| Item 1.01 |
Entry into a Material Definitive Agreement. |
On December 19, 2024, OraSure Technologies, Inc., a Delaware corporation (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with, Project Watson Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Sherlock Biosciences, Inc., a Delaware corporation (“Sherlock”), and Mr. Paul Meister, solely in his capacity as representative of the securityholders of Sherlock for certain purposes described in the Merger Agreement, pursuant to which the Company acquired Sherlock by way of a merger of the Merger Sub with and into Sherlock, with Sherlock surviving the merger and continuing as a wholly-owned subsidiary of the Company (the “Merger”).
Sherlock’s Board of Directors (the “Sherlock Board”) determined that the transactions contemplated by the Merger Agreement, including the Merger, are in the best interests of Sherlock and its stockholders, and approved the Merger Agreement and the transactions contemplated by the Merger Agreement. The Sherlock Board also resolved to recommend that Sherlock’s stockholders vote to adopt and approve the Merger Agreement and the Merger.
The consideration to be paid by the Company in connection with the Merger pursuant to the Merger Agreement consists of, subject to the terms and conditions of the Merger Agreement: (i) an upfront payment of $5 million (such payment, the “Initial Merger Consideration”), plus certain legal expenses and directors’ and officers’ tail policy insurance costs, (ii) two milestone payments of up to an aggregate of $20 million, each conditioned upon the achievement of a regulatory milestone associated with Sherlock’s Chlamydia Trachomatis/Neisseria Gonorrhoeae (“CT/NG”) test, and (iii) quarterly royalty payments, through December 31, 2034, representing a mid-single digit percentage of the net sales the CT/NG test received by the Company (or its affiliates) in each jurisdiction where the CT/NG test has received regulatory approval (such contingent payments referred to in the foregoing items (i) and (ii), the “Future Payments” and together with the Initial Merger Consideration, the “Total Merger Consideration”), and with respect to each Future Payment, subject to certain deductions and the Company’s right of set-off against certain items as set forth in the Merger Agreement.
Pursuant to the Merger Agreement, the Total Merger Consideration will be allocated among Sherlock’s noteholders, preferred stockholders and common stockholders as of immediately prior to the effective time of the Merger as follows:
| |
- |
Each convertible note issued by Sherlock and outstanding immediately prior to the effective time of the Merger will be cancelled and converted into the right to receive an amount in cash equal to the portion of the Initial Merger Consideration payable with respect to such convertible note as set forth on an initial payment schedule that is attached to the Merger Agreement and the portion of each Future Payment (if any) payable with respect to such convertible note as will be set forth on a future payment allocation schedule to be prepared by the representative of the securityholders of Sherlock, provided that the amounts payable to the holders of all convertible notes issued by Sherlock pursuant to the Merger Agreement will not exceed the aggregate of the payout amounts with respect to such convertible notes (the payout amount with respect to each convertible note being the outstanding principal amount (together with all accrued but unpaid interest as of the date Merger Agreement), multiplied by three) (such aggregate of the payout amounts, the “Note Payout Amount”). |
| |
- |
Each share of Sherlock’s preferred stock will be cancelled and automatically converted into the right to receive its pro rata (calculated in accordance with the liquidation waterfall provision in Sherlock’s certificate of incorporation) of each Future Payment that is in excess of the Note Payout Amount. |
| |
- |
Each share of Sherlock’s common stock will be cancelled and automatically converted into the right to receive its pro rata (calculated in accordance with the liquidation waterfall provision in Sherlock’s certificate of incorporation) of each Future Payment that is in excess of the Note Payout Amount. |
Each stock option granted by Sherlock and outstanding immediately before the effective time of the Merger will be terminated and cancelled without the payment of any consideration in respect thereof and the holders of such stock options will cease to have any rights with respect thereto.
The Merger Agreement contains customary representations, warranties, indemnities and covenants of the Company and Sherlock and its securityholders.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2024.
2
