APLI Appili Therapeutics Inc

Appili Therapeutics Inc. (TSX: APLI; OTCPink: APLIF) (“Appili”), a biopharmaceutical company focused on drug development for infectious diseases and medical countermeasures, today announced that it has entered into a definitive arrangement agreement (the "Arrangement Agreement") pursuant to which Aditxt Inc. (NASDAQ: ADTX) (“Aditxt”), a Richmond, Virginia- based company dedicated to discovering, developing, and deploying promising health innovation, through its wholly-owned subsidiary, Adivir, Inc. (“Adivir” or the “Buyer”), agreed to acquire all of the issued and outstanding Class A common shares (the "Appili Shares") of Appili by way of a court-approved plan of arrangement under the Canada Business Corporations Act (the "Transaction").

Overview and Rationale for the Transaction

Under the terms of the Arrangement Agreement, shareholders of Appili (the "Appili Shareholders") will receive (i) 0.002745004 of a share of common stock (each whole share, an “Aditxt Share”) of Aditxt (the “Share Consideration”) and (ii) US$0.0467 (or approximately CAD$0.0633 with reference to the Bank of Canada closing exchange rate on March 29, 2024) for each Appili Share held (the “Cash Consideration” and together with the Share Consideration collectively, the “Transaction Consideration”) representing implied total consideration per Appili Share of approximately US$0.0561(or approximately CAD$0.07598 with reference to the Bank of Canada closing exchange rate on March 29, 2024) based on the closing price of the Aditxt shares on March 28, 2024. The Transaction Consideration represents an approximately 117% premium to the trading price of the Appili Shares based on the closing price of the shares of Appili on April 1, 2024 (the last trading prior to the execution of the Arrangement Agreement) and an approximately 141% premium to the 30-day volume weighted average price of the Appili Shares prior to the date of the Arrangement Agreement.

The Transaction is expected to provide much needed resources and access to capital which will allow the combined enterprise to execute its development plans more efficiently. Aditxt and its subsidiaries have complementary medical and scientific knowledge in immunology and immune profiling and expertise in diagnostics and other tools, which can be used to expedite development programs and be used in clinical practice.

“This transaction with Aditxt aligns with our goals on multiple levels. Through the Aditxt platform, we can amplify our impact and reach in the fight against life-threatening infectious diseases. We see this as an opportunity for growth, innovation, and collaboration. Our shared vision and combined expertise will undoubtedly accelerate our mission to develop innovative treatments and solutions for some of the most challenging health threats facing the world today. Appili’s programs can now leverage Aditxt’s proven research and development, operations, and commercialization expertise to accelerate the development of our three programs. Secondly, as a NASDAQ-listed company, Aditxt will facilitate access to capital for Appili’s programs in this challenging economic environment. We welcome this new chapter, confident that together, we will achieve even greater heights in deploying innovative healthcare solutions.” said Dr. Don Cilla, President and CEO of Appili Therapeutics.

The Transaction is expected to enhance the combined entity’s portfolio of products and potentially create substantive synergies among existing programs, particularly precision diagnostics. Integrating Appili’s expertise and product lines with Aditxt could pave the way for a comprehensive approach to population health, from early detection and prevention to treatment. Collaboration within the Aditxt ecosystem has the potential to streamline patient care, from early detection through precision diagnostics to the development of tailored treatment strategies. This synergy provides an opportunity to accelerate innovation and enhances the effectiveness and personalization of healthcare delivery.

Amro Albanna, Co-Founder, Chairman, and CEO of Aditxt, elaborated on the significance of this acquisition, stating, “The acquisition of Appili would represent another step in Aditxt’s journey towards advancing promising innovations in health. Our mission is to accelerate some of the most promising health innovations, like those developed by Appili, to reach their full potential and to have a lasting impact. The urgency for innovative and effective public health solutions is unprecedented. The need to discover and bring new treatments to the market or to enhance existing ones to combat public health challenges has never been more critical. By integrating Appili’s proven expertise and diverse portfolio in the infectious disease and biodefence domain, Aditxt can substantially contribute to advancing public health solutions.”

Additional Transaction Details

The Transaction will be effected by way of a court-approved plan of arrangement pursuant to the Canada Business Corporations Act. Under the terms of the Arrangement Agreement, Adivir will acquire all of the issued and outstanding Appili Shares, with each Appili Shareholder receiving the Transaction Consideration. In connection with the Transaction, each outstanding option and warrant of Appili will be cashed-out based on the implied in-the-money value of the Transaction Consideration.

In connection with the Transaction Aditxt will: (i) agree to repay no less than 50% in outstanding senior secured debt at the closing of the Transaction (the “Closing”) and to repay the remaining outstanding senior secured debt by no later than December 31, 2024; (ii) assume all of Appili’s remaining outstanding liabilities and indebtedness, and (iii) agree to satisfy certain payables of Appili at Closing as further detailed in the Arrangement Agreement.

Additional details of the Transaction will be described in the management information circular that will be mailed to the Appili Shareholders (the "Appili Circular") in connection with a special meeting of the Appili Shareholders (the "Appili Meeting") currently expected to be held prior to end of calendar Q2 2024 to approve the Transaction. Additional information regarding the terms of the Arrangement Agreement, the background to the Transaction, the rationale for the recommendations made by the Special Committees (as defined below) and how shareholders can participate in and vote at the Appili Meeting will be provided in the Appili Circular.

The Transaction is subject to the approval of at least two-thirds of the votes cast by the Appili Shareholders at the Appili Meeting.

All of Appili's directors and officers, and certain shareholders holding approximately 11.9% of the total voting power of the issued and outstanding Appili Shares have entered into voting support agreements with the Buyer to vote in favor of the Transaction.

The Transaction is conditional upon Aditxt raising at least US$20 million in financing (the “Aditxt Financing”) prior to Closing. In addition, completion of the Transaction is subject to other customary conditions, including the receipt of all necessary court, regulatory and stock exchange approvals. Subject to the receipt of all required approvals, Closing is currently expected to occur not later than early calendar Q3 2024.

The Arrangement Agreement contains customary terms and conditions, including non-solicitation provisions which are subject to Appili's right to consider and accept a superior proposal subject to a matching right in favour of Aditxt. The Arrangement Agreement also provides for the payment of a termination fee of CDN$1.25 million in certain circumstances.

A copy of the Arrangement Agreement will be available through Appili’s filings with the securities regulatory authorities in Canada on SEDAR+ at www.sedarplus.ca.

None of the securities to be issued pursuant to the Arrangement Agreement have been or will be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and any securities issued in the Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

If the Transaction is completed, the Appili Shares will be delisted from the TSX and the OTCQX and Appili will apply to cease to be a reporting issuer.

Recommendation of Appili's Special Committee and Appili’s Board

The special committee (the "Appili Special Committee") of the board of directors of Appili (the "Appili Board"), comprised of Theresa Matkovits, Jurgen Froehlich and Prakash Gowd, after receiving legal and financial advice, including the fairness opinion from its independent financial advisor discussed below, has unanimously recommended the Transaction having determined that the consideration to be received by the Appili Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Appili Shareholders.

The Appili Special Committee has obtained a fairness opinion from BDO Canada LLP to the effect that, as of the date of the Arrangement Agreement, and subject to the assumptions, limitations and qualifications on which such opinions are based, the consideration to be received by the Appili Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Appili Shareholders.

After receiving the recommendations of the Appili Special Committee, and the fairness opinion from its financial advisor discussed above, the Appili Board has unanimously determined that: (i) the consideration to be received by the Appili Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Appili Shareholders; (ii) the Transaction is in the best interests of Appili; and (iii) it approve and authorize the Transaction and the entering into of the Arrangement Agreement and all ancillary agreements; and (iv) in accordance with and subject to the terms of the Arrangement Agreement, it recommend to the Appili Shareholders that they vote in favour of the resolution to approve the Transaction at the Appili Meeting.

Additional details concerning the rationale for the recommendations made by the Appili Special Committee and the Appili Board, including copies of the fairness opinion prepared by the independent financial advisor to the Appili Special Committee and the Appili Board, will be set out in the Appili Circular to be filed and mailed to the Appili Shareholders in the coming weeks, which, together with the Arrangement Agreement, will be available under Appili's profile on SEDAR+ at www.sedarplus.ca.

Lender Approval

Appili’s senior secured lender, Long Zone Holdings (“LZH”), has provided the requisite consent to the Transaction along with certain waivers required pursuant to the terms of the loan agreement between Appili and LZH. In connection with such consent and waivers, Appili has agreed to issue to LZH an aggregate of $18,000 worth of Appili Shares prior to the Closing, subject to TSX approval.

Advisors

Dentons Canada LLP acted as legal counsel to Appili. Bloom Burton Securities Inc. acted as financial advisor to the Appili Board and BDO Canada LLP acted as independent financial advisor to the Appili Special Committee.

Aird & Berlis LLP acted as Canadian legal counsel to Aditxt. Sheppard, Mullin, Richter & Hampton LLP acted as US securities counsel to Aditxt and Nelson Mullins Riley & Scarborough LLP acted as US M&A counsel to Aditxt.

About Aditxt

Aditxt is an innovation platform dedicated to discovering, developing, and deploying promising innovations. Aditxt’s ecosystem of research institutions, industry partners, and shareholders collaboratively drives their mission to “Make Promising Innovations Possible Together.” The innovation platform is the cornerstone of Aditxt’s strategy, where multiple disciplines drive disruptive growth and address significant societal challenges. Aditxt operates a unique model that democratizes innovation, ensures every stakeholder’s voice is heard and valued, and empowers collective progress.

Aditxt has a diverse innovation portfolio, including Adimune™, Inc., which is leading the charge in developing a novel class of therapeutics for retraining the immune system to combat organ rejection, autoimmunity, and allergies. Adivir™, Inc. focuses on enhancing national and population health and impacting public health globally. Pearsanta™, Inc., delivers rapid, personalized, and high-quality lab testing accessible anytime, anywhere, led by its CLIA-certified and CAP-accredited clinical laboratory based in Richmond, VA.

For more information about Aditxt, Inc., visit www.aditxt.com.

About Appili

Appili is an infectious disease biopharmaceutical company that is purposefully built, portfolio-driven, and people-focused to fulfill its mission of solving life-threatening infections. By systematically identifying urgent infections with unmet needs, Appili’s goal is to strategically develop a pipeline of novel therapies to prevent deaths and improve lives. Appili is currently advancing a diverse range of anti-infectives, including an FDA approved ready-made suspension of metronidazole for the treatment of antimicrobial infections, a vaccine candidate to eliminate a serious biological weapon threat, and a topical antiparasitic for the treatment of a disfiguring disease. Led by a proven management team, Appili is at the epicenter of the global fight against infection.

For more information about Appili Therapeutics Inc., visit www.AppiliTherapeutics.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, "may", "would", "could", "will", "likely", "expect", "anticipate", "believe, "intend", "plan", "forecast", "project", "estimate", "outlook" and other similar expressions. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.

Forward-looking statements in this news release include, but are not limited to: statements with respect to the anticipated completion of the Transaction, the timing for its completion, and the delisting of the Appili Shares from the TSX; the timing for the holding of the Appili Meeting; the satisfaction of closing conditions which include, without limitation (i) required Appili shareholder approval, (ii) the Aditxt Financing, (iii) certain termination rights available to the parties under the Arrangement Agreement, and (iv) other approvals and closing conditions contained in the Arrangement Agreement; statements with respect to the anticipated effects of the Transaction on Aditxt and its strategy going forward and statements with respect to the anticipated benefits associated with the acquisition of Appili. Actual results and developments may differ materially from those contemplated by these statements.

Such forward-looking statements are based on certain assumptions regarding Aditxt and Appili, including the successful completion of the Transaction, anticipated benefits from the Transaction, and expected growth, results of operations, performance, industry trends and growth opportunities. While Appili considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect.

Among other things, there can be no assurance that the Transaction will be completed or that the anticipated benefits from the Transaction will be achieved.

Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, risks relating to: (i) current and future market conditions; (ii) federal, state, provincial, territorial, local and foreign government laws, rules and regulations; (iii) the ability of the parties to satisfy the closing conditions of the Arrangement Agreement, including the Aditxt Financing; (iv) the ability of the Appili Board to consider and approve a superior proposal for Appili prior to the completion of the Transaction; (v) failure to receive the necessary shareholder, court or regulatory approvals where applicable, or failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; (vi) unforeseen challenges in integrating the businesses of Aditxt and Appili; (vii) failure to realize the anticipated benefits of the Transaction; (viii) the business, operational and/or financial performance or achievements of Aditxt and Appili may be materially different from that currently anticipated; (ix) other unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions; and (x) the risk factors set out in Appili's most recently filed annual information form, as well as discussions of potential risks, uncertainties, and other important factors in the Appili’s other filings with the Canadian securities regulators on SEDAR+. In particular, the benefits anticipated in respect of the Transaction are based on the current business, operational and financial position of each of Aditxt and Appili, which are subject to a number of risks and uncertainties. Readers are cautioned that the foregoing list of risks, uncertainties and assumptions are not exhaustive. In addition, if the Transaction is not completed, and Appili continues as an independent entity, there are risks that the announcement of the Arrangement Agreement and the dedication of substantial resources of Appili to the completion of the Proposed Transaction could have an impact on its business and strategic relationships, operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Consequently, the reader is cautioned not to place undue reliance on the forward-looking statements and information contained in this press release.

The statements in this press release are made as of the date of this release. Appili disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

No securities regulatory authority has either approved or disapproved of the contents of this press release. This press release is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.

Media:Jenna McNeil, Communications ManagerAppili Therapeutics E: JMcNeil@AppiliTherapeutics.com

Investor Relations:Don Cilla, President and CEO Appili TherapeuticsE: Info@AppiliTherapeutics.com