted basis for each of Elicio and Angion, and, for Angion, using the treasury stock method and excluding out-of-the-money options and out-of-the money warrants of Angion. The post-closing ownership reflected relative valuations of $105 million and $46 million and assumed Angion’s net cash at closing was $31 million. The November 28 Term Sheet included terms for Angion to provide a $10 million bridge loan to Elicio, bearing interest at 1.0% annually upon signing of the merger agreement, with the loan forgiven at closing and credited towards Angion’s net cash. Additionally, the November 28 Term Sheet proposed a nine member board of directors with six designees from Elicio and three designees from Angion, one of whom would be Dr. Venkatesan, that the continuing executive officers and directors of the combined company, as well as the existing major investors of each of Angion and Elicio, enter into lock-up agreements for a period of 180 days following the closing of the proposed merger, that officers and directors of each of Angion and Elicio, together with any stockholders of Angion and Elicio, respectively, affiliated with any such officer or director, enter into support agreements to vote in favor of the proposed merger, a binding 45-day exclusivity provision, a detailed definition of Angion net cash, that the definitive agreement include customary deal protections such as no-shop provisions and fiduciary outs for both parties, and included a condition to Elicio’s obligation to consummate the proposed merger that Angion net cash at closing be at least $25 million.

 

6.The following disclosure replaces the seventh full paragraph on page 105 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

On December 7, 2022, Mr. Connelly sent Dr. Venkatesan a revised non-binding term sheet (the December 7 First Term Sheet), including a post-closing ownership of 69.5% for Elicio and 30.5% for Angion equity holders. The December 7 First Term Sheet revised the collar range such that the post-closing ownership split would be subject to adjustment to the extent Angion’s actual net cash at closing is greater than $31 million or less than $28 million, and added that the post-closing equity split would be adjusted dollar-for-dollar to the extent Elicio closes any equity investment prior to the closing. The December 7 First Term Sheet also proposed a nine member board of directors with seven designees from Elicio and two designees from Angion, one of whom would be Dr. Venkatesan, proposed that exclusivity end 30 days after the signing of the term sheet and included certain changes to the definition of Angion net cash. Additionally, the December 7 First Term Sheet also included the option for current investors of Elicio (or affiliates thereof) to invest up to $15 million in equity of Elicio prior to Closing without consent from Angion.

 

7.The following disclosure replaces the fourth full paragraph on page 106 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

On December 14, 2022, Dr. Venkatesan sent Mr. Connelly a revised term sheet, executed by Angion (the December 14 Term Sheet), adding back terms for Angion to provide a bridge loan. The December 14 Term Sheet proposed that the bridge loan would have an original issue discount of 20% based on a principal amount of $12.5 million. The December 14 Term Sheet also provided that if the merger was consummated or Elicio terminated the merger agreement for Angion’s breach of the merger agreement under certain circumstances, the bridge loan would bear simple interest at 1.0% annually from and after the date of the merger agreement based on a principal amount equal to the amount actually advanced by Angion. Pursuant to the December 14 Term Sheet, if Angion terminated the merger agreement for Elicio’s breach of the merger agreement under circumstances, the outstanding principal balance of the bridge note would be paid back by Elicio within ten business days of such termination. The December 14 Term Sheet also included a post-closing ownership of 65.5% for Elicio and 34.5% for Angion equity holders. The December 14 Term Sheet revised the collar range such that the post-closing ownership split would be subject to adjustment to the extent Angion’s actual net cash at closing is greater than $31.5 million or less than $26.5 million. The December 14 Term Sheet also included that Elicio would not have the right to terminate the merger agreement for any fiduciary out, proposed a nine member board of directors with six designees from Elicio and three designees from Angion, one of whom would be Dr. Venkatesan, proposed that exclusivity end on January 6, 2023 and included certain clarifications to the definition of Angion net cash. Additionally, the December 14 Term Sheet clarified that the $15 million investment contemplated by the December 7 Second Term Sheet, which investment may be in debt, equity, or convertible debt or equity of Elicio, would all be converted into equity of Elicio at the Closing.

8.The following disclosure is inserted after the second full paragraph on page 108 of the proxy statement/prospectus/information statement:

On April 11, 2023, the Angion Board held a videoconference meeting, with Angion management and representatives of Cooley present, to discuss the Merger and related processes and timelines, including the selection of two independent Angion directors to serve on the board of directors of the post-Merger entity along with Dr. Venkatesan. During this meeting, after considering the expertise of each Angion independent director and such directors’ discussions with Mr. Connelly, the Angion Board voted to approve Ms. Wilson and Dr. Nissenson as the two additional Angion designees to serve on the board of directors of the post-closing entity.

In the course of preparing for the closing of the Merger, representatives of Oppenheimer identified, and on May 12, 2023, notified Angion management regarding the following mathematical errors in the calculation of unlevered free cash flows in the Financial Projections for Elicio, as prepared by Elicio and adjusted by Angion management: (1) interest income was inadvertently added to EBIT; and (2) increases for working capital should have been deducted and decreases to working capital should have been added rather than vice‐versa.  At the Angion Board’s request, Oppenheimer updated its discounted cash flow analysis and its related implied exchange ratio range analysis to account for such changes, as of January 13, 2023, the date of its opinion.  Oppenheimer had previously discounted the future cash flows to December 31, 2023, and by taking into account the changes to the Financial Projections discussed above and by discounting to December 31, 2022, the range of approximate implied total equity value of Elicio decreased from $561 million ‐ $773 million to $402 million ‐ $573 million and the related calculation of ranges of Angion’s equity value as a percentage of the combined company’s equity value increased from 6.1% ‐ 8.2% to 8.0% ‐ 11.1%.

Oppenheimer reviewed enterprise values of the selected public companies, calculated as equity values based on closing stock prices on January 12, 2023 plus debt, less cash and cash equivalents, including marketable securities and short-term investments. Financial data of the selected companies were based on public filings and other publicly available information. The enterprise values for the selected companies were as follows: $240.7 million (ALX Oncology); $27.5 million (BioAtla); $191.3 million (Sutro Biopharma); $159.3 million (PDS Biotechnology); $183.7 million (Aadi Bioscience); $154.2 million (Gritstone bio); $392.7 million (Omega Therapeutics); $78.8 million (Biomea Fusion); $117.6 million (Acrivon Therapeutics); $97.5 million (Cue Biopharma); and $49.9 million (Kinnate Biopharma).  The median enterprise value observed for the selected companies was $154.2 million. The selected companies with publicly traded equity securities and the corresponding financial data are below:

 

($ shown in millions, except share price)

10.The following disclosure replaces the second full paragraph on page 116 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

Oppenheimer conducted a discounted cash flow analysis, which is designed to imply a potential current value of Elicio by calculating the estimated present value of the standalone after-tax free cash flows that Elicio management forecasted to be generated, as adjusted by Angion’s management, during the calendar years ending December 31, 2023 through December 31, 2039 (provided below in the section titled “Certain Unaudited Financial Projections”). As described above in the section titled “Background of the Merger,” in the course of preparing for the closing of the Merger, representatives of Oppenheimer identified and, on May 12, 2023, notified Angion management regarding mathematical errors in the calculation of unlevered free cash flows for Elicio, as prepared by Elicio and adjusted by Angion management. After correcting the errors and at the Angion Board’s request, Oppenheimer updated its discounted cash flow analysis to account for such changes, as of January 13, 2023, the date of its opinion.  Oppenheimer calculated terminal values for Elicio by applying a range of increasing perpetuity rates of 0.0% to 2.0% (which were chosen based on Oppenheimer’s professional judgment) to the updated calendar year 2039 unlevered free cash flow in order to derive a range of terminal values for Elicio. The cash flow and terminal values were then discounted to present value using discount rates ranging from 28.5% to 31.5%, which were based on venture capital rates of return for companies in a similar stage of development (bridge/initial public offering - stage financing) and selected based on Oppenheimer’s professional judgment. After adding Elicio’s net cash of $7.8 million as of December 31, 2022 (based on internal estimates provided by Elicio management and approved for Oppenheimer’s use by Angion’s management), Oppenheimer derived an approximate implied total equity value of Elicio of $402561 million to $573773 million.

11.The following disclosure replaces the fifth full paragraph starting on page 116 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

Oppenheimer reviewed adjusted implied total enterprise values of the selected precedent initial public offerings, calculated as fully-diluted initial public offering post-money equity value less pro forma net debt, adjusted to reflect the performance of the SPDR S&P Biotech ETF (XBI) Index from the date of such company’s initial public offering to January 12, 2023. Financial data of the selected precedent initial public offerings were based on public filings and other publicly available information. The adjusted implied total enterprise values for the selected precedent initial public offerings were as follows: $218.1 million (Acrivon Therapeutics); $125.4 million (Xilio Therapeutics); $129.8 million (Immuneering); and $104.2 million (Werewolf Therapeutics). The median adjusted implied total enterprise value observed for the selected precedent initial public offerings was $127.6 million. The selected precedent initial public offerings and the corresponding financial data are below:

 

($ shown in millions)

12.The following disclosure replaces the second and third full paragraphs on page 117 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

Oppenheimer utilized the range of implied equity values of Elicio based on the Selected Public Companies Analyses, the Discounted Cash Flow Analysis and the Selected Precedent Initial Public Offering Analysis to calculate the implied equity values for Elicio of approximately $147 million to approximately $177 million, approximately $561 million to approximately $773 million (approximately $402 million to approximately $573 million using the corrected unlevered free cash flows in the Financial Projections), and approximately $123 million to approximately $148 million, respectively, and compared those amounts to the $95.0 million equity value of Elicio pursuant to the Merger Agreement. Oppenheimer also calculated the implied number of shares of Angion common stock that would be issued to Elicio stockholders in the Merger based on the implied equity value of Angion to the implied equity value of Elicio based on the foregoing analytical methods.

13. The following disclosure is inserted after the second full paragraph on page 121 of the proxy statement/prospectus/information statement and replaces the chart and related footnotes on page 121 of the proxy statement/prospectus/information statement. The modified text is underlined below:

 

As described above in the section titled “Background of the Merger,” in the course of preparing for the closing of the Merger, representatives of Oppenheimer identified and, on May 12, 2023, notified Angion management regarding certain mathematical errors in the calculation of unlevered free cash flows in the Financial Projections for Elicio, as prepared by Elicio and adjusted by Angion management: (1) interest income was inadvertently added to EBIT; and (2) increases for working capital should have been deducted and decreases to working capital should have been added rather than vice‐versa. Additionally, grant revenue was inadvertently not included in the disclosure in the proxy statement/prospectus/information statement of the estimated total global revenue for 2023. The results of correcting those errors, as well as the unaffected inputs with respect to taxes, depreciation and amortization, and capital expenditures, are set forth below:

 

Financial Projections

($ in millions)

(1) Equal to total worldwide net sales and grant revenue.

14.The following disclosure replaces the last full paragraph on page 121 of the proxy statement/prospectus/information statement. The modified text is underlined or omitted as strikethrough text below:

 

On January 13, 2023, the Angion Board adopted the Angion Biomedica Corp. Retention Bonus Plan (Retention Bonus Plan). Participants in the Retention Bonus Plan include Jay Venkatesan, M.D., Angion’s President, Chief Executive Officer and Chairman, and Jennifer Rhodes, Angion’s Executive Vice President, Chief Business Officer, General Counsel, Chief Compliance Officer and Secretary. The Retention Bonus Plan provides for the payment of a cash retention bonus equal to 100% of a participant’s base salary (i.e., $608,000 in the case of Dr. Venkatesan and $440,840 in the case of Ms. Rhodes), 65% of which becomes earned and payable upon the occurrence of a corporate triggering event (defined to include a change in control (as defined in Angion’s 2021 Incentive Award Plan), a reverse merger or a dissolution) and 35% of which becomes earned and payable three months after the occurrence of such corporate triggering event, subject in each case to earlier payment upon the occurrence of a qualifying termination of the participant’s employment by Angion without “cause” or by the participant for “good reason,” each as defined in the Retention Bonus Plan. Upon the earlier of a corporate triggering event or a qualifying termination, time-based equity awards will vest in full, the post-termination exercise period of options held by the participant will be extended by four years (but no later than the original term of the option) and participants will receive an additional lump sum cash payment (approximately $1,464,000 in the case of Dr. Venkatesan and $642,000 in the case of Ms. Rhodes, in each case less applicable withholding). Participants will no longer have the right to receive any payments under Angion’s Executive Separation Benefits Plan. The receipt of payments under the Retention Bonus Plan is subject to the execution of a general release of claims by the participant. Concurrently, the Angion Board approved modifications of the Angion stock options held by Gregory Curhan, Angion’s Chief Financial Officer, such that, upon the earlier of a corporate triggering event or a qualifying termination and subject to Mr. Curhan’s execution of a general release of claims, one option granted in 2022 will vest in full and the post-termination exercise period of all options will be extended by four years (but no later than the original term of the option).

15.The following new disclosure is inserted after the last full paragraph on page 134 of the proxy statement/prospectus/information statement:

Legal Proceedings

The Klein Complaint was filed in the United States District Court for the Eastern District of New York on February 17, 2023 by a purported stockholder of Angion in connection with the Merger. The Klein Complaint named as defendants Angion and the members of the Angion Board. The Klein Complaint alleged claims for breaches of fiduciary duty against the members of the Angion Board, aiding and abetting breaches of fiduciary duty against Angion, violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the members of the Angion Board. The plaintiff contended that the registration statement on Form S-4 filed on February 13, 2023 omitted or misrepresented material information regarding the Merger, rendering the Registration Statement false and misleading. The Klein Complaint sought injunctive and declaratory relief, as well as damages. On February 21, 2023, the plaintiff filed a notice of voluntary dismissal of the Klein Complaint. Although the plaintiff voluntarily dismissed this case, litigation of this type is prevalent in mergers involving public companies, and other potential plaintiffs may file lawsuits challenging the Merger, or the Klein Complaint may be refiled. Additionally, between February 23 and May 18, 2023, Angion received the Demands from purported stockholders of Angion making substantially similar claims as in the Klein Complaint and demanding that Angion’s Board remedy alleged violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and violations of Section 20(a) of the Exchange Act, based on alleged material omissions or misrepresentations regarding the Merger in the proxy statement/prospectus/information statement. On or about April 19, 2023, Angion received the Records Request under 8 Del. C § 220, seeking certain documents and information related to the Merger.

Additional lawsuits may be filed against Angion, Merger Sub, Elicio, and/or the Angion Board and additional demands may be received in connection with the Merger and the Registration Statement, or the Klein Complaint described above may be refiled. The defendants dispute the allegations in the Demands.

This Form 8-K contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. This includes statements regarding: the anticipated completion and effects of the proposed Merger; anticipated communications regarding each of Angion’s and Elicio’s entry into the Merger Agreement; and other statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Angion uses words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on Angion’s expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors, including, but not limited to, risks relating to: the completion of the Merger, including the need for stockholder approval and the satisfaction (or waiver) of closing conditions; the ability of Angion to remain listed on the Nasdaq Global Market; and the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement.

 

New factors emerge from time to time and it is not possible for Angion to predict all such factors, nor can Angion assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These risks, as well as other risks associated with the Merger, are more fully discussed in the proxy statement/prospectus/information statement filed with the SEC in connection with the contemplated transactions. Additional risks and uncertainties are identified and discussed in the “Risk Factors” section of Angion’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. Forward-looking statements included in this Form 8-K are based on information available to Angion as of the date of this Form 8-K. Angion undertakes no obligation to update such forward-looking statements to reflect events or circumstances after the date of this Form 8-K, except to the extent required by law.

 

Additional Information and Where to Find It

 

The contemplated transactions referenced in this Form 8-K have not yet been consummated. This Form 8-K is for informational purposes only and is not a substitute for any materials that Angion has filed or may file with the SEC. In connection with the proposed Merger, pursuant to the Merger Agreement, Angion has filed relevant materials with the SEC, including this Form 8-K, the Registration Statement and the proxy statement/prospectus/information statement. ANGION URGES INVESTORS AND STOCKHOLDERS TO READ THESE MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ANGION, ELICIO AND THE CONTEMPLATED TRANSACTIONS AND RELATED MATTERS. Investors and stockholders will be able to obtain free copies of this Form 8-K, the Registration Statement, the proxy statement/prospectus/information statement and other documents filed by Angion with the SEC (when they become available) through the website maintained by the SEC at www.sec.gov. In addition, investors and stockholders will be able to obtain free copies of this Form 8-K, the Registration Statement, the proxy statement/prospectus/information statement and other documents filed by Angion with the SEC by contacting Investor Relations by email at investors@angion.com. Investors and stockholders are urged to read this Form 8-K, the Registration Statement and the proxy statement/prospectus/information statement, and the other relevant materials when they become available before making any voting or investment decisions.

Participants in the Solicitation

 

Angion and Elicio, and each of their respective directors and executive officers and certain of their other members of management and employees, may be deemed to be participants in the solicitation of proxies in connection with the contemplated transactions. Information about Angion’s directors and executive officers is included in Angion’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 17, 2023, as amended by Amendment No 1 on Form 10-K/A, filed with the SEC on April 28, 2023, and the proxy statement/prospectus/information statement. Additional information regarding these persons and their interests in the contemplated transactions is included in the proxy statement/prospectus/information statement. These documents can be obtained free of charge from the sources indicated above.

 

No Offer or Solicitation

 

This Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor will there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No public offering of securities will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.