PREM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Filed by the Registrant ☒   Filed by a party other than the Registrant ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under §240.14a-12

Landos Biopharma, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 


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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION, DATED APRIL 15, 2024

 

 

LOGO

Landos Biopharma, Inc.

P.O. Box 11239

Blacksburg, Virginia 24062

Dear Landos Biopharma, Inc. Stockholder:

You are cordially invited to attend a virtual special meeting (including any adjournments or postponements thereof, the “Special Meeting”) of stockholders of Landos Biopharma, Inc. (“Landos”) to be held virtually on     , 2024, at      Eastern Time via live audio webcast on the Internet at www.virtualshareholdermeeting.com/LABP2024SM. The accompanying proxy statement is dated     , 2024 and, together with the enclosed form of proxy card, is first being mailed on or about     , 2024.

At the Special Meeting, you will be asked to consider and vote on (i) a proposal to adopt the Agreement and Plan of Merger, dated March 24, 2024 (such agreement, as it may be amended, modified or supplemented from time to time, the “Merger Agreement”), by and among Landos, Bespin Subsidiary, LLC, a Delaware limited liability company and a wholly owned subsidiary of AbbVie (“Parent”), and Bespin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and AbbVie Inc., a Delaware corporation (“AbbVie” or “Guarantor”), solely for the limited purposes set forth therein, and (ii) a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the proposal to adopt the Merger Agreement if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”). Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Landos, with Landos continuing as the surviving corporation and a wholly owned subsidiary of Parent (the “Merger”).

If the Merger is completed, you will be entitled to receive (i) $20.42 in cash, without interest thereon and subject to any withholding of taxes, for each share of Landos common stock (“common stock”) that you own (unless you have properly exercised your appraisal rights), which represents a premium of approximately 161% to the closing price of $7.83 of Landos’ common stock on March 22, 2024, the last full trading day prior to the announcement of the Merger and (ii) one (1) contractual contingent value right for each share of common stock that you own (unless you have properly exercised your appraisal rights), representing the right to receive a contingent payment in cash, without interest thereon and subject to any withholding of taxes, upon the achievement of the milestone requirements set forth in the Contingent Value Rights Agreement (the “CVR Agreement”) between Parent, Broadridge Corporate Issuer Solutions, LLC (the “Rights Agent”) and AbbVie, for the limited purposes set forth therein, in substantially the form attached to the Merger Agreement.

Landos’ Board of Directors (the “Board of Directors”), after considering the factors more fully described in the enclosed proxy statement, has unanimously (a) determined that the consummation of the Merger, the other transactions contemplated by the Merger Agreement, the Merger Agreement, the CVR Agreement and the Voting Agreement (the “Transactions”), are advisable and fair to, and in the best interests of, Landos and its stockholders; (b) authorized and approved the execution, delivery, and performance of the Merger Agreement, the CVR Agreement and the Voting Agreement by Landos and approved the Merger; (c) recommended the adoption of the Merger Agreement by Landos’ stockholders and (d) directed that the Merger Agreement be submitted for consideration by Landos’ stockholders at the Special Meeting. The Board of Directors unanimously recommends, on behalf of Landos, that you vote (1) “FOR” the adoption of the Merger Agreement and (2) “FOR” the Adjournment Proposal.

Landos record stockholders or beneficial owners who do not vote in favor of the proposal to adopt the Merger Agreement will have the right to seek appraisal of the “fair value” of their shares of our common stock (exclusive of any elements of value arising from the accomplishment or expectation of the merger and together


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with interest (as described in the accompanying proxy statement) to be paid on the amount determined to be “fair value”) in lieu of receiving $20.42 in cash, without interest thereon and subject to any withholding of taxes, and one (1) contractual contingent value right per share of common stock if the merger is completed, as determined in accordance with Section 262 of the General Corporation Law of the State of Delaware (which we refer to as the “DGCL”). To do so, a Landos record stockholder or beneficial owner must properly demand appraisal before the vote is taken on the Merger Agreement and comply with all other requirements of the DGCL, including Section 262 of the DGCL, which are summarized in the accompanying proxy statement, and certain conditions set forth in Section 262(g) of the DGCL must be satisfied. A copy of Section 262 of the DGCL is accessible, without subscription or cost, at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262 and is incorporated by reference herein.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement, the Merger and the CVR Agreement. A copy of the Merger Agreement is attached as Annex A to the proxy statement (including the form of CVR Agreement which is an exhibit to the Merger Agreement).

The proxy statement also describes the actions and determinations of the Board of Directors in connection with its evaluation of the Merger Agreement and the Merger. You should carefully read and consider the entire enclosed proxy statement and its annexes, including, but not limited to, the Merger Agreement, as they contain important information about, among other things, the Merger and how it affects you.

Whether or not you plan to attend the Special Meeting virtually, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). If you attend the Special Meeting and vote at the meeting your vote will revoke any proxy that you have previously submitted.

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

Your vote is very important, regardless of the number of shares that you own. We cannot complete the Merger unless the proposal to adopt the Merger Agreement is approved by the affirmative vote of the holders of a majority of the shares of Landos’ common stock that are issued and outstanding as of the close of business on     , 2024 , which is the record date for the Special Meeting.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(212) 929-5500 (Call Collect)

Or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

On behalf of the Board of Directors, I thank you for your support and appreciate your consideration of this matter.

Sincerely,

 

 

 

Gregory Oakes

President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger, passed upon the merits or fairness of the Merger Agreement or the transactions contemplated thereby, including the proposed Merger, or passed upon the adequacy or accuracy of the information contained in the accompanying proxy statement. Any representation to the contrary is a criminal offense.


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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION, DATED APRIL 15, 2024

 

 

LOGO

Landos Biopharma, Inc.

P.O. Box 11239

Blacksburg, Virginia 24062

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON     , 2024

Notice is hereby given that a virtual special meeting of stockholders (including any adjournments or postponements thereof, the “Special Meeting”) of Landos Biopharma, Inc., a Delaware corporation (“Landos”), to be held virtually on     , 2024, at     Eastern Time via live audio webcast on the Internet at www.virtualshareholdermeeting.com/LABP2024SM, for the following purposes:

 

  1.

To consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated March 24, 2024 (such agreement, as it may be amended, modified or supplemented from time to time, the “Merger Agreement”), by and among Landos, Bespin Subsidiary, LLC, a Delaware limited liability company and a wholly owned subsidiary of AbbVie (“Parent”), and Bespin Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and AbbVie Inc., a Delaware corporation (“AbbVie”), solely for the limited purposes set forth therein. Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Landos, with Landos continuing as the surviving corporation and a wholly owned subsidiary of Parent (the “Merger”); and

 

  2.

To consider and vote on any proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the proposal to adopt the Merger Agreement if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

Only stockholders of record as of the close of business on     , 2024, are entitled to notice of the Special Meeting and to vote at the Special Meeting or any adjournment, postponement or other delay thereof.

Landos’ Board of Directors (the “Board of Directors”) unanimously recommends, on behalf of Landos, that you vote (1) “FOR” the adoption of the Merger Agreement and (2) “FOR” the Adjournment Proposal.

All stockholders are invited to attend the Special Meeting virtually. Whether or not you plan to attend the Special Meeting virtually, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). If you attend the Special Meeting and vote virtually, your vote will revoke any proxy that you have previously submitted. If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

 

 

 

Gregory Oakes

President and Chief Executive Officer

Blacksburg, VA

    , 2024


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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION, DATED APRIL 15, 2024

LANDOS BIOPHARMA, INC.

P.O. Box 11239

Blacksburg, Virginia 24062

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD VIRTUALLY VIA WEBCAST ON    , 2024

This proxy statement is available on the investor relations page of our website at https://ir.landosbiopharma.com/sec-filings. We intend to mail these proxy materials on or about    , 2024 to all stockholders of record entitled to vote at the Special Meeting.

A complete list of the stockholders entitled to vote at the Special Meeting will be available for examination for the ten (10) days prior to the Special Meeting. To access the list of record stockholders, stockholders should email info@landosbiopharma.com. Stockholders may examine the list for any legally valid purpose related to the Special Meeting. This list also will be available during the Special Meeting at www.virtualshareholdermeeting.com/LABP2024SM.

YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING VIRTUALLY, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE: (1) BY TELEPHONE; (2) THROUGH THE INTERNET; OR (3) BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before it is voted at the Special Meeting.

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the proposal to adopt the Merger Agreement, without your instructions.

If you are a stockholder of record, meaning that your Landos shares are registered in your name directly with Landos’ transfer agent, voting virtually at the Special Meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain a “legal proxy” in order to vote virtually at the Special Meeting.

If you fail to (1) return your proxy card, (2) grant your proxy electronically over the Internet or by telephone or (3) vote virtually at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement, but will have no effect on the Adjournment Proposal (as defined below).

You should carefully read and consider the entire accompanying proxy statement and its annexes, including, but not limited to, the Merger Agreement as they contain important information about, among other things, the Merger and how it affects you. If you have any questions concerning the Merger Agreement, the Merger, the


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Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(212) 929-5500 (Call Collect)

Or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com


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TABLE OF CONTENTS

 

SUMMARY

     1  

The Special Meeting

     1  

Vote Required; Abstentions and Broker Non-Votes

     2  

Shares Held by Landos’ Directors and Executive Officers

     2  

The Merger

     3  

Parties Involved in the Merger

     3  

Effect of the Merger

     4  

Effect on Landos if the Merger is Not Completed

     4  

Merger Consideration

     4  

Recommendation of the Landos Board of Directors

     6  

Opinion Landos’ Financial Advisor

     6  

Interests of Landos’ Directors and Executive Officers in the Merger

     7  

Appraisal Rights

     7  

Material U.S. Federal Income Tax Consequences of the Merger

     8  

Regulatory Approvals Relevant for the Merger

     9  

Conduct of Business Pending the Merger

     9  

Conditions to the Closing of the Merger

     10  

Termination of the Merger Agreement

     11  

Form of Contingent Value Rights Agreement

     12  

Voting Agreement

     12  

QUESTIONS AND ANSWERS

     13  

FORWARD-LOOKING STATEMENTS

     21  

THE SPECIAL MEETING

     23  

Date, Time and Place

     23  

Purpose of the Special Meeting

     23  

Record Date; Shares Entitled to Vote; Quorum

     23  

Vote Required; Abstentions and Broker Non-Votes

     23  

Shares Held by Landos’ Directors and Executive Officers

     24  

Voting of Proxies

     24  

Revocability of Proxies

     25  

Adjournments and Recess

     25  

Board of Directors’ Recommendation

     25  

Solicitation of Proxies

     26  

Anticipated Date of Completion of the Merger

     26  

Appraisal Rights

     26  

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on     , 2024

     27  

Questions and Additional Information

     27  

THE MERGER

     28  

Parties Involved in the Merger

     28  

Effect of the Merger

     29  

Effect on Landos if the Merger is Not Completed

     29  

Merger Consideration

     29  

Background of the Merger

     30  

Recommendation of the Board of Directors and Reasons for Recommendation of the Merger

     36  

Interests of Landos’ Directors and Executive Officers in the Merger

     49  

Equity Interests of Landos’ Executive Officers and Non-Employee Directors

     55  

Appraisal Rights

     56  

 

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Material U.S. Federal Income Tax Consequences of the Merger

     62  

Regulatory Approvals Relevant to the Merger

     67  

Legal Proceedings

     69  

PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

     70  

Effects of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

     70  

Closing and Effective Time

     71  

Closing Amount

     71  

Exchange and Payment Procedures

     72  

Representations and Warranties

     73  

Conduct of Business Pending the Merger

     75  

The “No Shop” Period—No Solicitation of Other Offers

     78  

The Board of Directors’ Recommendation; Change in Recommendation

     79  

Employee Benefits

     81  

Efforts to Close the Merger

     82  

Other Covenants

     84  

Conditions to the Closing of the Merger

     85  

Termination of the Merger Agreement

     88  

Effect of Termination; Termination Fees

     89  

Specific Performance

     89  

Fees and Expenses

     90  

Amendment

     90  

Governing Law

     90  

Form of Contingent Value Rights Agreement

     90  

Voting Agreement

     91  

PROPOSAL 2: THE ADJOURNMENT PROPOSAL

     92  

Vote Required and Board of Directors Recommendation

     92  

MARKET PRICES AND DIVIDEND DATA

     93  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     94  

OTHER MATTERS

     96  

Other Matters

     96  

Future Stockholder Proposals

     96  

Householding of Special Meeting Materials

     97  

WHERE YOU CAN FIND MORE INFORMATION

     98  

MISCELLANEOUS

     99  

Annex A The Merger Agreement

     A-1  

Annex B Form of Contingent Value Rights Agreement

     B-1  

Annex C Opinion of Landos’ Financial Advisor

     C-1  

 

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SUMMARY

This summary highlights selected information from this proxy statement related to the merger of Bespin Merger Sub, Inc., a wholly owned subsidiary of Bespin Subsidiary, LLC with and into Landos Biopharma, Inc. (the “Merger”) and may not contain all of the information that is important to you. To understand the Merger more fully and for a more complete description of the legal terms of the Merger, you should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including, but not limited to, the Merger Agreement (as defined below), along with all of the documents to which we refer in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. The Merger Agreement is attached as Annex A to this proxy statement. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger.

Except as otherwise specifically noted in this proxy statement, “Landos,” “we,” “our,” “us” and similar words refer to Landos Biopharma, Inc., including, in certain cases, our subsidiaries. Throughout this proxy statement, we refer to AbbVie Inc. as “AbbVie” and Bespin Subsidiary, LLC as “Parent” and Bespin Merger Sub, Inc. as “Merger Sub.” In addition, throughout this proxy statement we refer to the Agreement and Plan of Merger, dated March 24, 2024, by and among Landos, Parent, Merger Sub, and AbbVie for the limited purposes set forth therein, as the “Merger Agreement,” our common stock, par value $0.01 per share, as “common stock” or “shares” and the holders of our common stock as “stockholders.”

The Special Meeting

Date, Time, Place and Purpose of the Special Meeting

A special meeting of stockholders to consider and vote on the proposal to adopt the Merger Agreement will be held virtually on    , 2024, at      Eastern Time at via live audio webcast on the Internet at www.virtualshareholdermeeting.com/LABP2024SM (the “Special Meeting”).

At the Special Meeting, stockholders of record as of the close of business on    , 2024 (the “Record Date”) will be asked to consider and vote on:

 

   

a proposal to adopt the Merger Agreement and approve the transactions contemplated thereby (the “Merger Proposal”); and

 

   

a proposal to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies to approve the proposal to adopt the Merger Agreement if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting (the “Adjournment Proposal”).

We do not expect that any matters other than the proposals set forth above will be brought before the Special Meeting, and only matters specified in the notice of the meeting may be acted upon at the Special Meeting.

Record Date; Shares Entitled to Vote; Quorum

You are entitled to receive notice of, and vote at, the Special Meeting if you owned shares of common stock at the close of business on the Record Date. Each holder of common stock shall be entitled to one (1) vote for each such share of common stock owned at the close of business on the Record Date on all matters properly coming before the Special Meeting. As of the Record Date, there were      shares of common stock outstanding and entitled to vote at the Special Meeting. A quorum is the minimum number of shares required to be present at the Special Meeting for the meeting to be properly held under our bylaws and Delaware law. The holders of a majority of the common stock that are issued and outstanding as of the close of business on the Record Date, present virtually or represented by proxy, will constitute a quorum at the Special Meeting. A quorum is necessary to hold a valid Special Meeting at which stockholders can vote to adopt the Merger

 

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Agreement. Your shares of common stock will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee), if you vote at the meeting or if you attend the Special Meeting virtually but abstain from voting. The Special Meeting may be adjourned whether or not a quorum is present.

Vote Required; Abstentions and Broker Non-Votes

The affirmative vote of the holders of a majority of the shares of common stock that are issued and outstanding as of the close of business on the Record Date is required to adopt the Merger Agreement. Because the required vote for the proposal to adopt the Merger Agreement is based on the number of votes our stockholders are entitled to cast rather than on the number of votes actually cast, if you fail to authorize a proxy or vote online at the meeting, abstain from voting at the meeting or fail to instruct your broker on how to vote, such failure will have the same effect as votes cast “AGAINST” the Merger Proposal. As of     , 2024, the Record Date for the Special Meeting,    shares constitute a majority of the issued and outstanding shares of common stock.

Approval of the Adjournment Proposal requires either (i) if a quorum is present, the affirmative vote of the majority of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Special Meeting and entitled to vote generally on the subject matter or (ii) if a quorum is not present, the vote of the holders of a majority of the shares represented at the Special Meeting. Assuming the Special Meeting is held solely by means of remote communication, as it is currently scheduled to be, no shares will be present in person at the Special Meeting, and only shares present virtually or represented by proxy at the Special Meeting will be able to be voted.

An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal. If a stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted “AGAINST” the proposal to adopt each of the Merger Agreement and the Adjournment Proposal. However, abstentions are counted for purposes of determining whether a quorum is present at the Special Meeting. As a result, an abstention of any of the aforementioned proposals will be counted for purposes of determining the presence or absence of a quorum, but will count as a vote “AGAINST” such proposal.

A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote the shares. We do not expect any “broker non-votes” at the Special Meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are “broker non-votes,” each broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement, but any such “broker non-votes” will have no effect on the Adjournment Proposal.

Shares Held by Landos’ Directors and Executive Officers

As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate,      shares of common stock, representing approximately  % of the shares of common stock outstanding on the Record Date (and approximately  % of the shares of common stock outstanding when taking into account Landos Options and Landos RSUs held, in the aggregate, by our directors and executive officers).

Our directors and executive officers have informed us that they currently intend to vote all of their respective shares of common stock (i) “FOR” the adoption of the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

 

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The Merger

Parties Involved in the Merger

Landos Biopharma, Inc.

Landos is a clinical-stage biopharmaceutical company focused on the development of novel, oral, once-daily therapeutics for patients with autoimmune diseases. Landos’ core expertise is the development of compounds that target novel pathways at the interface of immunity and metabolism. Based on Landos’ understanding of the role that cellular metabolic pathways have on modulating inflammatory responses, Landos aims to inhibit these inflammatory responses by changing the metabolic processes in target cells. Landos believes the therapeutics it develops, if approved, could have a positive impact on the quality of life of patients suffering from autoimmune and chronic inflammatory diseases. Landos’ current focus and lead product candidate is NX-13, a novel, oral, gut-selective, NLRX1 agonist in development as a once-daily, oral treatment for ulcerative colitis and Crohn’s disease that targets NLRX1, a mitochondria-associated receptor that has been associated with the modulation of inflammatory cytokines for ulcerative colitis and Crohn’s disease. NX-13 is designed to target NLRX1 and induce anti-inflammatory effects in CD4+ T cells as well as other cells in the gastrointestinal tract. Landos’ common stock is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “LABP.” Landos’ executive officers and employees work remotely in a “virtual office” setting. Landos’ mailing address is P.O. Box 11239, Blacksburg, VA 24062 and its telephone number is (540) 218-2232.

AbbVie Inc.

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie’s portfolio of products includes immunology products, oncology products, aesthetics products, neuroscience products, eye care products and other key products. AbbVie was incorporated in Delaware on April 10, 2012. AbbVie’s common stock is listed and traded on The New York Stock Exchange (the “NYSE”) under the symbol “ABBV.” AbbVie’s principal executive offices are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400, and its telephone number is (847) 932-7900.

Bespin Subsidiary, LLC

Parent is a Delaware limited liability company and a wholly owned subsidiary of AbbVie and was formed on March 15, 2024, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Parent has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. The principal executive offices of Parent are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400, and its telephone number is (847) 932-7900.

Bespin Merger Sub, Inc.

Merger Sub is a Delaware corporation and a wholly owned subsidiary of Parent and was formed on March 15, 2024, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon the completion of the Merger, Merger Sub will cease to exist and Landos will continue as the surviving corporation and a wholly owned subsidiary of Parent (the “Surviving Corporation”). The principal executive offices of Merger Sub are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400, and its telephone number is (847) 932-7900.

 

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Effect of the Merger

Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Landos, with Landos continuing as the surviving corporation and a wholly owned subsidiary of Parent. As a result of the Merger, Landos’ common stock will no longer be publicly traded, and will be delisted from Nasdaq. In addition, Landos’ common stock will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Landos will no longer file periodic reports with the U.S. Securities and Exchange Commission (the “SEC”). If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation. The time at which the Merger will become effective (the “Effective Time”) will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later time as we and Parent may agree in writing and specify in the certificate of merger).

Effect on Landos if the Merger is Not Completed

If the Merger Agreement is not adopted by stockholders, or if the Merger is not completed for any other reason:

 

  (i)

the stockholders will not be entitled to, nor will they receive, any payment for their respective shares of common stock pursuant to the Merger Agreement;

 

  (ii)

(A) Landos will remain an independent public company, (B) Landos’ common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and (C) Landos will continue to file periodic reports with the SEC; and

 

  (iii)

under certain specified circumstances, Landos will be required to pay Parent a termination fee of $7,000,000 (the “Landos Termination Fee”) upon or following the termination of the Merger Agreement. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Effect of Termination; Termination Fees.”

Merger Consideration

Landos Common Stock

At the Effective Time, and without any further action on the part of the parties or any stockholder, each share of common stock then outstanding immediately prior to the Effective Time (other than (i) common stock owned by Landos or any wholly owned Landos subsidiary as treasury stock or otherwise, (ii) common stock held directly or indirectly by AbbVie, Parent or Merger Sub or any other wholly owned subsidiary of AbbVie ((i) and (ii) collectively, the “Cancelled Shares”) and (iii) any common stock outstanding immediately prior to the Effective Time, and held by holders who are entitled to demand appraisal rights under Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”) and have properly exercised and perfected their respective demands for appraisal of such shares in the time and manner provided in Section 262 of the DGCL and, as of the Effective Time, have neither effectively withdrawn nor lost their rights to such appraisal and payment under the DGCL (the “Dissenting Shares”)) will be cancelled and cease to exist and automatically converted into the right to receive (A) cash in an amount equal to $20.42, without interest (the “Closing Amount”), subject to any withholding of taxes and (B) one (1) contractual contingent value right (“CVR”) per share of common stock that you own, representing the right to receive a contingent payment in cash, without interest thereon and subject to any withholding of taxes, upon the achievement of the milestone requirements set forth in the Contingent Value Rights Agreement (the “CVR Agreement”) by and between Parent, Broadridge Corporate Issuer Solutions, LLC (the “Rights Agent”), and AbbVie, for the limited purposes set forth therein, in substantially the form attached to the Merger Agreement ((A) and (B) collectively, the “Merger Consideration”).

At or prior to the Effective Time, AbbVie will cause to be deposited, sufficient funds to pay the Closing Amount with Broadridge Corporate Issuer Solutions, LLC (the “Paying Agent”) for payment of each share of

 

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common stock owned by each stockholder. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Exchange and Payment Procedures.”

After the Merger is completed, you will have the right to receive the Closing Amount, but you will no longer have any rights as a stockholder. Stockholders who properly exercise their appraisal rights have the right to receive payment for the “fair value” of their shares determined pursuant to an appraisal proceeding, as contemplated by Delaware law. For more information, please see the section of this proxy statement captioned “The Merger—Appraisal Rights.”

Treatment of Landos Options and Landos RSUs

Landos has granted under its 2019 Equity Incentive Plan or prior stock plans (collectively, the “Landos Stock Plans”) awards of options to purchase shares of common stock (each, a “Landos Option”) and restricted stock units covering shares of common stock subject to vesting conditions based solely on continued employment or service to Landos or any of its subsidiaries (each such restricted stock unit, a “Landos RSU”). The Merger Agreement provides that, at the Effective Time, subject to all required withholding taxes, each:

 

   

Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is less than or equal to the Closing Amount will be cancelled and converted into the right to receive (A) an amount in cash, without interest, equal to the product of (1) the excess, if any, of the Closing Amount over the exercise price per share of common stock of such Landos Option, multiplied by (2) the number of shares of common stock then subject to such Landos Option and (B) one (1) CVR per share of common stock subject to such Landos Option;

 

   

Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is greater than the Closing Amount will be cancelled without any consideration being payable in respect thereof, and have no further force or effect; and

 

   

Landos RSU that is unvested and outstanding as of immediately prior to the Effective Time will be cancelled and converted into the right to receive (A) an amount in cash, without interest, in respect thereof equal to the Closing Amount multiplied by the number of shares of common stock subject to such Landos RSU and (B) one (1) CVR.

For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Closing Amount—Treatment of Landos Options and Landos RSUs.”

Treatment of Warrants

Landos has issued pre-funded warrants to purchase shares of common stock (each, a “Landos Warrant”) pursuant to that certain Securities Purchase Agreement, dated as of January 4, 2024, between the Landos and purchasers thereto. The Merger Agreement provides that at the Effective Time each Landos Warrant shall be deemed to have been exercised in full in a “cashless exercise” pursuant to Sections 9(c) and 10 of the Landos Warrants effective immediately prior to and contingent upon closing of the Merger (the “Closing”), and at the Effective Time shall be converted automatically into the right to receive (a) an amount in cash equal to the Closing Amount multiplied by (x) the total number of shares of common stock underlying such Landos Warrant as of immediately prior to the Effective Time multiplied by (y)(A) an amount equal to (1) the Applicable Closing Price minus (2) the applicable exercise price per share of common stock of such Landos Warrant, divided by (B) the Applicable Closing Price and (b) a number of CVRs equal to the total number of shares of common stock underlying such Landos Warrant as of immediately prior to the Effective Time.

 

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The “Applicable Closing Price” is equal to the Closing Sale Price (as defined in the Landos Warrants) per share of common stock as of the Trading Day (as defined in the Landos Warrants) on the date immediately preceding the date on which closing occurs (the “Closing Date”).

Recommendation of the Landos Board of Directors

After considering various factors described in this proxy statement under the caption, “The Merger —Recommendation of the Board of Directors and Reasons for Recommendation of the Merger,” the Board of Directors unanimously (a) determined that the Transactions, including the Merger, are advisable and fair to, and in the best interests of, Landos and its stockholders; (b) authorized and approved the execution, delivery, and performance of the Merger Agreement, the CVR Agreement and the Voting Agreement by Landos and approved the Merger; (c) recommended the adoption of the Merger Agreement by Landos’ stockholders and (d) directed that the Merger Agreement be submitted for consideration by Landos’ stockholders at the Special Meeting.

The Board of Directors also unanimously recommends, on behalf of Landos, that stockholders vote (i) “FOR” the adoption of the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

Prior to receipt of the required stockholder approval, under certain specified circumstances, the Board of Directors may withdraw or change the foregoing recommendation if the Board of Directors determines in good faith, after consultation with its outside financial advisors and outside legal counsel, that failure to take such action would be inconsistent with its fiduciary duties to the stockholders in accordance with law. However, the Board of Directors cannot withdraw or change the foregoing recommendation unless it complies with certain procedures in the Merger Agreement, including, but not limited to, providing AbbVie four (4) business days to make adjustments in the terms and conditions of the Merger Agreement (as described further in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—The Board of Directors’ Recommendation; Change in Recommendation”). The termination of the Merger Agreement by AbbVie following the withdrawal by the Board of Directors of its recommendation that stockholders adopt the Merger Agreement will result in the payment by Landos of the Landos Termination Fee. The termination of the Merger Agreement by Landos following the Board of Directors’ authorization for Landos to enter into a definitive agreement to consummate an alternative transaction contemplated by a Superior Proposal (as defined below) will result in the payment by Landos of the Landos Termination Fee. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—The Board of Directors’ Recommendation; Change in Recommendation.”

Opinion of Landos’ Financial Advisor

Landos retained Jefferies LLC (“Jefferies”) as its financial advisor in connection with a possible sale, disposition or other business transaction involving Landos. In connection with this engagement, Landos requested that Jefferies evaluate the fairness, from a financial point of view, to holders of shares (other than Parent, Merger Sub and their respective affiliates) of the Merger Consideration to be received by such holders pursuant to the Merger Agreement. At a meeting of the Board of Directors held on March 24, 2024, Jefferies rendered its oral opinion to the Board of Directors, which was subsequently confirmed by delivery of a written opinion dated March 24, 2024, to the effect that, as of the date of such opinion and based on and subject to the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of shares (other than Parent, Merger Sub and their respective affiliates) was fair, from a financial point of view, to such holders.

The full text of Jefferies’ opinion, which describes the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is

 

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attached as Annex C to this proxy statement and is incorporated herein by reference. Landos encourages you to read the opinion carefully and in its entirety. Jefferies’ opinion was provided for the use and benefit of the Board of Directors in its consideration of the Merger. Jefferies’ opinion did not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Landos, nor did it address the underlying business decision by Landos to engage in the Merger or the terms of the Merger Agreement and the CVR Agreement (together, the “Agreements”) or the documents referred to therein. Jefferies’ opinion did not constitute a recommendation as to how any holder of shares should vote on the Merger or any matter related thereto. The summary of the Jefferies opinion contained in this proxy statement is qualified in its entirety by reference to the full text of Jefferies’ opinion, which is attached hereto as Annex C.

For more information, please see the section of this proxy statement captioned “The Merger —Opinion of LandosFinancial Advisor.”

Interests of Landos’ Directors and Executive Officers in the Merger

When considering the foregoing recommendation of the Board of Directors that you vote to approve the proposal to adopt the Merger Agreement, stockholders should be aware that Landos’ directors and executive officers may have interests in the Merger that are different from, or in addition to, stockholders more generally. In (i) evaluating and negotiating the Merger Agreement, (ii) approving the Merger Agreement and the Merger and (iii) recommending that the Merger Agreement be adopted by stockholders, the Board of Directors was aware of and considered these interests, among other matters, to the extent that these interests existed at the time. These interests include:

 

   

at the Effective Time of the Merger, each Landos Option and Landos RSU will receive the treatment described in the section of this proxy statement captioned “The Merger—Interests of Landos’ Directors and Executive Officers in the Merger—Treatment of Landos Options and Landos RSUs;”

 

   

continued eligibility of Landos’ executive officers to receive severance payments and benefits under their employment or severance agreements, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of Landos’ Directors and Executive Officers in the Merger—Payments Upon Termination at or Following Change in Control;”

 

   

eligibility of Landos’ non-employee directors to receive accelerated vesting of their Landos Options, as described in more detail in the section of this proxy statement captioned “The Merger—Interests of Landos’ Directors and Executive Officers in the Merger—Equity Awards Held by Landos’ Executive Officers and Non-employee Directors;” and

 

   

continued indemnification and directors’ and officers’ liability insurance to be provided by the Surviving Corporation.

If the proposal to adopt the Merger Agreement is approved, the shares of common stock held by Landos directors and executive officers will be treated in the same manner as outstanding shares of common stock held by all other stockholders. For more information, please see the section of this proxy statement captioned “The Merger—Interests of Landos’ Directors and Executive Officers in the Merger.”

Appraisal Rights

If the Merger is consummated, stockholders (including beneficial owners of shares) who (1) do not vote in favor of the adoption of the Merger Agreement; (2) continuously hold their applicable shares of Landos’ common stock through the Effective Time; (3) properly demand appraisal of their shares; (4) meet certain statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise

 

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lose their rights to appraisal will be entitled to seek appraisal of their shares of Landos common stock in connection with the Merger under Section 262 of the DGCL if certain conditions set forth in Section 262(g) of the DGCL are satisfied. This means that these persons will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Landos common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the Merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to persons entitled to appraisal, interest will accrue thereafter only upon the sum of (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

Persons considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the Merger Consideration that they would receive pursuant to the Merger Agreement if they did not seek appraisal of their shares.

Only a stockholder of record or a beneficial owner may submit a demand for appraisal. To exercise appraisal rights, such person must (1) submit a written demand for appraisal to Landos before the vote is taken on the proposal to adopt the Merger Agreement; (2) not vote, in person by attending via live audio webcast or by proxy, in favor of the proposal to adopt the Merger Agreement; (3) continue to hold of record or own beneficially the subject shares of Landos common stock through the Effective Time; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings with respect of Landos unless certain conditions are satisfied by the persons seeking appraisal, as described further below. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL. Pursuant to Subsection (d)(1) of Section 262 of the DGCL, this proxy statement is to include either a copy of Section 262 of the DGCL or information directing the stockholders to a publicly available electronic resource at which Section 262 of the DGCL may be accessed without subscription or cost. You may find an electronic copy of Section 262 of the DGCL available at the following URL, accessible without subscription or cost, which is incorporated herein by reference: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. In the event of any inconsistency between the information contained in this summary, this proxy statement, or any of the documents incorporated herein or therein by reference, and the actual text of Section 262 of the DGCL, the actual text of Section 262 of the DGCL controls. All references in Section 262 of the DGCL and in this summary to a “stockholder” are to the record holder of shares as to which appraisal rights are asserted, unless otherwise expressly noted herein. All references in Section 262 of the DGCL and in this summary “beneficial owner” mean a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person, unless otherwise expressly noted. For more information, please see the section of this proxy statement captioned “The Merger—Appraisal Rights.”

Material U.S. Federal Income Tax Consequences of the Merger

The receipt of cash and CVRs in exchange for shares pursuant to the Merger generally will be treated for U.S. federal income tax purposes as consideration received in a sale or exchange of the shares that a holder of

 

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Landos common stock exchanges in the Merger. The amount of income, gain or loss a holder recognizes, and the timing and character of such income, gain or loss, will depend on the U.S. federal income tax treatment of the CVRs, with respect to which there is uncertainty. To the extent required to take a position, we intend to act consistently with the receipt of the CVRs as part of an “open transaction” for U.S. federal income tax purposes. Assuming such treatment is respected by the Internal Revenue Service (“IRS”), a U.S. Holder (as defined below under “The Merger – Material U.S. Federal Income Tax Consequences of the Merger”) is expected (except to the extent any portion of such payment is required to be treated as imputed interest as defined below under “The Merger – Material U.S. Federal Income Tax Consequences of the Merger”) to recognize income, gain or loss equal to the difference between the amount of cash received (including in payments pursuant to the CVRs, but not including the amount of such payments treated as imputed interest) in exchange for the shares sold or exchanged in the Merger and the U.S. Holder’s adjusted tax basis in the shares exchanged pursuant to the Merger. We urge you to consult your own tax advisor as to the particular tax consequences to you of the Merger (including the application and effect of any state, local or non-U.S. income and other tax laws). See “The Merger – Material U.S. Federal Income Tax Consequences of the Merger” for a more detailed discussion of certain U.S. federal income tax consequences of the Merger.

The U.S. federal, state, local and non-U.S. income and other tax consequences to holders or beneficial owners of Landos Options and Landos RSUs participating in the Merger with respect to such Landos Options and Landos RSUs are not discussed herein, and such holders or beneficial owners of Landos Options and Landos RSUs are strongly encouraged to consult their own tax advisors regarding such tax consequences. We urge you to consult with your own tax advisor as to the particular tax consequences to you of the Merger.

Regulatory Approvals Relevant for the Merger

Under the Merger Agreement, Landos and AbbVie have agreed to use reasonable best efforts to obtain all necessary regulatory approvals (including actions or nonactions, waivers, consents, clearances, decisions, declarations, approvals and, expirations, or terminations of waiting periods from governmental bodies) to consummate the Merger and the other transactions contemplated by the Merger Agreement, including applicable laws and regulations issued by a governmental body that are designed or intended to preserve or protect competition, prohibit and restrict agreements in restraint of trade or monopolization, attempted monopolization, restraints of trade and abuse of a dominant position, or to prevent acquisitions, mergers or other business combinations and similar transactions, the effect of which may be to lessen or impede competition or to tend to create or strengthen a dominant position or to create a monopoly (“Antitrust Laws”), and applicable laws that provide for review of the cross-border acquisition of any interest in or assets of a business or entity (including for national security or defense reasons) under the jurisdiction of an applicable governmental body (“Foreign Direct Investment Laws”).

For more information, please see the sections of this proxy statement captioned “The Merger—Regulatory Approvals Required for the Merger” and “Proposal 1—Adoption of The Merger Agreement.”

Conduct of Business Pending the Merger

No Solicitation of Other Offers

Under the Merger Agreement, during the period between the signing of the Merger Agreement and the earlier of the Effective Time and the termination of the Merger Agreement (the “Pre-Closing Period”), Landos may not, among other actions: (i) solicit, knowingly assist, initiate, knowingly encourage, or otherwise knowingly facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential or non-public information, properties, facilities, books or records of Landos or any subsidiary of Landos or entering into any form of agreement, arrangement or understanding) any inquiry, proposal, discussion,

 

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negotiation, or offer that constitutes or may reasonably be expected to constitute or lead to, a Landos Alternative Transaction (as defined below), (ii) enter into, continue, or otherwise initiate, solicit, knowingly encourage, engage, knowingly assist, or participate in or knowingly facilitate (including by the furnishing any confidential or non-public information of Landos or any of its subsidiaries) any discussions or negotiations with any person (other than with AbbVie, Parent, Merger Sub, AbbVie’s representatives or any person acting jointly or in concert with AbbVie, Parent or Merger Sub) regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, a Landos Alternative Transaction, (iii) make a Change in Recommendation (as defined below), (iv) enter into, or publicly propose to enter into, any agreement, letter of intent, agreement in principle, understanding or arrangement in respect of a Landos Alternative Transaction other than a confidentiality agreement permitted by and in accordance with the terms of the Merger Agreement, or (v) approve, authorize or publicly announce any intention to do any of the foregoing set forth in (i) through (iv). For more information, please see the sections of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Conduct of Business Pending the Merger” and “Proposal 1: Adoption of the Merger Agreement—No Solicitation of Other Offers.”

Notwithstanding the foregoing restrictions, under certain specified circumstances, from the date of the Merger Agreement to the receipt of the Required Company Stockholder Vote (as defined below), if, at any time prior to obtaining the Required Company Stockholder Vote, Landos receives an inquiry, proposal or offer, the consummation of which would constitute a Landos Alternative Transaction, that did not result, directly or indirectly, from any breach of the Merger Agreement or the AbbVie NDA (as defined herein), but subject to entering into a confidentiality agreement with such person containing terms that are not less favorable to Landos than those contained in the AbbVie NDA (it being understood that such confidentiality agreement must not contain any provision or term that would restrict, in any manner, Landos’ ability to consummate the transactions contemplated by the Merger Agreement and any agreements delivered pursuant thereto or comply with its disclosure obligations to Parent pursuant to the Merger Agreement), Landos and its representatives may (x) engage in or participate in discussions or negotiations with such person regarding such inquiry, offer or proposal and (y) provide copies of, access to or disclosure of information, properties, facilities, books or records of Landos or its subsidiaries (and any such copies, access or disclosure provided to such person shall have already been (or simultaneously be) provided to Parent and Parent’s representatives), if and only if, in the case of both clauses (i) and (ii), (x) Landos Board of Directors first determines in good faith, after consultation with its outside financial advisor(s) and outside legal counsel, that such proposal constitutes or would reasonably be expected to constitute or lead to a Superior Proposal (as defined below) and (y) that the failure to take such actions would be inconsistent with its fiduciary duties under applicable law.

If Landos terminates the Merger Agreement for the purpose of entering into an agreement in respect of a Superior Proposal, Landos must pay the Landos Termination Fee to AbbVie. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—The Board of Directors’ Recommendation; Change in Recommendation.”

Conditions to the Closing of the Merger

The obligations of Landos, AbbVie, Parent and Merger Sub, as applicable, to consummate the Merger are subject to the satisfaction or waiver of customary conditions, including (among other conditions), the following:

 

   

Landos’ receipt of the affirmative vote of the stockholders representing a majority of the outstanding shares of common stock on the Record Date adopting the Merger Agreement (the “Required Company Stockholder Vote”);

 

   

the absence of any law, rule, regulation, injunction, or order, by any governmental body having competent jurisdiction over AbbVie, Parent, Merger Sub, Landos, or any of their respective subsidiaries, prohibiting or making illegal the consummation of the Merger or any transaction contemplated by the Merger Agreement;

 

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in the case of AbbVie, Parent and Merger Sub, the absence of any Material Adverse Effect (as defined below) having occurred since the date of the Merger Agreement that is continuing as of the Effective Time;

 

   

the accuracy of the representations and warranties of Landos, Parent and Merger Sub in the Merger Agreement, subject to certain qualifiers, as of the date of the Merger Agreement, the Closing or the date in respect of which such representation or warranty was specifically made; and

 

   

the performance and compliance in all material respects by Landos, Parent and Merger Sub of their respective covenants and obligations of the Merger Agreement required to be performed and complied with by Landos, AbbVie, Parent and Merger Sub at or prior to the Effective Time.

Additionally, if, prior to the Effective Time:

 

   

AbbVie, in consultation with Landos, reasonably determines that a filing under the Hart Scott Rodino Antitrust Improvements Act of 1976 (“HSR Act”) is required in connection with the Merger and other transactions contemplated by the Merger Agreement, then the expiration or earlier termination of all applicable waiting periods the HSR Act will become a condition to the obligations of Parent and Landos to effect the Closing;

 

   

there is voluntary commitment or agreement with the U.S. Department of Justice (“DOJ”) or U.S. Federal Trade Commission (“FTC”) not to effect the Closing, then the expiration or earlier termination of all applicable waiting periods under such voluntary commitment or agreement will become a condition to the obligations of Parent and Landos to effect the Closing;

 

   

the U.K. Competition and Markets Authority (“CMA”) indicates in writing to AbbVie that it has decided to formally investigate the Merger and, accordingly, requests AbbVie to submit a merger notice in the form prescribed under the Enterprise Act 2002, and such indication and merger notice is provided by AbbVie to Landos, then the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods, as the case may be, under the applicable Antitrust Laws of the United Kingdom will become a condition to the obligations of Parent and Landos to effect the Closing; and

 

   

the European Commission (“EC”) indicates in writing to AbbVie that a member state of the European Union or the EC is making, or has made, a referral of the Merger to the EC under Article 22 of the EU Merger Regulation, and such indication is provided by AbbVie to Landos, then the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods, as the case may be, under the applicable Antitrust Laws of the European Union will become a condition to the obligations of Parent and Landos to effect the Closing.

For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Conditions to the Closing of the Merger.”

Termination of the Merger Agreement

In addition to the circumstances described above, AbbVie and Landos have certain customary rights to terminate the Merger Agreement under certain circumstances, including by mutual agreement, the imposition of final and non-appealable court orders or laws permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger, an uncured failure of any representations and warranties in the Merger Agreement to be true and accurate, an uncured breach of the Merger Agreement by the other party, if the Merger has not been consummated by 11:59 p.m., Eastern Time, on September 24, 2024, and if the Required Company Stockholder Vote has not been obtained at the Special Meeting (or any adjournment or postponement thereof). Under some circumstances, Landos is required to pay AbbVie the Landos Termination Fee. For more

 

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information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Effect of Termination; Termination Fees.”

Form of Contingent Value Rights Agreement

The Merger Agreement requires that, at or immediately prior to the Effective Time, AbbVie, Parent and the rights agent will enter into the CVR Agreement, substantially in the form attached as Exhibit D to the Merger Agreement (and attached to this proxy statement as Annex B), subject to such changes thereto as permitted under the Merger Agreement. The CVR Agreement will govern the terms of the CVRs and is further described in the section captioned “Form of Contingent Value Rights Agreement.”

While no guarantee can be given that any proceeds will be received, each CVR represents a non-tradeable contractual contingent right to receive $11.14, without interest and subject to applicable tax withholdings (which we refer to as the “Milestone Payment”), upon the initiation of the first Phase 3 clinical trial for a pharmaceutical product containing or comprising NX-13 with a specified formula, and derivatives thereof, or any other molecule, compound or agent directed to a NLRX1 pathway ligand compound that is controlled by Landos for the treatment of ulcerative colitis (the “Milestone”) prior to March 31, 2029 (the “Milestone Achievement Outside Date”).

There can be no assurance that the Milestone will be achieved prior to the Milestone Achievement Date or that Parent or AbbVie will be required to make the Milestone Payment to holders of CVRs.

The CVRs are contractual rights only and are not transferable except under limited circumstances, specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or other instrument and will not be registered with the SEC or listed for trading. The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in Parent, any constituent corporation party to the Merger Agreement or any of their respective affiliates or subsidiaries. No interest will accrue on any amounts payable on the CVRs.

Voting Agreement

On March 24, 2024, in connection with the Merger Agreement, Parent and Landos entered into a voting agreement (the “Voting Agreement”) with Xontogeny, LLC and Perceptive Advisors LLC and certain of their affiliates, pursuant to which such stockholders have agreed to vote their aggregate shares in favor of the adoption of the Merger Agreement and approval of the Merger at the Special Meeting. As of March 22, 2024, Xontogeny, LLC and Perceptive Advisors LLC and certain of their affiliates beneficially owned an aggregate of approximately 57.6% of the outstanding shares of Landos common stock. The Voting Agreement will terminate upon the termination of the Merger Agreement and certain other specified events.

 

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QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the Merger, the Merger Agreement, the CVR Agreement and the Special Meeting. These questions and answers may not address all questions that are important to you. You should carefully read and consider the more detailed information contained elsewhere in this proxy statement and the annexes to this proxy statement, including, but not limited to, the Merger Agreement, along with all of the documents we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you.

 

Q:

Why am I receiving this proxy statement and proxy card or voting instruction form?

 

A:

You are receiving this proxy statement and proxy card or voting instruction form in connection with the solicitation of proxies by the Board of Directors for use at the Special Meeting because you have been identified as a holder of Landos common stock as of the close of business on the Record Date for the Special Meeting. This proxy statement describes matters on which we urge you to vote and is intended to assist you in deciding how to vote your shares of Landos common stock with respect to such matters.

 

Q:

When and where is the Special Meeting?

 

A:

The Special Meeting will be held virtually on  , 2024, at   Eastern Time via live audio webcast on the Internet at www.virtualshareholdermeeting.com/LABP2024SM.

 

Q:

What am I being asked to vote on at the Special Meeting?

 

A:

You are being asked to consider and vote on:

 

   

a proposal to adopt the Merger Agreement pursuant to which, at the Effective Time, (i) Merger Sub will be merged with and into Landos, (ii) the separate corporate existence of Merger Sub will thereupon cease, and (iii) the corporate existence of Landos under the laws of the State of Delaware will continue as the surviving corporation and a wholly owned subsidiary of Parent; and

 

   

a proposal to approve the Adjournment Proposal.

 

Q:

Who is entitled to vote at the Special Meeting?

 

A:

Stockholders as of the Record Date are entitled to receive notice of, and to vote at, the Special Meeting. Each holder of Landos common stock is entitled to cast one (1) vote on each matter properly brought before the Special Meeting for each share of Landos common stock that such holder owned as of the close of business on the Record Date. If you are a beneficial owner, you will need to contact the broker, bank or other nominee who is the stockholder of record with respect to your shares to obtain your control number (as described below) prior to the Special Meeting.

 

Q:

May I attend the Special Meeting virtually and vote at the Special Meeting?

 

A:

Stockholders as of the Record Date are entitled to notice of the Special Meeting and to vote at the Special Meeting. If you are a stockholder of record, meaning that your Landos shares are registered directly in your name with Landos’ transfer agent, you do not need to do anything in advance to attend and/or vote your shares at the Special Meeting, but to attend the Special Meeting, stockholders of record will need to use their control number on their proxy card to log into www.virtualshareholdermeeting.com/LABP2024SM.

Beneficial stockholders whose shares are held by a broker, bank or other nominee and who do not have a control number may gain access to the meeting by logging into their brokerage firm’s website and selecting the stockholder communications mailbox to link through to the Special Meeting; instructions should also be provided on the voting instruction card provided by their broker, bank, or other nominee.

 

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We encourage you to access the Special Meeting before it begins. Online check-in will start approximately fifteen (15) minutes before the Special Meeting is scheduled to begin at   Eastern Time on  , 2024.

Each holder of record of common stock shall be entitled to cast one (1) vote on each matter properly brought before the Special Meeting for each such share owned at the close of business on the Record Date.

Attending the Special Meeting as a Guest. Guests may enter the Special Meeting in “listen-only” mode by entering the Special Meeting at www.virtualshareholdermeeting.com/LABP2024SM and entering the information requested in the “Guest Login” section. Guests will not have the ability to vote or ask questions at the Special Meeting.

 

Q:

What will I receive if the Merger is completed?

 

A:

Upon completion of the Merger, you will be entitled to receive (A) the Closing Amount of $20.42 in cash and (B) one (1) CVR, in each case, without interest thereon and subject to any withholding of taxes, for each share of common stock that you own immediately prior to the Effective Time, unless you have properly exercised, and not validly withdrawn or subsequently lost, your appraisal rights under the DGCL, and certain other conditions under the DGCL are satisfied. For example, if you own 100 shares of common stock, you will receive $2,042.00 in cash and 100 CVRs in exchange for your shares of common stock, subject to any withholding of taxes. You will not receive any shares of the capital stock in the Surviving Corporation.

 

Q:

What will holders of Landos stock awards receive if the Merger is consummated?

 

A:

At the Effective Time, subject to all required withholding taxes, each:

(i) Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is less than or equal to the Closing Amount will be cancelled and converted into the right to receive (A) an amount in cash, without interest, equal to the product of (1) the excess, if any, of the Closing Amount over the exercise price per share of common stock of such Landos Option, multiplied by (2) the number of shares of common stock then subject to such Landos Option and (B) one (1) CVR for each share of common stock subject to such Landos Option;

(ii) Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is greater than the Closing Amount will be cancelled without any consideration being payable in respect thereof, and have no further force or effect; and

(iii) Landos RSU that is unvested and outstanding as of immediately prior to the Effective Time will fully vest, be cancelled and converted into the right to receive (A) an amount in cash, without interest, in respect thereof equal to the Closing Amount multiplied by the number of shares of common stock subject to such Landos RSU and (B) one (1) CVR.

For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Closing Amount—Treatment of Landos Options and Landos RSUs.”

 

Q:

What will holders of Landos Warrants receive if the Merger is consummated?

 

A:

At the Effective Time each Landos Warrant will be deemed to have been exercised in full in a “cashless exercise” pursuant to Sections 9(c) and 10 of the Landos Warrants effective immediately prior to and contingent upon the Closing and will be converted automatically into the right to receive (a) an amount in cash equal to the Closing Amount multiplied by (x) the total number of shares of common stock underlying such Landos Warrant as of immediately prior to the Effective Time multiplied by (y)(A) an amount equal to (1) the Applicable Closing Price minus (2) the applicable exercise price per share of common stock of such Landos Warrant, divided by (B) the Applicable Closing Price and (b) a number of CVRs equal to the total number of shares of common stock underlying such Landos Warrant as of immediately prior to the Effective Time.

 

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The “Applicable Closing Price” is equal to the Closing Sale Price (as defined in the Landos Warrants) per share of our common stock as of the Trading Day (as defined in the Landos Warrants) on the date immediately preceding the Closing Date.

For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Closing Amount—Treatment of Landos Warrants.”

 

Q:

When do you expect the Merger to be completed?

 

A:

We are working toward completing the Merger as quickly as possible. In order to complete the Merger, Landos must obtain the Required Company Stockholder Vote described in this proxy statement, and the other closing conditions under the Merger Agreement must be satisfied or waived. Assuming timely satisfaction of necessary closing conditions, including obtaining the Required Company Stockholder Vote, Landos is currently targeting to consummate the Merger in the second calendar quarter of 2024, although Landos cannot assure completion by any particular date, if at all. Since the Merger is subject to a number of conditions, the exact timing of the Merger cannot be determined at this time.

 

Q:

What happens if the Merger is not completed?

 

A:

If the Merger Agreement is not adopted by stockholders or if the Merger is not completed for any other reason, stockholders will not receive any payment for their shares of common stock, Landos Options, Landos RSUs or Landos Warrants. Instead, Landos will remain an independent public company, our common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC. Under specified circumstances, Landos will be required to pay AbbVie the Landos Termination Fee upon the termination of the Merger Agreement, as described in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Effect of Termination; Termination Fees.”

 

Q:

How many shares are needed to constitute a quorum?

 

A:

The presence, virtually at the Special Meeting or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock issued and outstanding as of the close of business on the Record Date shall constitute a quorum for the transaction of business at the Special Meeting. Your shares of common stock will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee), if you vote at the meeting or if you attend the Special Meeting virtually but abstain from voting. If you return a properly signed and dated proxy card without indicating voting preferences on the proxy card, your shares of common stock will be counted as present for purposes of determining the presence of a quorum for the Special Meeting and all of your shares will be voted as recommended by the Board of Directors. The Special Meeting may be adjourned whether or not a quorum is present.

As of the close of business on     , 2024, the Record Date for the Special Meeting, there were      shares of common stock outstanding.

 

Q:

If my broker holds my shares in “street name,” will my broker automatically vote my shares for me?

 

A:

No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the Special Meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares. Without instruction, your shares will not be counted for the purpose of obtaining a quorum or voted on the proposals, which will have the same effect as if you voted “AGAINST” adoption of the merger agreement, but will have no effect on the adjournment proposal.

 

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Q:

What vote is required to adopt the Merger Agreement?

 

A:

The affirmative vote of the holders of a majority of the shares of common stock that are issued and outstanding as of the close of business on the Record Date is required to adopt the Merger Agreement.

If a quorum is present at the Special Meeting, the failure of any stockholder of record to: (i) submit a signed proxy card; (ii) grant a proxy over the Internet or by telephone (using the instructions provided in the enclosed proxy card); or (iii) vote virtually at the Special Meeting will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. If you hold your shares in “street name” and a quorum is present at the Special Meeting, the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement. If a quorum is present at the Special Meeting, abstentions will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.

 

Q:

What vote is required to approve the Adjournment Proposal, if necessary or appropriate?

 

A:

The affirmative vote of a majority of the votes cast virtually or by proxy at the Special Meeting is required to approve the Adjournment Proposal.

If a stockholder abstains from voting on the Adjournment Proposal, that abstention will have the same effect as if the stockholder voted “AGAINST” the proposal to adopt the Adjournment Proposal. However, abstentions are counted for purposes of determining whether a quorum is present at the Special Meeting. As a result, an abstention of any of the aforementioned proposals will be counted for purposes of determining the presence or absence of a quorum but will count as a vote “AGAINST” such proposal.

We do not expect any “broker non-votes” at the Special Meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are “broker non-votes,” such “broker non-votes” will have no effect on the Adjournment Proposal.

 

Q:

What is a “broker non-vote”?

 

A:

A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote the shares. Banks, brokerage firms or other nominees do not have discretion to vote on the proposal to adopt the Merger Agreement and the Adjournment Proposal, and, as a result, absent specific instructions from the beneficial owner of such shares of Landos common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of Landos common stock, which we refer to generally as “broker non-votes.” We do not expect any “broker non-votes” at the Special Meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are “broker non-votes,” each broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement, but any such “broker non-votes” will have no effect on the the Adjournment Proposal.

 

Q:

What happens if I do not vote or if I abstain from voting on the proposals?

 

A:

An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal. If you abstain from voting, that abstention will have the same effect as if you voted “AGAINST” the proposal to adopt the Merger Agreement and the Adjournment Proposal. However, abstentions are counted as shares present or represented by proxy at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting. As a result, an abstention of any of the aforementioned proposals will be counted for purposes of determining the presence or absence of a quorum, but will count as a vote “AGAINST” such proposal.

Failure to vote your shares of common stock (including a failure of your broker, bank or other nominee to vote shares held on your behalf) will also count as a vote “AGAINST” the proposal to adopt the Merger

 

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Agreement. If your shares are not deemed present or represented by proxy at the Special Meeting, then a failure to vote will not have any effect on the Adjournment Proposal. If your shares are deemed present or represented by proxy, then a failure to vote your shares will have the same effect as a vote “AGAINST” the Adjournment Proposal only if a quorum is not present, and, if a quorum is present, will have no effect on the Adjournment Proposal.

 

Q:

What do I need to do now?

 

A:

You should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including, but not limited to, the Merger Agreement, along with all of the documents that we refer to in this proxy statement, as they contain important information about, among other things, the Merger and how it affects you. Then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card), so that your shares can be voted at the Special Meeting, unless you wish to seek appraisal pursuant to Section 262 of the DGCL. If you hold your shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your shares.

 

Q:

Am I entitled to appraisal rights under the DGCL?

 

A:

If the Merger is consummated, Landos stockholders (including beneficial owners of shares) who (1) do not vote in favor of the adoption of the Merger Agreement; (2) continuously hold their shares of Landos common stock through the Effective Time; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements as described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the Merger under Section 262 of the DGCL if certain conditions set forth in Section 262(g) of the DGCL are satisfied. This means that these persons will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the Merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Merger and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to each person entitled to appraisal, interest will accrue thereafter only upon the sum of (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL regarding appraisal rights. A copy of Section 262 of the DGCL is accessible, without subscription or cost, at the following publicly available website, which is incorporated herein by reference: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. For additional information, please see the section of this proxy statement captioned “The Merger—Appraisal Rights.”

 

Q:

Should I send in my stock certificates, if any, now?

 

A:

No. A letter of transmittal will be mailed to you promptly, and in any event within three (3) business days, after the Closing Date, describing how you should surrender your shares of common stock for the Closing

 

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  Amount. If your shares of Landos common stock are held in “street name” by your bank, brokerage firm or other nominee, you will receive instructions from your bank, brokerage firm or other nominee as to how to effect the surrender of your “street name” shares of Landos common stock in exchange for the Closing Amount. Please do NOT return your stock certificate(s) with your proxy.

 

Q:

Should I surrender my book-entry shares now?

 

A:

No. After the Merger is completed, the payment agent will send each holder of record a letter of transmittal and written instructions that explain how to exchange shares of common stock represented by such holder’s book-entry shares for Closing Amount.

 

Q:

What happens if I sell or otherwise transfer my shares of common stock after the Record Date but before the Special Meeting?

 

A:

The Record Date for the Special Meeting is earlier than the date of the Special Meeting and the date that the Merger is expected to be completed. If you sell or transfer your shares of common stock after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies Landos in writing of such special arrangements, you will transfer the right to receive the Closing Amount, if the Merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the Special Meeting. You will also lose the ability to exercise appraisal rights in connection with the Merger with respect to the transferred shares. Even if you sell or otherwise transfer your shares of common stock after the Record Date, we encourage you to sign, date and return the enclosed proxy card in the accompanying reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card).

 

Q:

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:

If your shares are registered directly in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc., you are considered, with respect to those shares, to be the “stockholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by Landos.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of common stock held in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the Special Meeting. However, because you are not the stockholder of record, you may not vote your shares virtually at the Special Meeting.

 

Q:

If my broker holds my shares in “street name,” will my broker vote my shares for me?

 

A:

No. Your bank, broker or other nominee is permitted to vote your shares on any proposal currently scheduled to be considered at the Special Meeting only if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee to vote your shares. Without instructions, your shares will not be voted on such proposals, which will have the same effect as if you voted against the adoption of the Merger Agreement but will have no effect on the Adjournment Proposal.

 

Q:

How may I vote?

 

A:

If you are a stockholder of record (that is, if your shares of common stock are registered in your name with Broadridge Corporate Issuer Solutions, Inc., our transfer agent), there are four (4) ways to vote:

 

   

by signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope;

 

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by visiting the Internet at the address on your proxy card;

 

   

by calling toll-free (within the United States or Canada) at the phone number on your proxy card; or

 

   

by attending the Special Meeting virtually and voting in person.

A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of common stock, and to confirm that your voting instructions have been properly recorded when voting electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). Please be aware that, although there is no charge for voting your shares, if you vote electronically over the Internet or by telephone, you may incur costs such as Internet access and telephone charges for which you will be responsible.

Even if you plan to attend the Special Meeting virtually, you are strongly encouraged to vote your shares of common stock by proxy. If you are a record holder or if you obtain a “legal proxy” to vote shares that you beneficially own, you may still vote your shares of common stock virtually at the Special Meeting even if you have previously voted by proxy. If you are present at the Special Meeting and vote virtually, your previous vote by proxy will not be counted.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the Internet or by telephone. To vote over the Internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting form provided by your bank, broker or nominee.

 

Q:

May I change my vote after I have mailed my signed and dated proxy card?

 

A:

Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:

 

   

signing another proxy card with a later date and returning it to us prior to the Special Meeting;

 

   

submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy;

 

   

delivering a written notice of revocation to the Corporate Secretary of Landos at P.O. Box 11239, Blacksburg, Virginia 24062 by 11:59 p.m. Eastern Time on     , 2024; or

 

   

attending the Special Meeting and voting virtually. Attending the Special Meeting virtually will not in and of itself revoke a previously submitted proxy. You must specifically vote at the virtual Special Meeting in order for your previous proxy to be revoked.

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote virtually at the Special Meeting if you obtain a “legal proxy” from your bank, broker or other nominee.

 

Q:

What is a proxy?

 

A:

A proxy is your legal designation of another person to vote your shares of common stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of common stock is called a “proxy card.”

 

Q:

If a stockholder gives a proxy, how are the shares voted?

 

A:

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone

 

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  process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted (i) “FOR” the adoption of the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

 

Q:

What should I do if I receive more than one (1) set of voting materials?

 

A:

Please sign, date and return (or grant your proxy electronically over the Internet or by telephone using the instructions provided in the enclosed proxy card) each proxy card and voting instruction card that you receive.

You may receive more than one (1) set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one (1) brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one (1) name, you will receive more than one (1) proxy card.

 

Q:

Where can I find the voting results of the Special Meeting?

 

A:

If available, Landos may announce preliminary voting results at the conclusion of the Special Meeting. Landos intends to publish final voting results in a Current Report on Form 8-K to be filed with the SEC following the Special Meeting. All reports that Landos files with the SEC are publicly available when filed. For more information, please see the section of this proxy statement captioned “Where You Can Find More Information.”

 

Q:

Who can help answer my questions?

 

A:

If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(212) 929-5500 (Call Collect)

Or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

 

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FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements which involve substantial risks and uncertainties and are based on Landos’ beliefs and assumptions and on information currently available to Landos. All statements other than statements of historical facts contained in this proxy statement, including statements regarding the Transactions, are forward-looking statements. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” or “would,” or the negative of these words or other similar terms or expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions only as of the date of this proxy statement and information contained in this proxy statement should not be relied upon as representing Landos’ estimates as of any subsequent date. These statements, and related risks, uncertainties, factors and assumptions, include, but are not limited to:

 

   

the ability of the parties to consummate the Merger in a timely manner or at all;

 

   

the failure to satisfy the conditions to the consummation of the proposed Merger, including the adoption of the Merger Agreement by the stockholders;

 

   

potential delays in consummating the proposed transaction;

 

   

the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement;

 

   

the effect of the announcement or pendency of the proposed Merger on Landos’ business relationships, operating results, and business generally;

 

   

risks that the proposed Merger disrupts current plans and operations of Landos or AbbVie and potential difficulties in Landos employee retention as a result of the proposed Merger;

 

   

risks related to diverting management’s attention from Landos’ ongoing business operations;

 

   

outcome of any legal proceedings that may be instituted against the parties or their respective directors or officers related to the proposed Merger;

 

   

challenges to intellectual property;

 

   

costs related to the Merger;

 

   

the outcome of any legal proceedings that may be instituted against AbbVie or against Landos related to the Merger Agreement or the proposed Merger;

 

   

the ability to achieve the clinical development milestone set forth in the CVR Agreement;

 

   

adverse litigation or governmental action;

 

   

actual or anticipated fluctuations in our financial condition and operating results;

 

   

the uncertainties inherent in the initiation and enrollment of future clinical trials, including with respect to the clinical development set forth in the CVR Agreement;

 

   

expectations of expanding ongoing clinical trials;

 

   

availability and timing of data from ongoing clinical trials;

 

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expectations for future regulatory approvals or other matters that could affect the availability or commercial potential of our product candidates; and

 

   

other similar risks.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this proxy statement. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements as predictions of future events.

These risks are not exhaustive. Except as required by law, Landos assumes no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. Further information on factors that could cause actual results to differ materially from the results anticipated by Landos’ forward-looking statements is included in the reports Landos has filed or will file with the SEC, including Landos’ Annual Report on Form 10-K for the year ended December 31, 2023, and subsequent filings Landos makes with the SEC. These filings, when available, are available on the investor relations section of Landos’ website at https://ir.landosbiopharma.com and on the SEC’s website at www.sec.gov.

Stockholders are advised to consult any future disclosures that we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

 

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THE SPECIAL MEETING

The enclosed proxy is solicited on behalf of the Board of Directors for use at the Special Meeting.

Date, Time and Place

We will hold the Special Meeting virtually on    , 2024 at    Eastern Time via the live audio webcast on the Internet at www.virtualshareholdermeeting.com/LABP2024SM and, if applicable, at any adjournment or postponement thereof.

Purpose of the Special Meeting

At the Special Meeting, we will ask stockholders to vote on proposals to (i) adopt the Merger Agreement and (ii) approve the Adjournment Proposal.

We do not expect that any matters other than the proposals set forth above will be brought before the Special Meeting, and only matters specified in the notice of the meeting may be acted upon at the Special Meeting.

Our stockholders must approve the proposal to adopt the Merger Agreement in order for the Merger to be consummated. If our stockholders fail to approve the proposal to adopt the Merger Agreement, the Merger will not be consummated. A copy of the Merger Agreement is attached as Annex A to this proxy statement, which we urge you to read carefully in its entirety.

Record Date; Shares Entitled to Vote; Quorum

Only stockholders of record as of the Record Date are entitled to notice of the Special Meeting and to vote at the Special Meeting. For the ten days ending the day prior to the Special Meeting, a list of stockholders entitled to vote at the Special Meeting will be available to stockholders and will be available electronically at the Special Meeting. To access the list of record stockholders, stockholders should email info@landosbiopharma.com.

The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present virtually or represented by proxy, will constitute a quorum at the Special Meeting. As of the Record Date, there were      shares of common stock outstanding and entitled to vote at the Special Meeting, meaning that      shares of common stock must be represented virtually or by proxy at the Special Meeting to have a quorum. In the event that a quorum is not present at the Special Meeting, it is expected that the meeting will be adjourned to solicit additional proxies to approve the proposal to adopt the Merger Agreement.

Vote Required; Abstentions and Broker Non-Votes

The affirmative vote of the holders of a majority of the shares of common stock that are issued and outstanding as of the Record Date is required to adopt the Merger Agreement. As of the Record Date,     shares constitute a majority of the outstanding shares of common stock. Adoption of the Merger Agreement by stockholders is a condition to the Closing.

Approval of the Adjournment Proposal requires either (i) if a quorum is present, the affirmative vote of the majority of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Special Meeting and entitled to vote generally on the subject matter or (ii) if a quorum is not present, the vote of the holders of a majority of the shares represented at the Special Meeting. Assuming the Special Meeting is held solely by means of remote communication, as it is currently scheduled to be, no shares will be present in person at the Special Meeting, and only shares present virtually or represented by proxy at the Special Meeting will be able to be voted.

 

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An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal. If a stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted “AGAINST” the proposal to adopt the Merger Agreement and the Adjournment Proposal. However, abstentions are counted for purposes of determining whether a quorum is present at the Special Meeting. As a result, an abstention of any of the aforementioned proposals will be counted for purposes of determining the presence or absence of a quorum, but will count as a vote “AGAINST” such proposal.

A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote the shares. We do not expect any “broker non-votes” at the Special Meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are “broker non-votes,” each broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement, but any such “broker non-votes” will have no effect on the Adjournment Proposal.

Shares Held by Landos’ Directors and Executive Officers

As of the Record Date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate,    shares of common stock, representing approximately % of the shares of common stock outstanding on the Record Date (and approximately % of the shares of common stock outstanding when taking into account Landos Options and Landos RSUs held, in the aggregate, by our directors and executive officers).

Our directors and executive officers have informed us that they currently intend to vote all of their respective shares of common stock (i) “FOR” the adoption of the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

Voting of Proxies

If, at the close of business on the Record Date, your shares are registered in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc., on the Record Date, you may cause your shares to be voted by returning a signed and dated proxy card in the accompanying prepaid envelope, or you may vote virtually at the Special Meeting. Additionally, you may grant a proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card). You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the Internet or by telephone. Based on your proxy card or Internet and telephone proxies, the proxy holders will vote your shares according to your directions.

If your Landos shares are registered in your name and you plan to attend the Special Meeting and wish to vote virtually, you will need to enter the 16-digit Control Number found next to the label “Control Number” on your proxy card voting instruction form, or in the email sending you the proxy statement. If you attend the Special Meeting, and vote virtually, your vote will revoke any previously submitted proxy. If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the Special Meeting virtually.

Voting instructions are included on your proxy card. All shares represented by properly signed and dated proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholder. Properly signed and dated proxies that do not contain voting instructions will be voted (i) “FOR” the adoption of the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

If, at the close of business on the Record Date, your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or other nominee or attending the Special Meeting and voting

 

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virtually with a “legal proxy” from your bank, broker or other nominee. If such a service is provided, you may vote over the Internet or telephone through your bank, broker or other nominee by following the instructions on the voting form provided by your bank, broker or other nominee. If you do not return your bank’s, broker’s or other nominee’s voting form, do not vote via the Internet or telephone through your bank, broker or other nominee, if possible, or do not attend the Special Meeting and vote virtually with a “legal proxy” from your bank, broker or other nominee, it will have the same effect as if you voted “AGAINST” the proposal to adopt the Merger Agreement but will not have any effect on the Adjournment Proposal.

Revocability of Proxies

If you are a stockholder of record entitled to vote at the Special Meeting, you may change your vote or revoke your proxy at any time before it is voted at the Special Meeting by:

 

   

signing another proxy card with a later date and returning it to us prior to the Special Meeting;

 

   

submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy;

 

   

delivering a written notice of revocation to our Corporate Secretary at Landos Biopharma, Inc., P.O. Box 11239, Blacksburg, Virginia 24062, by     p.m. Eastern Time on    , 2024; or

 

   

attending the Special Meeting and voting virtually. Attending the Special Meeting virtually will not in and of itself revoke a previously submitted proxy. You must specifically vote at the virtual Special Meeting in order for your previous proxy to be revoked.

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote virtually at the Special Meeting if you obtain a “legal proxy” from your bank, broker or other nominee.

Adjournments and Recess

Although it is not currently expected, the Special Meeting may be adjourned or recessed to a later date or dates, including for the purpose of soliciting additional proxies, if there are insufficient votes at the time of the Special Meeting to approve the proposal to adopt the Merger Agreement or if a quorum is not present at the Special Meeting. Other than an announcement to be made at the Special Meeting of the time, date and place of an adjourned meeting, an adjournment generally may be made without notice. Any adjournment or recess of the Special Meeting for the purpose of soliciting additional proxies will allow the stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting as adjourned or recessed.

Board of Directors’ Recommendation

The Board of Directors, after considering various factors described under the caption, “The Merger —Recommendation of the Board of Directors and Reasons for Recommendation of the Merger,” has unanimously (a) determined that the Transactions, including the Merger, are advisable and fair to, and in the best interests of, Landos and its stockholders; (b) authorized and approved the execution, delivery, and performance of the Merger Agreement, the CVR Agreement and the Voting Agreement by Landos and approved the Merger; (c) recommended the adoption of the Merger Agreement by Landos’ stockholders and (d) directed that the Merger Agreement be submitted for consideration by Landos’ stockholders at the Special Meeting.

Accordingly, the Board of Directors unanimously recommends, on behalf of Landos, that you vote (i) “FOR” the adoption of the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

 

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Solicitation of Proxies

The expense of soliciting proxies will be borne by Landos. We have retained MacKenzie Partners, Inc. (“Proxy Solicitor”), a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $9,500 plus expenses. We will also indemnify Proxy Solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Completion of the Merger

Assuming timely satisfaction of necessary closing conditions, including obtaining the Required Company Stockholder Vote, Landos is currently targeting to consummate the Merger in the first half of 2024, although Landos cannot assure completion by any particular date, if at all. Since the Merger is subject to a number of conditions, the exact timing of the Merger cannot be determined at this time.

Appraisal Rights

If the Merger is consummated, Landos stockholders (including beneficial owners of shares of capital stock) who (1) do not vote in favor of the adoption of the Merger Agreement; (2) continuously hold their shares through the Effective Time; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the Merger under Section 262 of the DGCL if certain conditions set forth in Section 262(g) of the DGCL are satisfied. This means that such persons will be entitled to seek appraisal of their shares by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of Landos common stock, exclusive of any elements of value arising from the accomplishment or expectation of the Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the Merger through the date of payment of the judgment at a rate of five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment, compounded quarterly (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to each person entitled to appraisal, interest will accrue thereafter only upon the sum of (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, persons who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

Persons considering seeking appraisal should be aware that the fair value of shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the Merger Agreement if they did not seek appraisal of their shares.

To exercise appraisal rights, the stockholder of record or a beneficial owner must (1) submit a written demand for appraisal to Landos before the vote is taken on the proposal to adopt the Merger Agreement; (2) not vote, in person by attending via live audio webcast or by proxy, in favor of the proposal to adopt the Merger Agreement; (3) continue to hold of record or own beneficially the subject shares of Landos common stock through the Effective Time; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware

 

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Court of Chancery will dismiss appraisal proceedings in respect of Landos unless certain conditions are satisfied by the persons seeking appraisal. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights. A copy of Section 262 of the DGCL is accessible, without subscription or cost, at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. In the event of any inconsistency between the information contained in this summary, this proxy statement, or any of the documents incorporated herein or therein by reference, and the actual text of Section 262 of the DGCL, the actual text of Section 262 of the DGCL controls. If you hold your shares of Landos common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.

Delisting and Deregistration of Landos Common Stock

If the Merger is completed, the shares of Landos’ common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and shares of Landos’ common stock will no longer be publicly traded. As such, Landos will no longer file periodic reports with the SEC on account of Landos’ common stock.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on    , 2024

The proxy statement is available on the investor relations page of our website at https://ir.landosbiopharma.com.

Questions and Additional Information

If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(212) 929-5500 (Call Collect)

Or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

 

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THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger, because this document contains important information about the Merger and how it affects you.

Parties Involved in the Merger

Landos Biopharma, Inc.

Landos is a clinical-stage biopharmaceutical company focused on the development of novel, oral, once-daily therapeutics for patients with certain immunology diseases. Landos’ core expertise is the development of compounds that target novel pathways at the interface of immunity and metabolism. Based on Landos’ understanding of the role that cellular metabolic pathways have on modulating inflammatory responses, Landos aims to inhibit these inflammatory responses by changing the metabolic processes in target cells. Landos believes the therapeutics Landos develops, if approved, could have a significant positive impact on the quality of life of patients suffering from immunology diseases. Landos’ common stock is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “LABP.” Landos’ current focus and lead product candidate is NX-13, a novel, oral, gut-selective, NLRX1 agonist in development as a once-daily, oral treatment for ulcerative colitis and Crohn’s disease that targets NLRX1, a mitochondria-associated receptor that has been associated with the modulation of inflammatory cytokines for ulcerative colitis and Crohn’s disease. NX-13 is designed to target NLRX1 and induce anti-inflammatory effects in CD4+ T cells as well as other cells in the gastrointestinal tract. Landos’ common stock is listed on The Nasdaq Capital Market (“Nasdaq”) under the symbol “LABP.” Landos’ executive officers and employees work remotely in a “virtual office” setting. Landos’ mailing address is P.O. Box 11239, Blacksburg, VA 24062 and its telephone number is (540) 218-2232.

AbbVie Inc.

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie’s portfolio of products includes immunology products, oncology products, aesthetics products, neuroscience products, eye care products and other key products. AbbVie was incorporated in State of Delaware on April 10, 2012. AbbVie’s common stock is listed and traded on the NYSE under the symbol “ABBV.” AbbVie’s principal executive offices are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400, and its telephone number is (847) 932-7900.

Bespin Subsidiary, LLC

Parent is a Delaware limited liability company and a wholly owned subsidiary of AbbVie and was formed on March 15, 2024, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Parent has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. The principal executive offices of Parent are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400, and its telephone number is (847) 932-7900.

Bespin Merger Sub, Inc.

Merger Sub is a Delaware corporation and a wholly owned subsidiary of Parent and was formed on March 15, 2024, solely for the purpose of engaging in the transactions contemplated by the Merger Agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the Merger Agreement. Upon the completion of the Merger, Merger Sub will cease to exist and Landos will continue as the Surviving Corporation. The principal executive offices of Merger Sub are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400, and its telephone number is (847) 932-7900.

 

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Effect of the Merger

Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into Landos, with Landos continuing as the Surviving Corporation. As a result of the Merger, Landos will become an indirect wholly owned subsidiary of AbbVie, and our common stock will no longer be publicly traded and will be delisted from Nasdaq. In addition, our common stock will be deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC. If the Merger is completed, you will not own any shares of the capital stock of the Surviving Corporation.

The Effective Time will occur upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later time as we and Parent may agree in writing and specify in the certificate of merger).

Effect on Landos if the Merger is Not Completed

If the Merger Agreement is not adopted by stockholders, or if the Merger is not completed for any other reason:

 

  (i)

the stockholders will not be entitled to, nor will they receive, any payment for their respective shares of common stock pursuant to the Merger Agreement;

 

  (ii)

(A) Landos will remain an independent public company, (B) Landos’ common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and (C) Landos will continue to file periodic reports with the SEC;

 

  (iii)

we anticipate that (A) management will operate the business in a manner similar to that in which it is being operated today and (B) stockholders will be subject to similar types of risks and uncertainties as those to which they are currently subject, including, but not limited to, risks and uncertainties with respect Landos’ business, prospects and results of operations, as such may be affected by, among other things, the highly competitive industry in which Landos operates and economic conditions;

 

  (iv)

the price of our common stock may decline significantly, and if that were to occur, it is uncertain when, if ever, the price of our common stock would return to the price at which it trades as of the date of this proxy statement;

 

  (v)

the Board of Directors will continue to evaluate and review Landos’ business operations, strategic direction and capitalization, among other things, and will make such changes as are deemed appropriate (irrespective of these efforts, it is possible that no other transaction acceptable to the Board of Directors will be offered or that Landos’ business, prospects and results of operations will be adversely impacted); and

 

  (vi)

under certain specified conditions, Landos will be required to pay AbbVie the Landos Termination Fee. For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Effect of Termination; Termination Fees.”

Merger Consideration

At the Effective Time, each share of common stock (other than Cancelled Shares and Dissenting Shares) outstanding as of immediately prior to the Effective Time will be cancelled and automatically converted into the right to receive (A) the Closing Amount and (B) one (1) CVR, in each case, without interest thereon and subject to any withholding of taxes.

After the Merger is completed, you will have the right to receive the Closing Amount in respect of each share of common stock that you own (subject to any withholding of taxes), but you will no longer have any rights as a stockholder (except that stockholders who properly exercise their appraisal rights will have a right to receive payment of the “fair value” of their shares as determined pursuant to an appraisal proceeding, as contemplated by Delaware law). For more information, please see the section of this proxy statement captioned “—Appraisal Rights.”

 

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Background of the Merger

The Board of Directors, together with Landos senior management and with the assistance of its outside advisors, frequently reviews Landos’ strategic and financial alternatives in light of developments in Landos’ business, the sectors in which it operates, and the economy and financial markets generally, as they, individually and together, may affect Landos’ long-term strategic goals and plans. As part of this process, members of Landos senior management have engaged from time to time in business development and strategic discussions with participants in the biopharmaceutical and healthcare industries, including AbbVie, all with the goal of enhancing value for Landos stockholders. These strategic discussions have focused on, among other things, opportunities for business combinations, licensing transactions, commercial agreements, asset acquisitions and divestitures and other financial and strategic alternatives for Landos, including continuing as a standalone company.

From time to time beginning in late 2021 and continuing until mid-2022, representatives of AbbVie engaged in initial technical assessments involving a potential license (or option to license) by Landos to AbbVie of NX-13 and other compounds targeting NLRX1. To facilitate these discussions, Landos and AbbVie entered into a bilateral confidential disclosure agreement on September 15, 2021 (the “AbbVie NDA”), which was later extended by an amendment on October 11, 2022 (“Amendment No. 1 to AbbVie NDA”) and again by an amendment on September 8, 2023 (“Amendment No. 2 to AbbVie NDA”) (together, the “AbbVie NDA Amendments”). The AbbVie NDA and AbbVie NDA Amendments did not contain a standstill provision.

In May of 2022, the discussions between the representatives of Landos and AbbVie progressed to include business terms indicative of a potential licensing transaction. In connection with these progressed discussions, Landos opened a virtual data room to AbbVie and its advisors, AbbVie engaged in due diligence of NX-13 and Landos, and AbbVie made various proposals to Landos relating to a licensing transaction in May 2022, January 2023 and July 2023. During the course of these discussions, the representatives of Landos regularly updated the Board of Directors and received direction from the Board of Directors regarding further discussion with AbbVie of the terms of a potential transaction. It was noted by the Board of Directors that following the consummation of Landos’ sale of its LANCL2 portfolio, including clinical compounds omilancor and LABP-104, as well as the preclinical LABP-111 compound, in February 2023, NX-13 comprised a substantial portion of Landos’ value as its sole clinical program and that as a result, entering into such a potential commercial transaction with AbbVie would leave Landos without a clinical program that was not subject to a licensing agreement with a third party. In August 2023, Landos and AbbVie ceased discussions of an option or licensing transaction with respect to NX-13, but agreed to stay in touch regarding a potential strategic transaction between the parties.

On September 22, 2023, AbbVie submitted to Landos a non-binding indication of interest for the acquisition of 100% of the outstanding share capital of Landos on a fully diluted basis for $122.5 million in cash at closing, subject to AbbVie’s completion of due diligence (the “September 22 Proposal”). A list of initial due diligence questions was attached to the proposal. The total equity value contemplated by the September 22 Proposal was equivalent to approximately $18.63 per share of Landos common stock at closing based on the current number of outstanding shares at that time on a fully diluted basis.

On September 25, 2023, the Board of Directors held a meeting with Mr. Oakes and representatives of Cooley LLP (“Cooley”), Landos’ outside legal counsel, present. The Board of Directors discussed the terms of the September 22 Proposal and Mr. Oakes reviewed with the Board of Directors the prior proposals received from AbbVie with respect to a potential licensing transaction. The Board of Directors also discussed the potential engagement of an investment bank to assist the Board of Directors in evaluating the September 22 Proposal. Representatives of Cooley reviewed with the Board of Directors the directors’ fiduciary duties, including in the context of a potential sale of the company. After discussion, the Board of Directors directed Mr. Oakes to reach out to investment banks with relevant experience in the life sciences sector and in M&A transactions to assist the Board of Directors in evaluating the September 22 Proposal. The Board of Directors also directed Mr. Oakes to indicate to AbbVie that the Board of Directors was not prepared to transact at the price contemplated by

 

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the September 22 Proposal, but that Landos would continue to discuss with AbbVie and respond to AbbVie’s diligence requests to determine if AbbVie would be able to propose a higher price.

Between September 27, 2023 and October 9, 2023 there were several discussions between representatives of Landos and AbbVie regarding the proposal and AbbVie’s diligence requests. During such discussions, the Landos representatives provided the Board of Directors’ message that it was not prepared to transact at the proposed price. AbbVie representatives indicated to Landos that AbbVie was still engaged and wanted to continue exploring a potential acquisition of Landos.

On October 10, 2023, the Board of Directors held a meeting with Mr. Oakes and representatives of Cooley present to discuss the engagement of a financial advisor. Representatives of Jefferies LLC (“Jefferies”) were invited to attend the meeting to discuss AbbVie’s September 22 Proposal and to allow the Board of Directors to evaluate Jefferies’ experience and capabilities relevant to a potential strategic transaction. Mr. Oakes and Mr. Garabedian reviewed their discussions with representatives of AbbVie since the September 25 meeting of the Board of Directors. Representatives of Jefferies then reviewed Jefferies’ perspectives on the current biopharmaceutical market environment and the September 22 Proposal. The Board of Directors agreed to meet later in the week to consider the engagement of Jefferies. The Board of Directors also directed Mr. Oakes to contact representatives of AbbVie to indicate that the Board of Directors would soon conclude its discussions regarding retaining a financial advisor.

On October 12, 2023, at the direction of the Board of Directors, Mr. Oakes contacted a representative of AbbVie to deliver the message directed by the Board of Directors.

On October 13, 2023, the Board of Directors held a meeting with Landos senior management and representatives of Cooley present to discuss engaging Jefferies as Landos’ financial advisor in connection with a potential strategic transaction. In considering this decision, the Board of Directors reviewed the proposed terms of an engagement letter proposed by Jefferies with respect to Jefferies’ engagement to act as Landos’ financial advisor in connection with a potential strategic transaction and a copy of Jefferies’ customary relationship disclosures regarding its relationships in the past two years with AbbVie and certain stockholders of Landos, Xontogeny, LLC and funds affiliated with Perceptive Advisors LLC, which had been provided by Jefferies at the request of the Board of Directors on October 10, 2023. The Board of Directors considered Jefferies’ qualifications, experience and reputation in the biopharmaceutical industry and in connection with strategic transactions involving public companies, and noted that Jefferies is an internationally recognized investment banking firm. After discussing the foregoing, the Board of Directors determined to engage Jefferies as its financial advisor. Later that day, Landos entered into an engagement letter with Jefferies.

On October 16, 2023, the Board of Directors held a meeting with Mr. Oakes and representatives of Cooley present to review the October Preliminary Projections (as defined in the section titled “Certain Financial Projections”) prepared by Landos senior management. The Board of Directors and Mr. Oakes discussed the various assumptions, opportunities, risks, challenges and uncertainties inherent in Landos’ business and the October Preliminary Projections, including the appropriate probabilities of success to ascribe to NX-13 with respect to ulcerative colitis and Crohn’s disease in light of the experience and expertise with drug development of members of the Board of Directors. The Board of Directors directed Landos senior management to instruct Jefferies to use the October Preliminary Projections in its preliminary financial analysis and determined to continue to discuss the various assumptions, opportunities, risks, challenges and uncertainties inherent in Landos’ business and the October Preliminary Projections in connection with any subsequent consideration of a strategic transaction.

On October 17, 2023, the Board of Directors held a meeting with Mr. Oakes and representatives of Jefferies and Cooley present. Representatives of Jefferies presented Jefferies’ preliminary financial analyses with respect to the September 22 Proposal, taking into account the October Preliminary Projections as directed by the Board

 

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of Directors. Following Jefferies’ presentation of its preliminary financial analyses, the Board of Directors engaged in further discussion with representatives of Cooley and Jefferies regarding AbbVie’s September 22 Proposal and potential responses, including indicating that the price contemplated by the September 22 Proposal did not represent a basis on which the Board of Directors would be willing to transact, proposing that AbbVie increase the up-front valuation in AbbVie’s offer and suggesting the addition of CVRs to secure potential additional value for the stockholders of Landos subject to achievement of certain future milestones. The Board of Directors then directed Jefferies to contact AbbVie to indicate that the Board of Directors was not prepared to transact at the value of the current offer and that Landos was focused on executing its standalone plan, which was fully funded through the readout of data from the ongoing Phase 2 clinical trial of NX-13.

On October 18, 2023, representatives of Jefferies contacted representatives of AbbVie to convey the Board of Directors’ feedback on the September 22 Proposal. At Jefferies’ request, the representatives of Jefferies and AbbVie agreed to arrange a meeting to discuss Landos’ pre-clinical pipeline and operating costs.

On October 26, 2023, representatives of Jefferies and a representative of AbbVie held such call to discuss AbbVie’s due diligence calls regarding Landos’ pre-clinical pipeline and operating costs and to facilitate arrangement of follow-up due diligence calls regarding the same.

Also on October 26, 2023, Landos and AbbVie entered into an amendment to the AbbVie NDA, which included an extension of the term of the AbbVie NDA and a standstill provision (with customary exclusions, including a fall-away provision).

On November 3, 2023, AbbVie submitted to Landos a revised non-binding indication of interest for the acquisition of 100% of the outstanding share capital of Landos on a fully diluted basis for $122.5 million in cash at closing plus one CVR per share of Landos common stock representing the right to receive an aggregate contingent payment of $75 million, payable upon initiation of the first dosing of the first human subject, prior to December 31, 2028, in a Phase 3 registrational trial for a product containing NX-13 for ulcerative colitis (the “November 3 Proposal”). The total equity value contemplated by the November 3 Proposal was equivalent to approximately $18.63 per share of Landos common stock at closing and approximately $11.09 per share of Landos common stock with respect to the nominal value of the CVR based on the total number of outstanding shares at that time on a fully diluted basis. The November 3 Proposal stipulated that the direction of the research, development, clinical trial process and regulatory approval for such a product would be in AbbVie’s sole discretion.

Later that day, representatives of Jefferies and a representative of AbbVie held a call to discuss the November 3 Proposal, during which call the AbbVie representative indicated that he would need to hear back quickly in order to continue to devote resources to evaluating the potential transaction.

On November 6, 2023, the Board of Directors met with Mr. Oakes and representatives of Jefferies and Cooley present to discuss the November 3 Proposal. Representatives from Jefferies reviewed the November 3 Proposal, including Jefferies’ preliminary financial analyses with respect to the November 3 Proposal, taking into account the October Preliminary Projections, and informed the Board of Directors that AbbVie had indicated that it would need to hear back quickly in order to continue to devote resources to evaluating the potential transaction. The Board of Directors discussed potential responses to AbbVie and Landos’ outlook as a standalone company in the absence of a strategic transaction. After discussion, as part of the negotiations, the Board of Directors directed Jefferies to indicate to AbbVie that the upfront price per share would need to be comfortably above $20.00 per share for the Board of Directors to consider a potential transaction at that time. The Board of Directors also directed Jefferies to advocate for a commitment by AbbVie to use commercially reasonable efforts to achieve the milestone under the CVR, a longer timeline for achieving the milestone under the CVR and an expansion of the milestone trigger under the CVR to include a Phase 3 clinical trial for Crohn’s disease, in addition to such a trial for ulcerative colitis. The next day representatives of Jefferies relayed the Board’s message to representatives of AbbVie.

 

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On November 13, 2023, a representative of AbbVie reached out to a representative of Jefferies to indicate that AbbVie would be willing to increase the total aggregate up-front payment to $137.5 million and extend the expiration date of the Milestone by three months to March 31, 2029 (the “November 13 Proposal”). A representative of AbbVie indicated that the terms of the November 13 proposal were otherwise the same as the terms of the November 3 Proposal. The total equity value contemplated by the November 13 Proposal was equivalent to approximately $20.85 per share of Landos common stock at closing and approximately $11.38 per share of Landos common stock with respect to the nominal value of the CVR based on the total number of outstanding shares at that time on a fully diluted basis. The representative of AbbVie indicated that this proposal would be confirmed in writing via delivery of draft transaction documents later that week and that AbbVie desired to finalize all transaction documents by November 30, 2023 to be in a position to publicly announce a transaction by early December 2023.

Later that day, the Board of Directors met with Mr. Oakes and representatives of Jefferies and Cooley present. Mr. Oakes and the representatives of Jefferies and Cooley reviewed the updates reflected in the November 13 Proposal, including Jefferies’ preliminary financial analyses with respect to the November 13 Proposal, taking into account the October Preliminary Projections, and AbbVie’s proposed timeline to signing transaction documents and announcing a transaction. The Board of Directors discussed the November 13 Proposal and the potential benefits and risks of outreach to additional potential acquirers with the November 13 Proposal in-hand, and whether any third parties could reasonably be expected to have both financial ability and strategic interest in a potential transaction with Landos at this time, including third parties that from time to time had previously expressed interest in Landos’ business. The Board of Directors noted that Landos had regularly engaged in discussions with large pharmaceutical companies in the ordinary course and had gauged the interest of many of these companies in a potential strategic transaction with Landos in the preceding months, and discussed that such companies had generally indicated that they would not be interested in a potential strategic transaction with Landos until after top-line results from the Phase 2 trial for NX-13 became available. The Board of Directors further discussed that AbbVie had already conducted significant diligence and that other potential acquirors would require significant time in order to conduct diligence and potentially formulate a proposal if they were interested in doing so. The Board of Directors discussed that such a delay might risk AbbVie’s interest in acquiring Landos on the currently proposed terms or at all in light of AbbVie’s prior indications regarding timing and that it would need to hear back quickly in order to continue to devote resources to evaluating the potential transaction. Following this discussion, the Board of Directors determined not to conduct outreach to third parties regarding a potential acquisition of Landos at that time.

On November 14, 2023, a representative of AbbVie sent representatives of Jefferies an email attaching initial drafts of the Merger Agreement and CVR Agreement, noting that these agreements reflected AbbVie’s “best-and-final offer” regarding up-front price and CVR value and reiterating AbbVie’s desire to be ready to finalize transaction agreements by November 30, 2023. The draft Merger Agreement proposed, among other things, structuring the transaction as a one-step merger to be approved at a special meeting of Landos’ stockholders and a termination fee payable by Landos equal to $8,500,000, or approximately 4.0% of the total transaction value. The draft CVR Agreement generally reflected the terms of the November 13 Proposal, including that there was no obligation for AbbVie to use commercially reasonable efforts to achieve the CVR milestone.

On November 18, 2023, following discussions between representatives of Cooley and members of the Board of Directors, Cooley sent revised drafts of the Merger Agreement and CVR Agreement to AbbVie’s outside legal counsel at Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”). The draft Merger Agreement proposed, among other things, structuring the transaction as a tender offer followed by a second-step merger and a termination fee payable by Landos equal to 2.75% of the total transaction value. The draft of the CVR Agreement included, among other things, an obligation for AbbVie to use commercially reasonable efforts to achieve the CVR milestone.

 

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Later on November 18, 2023, a representative of Paul Weiss called a representative of Cooley to review AbbVie’s initial feedback to the markups of the Merger Agreement and CVR Agreement sent by Cooley earlier that day.

On November 19, 2023, representatives of Jefferies, Mr. Oakes and a representative of AbbVie held a call to review AbbVie’s initial feedback to the markups of the Merger Agreement and CVR Agreement sent by Cooley the prior day.

On November 20, 2023, the Board of Directors met with Mr. Oakes and representatives of Jefferies and Cooley present. The representatives of Jefferies reviewed its preliminary financial analyses of the November 13 Proposal, taking into account the October Preliminary Projections, which Jefferies had previously presented at the November 13 meeting of the Board of Directors. The Board of Directors continued its discussion from the October 16 and October 17 meetings of the various assumptions, opportunities, risks, challenges and uncertainties inherent in Landos’ business and the October Preliminary Projections and discussed certain changes to the October Preliminary Projections, including the appropriate probabilities of success to ascribe to NX-13 for treatment of ulcerative colitis and Crohn’s disease based on review of certain market and empirical data with respect to the probability of success to FDA approval for drug candidates in the ulcerative colitis and Crohn’s disease indications, applicable scientific literature and the experience and expertise with drug development of members of the Board of Directors, as further described in the section titled “Certain Financial Projections”. After discussion, the Board of Directors directed Jefferies to use the Management Projections (as defined in the section titled “Certain Financial Projections”) in subsequent financial analyses. Mr. Oakes and the representatives of Cooley updated the Board of Directors on the current progress of diligence and the negotiations of the terms of the draft Merger Agreement and CVR Agreement, including the initial feedback received during the November 18 and November 19 discussions. After discussion, the Board of Directors determined that the terms of the November 13 Proposal represented a basis on which Landos and its advisors should continue to engage in discussions with AbbVie regarding the potential transaction, and gave direction to Cooley for continuing to negotiate the transaction terms and responding to the initial feedback provided by AbbVie and Paul Weiss on Cooley’s markups of the draft transaction agreements. From this time until the entry into the Merger Agreement and finalization of the CVR Agreement, representatives of Cooley continued to negotiate the terms of the draft agreements on behalf of Landos based on the direction of the Board of Directors.

On November 27, 2023, the Board of Directors met with Mr. Oakes and representatives of Jefferies and Cooley. Mr. Oakes and the representatives of Cooley reviewed the status of the negotiation of the draft transaction agreements and AbbVie’s due diligence. Representatives of Jefferies reviewed a revised preliminary financial analysis of the November 13 Proposal, which took into account the Management Projections (as defined in the section titled “Certain Financial Projections”) as directed by the Board of Directors. Representatives of Cooley then reviewed the terms that remained under negotiation in the draft transaction agreements and the Board of Directors gave direction based on this discussion. Mr. Oakes and representatives of Cooley reviewed the status of AbbVie’s due diligence, indicating that AbbVie had requested to schedule due diligence calls.

Beginning on December 4, 2023, representatives of Landos and Cooley and certain former employees of Landos conducted due diligence calls with representatives of AbbVie and Paul Weiss and responded to supplemental diligence requests from AbbVie. Landos continued to engage in due diligence calls at AbbVie’s request and respond to AbbVie’s supplemental diligence requests until shortly prior to the entry into the Merger Agreement and finalization of the CVR Agreement.

On December 6, 2023, Paul Weiss sent Cooley an initial draft of a Voting Agreement. Cooley sent to Paul Weiss revisions to the Voting Agreement on December 7, 2023, and followed up on December 11, 2023 with an incremental draft of the Voting Agreement reflecting comments from Xontogeny, LLC and Perceptive Advisors LLC. Representatives of Cooley and such stockholders negotiated the terms of such Voting Agreement, including with respect to, among other things, the termination provisions applicable to the Voting Agreement, the ability of the Landos stockholders signatory thereto to transfer their shares of Landos stock to their respective affiliates and the scope of the obligations of Xontogeny, LLC and Perceptive Advisors LLC to vote their shares in favor of the adoption of the Merger Agreement.

 

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On December 20, 2023, a representative of AbbVie indicated to Mr. Oakes that AbbVie’s due diligence process remained ongoing and that, in light of the upcoming holidays, AbbVie would intend to resume its due diligence process during January 2024.

On December 21, 2023, the Board of Directors met with Mr. Oakes and representatives of Cooley present. Mr. Oakes and the representatives of Cooley reviewed the status of the negotiation of the transaction documents and AbbVie’s due diligence process, noting that while AbbVie remained engaged, AbbVie continued to make additional due diligence requests and indicated that its completion of due diligence remained the primary outstanding item from its perspective. The Board of Directors directed Landos senior management and advisors to continue to respond to AbbVie’s due diligence requests.

From January 9, 2024 to February 1, 2024, both in person at the JP Morgan Healthcare Conference and telephonically shortly thereafter, members of Landos senior management held meetings with representatives of five companies in the biopharmaceutical and healthcare industries, as Landos has done from time to time in the ordinary course of business. The representatives of each of these companies indicated that such companies would not be interested in a potential strategic transaction with Landos until after top-line results from the Phase 2 trial for NX-13 became available. Mr. Oakes updated the Board of Directors regarding these meetings.

During January 2024 to mid-March 2024, AbbVie continued to make supplemental due diligence requests, conduct diligence calls with Landos and its representatives, and engage in confirmatory due diligence of Landos.

On March 14, 2024, representatives of AbbVie called Mr. Oakes to inform him that AbbVie had completed its due diligence and was prepared to enter into the transaction agreements as soon as possible.

On March 17, 2024, the Board of Directors held a meeting with Landos senior management and representatives of Jefferies and Cooley present. Mr. Oakes reviewed the recent discussions with AbbVie. Representatives from Cooley reviewed the fiduciary duties of the directors, including in the context of a potential sale of the company. Representatives from Cooley then reviewed drafts of the Merger Agreement, CVR Agreement and Voting Agreement that reflected the negotiation of the terms of the agreements by Landos and its advisors as directed by the Board of Directors, noting that the total equity value proposed by AbbVie for the transaction would result in a value of $20.42 per share of Landos common stock at closing and $11.14 per share of Landos common stock with respect to the nominal value of the CVR based on the number of outstanding shares at that time on a fully diluted basis, which number of outstanding shares had increased slightly in the ordinary course in the approximately four months following the November 13 Proposal. Following discussion, the Board of Directors directed Landos senior management and the legal and financial advisors to finalize the terms of the transaction agreements for consideration by the Board of Directors.

From March 17, 2024 through March 22, 2024, Paul Weiss and Cooley worked to finalize drafts of the Merger Agreement, Landos disclosure schedules to the Merger Agreement, CVR Agreement and Voting Agreement.

On March 24, 2024, the Board of Directors held a meeting with Landos senior management and representatives of Jefferies and Cooley present. Representatives of Cooley reviewed the fiduciary duties of the directors, including in the context of a potential sale of the company. The Board of Directors also reviewed the Management Projections and approved them for use in Jefferies’ financial analysis. Representatives of Jefferies then reviewed its financial analysis of the Merger Consideration and rendered Jefferies’ oral opinion (which was subsequently confirmed in writing) to the Board of Directors to the effect that, as of the date of such opinion and based on and subject to the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of shares (other than Parent, Merger Sub and their respective affiliates) pursuant to the Merger Agreement is fair, from a financial point of view, to such holders. For more information about Jefferies’ opinion, see below under the captions “The Merger—Opinion of Landos’ Financial Advisor”. The Board of Directors also considered

 

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updates to the customary relationship disclosures previously provided by Jefferies regarding its relationships in the past two years with AbbVie and certain stockholders of Landos, Xontogeny, LLC and funds affiliated with Perceptive Advisors LLC, which updates to the customary relationship disclosures Jefferies provided on March 15. Representatives of Cooley reviewed with the Board of Directors the terms of the proposed final Merger Agreement, CVR Agreement and Voting Agreement. For more information concerning the terms of the agreements, see the section titled “Proposal 1: Adoption of the Merger Agreement.” Following discussion among the directors, after careful consideration, and taking into account the factors described in the section titled “The Merger—Recommendation of the Board of Directors and Reasons for the Merger,” the Board of Directors unanimously (a) determined that the Transactions, including the Merger, are advisable and fair to, and in the best interests of, Landos and its stockholders; (b) authorized and approved the execution, delivery, and performance of the Merger Agreement, the CVR Agreement and the Voting Agreement by Landos and approved the Merger; (c) recommended the adoption of the Merger Agreement by Landos’ stockholders and (d) directed that the Merger Agreement be submitted for consideration by Landos’ stockholders at the Special Meeting.

Later that day, Landos and AbbVie and certain of its affiliates executed the Merger Agreement.

On March 25, 2024, Landos and AbbVie issued a joint press release announcing the execution of the Merger Agreement.

Recommendation of the Board of Directors and Reasons for Recommendation of the Merger

Recommendation of the Board of Directors

The Board of Directors has unanimously (a) determined that the Transactions, including the Merger, are advisable and fair to, and in the best interests of, Landos and its stockholders; (b) authorized and approved the execution, delivery, and performance of the Merger Agreement, the CVR Agreement and the Voting Agreement by Landos and approved the Merger; (c) recommended the adoption of the Merger Agreement by Landos’ stockholders and (d) directed that the Merger Agreement be submitted for consideration by Landos’ stockholders at the Special Meeting.

The Board of Directors unanimously recommends, on behalf of Landos, that you vote (i) “FOR” the adoption the Merger Agreement and (ii) “FOR” the approval of the Adjournment Proposal.

Reasons for Recommendation of the Merger

In the course of reaching its determination and recommendation, the Board of Directors consulted with Landos management, its legal counsel, Cooley, and its financial advisor, Jefferies. The Board of Directors considered a number of factors, including the below non-exhaustive list of material reasons (which are not listed in order of relative importance), and has unanimously (a) determined that the Transactions, including the Merger are advisable and fair to, and in the best interests of, Landos and its stockholders; (b) authorized and approved the execution, delivery, and performance of the Merger Agreement and any applicable ancillary agreements by Landos and unanimously approved the Merger; and (c) recommended the adoption of the Merger Agreement by the holders of Landos common stock and directed that the Merger Agreement be submitted for adoption by Landos’ stockholders at the Special Meeting:

 

   

Compelling Premium. The fact that the upfront cash consideration of $20.42 per share represented a compelling premium to historical market prices for the shares of Landos common stock, including that such upfront portion of the Merger Consideration constituted a premium of:

 

     

approximately 161% to the closing price of Landos’ common stock of $7.83 per share on March 22, 2024, the last full trading day prior to the announcement of the Merger;

 

     

approximately 225% to the 30-day trading period volume weighted average price as of on March 22, 2024, the last full trading day prior to the announcement of the Merger (“VWAP”) of shares of Landos common stock;

 

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approximately 275% to the 60-day trading period VWAP of shares of Landos common stock;

 

     

approximately 308% to the 90-day trading period VWAP of shares of Landos common stock; and

 

     

approximately 346% to the 180-day trading period VWAP of shares of Landos common stock;

 

   

Certainty of Value. The fact that the upfront cash consideration (representing a substantial portion of the overall Merger Consideration) would offer immediate liquidity and certainty of value to Landos’ stockholders. The Board of Directors believed this certainty of value was compelling, especially when viewed against the risks and uncertainties of continuing as a standalone company as described below;

 

   

CVR Consideration; Opportunity to Realize Additional Value. The fact that, in addition to the upfront cash consideration, Landos’ stockholders will receive one CVR per share of Landos common stock outstanding as of immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares), which provides Landos’ stockholders an opportunity to realize additional value of $11.14 per share in cash, without interest thereon and subject to any withholding of taxes, to the extent that the Milestone set forth in the CVR Agreement is achieved within the time period described therein, including the following related factors:

 

     

the business reputation and capabilities of AbbVie, including AbbVie’s track record of successfully completing merger and acquisition transactions and its ability to successfully drive commercial value through effective drug candidate and product life-cycle management; and

 

     

the fact that in addition to the upfront cash consideration, the CVR would result in an even higher premium to recent and historical trading prices than those described above being paid to holders of shares of Landos common stock;

 

   

Highest Offer. The Board of Directors’ belief that (a) as a result of an active negotiating process over the course of several months that resulted in an increase to the aggregate Merger Consideration from AbbVie’s initial offer (as more fully described above under the section of this proxy statement captioned “The Merger—Background of the Merger”), Landos had obtained AbbVie’s best offer, (b) there was substantial risk of losing AbbVie’s final upfront cash consideration offer of $20.42 per share plus one CVR per share (other than Cancelled Shares and Dissenting Shares), in each case, without interest thereon and subject to any withholding of taxes, if Landos continued to pursue a higher price and (c) based on the conversations and negotiations with AbbVie and historical conversations with other potential acquirors (as more fully described above under the section of this proxy statement captioned “The Merger—Background of the Merger”), as of the date of the Merger Agreement, the upfront cash consideration offer of $20.42 per share plus one CVR per share (other than Cancelled Shares and Dissenting Shares), in each case, without interest thereon and subject to any withholding of taxes, represented the highest price reasonably obtainable by Landos under the circumstances;

 

   

Drug Candidate Development and Regulatory Risks. The risks inherent in the research, development and commercialization of NX-13, the risks related to conducting and compiling data from clinical trials, the risks related to seeking approval for marketing from the U.S. Food and Drug Administration (“FDA”) and other regulatory authorities (including any potential conditions or contingencies of such approvals) and other factors affecting the revenues and profitability of biopharmaceutical products generally;

 

   

Potential Strategic Alternatives. The Board of Directors’ belief that none of the possible alternatives to the Merger (including the possibility of continuing to operate Landos as an independent company without a significant capital raise, pursuing a different strategic transaction or pursuing a significant capital raise, and the desirability and perceived risks of those alternatives, as well as the potential benefits and risks to Landos’ stockholders of those alternatives, and the timing and likelihood of effecting such alternatives) was reasonably likely to present superior opportunities for Landos to create greater value for its stockholders, taking into account execution risks as well as business, competitive, financial, industry, legal, market and regulatory considerations;

 

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Speed and High Degree of Certainty of Closing. The high degree of certainty that the Closing would be achieved in a timely manner under the terms of the Merger Agreement, including as a result of the following:

 

     

the financial strength of AbbVie and its ability to fund the Merger Consideration with cash on hand;

 

     

the conditions to the consummation of the Merger set forth in the Merger Agreement being specific and limited;

 

     

the absence of any financing condition in the Merger Agreement;

 

     

the commitment made by each of Parent and Landos to use its respective reasonable best efforts to take all actions to consummate the Merger, including to obtain all necessary regulatory approvals (including actions or nonactions, waivers, consents, clearances, decisions, declarations, approvals and, expirations, or terminations of waiting periods from governmental bodies), including under any antitrust or foreign direct investment law, and to obtain any required third party consents (see below under the caption “Proposal 1: Adoption of the Merger Agreement” for more information); and

 

     

that stockholders holding, in the aggregate, approximately 57.6% of the voting power of the shares outstanding as of March 22, 2024, entered into a Voting Agreement providing that, among other things, each such stockholder will, subject to certain exceptions (including in the case that the Merger Agreement is validly terminated by Landos to accept a Superior Proposal or the Board of Directors makes a Change in Recommendation), vote its shares in favor of the adoption of the Merger Agreement and approval of the Merger at the Special Meeting and, subject to certain exceptions, not transfer any of the shares that are subject to the Voting Agreement;

 

   

Opinion of Landos’ Financial Advisor. The oral opinion of Jefferies rendered to the Board of Directors on March 24, 2024, subsequently confirmed by delivery of a written opinion dated March 24, 2024, to the effect that, as of such opinion and based on and subject to the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of shares (other than Parent, Merger Sub and any of their respective affiliates) was fair, from a financial point of view, to such holders, as more fully described below under the section of this proxy statement captioned “The Merger–Opinion of Landos’ Financial Advisor,” which full text of the written opinion is attached as Annex C to this proxy statement and is incorporated by reference in this proxy statement in its entirety;

 

   

Additional Transaction Terms. The additional terms of the Merger Agreement and the related agreements, including:

 

     

Landos’ right, subject to certain conditions, to respond to and negotiate unsolicited acquisition proposals that are made on or after March 24, 2024 and prior to the time Merger is adopted by Landos’ stockholders, as more fully described in the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement”;

 

     

Landos’ ability to terminate the Merger Agreement in order to accept a Superior Proposal, subject to certain conditions of the Merger Agreement and paying a termination fee of $7,000,000, which termination fee the Board of Directors believed is reasonable, is consistent with the amount of such fees payable in comparable transactions on a relative basis, and is not preclusive of, or a substantial impediment to, a third party making an Acquisition Proposal (as more fully described under the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement”);

 

     

the ability of the Board under the Merger Agreement to withdraw or modify its recommendation that Landos’ stockholders vote their shares in favor of the adoption of the Merger Agreement in certain circumstances, including in connection with an alternative transaction or positive material event or development constituting a change in circumstances;

 

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Landos’ right to specific performance to prevent breaches of the Merger Agreement; and

 

     

the outside date of September 24, 2024 (subject to extension in certain circumstances), allowing for time that the Board of Directors believed to be sufficient to complete the Merger;

 

   

Risks Relating to Remaining a Standalone Company. The Board of Directors assessed Landos’ prospects for substantially increasing stockholder value as a standalone company in excess of the Merger Consideration, given the risks and uncertainties in its business. The Board of Directors considered Landos’ current business and financial plans, including the risks and uncertainties associated with achieving and executing on Landos’ business and financial plans in the short- and long-term, as well as the general risks of market conditions that could reduce the price of the shares. Among the potential risks and uncertainties identified by the Board of Directors were:

 

     

the challenges associated with designing and conducting future clinical trials for NX-13 or any other current or future product candidate, the outcome of which is inherently uncertain and may not support regulatory approval, as well as the status and prospects for Landos’ current pipeline of other drug candidates, and the risks inherent in the research, development, regulatory review and potential future commercialization of these drug candidates;

 

     

the possible failure or delays of current or future preclinical studies or clinical trials;

 

     

the reliance on third parties or partners, to conduct clinical trials and the risks and costs of hiring additional personnel as Landos’ pre-commercial and clinical activities increase;

 

     

the uncertainty of the outcomes of ongoing and planned clinical trials and the potential to not obtain regulatory approval, including the potential identification of safety-related concerns associated with the use of a drug candidate;

 

     

the significant risks and challenges associated with commercializing NX-13 and Landos’ other drug candidates, including product development and pre-commercial operations, the costs associated with successfully scaling commercial operations globally and the risk that Landos is unable to generate adequate product revenue;

 

     

the risks and costs of developing a commercial infrastructure in anticipation of obtaining marketing approval;

 

     

the risks inherent in obtaining regulatory approvals from regulatory authorities and adequate reimbursement from regulatory authorities and other third party payors to be able to commercialize and sell NX-13 and Landos’ other product candidates;

 

     

risks and potential delays relating to the manufacturing and supply of Landos’ drug candidates and future drug candidates for clinical trials and in preparation for commercialization, the risk of reliance on suppliers, including due to the failure to comply with manufacturing regulations;

 

     

the fact that Landos may not ever be able to achieve profitability;

 

     

that positive operational performance by companies with similar market capitalization to Landos in the biopharmaceutical industry has not necessarily translated into increased stockholder value for such companies;

 

     

the challenges faced by the biopharmaceutical industry, which could impact material growth in Landos’ core businesses, including current and potential future competition, macroeconomic trends and the fact that the industry is subject to complex regulatory and political regimes and evolving pricing environment, particularly with respect to generating revenue and profitability in light of the increasing scrutiny of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals;

 

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the current state of the U.S. and global economies, including recent volatility in the biopharmaceutical financial markets, potential volatility resulting from escalating political tensions, and the current and potential impact in both the near term and long term on the biopharmaceutical industry and the future commercialization efforts required if any of Landos’ product candidates are approved for sale, including the numerous risks, costs and uncertainties associated with research, development and commercialization of Landos’ pipeline programs and candidates Landos may develop;

 

     

the challenges associated with Landos’ need for additional capital to support pivotal trials, including the difficult financing environment for biopharmaceutical companies, the uncertainty that Landos would be able to raise sufficient cash to fund its business, and the potential dilutive impact any financing would have on Landos’ stockholders;

 

     

the risks and uncertainties inherent in Landos’ ability to receive royalty income resulting from the commercialization and sale by third parties under its existing third-party license and collaboration agreements;

 

     

the various additional risks and uncertainties that are set forth in Part I, Item 1A. of Landos’ Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 21, 2024, as updated by Landos’ subsequent filings with the SEC; and

 

     

the risk that as a standalone company Landos would need to seek additional funding through future equity, royalty and/or debt financings or additional collaborations or strategic partnerships, and any such fundraising could have a highly dilutive effect on Landos’ existing stockholders, could require Landos to enter into restrictive covenants, might only be available on unfavorable terms or might not be available at all;

 

   

Availability of Appraisal. The Board of Directors also took into consideration the availability of appraisal rights under Section 262 of the DGCL to Landos’ stockholders who do not vote in favor of the adoption of the Merger Agreement and comply with all of the required procedures under Delaware law, which provides those eligible stockholders with an opportunity to have a Delaware court determine the fair value of their shares, which may be more than, less than, or the same as the amount such stockholders would have received under the Merger Agreement.

The Board of Directors also considered a number of uncertainties and risks concerning the Merger and other potentially negative reasons in determining whether to approve the Merger Agreement and the Merger, including the following (which are not listed in any relative order of importance):

 

   

the fact that Landos would no longer exist as an independent, publicly traded company, and stockholders would no longer participate in any future earnings or growth and would not benefit from any potential future appreciation in value of Landos, except to the extent the Milestone Payment is made pursuant to the CVR Agreement;

 

   

the fact that the Milestone may not be achieved at all or during the period required by the CVR Agreement for Landos’ stockholders to receive the Milestone Payment;

 

   

the risks and costs to Landos if the Merger does not close or is not completed in a timely manner, including the diversion of management and employee attention, and the potential effect on its ongoing clinical trials and preparation for potential regulatory approval and commercialization of its drug product candidates;

 

   

the restrictions on the conduct of Landos’ business prior to the consummation of the Merger, including the requirement that Landos use commercially reasonable efforts to conduct its business in the ordinary course of business as was being conducted prior to the date of the Merger Agreement, subject to specific limitations, which may delay or prevent Landos from undertaking business opportunities that may arise before the completion of the Merger and that, absent the Merger Agreement, Landos might have pursued;

 

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the fact that an all-cash transaction would generally be taxable to Landos’ stockholders that are U.S. persons for U.S. federal income tax purposes;

 

   

the effect of the non-solicitation provisions of the Merger Agreement that restrict Landos’ ability to solicit or, subject to certain exceptions, engage in discussions or negotiations with third parties regarding a proposal to acquire Landos;

 

   

the fact that, upon termination of the Merger Agreement under certain specified circumstances, Landos will be required to pay a termination fee of $7,000,000, which could discourage certain alternative proposals for an acquisition of Landos within 12 months of the date of termination of the Merger Agreement or adversely affect the valuation that might be proposed by a third party;

 

   

the significant costs involved in connection with entering into the Merger Agreement and completing the Merger (many of which are payable whether or not the Merger is consummated) and the substantial time and effort of Landos management required to complete the Merger, which may disrupt its business operations and have a negative effect on its financial results;

 

   

the risk that the Merger might not be completed and the effect of the resulting public announcement of termination of the Merger Agreement on the trading price of Landos’ common stock;

 

   

the risk of litigation arising in respect of the transactions contemplated by the Merger Agreement;

 

   

the risk that any regulatory approvals could be determined to be required after the date of this proxy statement the risk that such approvals may ultimately not be obtained;

 

   

the fact that Landos’ directors and officers may have interests in the Merger that may be different from, or in addition to, those of Landos’ stockholders (see below under the caption “—Interests of Landos’ Directors and Executive Officers in the Merger”); and

 

   

the possible loss of key management or other personnel of Landos during the pendency of the Merger.

The foregoing discussion of reasons for the recommendation to adopt the Merger Agreement and approve the Merger and the transactions contemplated thereby addresses the reasons considered by the Board of Directors in consideration of its recommendation. In view of the wide variety of reasons considered by the Board of Directors in connection with its evaluation of the Merger and the complexity of these matters, the Board of Directors did not find it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific reasons considered in reaching its determination and recommendation. Rather, in considering the information and reasons described above, individual members of the Board of Directors each applied his or her own personal business judgment to the process and may have given differing weights to differing factors. The Board of Directors based its unanimous recommendation on the totality of the information available and the factors presented to and considered by it. This explanation of the Board of Directors’ reasons for the Merger and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Forward-Looking Statements.

Certain Financial Projections

Landos does not, as a matter of course, regularly prepare long-range projections or publicly disclose forecasts or internal projections as to future performance, revenues, earnings or other results of operations due to, among other reasons, the inherent unpredictability of the underlying assumptions and projections. However, in October 2023, in connection with the Board of Directors’ review of potential strategic alternatives, Landos senior management, at the direction of the Board of Directors, prepared preliminary, draft unaudited financial projections for fiscal years 2024 through 2046 based on the best currently available estimates and good faith judgments of senior management at that time (the “October Preliminary Projections”) to assist the Board of Directors’ strategic review and evaluation of Landos’ intrinsic value as a standalone company and to inform Jefferies’ preliminary financial analyses prepared for the Board of Directors. Following that time, the Board of Directors and Landos senior management continued to discuss the various assumptions reflected in the October

 

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Preliminary Projections. As a result of these discussions, the October Preliminary Projections were revised to reflect certain changes (as so revised, the “Management Projections”), including, among others, (i) the addition of certain unaudited financial projections associated with Landos’ pipeline assets (i.e., the Management Projections included projections with respect to LABP-73 for treatment of atopic dermatitis, asthma and eosinophilic esophagitis, with a probability of success of 3% for such indications, based on review of market and empirical data with respect to the probability of success to FDA approval for drug candidates in such indications), (ii) the addition of unaudited financial projections for fiscal years 2047 through 2049 to account for the addition of Landos’ pipeline assets to the Management Projections and the timing of Landos senior management’s anticipated loss of exclusivity applicable thereto, (iii) a reduction in the probability of success for NX-13 for treatment of ulcerative colitis (UC) from 30% to 25% based on review of certain market and empirical data and scientific literature with respect to the probability of success to FDA approval for drug candidates in the UC indication and (iv) a reduction in the probability of success for NX-13 for treatment of Crohn’s disease from 25% to 15% based on review of certain market and empirical data and scientific literature with respect to the probability of success to FDA approval for drug candidates in the Crohn’s disease indication. The Management Projections were otherwise materially the same as the October Preliminary Projections. Consistent with the view of the Board of Directors and Landos senior management that the Management Projections then reflected the best available estimates and good faith judgments as to the future financial performance of Landos on a risk adjusted basis at that time, the Board of Directors approved the Management Projections on March 24, 2024 and directed Jefferies to use the Management Projections in connection with the rendering of its fairness opinion to the Board of Directors and its related financial analyses.

The October Preliminary Projections and the Management Projections (each, the “Projections”) reflect estimates and assumptions made by Landos senior management with respect to product launch years, peak sales, loss of exclusivity, probability of success, general business, economic, competitive, regulatory and other market and financial conditions and other future events, all of which are difficult to predict and many of which are beyond Landos’ control. In particular, the Projections, while presented with numerical specificity, necessarily were based on numerous variables and assumptions that are inherently uncertain. Because the Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year and are unlikely to anticipate each and every circumstance that could have an effect on Landos’ business and its results of operations. The Projections were developed solely using the information available to Landos senior management at the time they were created and reflect assumptions as to certain business decisions that are subject to change. Important factors that may affect actual results or that may result in the Projections not being achieved include the ability to generate revenue for NX-13 and Landos’ pipeline assets, the ability to obtain regulatory approval for NX-13 and Landos’ pipeline assets and the effect of regulatory actions, including the impact on product launch years, the effectiveness of Landos’ commercial execution, the decisions of actual and potential third-party partners, Landos’ ability to partner and the terms of any such partnering transactions, the success of clinical testing and development, manufacturing and supply availability, patent life and other rights or exclusivity, the effect of global economic conditions and increases in regulatory oversight and other risk factors described in Landos’ annual report on Form 10-K for the fiscal year ended December 31, 2023, subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. The Projections also reflect assumptions as to certain business decisions that are subject to change. Modeling and forecasting the future in the biopharmaceutical industry, in particular, is a highly speculative endeavor.

None of Landos, AbbVie or any of their respective affiliates, advisors or other representatives makes any representation to any stockholder regarding the validity, reasonableness, accuracy or completeness of the Projections or the ultimate performance of Landos relative to the Projections. The Projections were not prepared with a view toward public disclosure or toward complying with U.S. generally accepted accounting principles (“GAAP”), the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither Landos’ independent registered public accounting firm, nor any other independent accountants, has audited, reviewed, compiled or performed any procedures with respect to the Projections or expressed any opinion or any form of assurance related thereto. The inclusion of the Projections in this proxy statement does not constitute an admission or representation of Landos that the Projections or the information

 

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contained therein is material. Except as required by applicable law, neither Landos nor any of its affiliates intends to, and each of them disclaims any obligation to, update, correct or otherwise revise the Projections if any or all of them have changed or change or otherwise have become, are or become inappropriate (even in the short term). These considerations should be taken into account if evaluating the Projections, which were prepared as of an earlier date.

The Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Landos in its public filings with the SEC. The Projections were developed by Landos senior management on a standalone basis without giving effect to the Merger or the other transactions contemplated by the Merger Agreement, and therefore the Projections do not give effect to the proposed Merger or any changes to Landos’ operations or strategy that may be implemented after the consummation of the Merger, including any costs incurred in connection with the proposed Merger. Furthermore, the Projections do not take into account the effect of any failure of the proposed Merger to be completed and should not be viewed as accurate or continuing in that context.

The Projections further reflect subjective judgment in many respects and, therefore, are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The inclusion of the Projections should not be regarded as an indication that Landos or anyone who received the Projections then considered, or now considers, the Projections to be necessarily predictive of actual future events, and this information should not be relied upon as such. Landos senior management views the Projections as being subject to inherent risks and uncertainties associated with such long-range projections.

The risk-adjusted net revenue, earnings before interest and taxes (“EBIT”) and unlevered free cash flow contained in the Projections set forth below are “non-GAAP financial measures,” which are financial performance measures that are not calculated in accordance with GAAP. Non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP. The most directly comparable GAAP financial measure for risk-adjusted net revenue is revenue, the most directly comparable GAAP financial measure for EBIT is net income (loss) and the most directly comparable GAAP financial measure for unlevered free cash flow is net cash provided by (used in) operating activities. Certain SEC rules that otherwise would require a reconciliation of a non-GAAP financial measure to a GAAP financial measure in other contexts do not apply to non-GAAP financial measures provided to a Board of Directors or financial advisors in connection with a proposed business combination transaction such as the proposed Merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of non-GAAP financial measures to a GAAP financial measure were not provided to or relied upon by the Board of Directors or Jefferies in connection with the proposed Merger. Accordingly, Landos has not provided a reconciliation of the financial measures included in the Projections to the relevant GAAP financial measures. The Projections may differ from published analyst estimates and forecasts and do not take into account any events or circumstances after the date they were prepared, including the announcement of the Merger.

In light of the foregoing factors and uncertainties inherent in the Projections, holders of shares are cautioned not to place undue, if any, reliance on the summary of the Projections set forth below. The information and tables set forth below are included solely to give Landos stockholders access to a summary of the Management Projections and, solely for informational purposes, the October Preliminary Projections that were made available to the Board of Directors and Jefferies and are not included in this proxy statement in order to influence any stockholder’s decision to vote with respect to the proposal to adopt the Merger Agreement or for any other purpose:

 

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Management Projections

(U.S. dollars in millions)

 

    2024     2025     2026     2027     2028     2029     2030     2031     2032     2033      2034      2035      2036  

Risk-Adjusted Net Revenue(1)

    —       $ 3.8       —        —       $ 0.3      $ 1.2      $  36.6      $  98.7      $  129.2     $ 164.5      $ 217.1      $ 280.6      $ 341.9  

EBIT(2)

  ($ 23.0   ($ 20.0   ($ 37.8   ($ 57.6   ($ 67.4   ($ 81.6   ($ 91.1   ($ 23.6   ($ 3.5   $ 29.5      $ 80.8      $ 141.4      $ 199.2  

Unlevered Free Cash Flow(3)

  ($ 23.0   ($ 20.0   ($ 37.8   ($ 57.6   ($ 67.4   ($ 81.6   ($ 94.0   ($ 30.4   ($ 6.5   $ 18.6      $ 55.4      $ 99.7      $ 143.3  

 

     2037      2038      2039      2040      2041      2042      2043      2044      2045      2046      2047      2048      2049  

Risk-
Adjusted Net Revenue
(1)

   $ 412.7      $ 455.3      $ 496.9      $ 535.6      $ 575.8      $ 619.4      $ 660.1      $ 505.4      $ 176.4      $ 183.5      $ 62.4      $ 14.3      $ 14.0  

EBIT(2)

   $ 265.8      $ 307.5      $ 348.4      $ 387.6      $ 424.8      $ 464.8      $ 501.2      $ 454.1      $ 155.3      $ 161.0      $ 47.7      $ 6.8      $ 6.4  

Unlevered Free Cash Flow(3)

   $ 192.3      $ 226.4      $ 257.2      $ 286.9      $ 314.6      $ 344.1      $ 371.6      $ 356.0      $ 149.4      $ 120.0      $ 38.2      $ 9.9      $ 4.8  

 

(1)

Risk-Adjusted Net Revenue includes (i) milestones and tiered low-double-digit royalties to be paid by LianBio Respiratory Limited (“LianBio”) to Landos on future net sales of NX-13 in China and select Asian markets and (ii) mid-single-digit royalties payable to Landos on future net sales of BT-11 and assumes a probability of success for NX-13 of 25% for treatment of ulcerative colitis (UC) and 15% for treatment of Crohn’s disease and a probability of success for LABP-73 of 3% for treatment of atopic dermatitis, asthma and eosinophilic esophagitis.

(2)

EBIT is a non-GAAP financial measure that is calculated as risk-adjusted net revenue less (i) U.S. cost of goods sold expense, less (ii) royalties owed, less (iii) research and development expenses, less (iv) general and administrative expenses, less (v) sales and marketing expenses.

(3)

Unlevered Free Cash Flow is a non-GAAP financial measure that is calculated as EBIT less (i) income taxes, plus (ii) depreciation and amortization, less (iii) capital expenditures, less (iv) changes in net working capital. Unlevered free cash flow did not take into account any offset to Landos’ taxes by net operating losses or Landos’ estimated cash balance. As described in the section below titled “—Opinion of Landos’ Financial Advisor,” for purposes of the discounted cash flow analysis conducted by Jefferies in connection with the delivery of its opinion, the Board of Directors instructed Jefferies to use (a) estimated federal net operating losses of $101.2 million as of December 31, 2023, and a tax rate of 25%, and (b) an estimated cash balance of $29.0 million as of March 31, 2024. Jefferies separately calculated the present value of the tax savings from Landos’ estimated usage of net operating losses and included the result in its determination of estimated implied equity values as discussed in the section below titled “—Opinion of Landos’ Financial Advisor.”

October Preliminary Projections

The October Preliminary Projections were provided to Jefferies and to the Board of Directors in October 2023 to assist the Board of Directors’ strategic review and evaluation of Landos’ intrinsic value as a standalone company as described in the section above captioned “ —Background of the Merger.” Since the October Preliminary Projections were not approved by the Board of Directors, the October Preliminary Projections are included in this proxy statement solely for informational purposes and only to contextualize the events described in the section above captioned “ —Background of Merger” during the relevant period. The Board of Directors did not rely on the October Preliminary Projections in approving the Merger Agreement and the Merger and Jefferies did not rely on the October Preliminary Projections for purposes of its analyses in connection with the delivery of the opinion described in the section below captioned “—Opinion of Landos’ Financial Advisor.

 

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(U.S. dollars in millions)

 

     2024     2025     2026     2027     2028     2029     2030     2031     2032     2033      2034      2035  

Risk-Adjusted Net Revenue(1)

     —       $ 4.5       —        —       $ 0.3      $ 1.2      $ 43.6      $  118.1      $  154.9     $ 200.7      $ 274.1      $ 366.8  

EBIT(2)

   ($ 23.0   ($ 22.1   ($ 47.0   ($ 73.4   ($ 88.7   ($ 104.9   ($ 112.4   ($ 29.2   ($ 8.1   $ 34.8      $ 107.1      $ 199.1  

Unlevered Free Cash Flow(3)

   ($ 23.0   ($ 22.1   ($ 47.0   ($ 73.4   ($ 88.7   ($ 104.9   ($ 115.9   ($ 37.4   ($ 11.8   $ 21.6      $ 73.0      $ 140.1  

 

     2036      2037      2038      2039      2040      2041      2042      2043      2044      2045      2046  

Risk-Adjusted Net Revenue(1)

   $  457.8      $  565.6      $  628.3      $  678.2      $ 722.5      $ 765.7      $ 811.3      $ 852.2      $ 614.2      $ 138.6      $ 134.9  

EBIT(2)

   $  288.2      $  390.8      $  452.5      $  499.3      $ 543.0      $ 583.4      $ 626.9      $ 664.9      $ 559.6      $ 127.3      $ 123.6  

Unlevered Free Cash Flow(3)

   $  207.1      $  282.4      $  333.1      $  369.5      $ 402.9      $  433.2      $ 465.5      $ 494.4      $ 443.4      $ 143.0      $  93.1  

 

(1)

Risk-Adjusted Net Revenue includes (i) milestones and tiered low-double-digit royalties to be paid by LianBio to Landos on future net sales of NX-13 in China and select Asian markets and (ii) mid-single-digit royalties payable to Landos on future net sales of BT-11 and assumes a probability of success for NX-13 of 30% for treatment of ulcerative colitis (UC) and 25% for treatment of Crohn’s disease.

(2)

EBIT is a non-GAAP financial measure that is calculated as risk-adjusted net revenue less (i) U.S. cost of goods sold expense, less (ii) royalties owed, less (iii) research and development expenses, less (iv) general and administrative expenses, less (v) sales and marketing expenses.

(3)

Unlevered Free Cash Flow is a non-GAAP financial measure that is calculated as EBIT less (i) income taxes, plus (ii) depreciation and amortization, less (iii) capital expenditures, less (iv) changes in net working capital. Unlevered free cash flow did not take into account any offset to Landos’ taxes by net operating losses or Landos’ estimated cash balance.

Opinion of Landos’ Financial Advisor

Landos retained Jefferies as its financial advisor in connection with a possible sale, disposition or other business transaction involving Landos. In connection with this engagement, Landos requested that Jefferies evaluate the fairness, from a financial point of view, to holders of shares (other than Parent, Merger Sub and their respective affiliates) of the Merger Consideration to be received by such holders pursuant to the Merger Agreement. At a meeting of the Board of Directors held on March 24, 2024, Jefferies rendered its oral opinion to the Board of Directors, which was subsequently confirmed by delivery of a written opinion dated March 24, 2024, to the effect that, as of the date of such opinion and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by the holders of shares (other than Parent, Merger Sub and their respective affiliates) was fair, from a financial point of view, to such holders.

The full text of Jefferies’ opinion, which describes the various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex C to this proxy statement and is incorporated herein by reference. Landos encourages you to read the opinion carefully and in its entirety. Jefferies’ opinion was provided for the use and benefit of the Board of Directors in its consideration of the Merger. Jefferies’ opinion did not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Landos, nor did it address the underlying business decision by Landos to engage in the Merger or the terms of the Agreements or the documents referred to therein. Jefferies’ opinion did not constitute a recommendation as to how any holder of shares should vote on the Merger or any matter related thereto. The following summary is qualified in its entirety by reference to the full text of Jefferies’ opinion.

 

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In arriving at its opinion, Jefferies, among other things:

 

   

reviewed an execution version, provided to Jefferies on March 24, 2024, of the Merger Agreement and related form of the CVR Agreement attached as an exhibit thereto;

 

   

reviewed certain publicly available financial and other information about Landos;

 

   

reviewed certain information furnished to Jefferies and approved for Jefferies’ use by Landos’ management, including financial forecasts, estimates and analyses, relating to (a) the business, operations and prospects of Landos and (b) the probability of achieving the Milestone under the CVR Agreement;

 

   

held discussions with members of senior management of Landos concerning the matters described in the second and third bullets above;

 

   

reviewed the share trading price history for the shares; and

 

   

conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate.

In Jefferies’ review and analyses and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available to Jefferies by Landos or that was publicly available to Jefferies (including, without limitation, the information described above), or that was otherwise reviewed by Jefferies. Jefferies relied on assurances of the management of Landos that it was not aware of any facts or circumstances that would make any of the foregoing information incomplete, inaccurate or misleading. Jefferies did not obtain any independent evaluation or appraisal of any of the assets or liabilities (contingent, accrued, derivative, off-balance sheet or otherwise) of, nor did Jefferies conduct a physical inspection of any of the properties or facilities of, Landos, and Jefferies was not furnished with and assumed no responsibility to obtain or conduct any such evaluations, appraisals or physical inspections. Jefferies did not evaluate and does not express any opinion as to the solvency or fair value of Landos or any other entity under any laws relating to bankruptcy, insolvency or similar matters. Jefferies’ analyses and opinion also do not consider any actual or potential arbitration, litigation, claims or possible unasserted claims, investigations or other proceedings to which Landos or any other entity is or in the future may be a party or subject.

With respect to the financial forecasts and estimates provided to and, at Landos’ direction, examined by Jefferies, Jefferies noted that projecting future results of any company is inherently subject to uncertainty. However, Jefferies was informed by Landos, and Jefferies assumed, that such financial forecasts and estimates were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Landos as to, and are an appropriate basis upon which to evaluate, the future financial performance of Landos and the other matters covered thereby (including management’s forecasts and assessments regarding the probability of achieving the Milestone under the CVR Agreement). Jefferies expressed no opinion as to Landos’ financial forecasts or estimates or the assumptions on which they were made.

Jefferies relied upon the assessments of the management of Landos as to, among other things, (a) the potential impact on Landos of market, competitive and other conditions, trends and developments in and prospects for, and governmental, regulatory and legislative matters relating to or affecting, the biopharmaceutical industry, and the immunology sector thereof, including with respect to the pricing of and third-party coverage and reimbursement for pharmaceutical products, (b) matters relating to the CVR Product (as defined in the CVR Agreement), the potential use and indications for such product, related technology and intellectual property and regulatory approval processes and risks, including with respect to the probability and timing for achieving the Milestone or Landos’ expected use and indications for the CVR Product, the development, clinical testing, manufacturing and commercialization of the CVR Product and related use and indications, the validity and duration of licenses and patents, and (c) Landos’ existing and future agreements and arrangements with, and ability to attract, retain and/or replace, key employees and consultants, customers, suppliers and other commercial and collaboration relationships. Jefferies assumed that there would not be any developments with respect to any such matters that would be material in any respect to Jefferies’ analyses or opinion.

 

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Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date thereof. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Jefferies’ opinion of which Jefferies becomes aware after the date thereof.

Jefferies made no independent investigation of, and Jefferies expressed no view or opinion as to, any legal, regulatory, accounting or tax matters affecting or relating to Landos or the Merger and Jefferies assumed the correctness in all respects material to its analyses and opinion of all legal, regulatory, accounting and tax advice given to Landos and the Board of Directors, including, without limitation, advice as to the legal, regulatory, accounting and tax consequences of the terms of, and transactions contemplated by, the Agreements. In addition, in preparing its opinion, Jefferies did not take into account any tax consequences of the transaction to any holder of shares. Jefferies assumed that the final form of the Agreements were substantially similar to the last drafts of the Agreements reviewed by Jefferies in all respects material to its analyses and opinion. Jefferies also assumed that the Merger would be consummated in accordance with the terms of the Merger Agreement without waiver, modification or amendment of any term, condition or agreement. Jefferies also assumed that, in the course of obtaining the necessary governmental, regulatory or third party approvals, consents, waivers and releases for the Merger, no delay, limitation, restriction or condition would be imposed or occur that would have an adverse effect on Landos, AbbVie or the contemplated benefits of the Merger or that otherwise would be material in any respect to Jefferies’ analyses or opinion.

Jefferies’ opinion was for the use and benefit of the Board of Directors in its consideration of the Merger, and Jefferies’ opinion did not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Landos, nor did it address the underlying business decision by Landos to engage in the Merger or the terms of the Agreements or the documents referred to therein. Jefferies’ opinion did not constitute a recommendation as to how any holder of shares should vote on the Merger or any matter related thereto. In addition, Jefferies’ opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities (including Landos’ pre-funded warrants), creditors or other constituencies of Landos, other than the holders of shares. Jefferies expressed no opinion as to the price at which shares would trade at any time. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable or to be received by any of Landos’ officers, directors or employees, or any class of such persons, in connection with the Merger relative to the Merger Consideration to be received by holders of shares. Jefferies’ opinion was authorized by the fairness committee of Jefferies.

In connection with rendering its opinion to the Board of Directors, Jefferies performed certain financial and comparative analyses, including those described below. The following summary is not a complete description of all analyses performed and factors considered by Jefferies in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. These analyses necessarily involved complex considerations and judgments concerning financing characteristics and other factors that could affect the public trading or other values of the companies concerned.

Jefferies believes that its analyses and the summary below must be considered as a whole and in context and that selecting portions of its analyses and factors, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Jefferies’ analyses and opinion. Jefferies did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.

The estimates of the future performance of Landos in or underlying Jefferies’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, Jefferies considered industry performance, general business and economic conditions

 

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and other matters, many of which are beyond the control of Landos. Estimates of the financial value of companies or businesses do not purport to be appraisals or necessarily reflect the prices at which companies, businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the implied reference ranges resulting from, any particular analysis described below are inherently subject to substantial uncertainty and should not be taken as Jefferies’ view of the actual value of Landos or its businesses or securities.

The terms of the Merger were determined through negotiations between Landos and AbbVie, and the decision by Landos to enter into the Agreements was solely that of the Board of Directors. Jefferies’ opinion and financial analyses were only one of many factors considered by the Board of Directors in its evaluation of the Merger and should not be viewed as determinative of the views of the Board of Directors or Landos’ management with respect to the Merger or the Merger Consideration.

Financial Analyses

The summary of the financial analyses described in this section is a summary of the material financial analyses reviewed with the Board of Directors and performed by Jefferies in connection with its analyses and opinion. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses. The order in which the financial analyses summarized below appear does not necessarily reflect the relative importance or weight given to such analyses. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 24, 2024, and is not necessarily indicative of current or future market conditions. For purposes of the financial analyses described below, (i) the term “Upfront Merger Consideration” refers to the $20.42 per share cash amount, without interest thereon, payable in the Merger and (ii) the term “Implied Merger Consideration” refers to the Upfront Merger Consideration plus, with respect to the $11.14 per share Milestone Payment, without interest thereon, the implied present value (as of March 31, 2024) of such contingent payment based on the probability and expected timing of achieving the Milestone, per Landos’ management, and calculated using calculated using a discount rate of 15% (which was the midpoint of a selected discount rate range of 14.0% to 16.0%, based on an estimate of Landos’ weighted average cost of capital), which implied present value is equal to $3.80 per Share.

Discounted Cash Flow Analysis

Jefferies performed a discounted cash flow analysis of Landos by calculating the estimated present value of the stand-alone Unlevered Free Cash Flow, as described further in in the section of this proxy titled “ —Certain Financial Projections”, that Landos was forecasted to generate during the calendar years ending December 31, 2024 through December 31, 2049 based on the Management Projections. The present values of the Unlevered Free Cash Flow of Landos were then calculated using a selected discount rate range of 14.0% to 16.0%, based on Jefferies’ estimate of Landos’ weighted average cost of capital, to determine a range of implied enterprise values for Landos. Jefferies then added Landos’ forecasted net cash of $29 million and the present value of Landos’ net operating loss carryforwards, in each case, as of March 31, 2024 and as provided by Landos management, to calculate a range of implied equity values, and divided the result by the number of fully diluted outstanding shares to calculate a range of implied per share equity values for Landos. This analysis indicated a reference range of implied per share equity values of $14.51 to $24.90 per share, as compared to the Upfront Merger Consideration of $20.42 per share and the Implied Merger Consideration of $24.22 per share.

Certain Additional Information

Jefferies observed certain additional information that was not considered part of Jefferies’ financial analysis with respect to its opinion but was noted for informational purposes, including the following:

 

   

the historical trading performance of the shares during the 52-week period ended March 22, 2024 (the last trading day prior to public announcement of the Merger), which indicated low and high intraday

 

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prices for the shares during such 52-week period of $2.43 per share and $8.08 per share (adjusted for historical reverse stock split), respectively, as compared to the Upfront Merger Consideration of $20.42 per share and the Implied Merger Consideration of $24.22 per share; and

 

   

the publicly available stock price target for the shares of one research analyst, which indicated a stock price target $5.00 per share, as compared to the Upfront Merger Consideration of $20.42 per share and the Implied Merger Consideration of $24.22 per share.

Miscellaneous

Landos has agreed to pay Jefferies for its financial advisory services in connection with the Merger an aggregate fee based upon a percentage of the transaction value of the Merger, which fee is estimated as of the date of this proxy statement to be approximately $6.7 million, of which $1.5 million became payable upon delivery of Jefferies’ opinion to the Board, $2.95 million of which is payable contingent upon the closing of the Merger and $2.25 million of which is payable contingent upon payment of the Milestone Payment. In addition, Landos agreed to reimburse Jefferies for certain expenses, including fees and expenses of counsel, incurred in connection with Jefferies’ engagement and to indemnify Jefferies and related parties against liabilities arising out of or in connection with the services rendered and to be rendered by Jefferies under its engagement.

During the two-year period prior to the date of Jefferies’ opinion, Jefferies and its affiliates did not provide financial advisory or financing services to Landos or AbbVie for which Jefferies or its affiliates received fees. Jefferies and its affiliates may provide financial advisory and/or financing services to Landos and AbbVie and/or their respective affiliates in the future, for which services Jefferies and its affiliates would expect to receive compensation. In the ordinary course of its business, Jefferies and its affiliates may trade or hold securities or financial instruments (including loans and other obligations) of Landos and AbbVie and/or their respective affiliates for its own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions in those securities.

Jefferies was selected as Landos’ financial advisor in connection with the Merger because, among other things, Jefferies is an internationally recognized investment banking firm with substantial experience in mergers and acquisition transactions and based on its familiarity with Landos’ business and industry. Jefferies is regularly engaged in the valuation of businesses and their securities in connection with mergers, acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.

Interests of Landos’ Directors and Executive Officers in the Merger

When considering the recommendation of the Board of Directors that you vote to approve the proposal to adopt the Merger Agreement, you should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of stockholders generally, as more fully described below. The Board of Directors was aware of and considered these interests, among other matters, to the extent that they existed at the time, in reaching the determination that the terms and conditions of the Merger and the Merger Agreement were advisable, fair to and in the best interests of Landos and its stockholders, in reaching its decision to approve and adopt the Merger Agreement and in making their recommendation that the stockholders vote in favor of the adoption of the Merger Agreement. For more information, please see the below subsections of this Section captioned “The Merger—Interests of Landos’ Directors and Executive Officers in the Merger.”

Arrangements with AbbVie

As of the date of this proxy statement, none of our executive officers has entered into any agreement with AbbVie or any of its affiliates regarding employment with, or the right to purchase or participate in the equity of, the Surviving Corporation or one or more of its affiliates. Prior to and following the Closing, however, certain of our executive officers may have discussions, and following the Closing, may enter into agreements with,

 

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AbbVie, Parent or Merger Sub, their subsidiaries or their respective affiliates regarding employment with, or the right to purchase or participate in the equity of, the Surviving Corporation or one or more of its affiliates.

Insurance and Indemnification of Directors and Executive Officers

Under the Merger Agreement, all rights to indemnification, advancement of expenses, and exculpation by Landos existing (the “Indemnification Obligations”) in favor of those persons who are directors or officers of Landos as of the date of the Merger Agreement or have been directors or officers of Landos in the past (collectively, the “Indemnified Persons”) for their acts and omissions occurring prior to the Effective Time, as provided in the organizational documents of Landos (as in effect as of the date of the Merger Agreement) or in any indemnification agreements between Landos and said Indemnified Persons that was made available to Parent (as in effect as of the date of the Merger Agreement) shall survive the Effective Time and shall not be amended, repealed, or otherwise modified in any manner that would adversely affect the rights thereunder of any Indemnified Person, and shall be observed and maintained by the Surviving Corporation and its subsidiaries to the fullest extent available under applicable law for a period of six (6) years from the Effective Time, and any claim made pursuant to such rights within such six (6)-year period shall continue to be subject to the Merger Agreement’s conditions and the rights provided under the Merger Agreement until disposition of such claim.

Additionally, from the Effective Time until the sixth anniversary of the Closing Date, Parent and the Surviving Corporation (together with their successors and assigns, the “Indemnifying Parties”) shall, to the fullest extent permitted under law and Landos’ organizational documents in effect as of the date of the Merger Agreement, indemnify and hold harmless each Indemnified Person in his or her capacity as an officer or director of Landos against all losses, claims, damages, liabilities, fees, expenses, judgments, or fines incurred by such Indemnified Person due to such Indemnified Person’s capacity as an officer or director of Landos in connection with any pending or threatened legal proceeding based on, arising out of, or relating to, in whole or in part, the fact that such Indemnified Person is or was a director or officer of Landos at or prior to the Effective Time and pertaining to any and all matters pending, existing, or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, including any such matter arising under any claim with respect to the transactions contemplated by the Merger Agreement and the other agreements delivered pursuant thereto, including the Merger.

Without limiting the foregoing, from the Effective Time until the sixth anniversary of the Closing Date, the Indemnifying Parties shall also, to the fullest extent permitted under applicable law, advance reasonable and documented out-of-pocket costs and expenses (including reasonable and documented attorneys’ fees) incurred by the Indemnified Persons in connection with matters for which such Indemnified Persons are eligible to be indemnified pursuant to the Merger Agreement within twenty (20) business days after receipt by Parent of a written request for such advance, subject to the execution by such Indemnified Persons of appropriate undertakings in favor of the Indemnifying Parties to repay such advanced costs and expenses if it is ultimately determined in a final and nonappealable judgment of a court of competent jurisdiction that such Indemnified Person is not entitled to be indemnified under the Merger Agreement or under applicable law or Landos’ organizational documents or indemnification agreement at the time of the Merger Agreement.

Any Indemnified Person wishing to claim indemnification under the Merger Agreement upon learning of any such legal proceeding, shall promptly notify Parent thereof in writing, but the failure to so notify shall not relieve Parent or Landos of any liability it may have to such Indemnified Person except to the extent such failure prejudices the Indemnifying Party. In the event of any legal proceeding: (i), subject to the terms and conditions of the Merger Agreement, Parent or Landos shall have the right to assume the defense thereof; (ii) the Indemnified Persons shall cooperate in the defense of any such matter if Parent or Landos elects to assume such defense, and Parent and Landos shall cooperate in the defense of any such matter if Parent or Landos elects not to assume such defense; (iii) the Indemnified Persons shall not be liable for any settlement effected without their prior written consent if Parent or Landos elects to assume such defense and Parent and Landos shall not be liable for any settlement effected without their prior written consent if Parent or Landos elects not to assume such defense; (iv) Parent and Landos shall not have any obligation hereunder to any Indemnified Person if and when a court of

 

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competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnified action of such Indemnified Person in the manner contemplated hereby is prohibited by applicable law; and (v) all rights to indemnification in respect of any such legal proceedings shall continue until final disposition of all such legal proceedings.

If a “tail policy” is not obtained by Landos prior to the Effective Time, from the Effective Time until the sixth anniversary of the Closing Date, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, maintain, in effect, the existing directors’ and officers’ and fiduciary liability insurance policies maintained by Landos as of the date of the Merger Agreement for the benefit of Landos, its subsidiaries and the Indemnified Persons who are currently covered by such existing policies with respect to their acts and omissions occurring prior to the Effective Time in their capacities as directors and officers of Landos (as applicable), on terms with respect to coverage, deductibles and amounts no less favorable than the existing policy; provided that, at or prior to the Effective Time, Landos shall, unless otherwise directed by Parent in writing, through a nationally recognized insurance broker approved by Parent (such approval not to be unreasonably withheld, delayed, or conditioned) purchase a six-year “tail” policy for the existing policies effective as of the Effective Time and if an applicable “tail policy” has been obtained, it shall be deemed to satisfy all obligations to obtain and/or maintain insurance pursuant to the Merger Agreement; provided that in no event shall the Surviving Corporation be required to pay annual premiums (or premium for a “tail policy”) in excess of three hundred percent (300%) of the annual premiums currently payable by Landos with respect to such current policies, it being understood that if the annual premiums payable for such insurance coverage exceeds such amount, Parent shall be obligated to cause Landos to obtain policies with the greatest coverage available for a cost equal to such amount.

Employee Benefits

For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Employee Benefits.”

Treatment of Landos Options and Landos RSUs

As of April 10, 2024, there were 3,119,226 shares of common stock outstanding, 476,187 shares of common stock subject to outstanding Landos Options, and 254,238 shares of common stock subject to outstanding Landos RSUs and. The Landos Options held by Landos’ non-employee directors and the Landos Options and Landos RSUs held by Landos’ executive officers immediately before the Effective Time will be treated as described below.

The Merger Agreement provides that, at the Effective Time, subject to all required withholding taxes, each:

(i) Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is less than or equal to the Closing Amount will be cancelled and converted into the right to receive (A) an amount in cash, without interest, equal to the product of (1) the excess, if any, of the Closing Amount over the exercise price per share of common stock of such Landos Option, multiplied by (2) the number of shares of common stock then subject to such Landos Option and (B) one (1) CVR per share of common stock subject to such Landos Option;

(ii) Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is greater than the Closing Amount will be cancelled without any consideration being payable in respect thereof, and have no further force or effect; and

(iii) Landos RSU that is unvested and outstanding as of immediately prior to the Effective Time, will be cancelled and converted into the right to receive (A) an amount in cash, without interest, in respect thereof equal to the Closing Amount multiplied by the number of shares of common stock subject to such Landos RSU and (B) one (1) CVR.

 

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For more information, please see the section of this proxy statement captioned “Proposal 1: Adoption of the Merger Agreement—Closing Amount—Treatment of Landos Options and Landos RSUs.”

Payments Upon Termination at or Following Change in Control

Employment Agreement with Gregory Oakes

In connection with his appointment as the Chief Executive Officer of Landos, Mr. Oakes and Landos entered into an employment agreement, effective as of June 20, 2022 (the “Oakes Agreement”). Pursuant to the terms of the Oakes Agreement, Mr. Oakes’ employment is at will and may be terminated at any time by us or Mr. Oakes.

If we terminate Mr. Oakes’ employment without “Cause,” or if Mr. Oakes terminates his employment for “Good Reason” (each, as defined in the Oakes Agreement) at any time except on or within twelve (12) months following the effective date of a Corporate Transaction, as defined in our 2019 Equity Incentive Plan (such period, the “Corporate Transaction Measurement Period”), Mr. Oakes will be eligible to receive (i) severance payments, in the form of salary continuation, in an amount equal to 12 months of his then-current base salary, (ii) payment of COBRA premiums for a period of up to 12 months, (iii) eligibility to receive a bonus for the prior calendar year if no bonus has been paid at the time of termination (the “Completed Year Bonus”); (iv) an additional payment equivalent to the pro rata portion of Mr. Oakes’ current year target bonus, prorated to reflect the partial year of service (the “Pro Rata Bonus”); (v) forgiveness of his obligation to repay the Retention Bonus (as defined in the Oakes Agreement), if applicable; and (vi) accelerated vesting of all outstanding unvested time-based equity awards that would have become vested during the 12 months following the termination date.

If we terminate Mr. Oakes’ employment without Cause or if Mr. Oakes terminates his employment for Good Reason during the Corporate Transaction Measurement Period, Mr. Oakes will be eligible to receive (i) a lump sum severance payment in an amount equal to 18 months of his then-current base salary, (ii) payment of COBRA premiums for a period of up to 18 months, (iii) eligibility for the Completed Year Bonus; (iv) the Pro Rata Bonus; (v) forgiveness of his obligation to repay the Retention Bonus, if applicable; and (vi) 100% accelerated vesting of all outstanding unvested time-based equity awards as of the termination date.

For the purposes of the Oakes Agreement, “Cause” generally means that Landos has determined in its sole discretion that Mr. Oakes has engaged in any of the following: (i) a material breach of any covenant or condition under the Oakes Agreement, the confidential information agreement between Mr. Oakes and Landos, or other similar written agreement between Landos and Mr. Oakes; (ii) any material act constituting dishonesty, fraud, immoral or disreputable conduct that is deemed by the Board of Directors in its reasonable, good faith discretion to be injurious to Landos or its reputation; (iii) any conduct which constitutes a felony under applicable law; (iv) material violation of any Landos policy or any material act of misconduct, in either case that is deemed by the Board of Directors in its reasonable, good faith discretion to be injurious to Landos or its reputation; (v) refusal to follow or implement a written clear and reasonable directive of the Board of Directors; (vi) breach of fiduciary duty; or (vii) gross negligence or gross incompetence in the performance of Mr. Oakes’s duties or failure to substantially perform such duties (other than due to disability or illness) after the expiration of fifteen (15) days without cure after written notice of such failure.

For the purposes of the Oakes Agreement, “Good Reason” generally means the occurrence of any of the following conditions without Mr. Oakes’s consent, after Mr. Oakes’s provision of written notice to Landos of the existence of such condition (which notice must be provided as described in the Oakes Agreement within thirty (30) days of the initial existence of the condition and must specify the particular condition in reasonable detail), provided that Landos has not first provided notice to Mr. Oakes of its intent to terminate Mr. Oakes’s employment: (i) a material reduction in Mr. Oakes’s duties, responsibilities or authorities, including a requirement that Mr. Oakes report to anyone other than the Board, provided, however, that neither the conversion of Landos to a subsidiary, division or unit of an acquiring entity in connection with a Corporate Transaction (as defined in the Plan) nor any change in Mr. Oakes’s reporting relationship as a result of such Corporate

 

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Transaction will be deemed a “material reduction,” unless Mr. Oakes’s duties, responsibilities or authorities with respect to the business of Landos are materially reduced; (ii) a material (greater than 10%) reduction by Landos of Mr. Oakes’s base salary or Target Percentage (as defined in the Oakes Agreement) (except in the case of either an across-the-board reduction in salaries or Target Percentage of similarly situated employees or a temporary reduction due to financial exigency); (iii) the relocation by Landos of Mr. Oakes’s principal place of employment by fifty (50) or more miles from Mr. Oakes’s then-current principal place of employment, provided that Mr. Oakes agrees to relocate to Landos’ executive office when that office is established, and such relocation shall not be “Good Reason” so long as the executive office is in the Northeastern United States; or (iv) a material breach of the Oakes Agreement. Notwithstanding the foregoing, Good Reason shall only exist if Landos is provided a thirty (30) day period to cure the event or condition giving rise to Good Reason, and it fails to do so within that cure period and, additionally, Mr. Oakes must resign for such Good Reason condition by giving notice as described in the Oakes Agreement within thirty (30) days after the period for curing the violation or condition has ended.

The severance benefits described above are conditioned upon Mr. Oakes executing and making effective and irrevocable a separation agreement that includes a general release as well as his compliance with certain non-competition, non-solicitation, non-disparagement and non-disclosure obligations, resignation from all positions with our company and return of all company property.

Severance Agreement with Dr. Fabio Cataldi

We have entered into a severance agreement with Dr. Cataldi, effective September 5, 2022 (the “Cataldi Severance Agreement”). Pursuant to the Cataldi Severance Agreement, if we terminate Dr. Cataldi’s employment without “Cause” or if Dr. Cataldi terminates his employment for “Good Reason” (each as defined in the Cataldi Severance Agreement) at any time, Dr. Cataldi will be eligible to receive severance payments, in the form of salary continuation, in an amount equal to 12 months of his then-current base salary. In addition, if we terminate Dr. Cataldi’s employment without Cause or if Dr. Cataldi terminates his employment for Good Reason at any time during the 12 months following the effective date of a Corporate Transaction, as defined in our 2019 Equity Incentive Plan, Dr. Cataldi will be eligible to receive 100% accelerated vesting of all outstanding unvested time-based equity awards as of the termination date.

For the purposes of the Cataldi Severance Agreement, “Cause” generally means that Landos has determined in its sole discretion that Dr. Cataldi has engaged in any of the following: (i) a material breach of any covenant or condition under the Cataldi Severance Agreement, the confidential information agreement between Dr. Cataldi and Landos, or other similar written agreement between Landos and Dr. Cataldi; (ii) any material act constituting dishonesty, fraud or immoral or disreputable conduct that is deemed by the Board of Directors in its reasonable, good faith discretion to be injurious to Landos or its reputation; (iii) any conduct which constitutes a felony under applicable law; (iv) material violation of any Landos policy or any material act of misconduct, in either case that is deemed by the Board of Directors in its reasonable, good faith discretion to be injurious to Landos or its reputation; (v) refusal to follow or implement a written clear and reasonable directive of the Board of Directors; (vi) breach of fiduciary duty; or (vii) gross negligence or gross incompetence in the performance of Dr. Cataldi’s duties or failure to substantially perform such duties (other than due to disability or illness) after the expiration of fifteen (15) days without cure after written notice of such failure.

For the purposes of the Cataldi Severance Agreement, “Good Reason” generally means the occurrence of any of the following conditions without Dr. Cataldi’s consent, after Dr. Cataldi’s provision of written notice to Landos of the existence of such condition (which notice must be provided as described in Section 4.1 within thirty (30) days of the initial existence of the condition and must specify the particular condition in reasonable detail), provided that Landos has not first provided notice to Dr. Cataldi of its intent to terminate Dr. Cataldi’s employment: (i) a material reduction in Dr. Cataldi’s duties, responsibilities or authorities, including a requirement that Dr. Cataldi report to anyone other than Landos’ Chief Executive Officer, provided, however, that neither the conversion of Landos to a subsidiary, division or unit of an acquiring entity in connection with a Corporate Transaction nor any change in Dr. Cataldi’s reporting relationship as a result of such Corporate

 

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Transaction will be deemed a “material reduction,” unless Dr. Cataldi’s duties, responsibilities or authorities with respect to the business of Landos are materially reduced; (ii) a material (greater than 10%) reduction by Landos of Dr. Cataldi’s base salary (as defined in the offer letter between Dr. Cataldi and Landos dated July 26, 2022 (the “Offer Letter”)) or target Annual Bonus (as defined in the Offer Letter) (except in the case of either an across-the-board reduction in salaries and/or annual bonuses of similarly situated employees or a temporary reduction due to financial exigency); (iii) the relocation by Landos of Dr. Cataldi’s principal place of employment by fifty (50) or more miles from Dr. Cataldi’s then-current principal place of employment, provided that Dr. Cataldi agrees to relocate to Landos’ executive office when that office is established, and such relocation shall not be “Good Reason” so long as the executive office is in the Northeastern United States; or (iv) a material breach of the Cataldi Severance Agreement. Notwithstanding the foregoing, Good Reason shall only exist if Landos is provided a thirty (30) day period to cure the event or condition giving rise to Good Reason, and it fails to do so within that cure period and, additionally, Dr. Cataldi must resign for such Good Reason condition by giving notice as described in the Cataldi Severance Agreement within thirty (30) days after the period for curing the violation or condition has ended.

The severance benefits described above are conditioned upon Dr. Cataldi executing and making effective and irrevocable a separation agreement that includes a general release as well as his compliance with certain non-competition, non-solicitation, non-disparagement and non-disclosure obligations, resignation from all positions with our company and return of all company property.

For more information, please see the section of this proxy statement captioned “Quantification of Potential Payments to Certain Landos Executive Officers in Connection with the Merger” below for a quantification of the severance amounts payable to certain of our executive officers on a qualifying termination. The aggregate amount of severance that would be paid to other executive officers, Mr. Oakes and Dr. Cataldi, in connection with a qualifying termination under the Oakes Agreement and the Cataldi Severance Agreement, respectively, is $1,606,714. Patrick Truesdell separated employment prior to the execution of the Merger Agreement and is not eligible to receive severance as a result of the Merger.

Quantification of Potential Payments to Certain Landos Executive Officers in Connection with the Merger

For purpose of the following table, we have assumed that the employment of all executive officers will terminate immediately following the Merger in a manner that entitles them to benefits under the Oakes Agreement and the Cataldi Severance Agreement. The estimated value of the severance payments and benefits, excluding equity acceleration, assuming the closing of the Merger occurs on April 30, 2024, for each of our executive officers is set forth below. For more information, see the section of this proxy statement captioned “The Merger—Interests of Landos’ Directors and Executive Officers” below for a quantification of the amounts that the named executive officers will receive in respect of vested equity awards at the Effective Time.

Severance Compensation

 

Name

   Estimated
Cash
Severance
($)(1)
     2024
Prorated
Bonus
Severance
($)(2)
     Other
Benefits(3)
     Total ($)  

Gregory Oakes

   $ 956,340      $ 127,512      $ 44,692      $ 1,128,544  

Fabio Cataldi, M.D.

   $ 478,170        —         —       $ 478,170  

 

(1)

The amounts listed in this column for each named executive officer represent cash severance payments to which each of Mr. Oakes and Dr. Cataldi may become entitled to under the Oakes Agreement and the Cataldi Severance Agreement, respectively, as described in more detail in the section of this proxy statement captioned “The Merger—Payments Upon Termination at or Following Change in Control.”

 

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(2)

The amounts listed in this column for Mr. Oakes represent the pro rata portion of Mr. Oakes’s current year target bonus as of the assumed Closing Date, April 30, 2024, prorated to reflect the partial year of service, as described in more detail in the section of this proxy statement captioned “The Merger—Payments Upon Termination at or Following Change in Control.”

(3)

Represents the lump sum cash amount equal to the product of the first month’s premiums required for continued health care coverage pursuant to COBRA under Landos’ group medical, dental and vision plans, multiplied by 18 months for Mr. Oakes. Dr. Cataldi is not eligible to receive any other benefits.

Equity Awards Held by Landos’ Executive Officers and Non-employee Directors

As discussed above at “Treatment of Landos Options and Landos RSUs”, at the Effective Time, each Landos Option and Landos RSU will be cancelled and automatically converted into the right to receive an amount in cash, without interest, equal to the product of (i) the aggregate number of shares subject to such award, multiplied by (ii) the Closing Amount (or, for each Landos Option, the excess, if any, of the Closing Amount over such Landos Option’s per share exercise price), subject to any required withholding of taxes.

Each of our executive officers is eligible to receive the applicable vesting acceleration benefits with respect to his or her equity awards described above under the heading “Payments Upon Termination at or Following Change in Control.

Equity Interests of Landos’ Executive Officers and Non-Employee Directors

The following table sets forth the number of shares of common stock and the number of shares of common stock underlying equity awards held by each of Landos’ executive officers and non-employee directors that would be outstanding as of April 30, 2024 (which, solely for purposes of this proxy statement, is the assumed Closing Date of the Merger). The table also sets forth the values of these shares and equity awards, determined as the number of shares multiplied by the Closing Amount (minus the applicable per share exercise price for any Landos Options). Except for the awards described herein, no additional shares of common stock or equity awards were granted to any executive officer or non-employee director in contemplation of the Merger.

Equity Interests of Landos’ Executive Officers and Non-Employee Directors

 

Name

   Shares
#(1)
     Shares
$
     Options
#(2)
     Options
$
     RSUs
#
     RSUs
$
     Total  

Gregory Oakes

     —         —         215,253      $ 2,894,589        54,454      $ 1,111,951      $ 4,006,540  

Fabio Cataldi, M.D.

     —         —         58,448      $ 769,256        48,813      $ 996,761      $ 1,766,017  

Christopher Garabedian

     —         —         5,400      $ 76,428        —         —       $ 76,428  

Roger Adsett

     —         —         7,200      $ 71,784        —         —       $ 71,784  

Alka Batycky

     —         —         3,600      $ 62,532        —         —       $ 62,532  

Fred Callori

     —         —         9,000      $ 76,428        —         —       $ 76,428  

Tiago Girão

     —         —         9,000      $ 76,428        —         —       $ 76,428  

Tim M. Mayleben

     —         —         32,548      $ 53,352        —         —       $ 53,352  

Patrick Truesdell(3)

     —         —         6,615      $ 89,978        —         —       $ 89,978  

 

(1)

This number includes shares of common stock beneficially owned, excluding shares of common stock issuable upon exercise of Landos Options or settlement of Landos RSUs.

(2)

The number of shares of common stock subject to Landos Options includes both vested and unvested Landos Options. The estimated number of shares subject to the vested and unvested portions of the Landos Options as of the assumed Closing Date, April 30, 2024, and the value (determined as the aggregate number of underlying shares multiplied by the Closing Amount minus the aggregate exercise price with respect to such shares) of those portions of the Landos Options are provided in the table below.

 

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(3)

Mr. Truesdell is a former officer of Landos and separated from Landos effective November 10, 2023.

 

Name

   Vested
Landos
Options
#
     Vested
Landos
Options
$
     Unvested
Landos
Options
#
     Unvested
Landos
Options
$
 

Gregory Oakes

     90,746      $ 1,194,373        124,507      $ 1,700,216  

Dr. Fabio Cataldi

     21,220      $ 272,446        37,228      $ 496,810  

Christopher Garabedian

     3,600      $ 45,612        1,800      $ 30,816  

Roger Adsett

     4,300      $ 34,676        2,900      $ 37,108  

Alka Batycky

     1,100      $ 19,107        2,500      $ 43,425  

Fred Callori

     6,800      $ 45,612        2,200      $ 30,816  

Tiago Girão

     7,200      $ 45,612        1,800      $ 30,816  

Tim M. Mayleben

     30,648      $ 22,536        1,900      $ 30,816  

Patrick Truesdell

     6,615      $ 89,978        —         —   

Appraisal Rights

If the Merger is consummated, Landos stockholders (including beneficial owners of shares) who do not vote in favor of the adoption of the Merger Agreement, who properly demand an appraisal of their shares, who continuously hold of record or beneficially own their shares through the Effective Time, who otherwise comply with the procedures of Section 262 of the DGCL and who do not withdraw their demands or otherwise lose their rights to appraisal may, subject to the conditions thereof, seek appraisal of their shares in connection with the Merger under Section 262 of the DGCL, which we refer to as “Section 262.” Unless the context requires otherwise, all references in Section 262 and in this summary to a “stockholder” are to the record holder of shares as to which appraisal rights are asserted, all references in Section 262 and in this summary to the words “beneficial owner” mean a person who is the beneficial owner of shares of stock held either in voting trust or by a nominee on behalf of such person, and all references in Section 262 and in this summary to the word “person” mean any individual, corporation, partnership, unincorporated association or other entity.

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, a copy of which is accessible, without subscription or cost, at the following publicly available website, which is incorporated herein by reference: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. The following summary does not constitute any legal or other advice and does not constitute a recommendation that Landos stockholders exercise their appraisal rights under Section 262. STOCKHOLDERS SHOULD CAREFULLY REVIEW THE FULL TEXT OF SECTION 262 AS WELL AS THE INFORMATION DISCUSSED BELOW.

Under Section 262, if the Merger is completed, holders of record of shares of Landos common stock or beneficial owners who (1) submit a written demand for appraisal of such stockholder’s shares of Landos common stock to Landos prior to the vote on the adoption of the Merger Agreement; (2) do not vote, in person by attending via live audio webcast or by proxy, in favor of the adoption of the Merger Agreement; (3) continuously hold of record or beneficially own such shares on the date of making the demand for appraisal through the Effective Time; and (4) otherwise comply with the procedures and satisfy certain ownership thresholds set forth in Section 262 may be entitled to have their shares of Landos common stock appraised by the Delaware Court of Chancery and to receive payment in cash, in lieu of the consideration set forth in the Merger Agreement, for the “fair value” of their shares of Landos common stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be the fair value from the effective date of the Merger through the date of payment of the judgment (or in certain circumstances described herein, on the difference between the amount determined to be the fair value and the amount paid by the Surviving Corporation in the Merger to each person entitled to appraisal prior to the entry of judgment in the appraisal proceeding) as described further below. However, after

 

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an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine persons entitled to appraisal rights, will dismiss appraisal proceedings as to all holders of shares of a class or series of stock that, immediately prior to the closing of the merger, were listed on a national securities exchange who are otherwise entitled to appraisal rights unless (A) the total number of shares of the class or series of stock for which appraisal rights have been pursued or perfected exceeds one percent of the outstanding shares of such class or series as measured in accordance with subsection (g) of Section 262; or (B) the value of the merger consideration in respect of such shares exceeds $1,000,000. We refer to these conditions as the “ownership thresholds.” Given that the shares of Landos common stock are listed on Nasdaq (and assuming such shares remain so listed up until closing of the Merger), then the Delaware Court of Chancery will dismiss any appraisal proceedings as to all holders of Landos common stock who are otherwise entitled to appraisal rights unless one of the ownership thresholds is satisfied.

Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on the amount determined to be the fair value of the shares subject to appraisal will accrue and compound quarterly from the Effective Time through the date the judgment is paid at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period (except that, if at any time before the entry of judgment in the proceeding, the Surviving Corporation makes a voluntary cash payment to each person entitled to appraisal, interest will accrue thereafter only upon the sum of (x) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest theretofore accrued, unless paid at that time). The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than twenty (20) days prior to the meeting, must notify each of its stockholders of record as of the record date for notice of such meeting that appraisal rights are available and include in the notice a copy of Section 262 or information directing the stockholders to a publicly available electronic resource at which Section 262 may be accessed without subscription or cost. This proxy statement constitutes Landos’ notice to Landos stockholders that appraisal rights are available in connection with the Merger, and the full text of Section 262 is available at the following URL: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. In connection with the Merger, any holder of shares of Landos common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Section 262 carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner may result in the loss of appraisal rights under the DGCL. A person who loses his, her or its appraisal rights will be entitled to receive the consideration described in the Merger Agreement without interest and less any applicable withholding taxes. Because of the complexity of the procedures for exercising the right to seek appraisal of shares of Landos common stock, Landos believes that if a person is considering exercising such rights, such person should seek the advice of legal counsel.

Stockholders or beneficial owners wishing to exercise the right to seek an appraisal of their shares of Landos common stock must do ALL of the following:

 

   

such person who has complied with the applicable requirements of Section 262 and is otherwise entitled to appraisal rights must not vote in favor of the proposal to adopt the Merger Agreement;

 

   

such person must deliver to Landos a written demand for appraisal before the vote on the Merger Agreement at the Special Meeting;

 

   

such person must continuously hold of record or beneficially own the shares of Landos common stock from the date of making the demand through the Effective Time (a person will lose appraisal rights if the person transfers the shares before the Effective Time); and

 

   

such person or the Surviving Corporation must file a petition in the Delaware Court of Chancery demanding a determination of the value of the stock of all such stockholders within 120 days after the Effective Time (the Surviving Corporation is under no obligation to file any petition and has no intention of doing so).

 

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In addition, after an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine persons entitled to appraisal rights, will dismiss appraisal proceedings as to all persons who asserted appraisal rights with respect to the shares of Landos common stock unless one of the ownership thresholds is met.

Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the Merger Agreement, each person who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the Merger Agreement or abstain.

Filing Written Demand

A person wishing to exercise appraisal rights must deliver to Landos, before the vote on the adoption of the Merger Agreement at the Special Meeting, a written demand for the appraisal of such person’s shares. In addition, that person must not vote or submit a proxy in favor of the adoption of the Merger Agreement. A vote in favor of the adoption of the Merger Agreement, in person at the Special Meeting or by proxy (whether by mail or via the Internet or telephone), will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal. A person exercising appraisal rights must hold, beneficially or of record, the shares on the date the written demand for appraisal is made and must continue to hold the shares through the Effective Time. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the Merger Agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the Merger Agreement or abstain from voting on the adoption of the Merger Agreement. Neither voting against the adoption of the Merger Agreement nor abstaining from voting or failing to vote on the proposal to adopt the Merger Agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the Merger Agreement. A proxy or vote against the adoption of the Merger Agreement will not constitute a demand. A person’s failure to make the written demand prior to the taking of the vote on the adoption of the Merger Agreement at the Special Meeting will constitute a waiver of appraisal rights.

In the case of a written demand for appraisal made by a stockholder of record, the demand must reasonably inform Landos of the identity of the stockholder and that the stockholder intends thereby to demand an appraisal of such stockholder’s shares. In the case of a written demand for appraisal made by a beneficial owner, the demand must reasonably identify the record holder of the shares for which the demand is made, be accompanied by documentary evidence of such beneficial owner’s beneficial ownership of such stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provide an address at which such beneficial owner consents to receive notices given by the Surviving Corporation and to be set forth on the Verified List (as defined below).

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

Landos Biopharma, Inc.

Attention: Corporate Secretary

P.O. Box 11239

Blacksburg, Virginia 24062

At any time within sixty (60) days after the Effective Time, any person who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw such person’s demand for appraisal and accept the per share price offered pursuant to the Merger Agreement, without interest and less any applicable withholding taxes, by delivering to Landos, as the Surviving Corporation, a written withdrawal of the demand for appraisal. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of

 

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Chancery will be dismissed as to any person without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just, including, without limitation, a reservation of jurisdiction (which we refer to as a “Reservation”) for any Application (as defined below); provided, however, that this shall not affect the right of any person who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal and to accept the Merger consideration within sixty (60) days after the Effective Time. If the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding with respect to a person, such person will be entitled to receive only the fair value determined in any such appraisal proceeding, which value could be less than, equal to or more than the per share price being offered pursuant to the Merger Agreement.

Notice by the Surviving Corporation

If the Merger is completed, within ten (10) days after the Effective Time, the Surviving Corporation will notify each stockholder (including any beneficial owner) of each constituent corporation who has properly made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the Merger Agreement, that the Merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the Effective Time, but not thereafter, the Surviving Corporation or any person who has complied with Section 262 and is otherwise entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the Surviving Corporation in the case of a petition filed by any person other than the Surviving Corporation, demanding a determination of the fair value of the shares held by all dissenting stockholders entitled to appraisal. The Surviving Corporation is under no obligation, and has no present intention, to file a petition, and stockholders should not assume that the Surviving Corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of Landos common stock. Accordingly, any persons who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of Landos common stock within the time and in the manner prescribed in Section 262. The failure to file such a petition within the period specified in Section 262 could nullify a previous written demand for appraisal.

Within 120 days after the Effective Time, any person who has complied with the requirements for an appraisal of such person’s shares pursuant to Section 262 will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the Merger Agreement and with respect to which Landos has received demands for appraisal, and the aggregate number of stockholders or beneficial owners holding or owning such shares (provided that where a beneficial owner makes a demand for appraisal directly, the record holder of such shares shall not be considered a separate stockholder holding such shares for purposes of this aggregate number). Such statement must be given within ten (10) days after receipt by the Surviving Corporation of the written request for such a statement or within ten (10) days after the expiration of the period for delivery of demands for appraisal, whichever is later.

If a petition for an appraisal is duly filed by any person other than the Surviving Corporation, service of a copy thereof must be made upon the Surviving Corporation, which will then be obligated within twenty (20) days after such service to file with the Delaware Register in Chancery a duly verified list (which we refer to as the “Verified List”) containing the names and addresses of all persons who have demanded appraisal for their shares and with whom agreements as to the value of their shares have not been reached. The Delaware Court of Chancery may order that notice of the time and place fixed for the hearing of such petition be given to the Surviving Corporation and all of the persons shown on the Verified List at the addresses stated therein. The costs of any such notice are borne by the Surviving Corporation.

After notice is provided to the applicable persons as required by the Delaware Court of Chancery, at the hearing on such petition, the Delaware Court of Chancery will determine the persons who have complied with

 

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Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the persons who demanded appraisal for their shares and who hold stock represented by stock certificates to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings. If any person fails to comply with this requirement, the Delaware Court of Chancery may dismiss the proceedings as to such person. Upon application by the Surviving Corporation or by any person entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the Verified List may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under Section 262.

Given that the shares of Landos common stock are listed on Nasdaq (and assuming such shares remain so listed up until closing of the Merger), the Delaware Court of Chancery will dismiss any appraisal proceedings as to all holders of shares of Landos common stock who are otherwise entitled to appraisal rights unless one of the ownership thresholds is met.

Determination of Fair Value

After the Delaware Court of Chancery determines the persons entitled to appraisal and, with respect to Landos common stock, that at least one of the ownership thresholds above has been satisfied in respect of persons seeking appraisal rights, then the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of Landos common stock, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the Merger through the date of payment of the judgment will be compounded quarterly and will accrue at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Merger and the date of payment of the judgment. However, the Surviving Corporation has the right, at any time prior to the Delaware Court of Chancery’s entry of judgment in the proceedings, to make a voluntary cash payment to each person seeking appraisal. If the Surviving Corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (x) the difference, if any, between the amount paid by the Surviving Corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery; and (y) interest accrued before such voluntary cash payment, unless paid at that time.

In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the Merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the Merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

Persons considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would

 

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receive pursuant to the Merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a Merger is not an opinion as to, and may not in any manner address, fair value under Section 262. ALTHOUGH LANDOS BELIEVES THAT THE PER SHARE PRICE IS FAIR, NO REPRESENTATION IS MADE AS TO THE OUTCOME OF THE APPRAISAL OF FAIR VALUE AS DETERMINED BY THE DELAWARE COURT OF CHANCERY, AND STOCKHOLDERS SHOULD RECOGNIZE THAT SUCH AN APPRAISAL COULD RESULT IN A DETERMINATION OF A VALUE HIGHER OR LOWER THAN, OR THE SAME AS, THE PER SHARE PRICE. Neither Landos nor Parent anticipates offering more than the per share price to any persons exercising appraisal rights, and each of Landos and Parent reserves the rights to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of Landos common stock is less than the per share price. If a petition for appraisal is not timely filed or, with respect to Landos common stock, if neither of the ownership thresholds above has been satisfied in respect of persons seeking appraisal rights, then the right to an appraisal will cease.

The Delaware Court of Chancery will direct the payment of the fair value of the shares, together with interest, if any, by the Surviving Corporation to the persons entitled thereto. Payment will be so made to each such person upon such terms and conditions as the Delaware Court of Chancery may order. The Delaware Court of Chancery’s decree may be enforced as other decrees in such Delaware Court of Chancery may be enforced.

The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a person whose name appears on the Verified List who participated in the proceeding and incurred expenses in connection therewith (which we refer to as an “Application”), the Delaware Court of Chancery may also order that all or a portion of such expenses, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal that were not dismissed pursuant to the terms of Section 262 or subject to an award pursuant to a Reservation. In the absence of such determination or assessment, each party bears its own expenses.

If any person who demands appraisal of his, her or its shares of Landos common stock under Section 262 fails to perfect, or loses or validly withdraws, such person’s right to appraisal, such person’s shares of Landos common stock will be deemed to have been converted at the Effective Time into the right to receive the per share price as provided in the Merger Agreement. A person will fail to perfect, or effectively lose, such person’s right to appraisal if no petition for appraisal is filed within 120 days after the Effective Time, if neither of the ownership thresholds above has been satisfied in respect of those seeking appraisal rights with respect to the shares of Landos common stock, or if the person delivers to the Surviving Corporation a written withdrawal of such person’s demand for appraisal and an acceptance of the per share price as provided in the Merger Agreement in accordance with Section 262.

From and after the Effective Time, no person who has demanded appraisal rights in compliance with Section 262 will be entitled to vote such shares of Landos common stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the Merger); provided, however, that if no petition for an appraisal is filed within the time provided in Section 262, if neither of the ownership thresholds above has been satisfied in respect of those seeking appraisal rights with respect to the shares of Landos common stock, or if such person delivers to the Surviving Corporation a written withdrawal of such person’s demand for an appraisal and an acceptance of the Merger, within sixty (60) days after the effective date of the Merger, then the right of such person to an appraisal will cease. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any person without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just, including, without limitation, a Reservation; provided, however, that the foregoing shall not affect the right of any person who has not commenced an appraisal

 

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proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal and to accept the terms offered upon the Merger within sixty (60) days after the effective date of the Merger.

Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of appraisal rights. In that event, you will be entitled to receive the per share price for your dissenting shares in accordance with the Merger Agreement, without interest and less any applicable withholding taxes. Consequently, any person wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

Material U.S. Federal Income Tax Consequences of the Merger

The following discussion is a summary of material U.S. federal income tax consequences of the Merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined below) whose shares are converted into the right to receive cash and CVRs pursuant to the Merger. This summary is general in nature and does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed, nor are the effects of the Medicare contribution tax on net investment income, the alternative minimum tax or the special tax accounting rules in Section 451(b) of the Code. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated under the Code, court decisions, published rulings and administrative pronouncements of the IRS, and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. This discussion is limited to stockholders who hold their shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes).

This discussion is for general information only and does not address all of the tax consequences that may be relevant to stockholders in light of their particular circumstances. For example, this discussion does not address the tax consequences that may be relevant to stockholders who may be subject to special treatment under U.S. federal income tax laws, such as:

 

   

banks, mutual funds, insurance companies or other financial institutions;

 

   

tax-exempt organizations;

 

   

retirement or other tax deferred accounts;

 

   

S corporations, partnerships or any other entities or arrangements treated as partnerships or pass-through entities for U.S. federal income tax purposes (or other pass-through entities) or an investor in a partnership, S corporation (or other pass-through entity);

 

   

dealers in stocks and securities; traders in securities that elect to use the mark-to-market method of accounting for their securities;

 

   

regulated investment companies or real estate investment trusts;

 

   

entities subject to the U.S. anti-inversion rules;

 

   

certain former citizens or long-term residents of the United States;

 

   

except as noted below, stockholders that own or have owned (directly, indirectly or constructively) five percent (5%) or more of Landos’ common stock (by vote or value);

 

   

stockholders holding shares as part of a hedging, constructive sale or conversion, straddle or other risk reduction transaction;

 

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stockholders whose shares constitute qualified small business stock within the meaning of Section 1202 of the Code;

 

   

stockholders that received their shares in a compensatory transaction, through a tax qualified retirement plan or pursuant to the exercise of options or warrants;

 

   

stockholders who own an equity interest, actually or constructively, in AbbVie or the Surviving Corporation following the Merger;

 

   

U.S. Holders whose “functional currency” is not the U.S. dollar;

 

   

stockholders who hold their shares through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States;

 

   

stockholders who are controlled foreign corporations, passive foreign investment companies or corporations that accumulate earnings to avoid U.S. federal income tax; or

 

   

stockholders that do not vote in favor of the Merger and properly demand appraisal of their shares under Section 262 of the DGCL.

If a partnership (including an entity or arrangement, domestic or non-U.S., treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares and partners therein should consult their tax advisors regarding the consequences of the Merger.

We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation.

THE FOLLOWING SUMMARY IS FOR GENERAL INFORMATIONAL PURPOSES ONLY AND IS NOT TAX PLANNING. WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO YOU IN CONNECTION WITH THE MERGER IN LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES, INCLUDING FEDERAL ESTATE, GIFT AND OTHER NON-INCOME TAX CONSEQUENCES, AND TAX CONSEQUENCES UNDER STATE, LOCAL OR NON-U.S. TAX LAWS.

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares that is for U.S. federal income tax purposes:

 

   

an individual who is (or is treated as) a citizen or resident of the United States;

 

   

a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust (1) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code; or (2) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

For purposes of this discussion, a “Non-U.S. Holder” is a beneficial owner of shares that is not a U.S. Holder nor an entity classified as a partnership for U.S. federal income tax purposes.

U.S. Holders

The exchange of shares for cash and CVRs pursuant to the Merger will be a taxable transaction to U.S. Holders for U.S. federal income tax purposes. The amount of gain or loss a U.S. Holder recognizes, and the

 

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timing and character of a portion of such gain or loss, depends in part on the U.S. federal income tax treatment of the CVRs, with respect to which there is a significant amount of uncertainty. The installment method of reporting any gain attributable to the receipt of a CVR generally will not be available with respect to the disposition of shares pursuant to the Merger because the shares are traded on an established securities market.

There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of the CVRs in connection with the Merger. The receipt of the CVRs as part of the Merger consideration might be treated as an “open transaction” or as a “closed transaction” for U.S. federal income tax purposes, each discussed below.

Pursuant to U.S. Treasury regulations addressing contingent payment obligations that are analogous to the CVRs, if the fair market value of the CVRs were determined to be “reasonably ascertainable,” a U.S. Holder should treat the transaction as a “closed transaction” and treat the fair market value of the CVRs as part of the consideration received in the Merger for purposes of determining gain or loss. On the other hand, if the fair market value of the CVRs could not be reasonably ascertained, a U.S. Holder should treat the transaction as an “open transaction” for purposes of determining gain or loss. These Treasury regulations state that only in “rare and extraordinary” cases would the value of contingent payment obligations not be reasonably ascertainable. There is no authority directly addressing whether contingent payment rights with characteristics similar to the rights under a CVR should be treated as “open transactions” or “closed transactions,” and such question is inherently factual in nature. We urge you to consult your own tax advisor with respect to the proper characterization of the receipt of, and payments made with respect to, a CVR. The following sections discuss certain U.S. federal income tax consequences of the Merger, as applicable, if the exchange of shares for cash and CVRs pursuant to the Merger, as applicable, is treated as an open transaction or, alternatively, as a closed transaction for U.S. federal income tax purposes. Under either “open” or “closed” transaction treatment, gain or loss generally will be determined separately for each block of shares (that is, shares acquired at the same cost in a single transaction) exchanged pursuant to the Merger. To the extent required to take a position, each of the AbbVie and Landos intend to act consistently for applicable tax purposes with open transaction treatment.

Treatment as Open Transaction. If the transaction is treated as an “open transaction” for U.S. federal income tax purposes, a U.S. Holder should generally recognize capital gain for U.S. federal income tax purposes on the exchange of shares pursuant to the Merger if and to the extent the amount of cash received in such exchange exceeds such U.S. Holder’s adjusted U.S. federal income tax basis in the shares sold or exchanged. However, a U.S. Holder may not be able to recognize loss for U.S. federal income tax purposes in connection with the Effective Time even if its adjusted U.S. federal income tax basis exceeds the amount of cash received as of the Effective Time, and instead may be required to defer recognition of loss (and the determination of the amount of such loss) until the U.S. Holder’s right to receive further payments under the CVRs terminates (e.g. when the Milestone Payment becomes due, the Milestone Achievement Outside Date lapses without achieving the Milestone, or, possibly, if the U.S. Holder abandons its CVRs), as discussed below.

The fair market value of the CVRs generally would not be treated as additional consideration for the shares at the time the CVRs are received in the Merger, and the U.S. Holder would have no U.S. federal income tax basis in the CVRs. Instead, the U.S. Holder would take payments under the CVRs into account when made or deemed made in accordance with the U.S. Holder’s regular method of accounting for U.S. federal income tax purposes. A portion of such payments may be treated as interest income under Section 483 of the Code (as discussed below under “Imputed Interest”) and the balance, in general, would be treated as additional consideration for the disposition of the shares. The portion of payments on the CVRs not treated as imputed interest under Section 483 of the Code will generally be treated as gain to the extent the sum of such payments (and all previous payments under the CVRs), together with the cash received upon the closing of the Merger, exceeds such U.S. Holder’s adjusted U.S. federal income tax basis in the shares surrendered pursuant to the Merger. Subject to the imputed interest rules discussed below, a U.S. Holder that does not receive cash pursuant to the Merger (including for this purpose any cash received as payments on the CVRs) in an amount at least equal to such U.S. Holder’s adjusted U.S. federal income tax basis in the shares surrendered pursuant to the

 

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Merger may be able to recognize a capital loss upon termination of the U.S. Holder’s right to receive further payments under the CVR (e.g. if the Milestone is achieved and the Milestone Payment becomes due, or the Milestone Achievement Outside Date lapses without achieving the Milestone), or possibly upon such U.S. Holder’s abandonment of its CVRs. Any such capital gain or loss will be long-term if the shares were held for more than one year prior to such disposition. The deductibility of capital losses is subject to certain limitations.

Treatment as Closed Transaction. If the receipt of the CVRs is treated as part of a closed transaction for U.S. federal income tax purposes, then a U.S. Holder generally would recognize capital gain or loss on an exchange of shares pursuant to the Merger, in an amount equal to the difference, if any, between: (i) the amount of cash received plus the fair market value (determined as of the Effective Time) of any CVRs received; and (ii) the U.S. Holder’s adjusted U.S. federal income tax basis in the shares exchanged. The proper method to determine the fair market value of a CVR is not clear. Gain or loss generally would be calculated separately for each block of shares (that is, shares acquired at the same cost in a single transaction) exchanged pursuant to the Merger. Any capital gain or loss recognized will be long-term capital gain or loss if the Holder’s holding period for such shares exceeds one year. The deductibility of capital losses is subject to limitations.

A U.S. Holder’s initial U.S. federal income tax basis in a CVR received in the Merger would equal the fair market value of such CVR as determined for U.S. federal income tax purposes. The holding period for a CVR would begin on the day following the date of the Effective Time.

There is no authority directly addressing the U.S. federal income tax treatment of receiving payments on the CVRs and, therefore, the amount, timing and character of any gain, income or loss with respect to the CVRs would be uncertain. For example, if a payment is made with respect to a CVR, it could be treated as a payment with respect to a sale or exchange of a capital asset or as giving rise to ordinary income. It is unclear how a U.S. Holder of the CVRs would recover its adjusted tax basis with respect to payments thereon. It is also possible that, were the payment to be treated as being made with respect to the sale of a capital asset, a portion of such payment may constitute imputed interest under Section 483 of the Code (as described below under “Imputed Interest”).

Imputed Interest. A portion of the payments made with respect to a CVR may be treated as imputed interest, which would be ordinary income to the U.S. Holder of a CVR. The portion of any payment made with respect to a CVR treated as imputed interest under Section 483 of the Code will be determined at the time such payment is made and generally should equal the excess of: (i) the amount of the payment in respect of the CVRs; over (ii) the present value of such amount as of the Effective Time, calculated using the applicable federal rate published by the IRS as the discount rate. A U.S. Holder must include in its taxable income interest imputed pursuant to Section 483 of the Code using such Holder’s regular method of accounting for U.S. federal income tax purposes.

Non-U.S. Holders

Any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

 

   

the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to the branch profits tax at a rate of thirty percent (30%) (or a lower rate under an applicable income tax treaty); or

 

   

such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the Merger, and certain other requirements are met, in which case such gain will be subject to U.S. federal income tax at a rate of thirty percent (30%) (or a lower rate under an applicable

 

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income tax treaty), which gain may be offset by certain U.S. source capital losses of such Non-U.S. Holder if the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

Generally, if payments are made to a Non-U.S. Holder with respect to a CVR, such Non-U.S. Holder may be subject to withholding at a rate of 30% (or a lower applicable treaty rate) on the portion of any such payments treated as imputed interest (as discussed above under “U.S. Holders – Treatment as Open Transaction”), or possibly a larger portion of the CVR payment depending on the U.S. federal income tax treatment of the CVRs unless such Non-U.S. Holder establishes its entitlement to exemption from or a reduced rate of withholding under an applicable tax treaty by providing the appropriate documentation (generally, IRS Form W-8BEN or W-8BEN-E or other applicable IRS Form W-8) to the applicable withholding agents. As discussed above, the tax treatment of the CVRs is unclear, and it is possible that AbbVie or the applicable withholding agent may be required to withhold additional amounts on payments with respect to the CVRs.

Information Reporting and Backup Withholding

Information reporting and backup withholding (currently, at a rate of twenty-four percent (24%)) may apply to the proceeds received by a stockholder pursuant to the Merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such stockholder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form) or (2) a Non-U.S. Holder that (i) provides a certification of such stockholder’s foreign status on the appropriate series of IRS Form W-8 (or a substitute or successor form) or (ii) otherwise establishes an exemption from backup withholding. Stockholders must generally provide the rights agent with the certification documentation descripted in this paragraph with respect to payments on the CVRs. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the stockholder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Tax information provided to a U.S. Holder and the IRS on IRS Form 1099-B for the year of the Merger may reflect only the cash amounts paid to the U.S. Holder in the Merger and not the fair market value of the U.S. Holder’s interest in payments made (or to be made) on the CVRs. Accordingly, a U.S. Holder that treats the Merger as a “closed transaction” for U.S. federal income tax purposes may receive an IRS Form 1099-B reporting an amount received that is less than the amount such U.S. Holder will realize in the year of the Merger. In addition, any IRS Form 1099-B a U.S. Holder receives with respect to payments on the CVRs may reflect the entire amount of the CVR payments paid to the U.S. Holder (except imputed interest) and therefore may not take into account the fact that the U.S. Holder already included the value of such payments in such U.S. Holder’s amount realized in the year the Merger. As a result, U.S. Holders reporting under this method should not rely on the amounts reported to them on IRS Forms 1099-B with respect to the Merger. U.S. Holders are urged to consult their tax advisors regarding how to accurately report their income under this method.

Withholding on Foreign Entities

Sections 1471 through 1474 of the Code (“FATCA”), impose a U.S. federal withholding tax of thirty percent (30%) on certain payments made to a “foreign financial institution” (as specially defined under these rules) unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding certain U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or an exemption applies. FATCA also generally will impose a U.S. federal withholding tax of thirty percent (30%) on certain payments made to a non-financial foreign entity unless such entity provides the withholding agent with either a certification that it does not have any substantial direct or indirect U.S. owners or provides information regarding substantial direct and indirect U.S. owners of the entity. An intergovernmental agreement between the United States and an applicable foreign

 

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country may modify these requirements. FATCA withholding currently applies to payments of dividends and interest. The Treasury Department has released proposed regulations which, if finalized in their present form, would eliminate the federal withholding tax of thirty percent (30%) applicable to the gross proceeds of a sale or other disposition of our common stock. In its preamble to such proposed regulations, the Treasury Department stated that taxpayers may generally rely on the proposed regulations until final regulations are issued.

AbbVie or another applicable withholding agent will be required to withhold tax at a rate of 30% on the portion of payments on the CVRs reported as imputed interest, or possibly a larger portion of the CVR payment depending on the U.S. federal income tax treatment of the receipt of the CVRs, if a Non-U.S. Holder fails to meet prescribed certification requirements. In general, no such withholding will be required with respect to a person that timely provides certifications that establish an exemption from FATCA withholding on a valid IRS Form W-8.

Stockholders are encouraged to consult with their own tax advisors regarding the possible implications of FATCA on the disposition of Landos common stock pursuant to the Merger.

THE FOREGOING SUMMARY DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF THE POTENTIAL TAX CONSEQUENCES OF THE MERGER OR THE OWNERSHIP OF CVRS. EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES. NOTHING IN THIS SUMMARY IS INTENDED TO BE, OR SHOULD BE CONSTRUED AS, TAX ADVICE.

Regulatory Approvals Relevant to the Merger

Landos, Parent and AbbVie have agreed to use reasonable best efforts to obtain all regulatory approvals (including actions or nonactions, waivers, consents, clearances, decisions, declarations, approvals and, expirations, or terminations of waiting periods from governmental bodies) necessary to consummate the Merger and the other transactions contemplated by the Merger Agreement, subject to certain limitations as set forth in the Merger Agreement.

Closing Conditions

Under the HSR Act and the rules promulgated thereunder, certain acquisitions may not be completed until information has been furnished to the DOJ and the FTC, and the applicable HSR Act waiting period requirements have been satisfied. If, prior to the Effective Time, AbbVie, in consultation with Landos, reasonably determines that a filing under the HSR Act is required in connection with the Merger and other transactions contemplated by the Merger Agreement, then the expiration or earlier termination of all applicable waiting periods the HSR Act will become a condition to the obligations of Parent and Landos to effect the Closing. If there is voluntary commitment or agreement with the DOJ or FTC not to effect the Closing, then the expiration or earlier termination of all applicable waiting periods under such voluntary commitment or agreement will become a condition to the obligations of Parent and Landos to effect the Closing. As of the date of this proxy statement, Landos understands that AbbVie has determined that no filing under the HSR Act is required, and that no voluntary commitment or agreement with the DOJ or FTC not to effect the Closing is in effect.

If, prior to the Effective Time, the CMA indicates in writing to AbbVie that it has decided to formally investigate the Merger and, accordingly, requests AbbVie to submit a merger notice in the form prescribed under the Enterprise Act 2002, and such indication and merger notice is provided by AbbVie to Landos, then the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods, as the case may be, under the applicable Antitrust Laws of the United Kingdom will become a condition to the obligations of Parent and Landos to effect the Closing. As of the date of this proxy statement, Landos understands that the CMA has not made any such indication in writing.

 

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If, prior to the Effective Time, the EC indicates in writing to AbbVie that a member state of the European Union or the EC is making, or has made, a referral of the Merger to the EC under Article 22 of the EU Merger Regulation, and such indication is provided by AbbVie to Landos, then the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods, as the case may be, under the applicable Antitrust Laws of the European Union will become a condition to the obligations of Parent and Landos to effect the Closing. As of the date of this proxy statement, Landos understands that the EC has not made any such indication in writing.

Regardless of whether the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods under the HSR Act or the applicable Antitrust Laws of the United Kingdom or the European Union becomes a condition to Closing, at any time before or after consummation of the Merger, the DOJ, the FTC, or other governmental body could take such action under the Antitrust Laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the Merger, seeking divestiture of substantial assets of one or more of the parties, requiring the parties to license or hold separate assets or terminate existing relationships and contractual rights, or requiring the parties to agree to other remedies. At any time before or after the completion of the Merger, any state or foreign jurisdiction could take such action under the Antitrust Laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the completion of the Merger, seeking divestiture of substantial assets of one or more of the parties, requiring the parties to license or hold separate assets or terminate existing relationships and contractual rights, or requiring the parties to agree to other remedies. Private parties may also seek to take legal action under the Antitrust Laws under certain circumstances, including by seeking to intervene in a regulatory process or litigate to enjoin or overturn regulatory approvals, any of which actions could significantly impede or even preclude obtaining required regulatory approvals. Landos cannot be certain that a challenge to the Merger will not be made or that, if a challenge is made, Landos will prevail.

Other Regulatory Approvals

One or more governmental agencies may impose a condition, restriction, qualification, requirement or limitation when it grants any necessary approvals and consents. Third parties may also seek to intervene in the regulatory process or litigate to enjoin or overturn regulatory approvals, any of which actions could significantly impede or even preclude obtaining required regulatory approvals. There is currently no way to predict how long it will take to obtain any required regulatory approvals or whether such approvals will ultimately be obtained and, in such case, there may be a substantial period of time between the approval by stockholders and the completion of the Merger.

We cannot assure you that any relevant regulatory clearances and approvals would be timely obtained, obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions, restrictions, qualifications, requirements or limitations on the completion of the Merger, including the requirement to (i) negotiating, committing to, and effecting, by consent decree, hold separate order, or otherwise, the sale, lease, license, divestiture, or disposition of any asset, right, product or product line, or business of Landos, AbbVie, or any of their respective affiliates, (ii) terminating any existing relationship, contractual right, or obligation of Landos, AbbVie, or any of their respective affiliates, (iii) terminating any venture or other arrangement, (iv) creating any relationship, contractual right, or obligation of Landos, AbbVie or any of their respective affiliates, (v) effectuating any other change or restructuring of Landos, AbbVie or any of their respective affiliates, (vi) undertaking or agreeing to (or requesting or authorizing Landos or any of its subsidiaries to undertake, effective upon the Closing) any requirement or obligation to provide prior notice to, or obtain prior approval from, any governmental body with respect to any transaction, (vii) otherwise taking or committing to take any action with respect to the businesses, product lines, or assets of Landos, AbbVie or any of their respective affiliates, and (viii) any sale, divestiture, disposition or other remedial measure pursuant to the Merger Agreement. These conditions or changes could result in the conditions to the Merger not being satisfied. There is currently no way to predict how long it will take to obtain any relevant regulatory approvals or whether such approvals would ultimately be obtained and, in such case, there may be a substantial period of time between the approval by stockholders and the completion of the Merger.

 

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Landos and AbbVie have agreed to use reasonable best efforts to obtain all regulatory approvals required to consummate the Merger and the other transactions contemplated by the Merger Agreement, subject to certain limitations as set forth in the Merger Agreement.

Legal Proceedings

As of the filing of this proxy statement, there were no legal proceedings pending related to the Merger.

 

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PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

The following summary describes the material provisions of the Merger Agreement. The descriptions of the Merger Agreement in this summary and elsewhere in this proxy statement are not complete and are qualified in their entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger, because this summary may not contain all the information about the Merger Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

The representations, warranties, covenants and agreements described below and included in the Merger Agreement (i) were made only for purposes of the Merger Agreement and as of specific dates; (ii) were made solely for the benefit of the parties to the Merger Agreement; and (iii) may be subject to important qualifications, limitations and supplemental information agreed to by Landos, AbbVie, Parent and Merger Sub in connection with negotiating the terms of the Merger Agreement and contained in the confidential disclosure schedules. In addition, the representations and warranties have been included in the Merger Agreement for the purpose of allocating contractual risk between Landos, AbbVie, Parent and Merger Sub rather than to establish matters as facts and may be subject to standards of materiality applicable to such parties that differ from those applicable to investors. Stockholders are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of Landos, AbbVie, Parent or Merger Sub or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement. In addition, you should not rely on the covenants in the Merger Agreement as actual limitations on the respective businesses of Landos, AbbVie, Parent and Merger Sub, because the parties may take certain actions that are either expressly permitted in the confidential disclosure schedule to the Merger Agreement or as otherwise consented to by the appropriate party, which consent may be given without prior notice to the public. The Merger Agreement is described below, and included as Annex A, only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding Landos, AbbVie, Parent, Merger Sub or their respective businesses. Accordingly, the representations, warranties, covenants and other agreements in the Merger Agreement should not be read alone, and you should read the information provided elsewhere in this document and in our filings with the SEC regarding Landos and its business.

Effects of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

The Merger Agreement provides that, on the terms and subject to the conditions of the Merger Agreement and in accordance with the DGCL, at the Effective Time (i) Merger Sub will be merged with and into Landos, (ii) the separate corporate existence of Merger Sub will thereupon cease, and (iii) the corporate existence of Landos under the laws of the State of Delaware will continue as the surviving corporation and a wholly owned subsidiary of Parent. The corporation surviving the Merger is sometimes referred to as the “Surviving Corporation.” The Merger will have the effects set forth in the applicable provisions of the DGCL.

At the Effective Time, the certificate of incorporation of Landos shall be amended and restated to conform to Exhibit C of the Merger Agreement until, subject to the terms of the Merger Agreement, thereafter, amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation. The name of the Surviving Corporation will be Landos Biopharma, Inc.

The parties to the Merger Agreement shall take all necessary action such that the bylaws of Merger Sub as in effect immediately prior to the Effective Time will become the bylaws of the Surviving Corporation (except that all references in such bylaws of Merger Sub to its name, date of incorporation, registered office or registered agent shall instead refer to the name, date of incorporation, registered office and registered agent, respectively, of

 

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the Surviving Corporation) until, subject to the Merger Agreement thereafter amended in accordance with the applicable provisions of the DGCL, the certificate of incorporation of the Surviving Corporation and such bylaws.

Closing and Effective Time

Closing shall take place (i) remotely by electronic exchange of executed documents, commencing at 10:00 a.m., New York City time, on the date that is two (2) business days after the date on which all of the closing conditions of the Merger (described below under the caption “—Conditions to the Closing of the Merger”) shall have been satisfied or waived (other than those conditions that by their nature are to be satisfied by actions to be taken at the Closing, but subject to the satisfaction or waiver thereof at or prior to the Closing) or (ii) at such other place, time, and date as Landos and Parent may agree in writing. On the date of the Closing (or on such other date as Parent and Landos may agree), Parent, Merger Sub and Landos shall cause a certificate of merger (the “Certificate of Merger”) to be filed with the Secretary of State of the State of Delaware and make all other filings or recordings required by the DGCL in connection with the Merger. The Merger will become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later date or time as may be agreed by Landos and Parent and specified in the Certificate of Merger in accordance with the DGCL.

Closing Amount

Common Stock

At the Effective Time, and without any further action on the part of the parties or any of Landos’ stockholders, each share of common stock of Landos, par value $0.01 per share that is outstanding immediately prior to the Effective Time (other than Cancelled Shares and Dissenting Shares) shall be converted automatically into the right to receive the Merger Consideration All shares that have been converted into the right to receive the Merger Consideration as provided in the Merger Agreement shall cease to exist and no longer being outstanding, and any holder of book-entry shares, or certificates with respect thereto that immediately prior to the Effective Time represented such shares, shall cease to have any right with respect to such shares other than the right to receive the Merger Consideration.

Treatment of Landos Options and Landos RSUs

The Merger Agreement provides that, at the Effective Time, subject to all required withholding taxes, each:

(i) Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is less than or equal to the Closing Amount will be cancelled and converted into the right to receive (A) an amount in cash, without interest, equal to the product of (1) the excess, if any, of the Closing Amount over the exercise price per share of common stock of such Landos Option, multiplied by (2) the number of shares of common stock then subject to such Landos Option and (B) one (1) CVR per share of common stock subject to such Landos Option;

(ii) Landos Option that is outstanding as of immediately prior to the Effective Time, whether or not then vested, having an exercise price per share of common stock that is greater than the Closing Amount will be cancelled without any consideration being payable in respect thereof, and have no further force or effect; and

(iii) Landos RSU that is unvested and outstanding as of immediately prior to the Effective Time will be cancelled and converted into the right to receive (A) an amount in cash, without interest, in respect thereof equal to the Closing Amount multiplied by the number of shares of common stock subject to such Landos RSU and (B) one (1) CVR.

 

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Treatment of Landos Warrants

At the Effective Time each Landos Warrant shall be deemed to have been exercised in full in a “cashless exercise” pursuant to Sections 9(c) and 10 of the Landos Warrants effective immediately prior to and contingent upon the Closing, and at the Effective Time shall be converted automatically into the right to receive (a) an amount in cash equal to the Closing Amount multiplied by (x) the total number of shares of common stock underlying such Landos Warrant as of immediately prior to the Effective Time multiplied by (y)(A) an amount equal to (1) the Applicable Closing Price minus (2) the applicable exercise price per share of common stock of such Landos Warrant, divided by (B) the Applicable Closing Price and (b) a number of CVRs equal to the total number of shares of common stock underlying such Landos Warrant as of immediately prior to the Effective Time.

The “Applicable Closing Price” is equal to the Closing Sale Price (as defined in the Landos Warrants) per share of common stock as of the Trading Day (as defined in the Landos Warrants) on the date immediately preceding the Closing Date.

Exchange and Payment Procedures

The Merger Agreement provides that the Paying Agent will act as agent for the holders of common stock and will receive the funds to which holders of common stock will become entitled in connection with the Merger. The Paying Agent will act as agent to the stockholders to receive the Closing Amount payments. No later than the Effective Time, Parent will deposit, or will cause to be deposited, in trust for the benefit of holders of the shares, cash in U.S. dollars sufficient to pay the aggregate Closing Amount in exchange for all of the shares outstanding immediately prior to the Effective Time (other than Cancelled Shares), payable upon due surrender of the certificates that, immediately prior to the Effective Time, represented shares (“Certificates”) (or effective affidavits of loss in lieu thereof) or uncertificated shares represented by book-entry (“Book-Entry Shares”) pursuant to the provisions of the Merger Agreement (such cash being referred to as the “Exchange Fund”).

As soon as reasonably practicable after the Effective Time and in any event not later than the third (3rd) business day following the Closing Date, Parent will cause the Paying Agent to mail to each holder of record of shares whose shares were Certificated and converted into the right to receive Merger Consideration pursuant to the Merger Agreement, (i) a letter of transmittal and (ii) instructions for use in effecting the surrender of Certificates in exchange for Merger Consideration. Upon (a) surrender of Certificates to the Paying Agent, together with such letter of transmittal, duly completed, and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Paying Agent in the case of shares that are Certificated or (b) receipt of an “agent’s message” by the Paying Agent in the case of a book-entry transfer of Book-Entry Shares, the holder of such Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares will be entitled to receive in exchange therefor (x) an amount in cash equal to the product of (1) the number of shares represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares and (2) the Closing Amount; and (y) a number of CVRs equal to the number of shares represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares. Notwithstanding anything to the contrary in the Merger Agreement, no holder of Book-Entry Shares will be required to provide a Certificate or an executed letter of transmittal to the Paying Agent in order to receive the payment that such holder is entitled to receive pursuant to the Merger Agreement. No interest will be paid or accrued on any amount payable upon due surrender of Certificates (or effective affidavits of loss in lieu thereof). In the event of a transfer of ownership of shares that is not registered in the stock transfer books of Landos, payment of Merger Consideration upon due surrender of a Certificate may be paid to such a transferee if the Certificate formerly representing such shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.

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demand, and any former holder of shares who has not surrendered their shares in accordance with the Merger Agreement may thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration, without any interest thereon, upon due surrender of their shares.

Representations and Warranties

The Merger Agreement contains representations and warranties of Landos, AbbVie, Parent and Merger Sub.

Some of the representations and warranties in the Merger Agreement made by Landos are qualified as to “materiality” or “Material Adverse Effect.” For purposes of the Merger Agreement, a “Material Adverse Effect” means an event, effect, change, occurrence, condition, or development (an “Effect”) that, individually or taken together, has had or would reasonably be expected to have a material adverse effect on the business, assets, properties, liabilities, operations, condition (financial or otherwise), or results of operations of Landos and its subsidiaries, taken as a whole. However, subject to certain exceptions, no Effect arising out of or resulting from any of the following will be deemed either alone or in combination to constitute or will be taken into account when determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur:

 

   

(a) any change in the market price or trading volume of Landos’ stock;

 

   

(b) the execution, announcement or consummation of the Transactions;

 

   

(c) general changes or developments in the clinical stage biopharmaceutical industry or changes in the economy generally or changes in other general business, financial, or market conditions (including interest rates, exchange rates, tariffs, trade wars, and credit markets);

 

   

(d) general changes or developments in the fluctuations in the value of any currency;

 

   

(e) (i) changes to any domestic, foreign or global political condition, (ii) any act of terrorism, war (whether or not declared), civil unrest, civil disobedience, protests, public demonstrations, insurrection, national or international calamity, sabotage or terrorism, (iii) any pandemic or epidemic or other outbreak of contagious diseases (or the escalation or worsening of any of the foregoing) or (iv) any volcano, tsunami, earthquake, hurricane, tornado, other natural or man-made disaster, or any similar force majeure event;

 

   

(f) the failure of Landos and its subsidiaries to meet internal or analyst’s expectation, forecast, estimate, or prediction in respect of revenues, earnings, or other financial or operating metrics for any period;

 

   

(g) any action taken (or failure to act) by Landos at the written direction of Parent and any action specifically required to be taken by Landos under the Merger Agreement (excluding the requirement that Landos conduct its business in all material respects in the ordinary course); or

 

   

(h) any change in any Law or GAAP after the date of the Merger Agreement.

It being understood that the exceptions in clauses (a) and (f) will not prevent, or otherwise affect a determination that the underlying cause of any such change, decline or failure referred to therein (if not otherwise falling within any of the exceptions provided by clauses (b) through (e) or (g) and (h) hereof) has been or would be reasonably expected to be a Material Adverse Effect; or except, in the case of each of clauses (c), (d), (e) and (h), to the extent that such Effect adversely disproportionately affects Landos and its subsidiaries, taken as a whole, compared to other similar biopharmaceutical companies, in which case only the incremental disproportionate adverse impact may be taken into account in determining whether there has been, or would reasonably expected to be, a Material Adverse Effect.

 

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In the Merger Agreement, Landos has made customary representations and warranties to AbbVie, Parent and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement and the Landos disclosure schedule. These representations and warranties relate to, among other things:

 

   

due organization, valid existence, good standing and authority and qualification to conduct business with respect to Landos and its subsidiaries;

 

   

ownership and capital structure of Landos and its subsidiaries;

 

   

the non-contravention of Landos’ obligations and the required consents, approvals and regulatory filings in connection with the Merger Agreement;

 

   

the applicability of Section 203 of the DGCL and any other applicable takeover or anti-takeover laws;

 

   

the preparation of Landos’ financial statements, including Landos’ maintenance of internal controls with respect to financial reporting and the preparation, compliance, accuracy and timely filing of or furnishing to the SEC all Landos SEC filings, including disclosure controls and procedures;

 

   

the absence of any action that has had a Material Adverse Effect;

 

   

title to Landos’ material tangible assets;

 

   

real and personal property;

 

   

intellectual property, data privacy and information security matters;

 

   

the existence and enforceability of specified categories of Landos’ material contracts;

 

   

the absence of undisclosed liabilities;

 

   

compliance with applicable laws;

 

   

FDA, healthcare regulatory compliance and related matters;

 

   

compliance with anti-corruption laws and sanctions and similar rules and regulations;

 

   

governmental authorizations;

 

   

tax matters;

 

   

employee benefit plans and labor matters;

 

   

environmental matters;

 

   

insurance matters;

 

   

litigation matters;

 

   

personal property matters;

 

   

matters related to transactions with affiliates;

 

   

Landos’ suppliers; and

 

   

investment bankers, brokers, finders or other intermediaries.

In the Merger Agreement, AbbVie, Parent and Merger Sub have made customary representations and warranties to Landos that are subject, in some cases, to specified exceptions and qualifications contained in the Merger Agreement. These representations and warranties relate to, among other things:

 

   

due organization, valid existence, good standing and authority and qualification to conduct business with respect to each of AbbVie, Parent and Merger Sub;

 

   

the non-contravention of AbbVie’s, Parent’s and Merger Sub’s obligations and required consents, approvals and regulatory filings in connection with the Merger Agreement;

 

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litigation matters;

 

   

sufficiency of funds; and

 

   

investment bankers, brokers, finders or other intermediaries.

The representations and warranties contained in the Merger Agreement will not survive the consummation of the Merger.

Conduct of Business Pending the Merger

The Merger Agreement provides that during the Pre-Closing Period, except (i) as expressly required or contemplated under the Merger Agreement or as required by applicable laws or (ii) with the written consent of Parent, which consent may not be unreasonably withheld, conditioned, or delayed, Landos will, and will cause its subsidiaries, use commercially reasonable efforts, to conduct its business in the ordinary course of business as was being conducted prior to the date of the Merger Agreement and preserve intact its material assets, business organization and relations with employees, material customers, suppliers, licensors, licensees, governmental bodies and any other person with whom Landos has material business relationships;.

Without limiting the generality of the foregoing, the Merger Agreement provides that, except (i) as expressly required or contemplated under the Merger Agreement or as required by applicable laws, (ii) with the written consent of Parent, which consent may not be unreasonably withheld, conditioned, or delayed, or (iii) as disclosed in the Landos disclosure schedules to the Merger Agreement, neither Landos nor any subsidiary may:

 

   

(i) establish a record date for, declare, accrue, set aside, or pay any dividend or make any other distribution in respect of any securities or (ii) repurchase, redeem, or otherwise reacquire any share of capital stock, or any right, warrant, or option to acquire any share of Landos capital stock, other than (a) with respect to transactions among Landos and its wholly owned subsidiaries or among Landos’ wholly owned subsidiaries, or (b) in connection with the vesting, exercise, or settlement of company equity awards or in connection with withholding to satisfy the exercise price and/or tax obligations with respect to company equity awards;

 

   

split, combine, subdivide, or reclassify any share of its capital or other equity interests;

 

   

sell, issue, grant, deliver, pledge, transfer, create an encumbrance, or authorize the issuance, sale, delivery, pledge, transfer, Encumbrance, or grant by Landos of (i) any capital stock, equity interest, or other security of Landos, (ii) any option, call, warrant, restricted securities, or right to acquire any capital stock, equity interest, or other security of Landos, or (iii) any instrument convertible into or exchangeable for any capital stock, equity interest, or other security of;

 

   

adopt a plan or agreement of complete or partial liquidation or dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization of Landos or any of its subsidiaries;

 

   

except as otherwise permitted under the terms of any employee plan as of the date of the Merger Agreement and which has been provided to Parent and included in the Landos disclosure schedule: (i) establish, adopt, terminate, or amend any employee plan (or other compensation or benefit plan, program, agreement, or arrangement that would be an employee plan if in effect on the date hereof); (ii) accelerate the vesting of any compensation or benefits under any employee plan; (iii) grant any bonus or severance to, or, other than increases to base salary in the ordinary course of business consistent with past practice that do not exceed 6% for any individual or 5% in the aggregate, increase the compensation or benefits of any Landos associate; (iv) enter into or amend any change-of-control, retention, employment, severance, consulting, or other agreement with any Landos associate; (v) hire or terminate (other than for cause) any Landos associate or (vi) make any determination under any employee plan that is inconsistent with Landos’ ordinary course of business past practice;

 

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amend or permit the adoption of any amendment to its certificate of incorporation or bylaws or other organizational document;

 

   

form any subsidiary, acquire any equity interest or equity-linked interest in any other entity or enter into any joint venture, partnership, limited liability corporation, or similar arrangement;

 

   

make or authorize aggregate capital expenditures in excess of $100,000;

 

   

acquire, lease, license, sublicense, pledge, sell, or otherwise dispose of, abandon, waive, relinquish or fail to renew, permit to lapse, transfer, assign, or subject to any material encumbrance, any material right or other material asset or property (in each case, excluding any intellectual property rights;

 

   

license, sublicense, pledge, transfer, assign, sell or otherwise dispose of, abandon, permit to lapse, encumber or grant any other right with respect to any Landos owned intellectual property or Landos licensed intellectual property that is exclusively licensed to Landos or any of its subsidiaries;

 

   

enter into, amend, renew, or modify a lease to which Landos is party if such lease, amendment, renewal, or modification would increase the aggregate amount of payments under such lease by in excess of $100,000 annually or terminate any such lease;

 

   

make any capital contribution or advance to, or investment in, any person, or incur, assume, prepay, repurchase, redeem, modify in any material respect or guarantee any indebtedness;

 

   

other than in the ordinary course of business, (i) amend or modify in any material respect any material contract, (ii) waive any material right under, terminate, replace, or release, settle, or compromise any material claim, liability or obligation under any material contract or (iii) enter into any contract that, if entered into prior to the date of the Merger Agreement, would have been a material contract;

 

   

amend or modify in any material respect any privacy policies, or any administrative, technical, or physical safeguards related to privacy or cybersecurity except to remediate any security issue, to enhance data security or integrity, to comply with or improve compliance with applicable privacy laws, as otherwise directed or required by a governmental body, or in relation to any new or updated software, products or technologies of Landos and its subsidiaries;

 

   

commence any legal proceeding, except: (i) with respect to routine matters in the ordinary course of business; (ii) in such cases where Landos reasonably determines in good faith that the failure to commence suit would be reasonably likely to result in a material impairment of a valuable aspect of its business; or (iii) in connection with or relating to the Transactions, including a breach of the Merger Agreement or any other agreement contemplated thereby;

 

   

settle, release, waive, or compromise any legal proceeding or other claim, other than (i) any actual or threatened legal proceeding, (ii) any actual or threatened legal proceeding or other claim arising out of or relating to the Transactions, including a breach of the Merger Agreement or any other agreement contemplated thereby, or (iii) pursuant to a settlement that does not relate to any of the Transactions and (a) that results solely in a monetary obligation involving only the payment of monies by Landos of not more than $100,000 in the aggregate; (b) that results solely in a monetary obligation that is funded by an indemnity obligation to, or an insurance policy of, Landos and the payment of monies by Landos that together with any settlement made under the foregoing are not more than $100,000 in the aggregate; (c) that results solely in a monetary obligation involving payment by Landos of an amount not greater than the amount specifically reserved in accordance with GAAP with respect to such Legal Proceeding or claim on the Balance Sheet; or (d) that does not result in any monetary obligation of Landos or one of its subsidiaries;

 

   

negotiate, adopt, enter into, amend, modify or terminate any collective bargaining agreement;

 

   

disclose to any person any trade secrets relating to any product or that are otherwise material to Landos or any of its subsidiaries, other than (i) in the ordinary course of business consistent with past practice, to contract manufacturers, contract research and/or organizations, distributors, customers, suppliers,

 

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licensors, licensees, sublicensees, governmental bodies and any other person with whom Landos has a business relationship as of the date of the Merger Agreement, (ii) in connection with non-disclosure agreements entered into in the ordinary course of business consistent with past practice subject to written confidentiality obligations binding on such person, or (iii) in compliance with the Merger Agreement’s covenants;

 

   

with regard to any product in development initiate or commence any new clinical trials;

 

   

with regard to any product in development (i) amend or modify any existing clinical trial protocols, study recruitment efforts, study enrollment activities or clinical trial timelines, or (ii) terminate any ongoing clinical trials or activities for planned clinical trials, except as required by applicable law, as determined by Landos in good faith and except where Landos reasonably believes such amendment, modification or termination, as applicable, is necessary to protect the safety or welfare of clinical trial subject(s) and it would be impracticable under applicable law and/or in light of such safety concerns to give advance notice;

 

   

make, change, or rescind any material tax election;

 

   

settle or compromise any material tax claim;

 

   

change any material method of accounting for tax purposes or tax accounting period;

 

   

amend, refile, modify or otherwise change any material tax return;

 

   

waive or extend any statute of limitations in respect of a period within which an assessment or reassessment of material taxes may be issued (other than in connection with an extension to file a tax return of no longer than seven (7) months);

 

   

enter into any material “closing agreement” as described in section 7121 of the Code with any governmental body;

 

   

surrender any right to claim a material tax refund, except in each case to the extent any such action is undertaken in the ordinary course of business;

 

   

change in any material respect their material financial accounting principles, practices or methods, except as required by GAAP or applicable law;

 

   

abandon or fail to maintain or perform any material obligations with respect to, any material Regulatory Authorizations;

 

   

with regard to any product in development (including manufacturing) or in commercial distribution, modify any specification for such product unless such modification is mandated or required by a governmental body;

 

   

enter into any new material line of business;

 

   

terminate, cancel or make any material changes to the structure, limits or terms and conditions of any material insurance policies, including allowing such insurance policies to expire without renewal or comparable replacement coverage or otherwise maintain insurance at less than current levels or otherwise in a manner inconsistent with past practice; or

 

   

enter into or authorize, agree, or commit to take any action any of the foregoing.

Nothing in the Merger Agreement gives to AbbVie, Parent or Merger Sub, directly or indirectly, any right to control or direct the operations of Landos prior to the Effective Time. Prior to the Effective Time, Landos will continue to exercise, consistent with the terms and conditions hereof, complete control and supervision of its operations and those of its subsidiaries.

 

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The “No Shop” Period—No Solicitation of Other Offers

For purposes of this proxy statement

“Landos Alternative Transaction” means any proposal or offer from any person (or “group,” within the meaning of Section 13(d) of the Exchange Act, of persons) other than AbbVie and its subsidiaries (such person, a “Landos Third Party”), relating to, in a single transaction or series of related transactions, any:

 

   

acquisition or license of assets of Landos or any Landos subsidiary equal to twenty percent (20%) or more of Landos and Landos subsidiaries’ assets (taken as a whole) or to which twenty percent (20%) or more of Landos and Landos subsidiaries’ revenues or earnings (taken as a whole) are attributable,

 

   

issuance or acquisition of twenty percent (20%) or more of the outstanding shares and other equity and voting interests (calculated on a fully diluted basis) in Landos,

 

   

recapitalization, tender offer, or exchange offer that if consummated, would result in any person or group beneficially owning twenty percent (20%) or more of the outstanding shares and other equity and voting interests (calculated on a fully diluted basis) in Landos, or

 

   

merger, consolidation, amalgamation, share exchange, business combination, recapitalization, liquidation, dissolution, or similar transaction involving Landos that, if consummated, would result in any person or group beneficially owning twenty percent (20%) or more of the outstanding shares and other equity and voting interests (calculated on a fully diluted basis) in Landos, in each case, other than the Transactions.

“Superior Proposal” means any bona fide written proposal made by a Landos Third Party to enter into an Landos Alternative Transaction that (i) did not result from a breach of the ‘No Solicitation’ and ‘Change in Recommendation’ provisions in Section 5.3 of the Merger Agreement and (ii) the Board of Directors determines, in its good faith judgment, after consultation with outside financial advisor(s) and outside legal counsel, (a) is reasonably likely to be consummated in accordance with its terms and conditions and is not subject to a diligence or financing condition and (b) is on terms that, if consummated, would result in a transaction more favorable to the stockholders of Landos from a financial point of view than the Transactions, in each case taking into account all financial, regulatory, legal and other aspects of such proposal, and the person making the proposal; provided that, for purposes of this definition of “Superior Proposal,” the references to “20%” in the definition of Landos Alternative Transaction will be deemed to be references to “50%.”

In addition, Landos has agreed not to, and to cause its subsidiaries not to, directly or indirectly, through any of its or their representatives or otherwise, and will not permit or authorize any such person to:

 

   

solicit, knowingly assist, initiate, knowingly encourage, or otherwise knowingly facilitate any inquiry, proposal, discussion, negotiation, or offer that constitutes or may reasonably be expected to constitute or lead to, a Landos Alternative Transaction;

 

   

enter into, continue, or otherwise initiate, solicit, knowingly encourage, engage, knowingly assist, or participate in or knowingly facilitate any discussions or negotiations with any person regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, a Landos Alternative Transaction;

 

   

make a Change in Recommendation;

 

   

enter into, or publicly propose to enter into, any agreement, letter of intent, agreement in principle, understanding or arrangement in respect of a Landos Alternative Transaction other than a confidentiality agreement permitted by and in accordance with the Merger Agreement; or

 

   

approve, authorize or publicly announce any intention to do any of the foregoing.

If, at any time prior to obtaining the Required Company Stockholder Vote, Landos receives an inquiry, proposal or offer, the consummation of which would constitute a Landos Alternative Transaction, that did not

 

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result, directly or indirectly, from Landos’ breach of the Merger Agreement or the AbbVie NDA, but subject to entering into a confidentiality agreement with such person containing terms that are not less favorable to Landos than those contained in the AbbVie NDA, Landos and its representatives may (x) engage in or participate in discussions or negotiations with such person regarding such inquiry, offer or proposal and (y) provide copies of, access to or disclosure of information, properties, facilities, books or records of Landos or its subsidiaries, if and only if, in the case of both clauses (x) and (y), the Board of Directors first determines (i) in good faith, after consultation with its outside financial advisor(s) and outside legal counsel, that such proposal constitutes or would reasonably be expected to constitute or lead to a Superior Proposal and (ii) that the failure to take such actions would be inconsistent with its fiduciary duties under applicable law; and Landos has been, and continues to be, in compliance with its obligations under the Merger Agreement.

Relatedly, if Landos, its subsidiaries or any of their respective affiliates or representatives receives or otherwise become aware of any written or oral inquiry, proposal, request for information or offer that constitutes, contemplates or may reasonably be expected to constitute or lead to a Landos Alternative Transaction, or any request for copies of, or disclosure of, confidential information in relation to a possible Landos Alternative Transaction, Landos will promptly notify Parent and Parent’s counsel, at first orally, and then within twenty-four (24) hours, in writing, of such inquiry, proposal, offer or request, a description of the material terms and conditions and the identity of all persons making any oral inquiry, proposal, offer or request, keep Parent promptly and reasonably informed of the status, the terms of any discussions or negotiations and any developments and discussions relating to any potential Landos Alternative Transaction and promptly provide to Parent a copy of any written proposal or offer, or, if applicable, the proposed definitive agreement and all ancillary documentation, with respect to such Landos Alternative Transaction.

As described below under the caption “—Effect of Termination; Termination Fees,” if prior to the Required Company Stockholder Vote, Landos terminates the Merger Agreement for the purpose of entering into an agreement in respect of a Superior Proposal, concurrently with such termination, Landos must pay the Landos Termination Fee to Parent.

The Board of Directors’ Recommendation; Change in Recommendation

As described above, and subject to the provisions described below, the Board of Directors has made the recommendation that the holders of Landos common stock vote “FOR” the proposal to adopt the Merger Agreement. The Merger Agreement provides that the Board of Directors will not effect a Change in Recommendation except as described below.

Subject to the exceptions described below, during the Pre-Closing Period, the Board of Directors will not take, or fail to take (if applicable), any of the following actions (any such action, an “Change in Recommendation”):

 

   

withdraw, amend, modify or qualify the recommendation of the Board of Directors to approve the adoption of the Merger Agreement by the holders of common stock (the “Landos Board Recommendation”) or publicly state its intention to do any of the foregoing;

 

   

approve, agree to, accept, endorse, adopt, recommend or submit or agree to submit to a vote of Landos’ stockholders any Landos Alternative Transaction;

 

   

fail to recommend against any publicly announced Landos Alternative Transaction (it being understood that failing to recommend against a publicly announced Landos Alternative Transaction for a period of no more than ten (10) business days following such announcement will not constitute a Change in Recommendation provided the Board of Directors has rejected such Landos Alternative Transaction and affirmed the Landos Board Recommendation by press release by the end of such ten (10) business day period;

 

   

fails to publicly reaffirm by press release (without qualification) the Landos Board Recommendation within ten (10) business days after having been requested in writing by Parent to do so (or in the event

 

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that the Company Special Meeting is scheduled to occur within such ten (10) business day period, prior to the date of the Company Special Meeting);

 

   

takes any action to exempt any person from the provisions of Section 203 of the DGCL or any other applicable state takeover statute;

 

   

fails to make the Landos Board Recommendation in this proxy statement;

 

   

publicly announce or publicly disclose any intention to do any of the foregoing; or

 

   

commit or agree to do any of the foregoing.

If Landos receives a Superior Proposal prior to obtaining the Required Company Stockholder Vote, the Board of Directors may make a Change in Recommendation or terminate the Merger Agreement to immediately thereafter enter into a definitive agreement with respect to such Superior Proposal in compliance with the terms of the Merger Agreement, if and only if:

 

   

Landos has been and continues to be in compliance with its contractual obligations under the Merger Agreement in all material respects;

 

   

Landos or its representatives have delivered to Parent a written notice of the determination of the Board of Directors that such proposal constitutes a Superior Proposal (the “Superior Proposal Notice”);

 

   

Landos or its representatives have provided to Parent a copy of the proposed definitive agreements for the Superior Proposal and all ancillary documentation and any other material documents or material correspondences, as well as any subsequent amendment or modification with respect to any of the foregoing, provided to or by Landos, and its subsidiaries or their respective affiliates and representatives in connection therewith;

 

   

at least four (4) business days (the “Matching Period”) have elapsed from the date that is the later of the date on which Parent received the Superior Proposal Notice and the date on which Parent received a copy of all the materials referenced in the prior bullet point; however, in the case of any subsequent amendment to any such materials, the Matching Period shall end on the later of the expiration of such four (4) business day period and two (2) business days after Parent received such amended materials;

 

   

during any Matching Period, Landos will, and will cause its representatives to, if requested by Parent, negotiate and consider in good faith with Parent and Parent’s representatives, any revision to the terms of the Transactions proposed by Parent in order for such proposal to cease to be a Superior Proposal;

 

   

after the Matching Period, the Board of Directors has determined in good faith (A) after consultation with its outside financial advisor(s) and outside legal counsel, that such proposal continues to constitute a Superior Proposal (and, if applicable, compared to the terms of the Transactions as proposed to be amended by Parent) and (B) after consultation with its outside financial advisors and outside legal counsel, that the failure to take the relevant action would be inconsistent with its fiduciary duties under applicable law; and

 

   

the making of the proposal constituting a Superior Proposal did not result, directly or indirectly, from any breach of the Merger Agreement or the AbbVie NDA.

Other than in connection with a Landos Alternative Transaction, the Board of Directors may make a Change in Recommendation in response to any positive material event or development or material change in circumstances with respect to Landos that (i) was not known to the Board of Directors as of or prior to the date of the Merger Agreement (or if known, the material consequences of which were not known or reasonably foreseeable by the Board of Directors) and (ii) does not relate to (x) any change in the market price or trading volume of Landos’ stock, (y) any Landos Alternative Transaction, or (z) Landos meeting or exceeding any internal or analyst’s expectation, forecast, estimate, or prediction in respect of revenues, earnings, or other financial or operating metrics for any period (each, a “Change in Circumstance”), if and only if:

 

   

Landos has delivered to Parent a written notice that (i) the Board of Directors has determined, in its good faith judgment, after consultation with outside financial advisor(s) and outside legal counsel, that

 

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the failure to make a Change in Recommendation would be inconsistent with its fiduciary duties under applicable law and (ii) describes the Change in Circumstance in reasonable detail (the “Determination Notice”);

 

   

at least four (4) business days (the “Change in Circumstance Matching Period”) have elapsed from the date on which Parent received the Determination Notice;

 

   

during any Change in Circumstance Matching Period, Landos will negotiate and consider in good faith with Parent and Parent’s representatives any revision to the terms of the Transactions proposed by Parent in order for the failure to make such a Change in Recommendation to no longer be inconsistent with the Board of Directors’ fiduciary duties under applicable law; and

 

   

after the Change in Circumstance Matching Period, the Board of Directors has determined in good faith after consultation with its outside financial advisor(s) and outside legal counsel, that failure to make a Change in Recommendation would still be inconsistent with its fiduciary duties under applicable law.

If the Board of Directors determines that any alternative proposal would cease to be a Superior Proposal by virtue of the revisions proposed by Parent, Landos will promptly (and in any event within twenty-four (24) hours of such determination) so advise Parent, and the parties will amend the Merger Agreement to reflect such offer made by Parent and will take and cause to be taken all such actions as are necessary to give effect to the foregoing.

Each successive (i) amendment to any proposal that results in an increase in, or modification of, the consideration (or value of such consideration) to be received by Landos’ stockholders or other material terms or conditions thereof or (ii) change in material facts and circumstances relating to the Change in Circumstance shall constitute a new proposal or Change in Circumstance (as applicable) and Landos will deliver a new Superior Proposal Notice for the new Superior Proposal; provided that Parent will be afforded only a two (2) business day Matching Period or Change in Circumstances Matching Period (as applicable) from (A) in the case of a Superior Proposal, the later of the date on which Parent received the Superior Proposal Notice for the new Superior Proposal and the date on which Parent received all of the materials with respect to such new Superior Proposal and (B) in the case of a Change in Circumstance, the date on which Parent received the Determination Notice for the new Change in Circumstance.

If Landos provides a Superior Proposal Notice or Determination Notice to Parent on a date that is less than ten (10) business days before the Special Meeting, Landos will either proceed with or will postpone the Special Meeting, as directed by Parent acting reasonably, to a date determined by Parent that is not more than ten (10) business days after the scheduled date of the Special Meeting but in any event Special Meeting will not be postponed to a date which would prevent the Effective Time from occurring on or prior to the End Date.

Employee Benefits

In the Merger Agreement AbbVie acknowledges that a “change in control,” “sale event” or term or concept of similar import within the meaning of the Employee Plans (as defined in the Merger Agreement) will occur at or prior to the Effective Time, as applicable. For a period of one (1) year following the Effective Time, AbbVie will provide, or cause to be provided, to each natural person who is employed by Landos or any of its subsidiaries (or who provides services to Landos or any of its subsidiaries pursuant to an arrangement with a professional employer organization) as of immediately prior to the Effective Time (including any such employee who is on disability or other approved leave) and who continues to be employed by the Surviving Corporation (or any of its affiliates) (or to provide services to the Surviving Corporation (or any of its affiliates) pursuant to an arrangement with a professional employer organization) during such one-year period (each, a “Continuing Employee”) (i) a base salary (or base wages, as the case may be) and target cash incentive compensation opportunities (excluding retention, change in control, and equity-based compensation), in each case, no less favorable than the base salary (or base wages, as the case may be) and target cash incentive compensation

 

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opportunities (excluding retention, change in control, and equity-based compensation) provided to such Continuing Employee immediately prior to the Effective Time, and (ii) other compensation or benefits (excluding equity-based compensation, severance benefits, retiree welfare benefits, defined benefit pension plans, and change in control plans, programs, perquisites, and arrangements) that are substantially similar in the aggregate to such other compensation or benefits (excluding equity-based compensation, severance benefits, retiree welfare benefits, defined benefit pension plans, and change in control plans, programs, perquisites, and arrangements) provided to such Continuing Employee immediately prior to the Effective Time. AbbVie will provide each Continuing Employee with service credit for purposes of eligibility to participate and vesting and, with respect to severance and vacation benefits only, level of benefits, under AbbVie’s and the Surviving Corporation’s employee benefit plans and arrangements to the extent such Continuing Employee is eligible to participate in such plans and arrangements and coverage under such plans and arrangements replaces coverage under a comparable Employee Plan in which such Continuing Employee participates immediately prior to the Closing Date, with respect to his or her length of service with Landos (and its predecessors) prior to the Closing Date, provided that such service credit would not result in the duplication of benefits under any employee benefit plan or arrangement.

To the extent that service is relevant for eligibility, vesting, or allowances under any health or welfare benefit plan of AbbVie and/or the Surviving Corporation, then AbbVie will use its commercially reasonable efforts to (A) waive all limitations as to pre-existing conditions, exclusions, and waiting periods with respect to participation and coverage requirements applicable to each Continuing Employee, to the extent that such conditions, exclusions, and waiting periods would not apply under a similar employee benefit plan in which such employee participated prior to the Effective Time and (B) ensure that such health or welfare benefit plan will, for purposes of eligibility, vesting, deductibles, co-payments, out-of-pocket maximums, and allowances, credit each Continuing Employee for service and amounts paid prior to the Effective Time with Landos (and its predecessors) to the same extent that such service and amounts paid was recognized prior to the Effective Time under the corresponding health or welfare benefit plan of Landos.

Landos and each of its subsidiaries will adopt resolutions and take all such corporate action as is necessary to terminate each 401(k) plan maintained, sponsored or contributed to by Landos or any of its subsidiaries (collectively, the “Landos 401(k) Plans”), in each case, effective as of the day immediately prior to the Closing Date, and Landos will provide AbbVie with evidence that such Landos 401(k) Plans have been properly terminated, the form of such termination documents will be subject to AbbVie’s review. Landos employees will be eligible to participate in a 401(k) plan maintained by AbbVie or any of its Subsidiaries as soon as reasonably practicable following the Closing Date, and will be entitled to effect a direct rollover of any eligible rollover distributions (as defined in Section 402(c)(4) of the Code) to such 401(k) plan maintained by AbbVie or its subsidiaries.

The Employee Benefits provisions of the Merger Agreement described above are solely for the benefit of the parties to the Merger Agreement, and no such provision is intended to, or will, constitute the establishment or adoption of or an amendment to any employee benefit plan for purposes of ERISA or otherwise, and no current or former employee or other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of the Merger Agreement or have the right to enforce the provisions hereof. Nothing in the Merger Agreement will confer upon any Landos associate any right to continue in the employ or service of AbbVie, the Surviving Corporation, or any subsidiary or affiliate thereof, or shall interfere with or restrict in any way any right that AbbVie, the Surviving Corporation, or any subsidiary or affiliate thereof may have to discharge or terminate the services of any Landos associate at any time for any reason whatsoever, with or without cause.

Efforts to Close the Merger

Under the Merger Agreement, Landos, AbbVie, Parent and Merger Sub will, and will cause their respective affiliates to, use their respective reasonable best efforts to take, or cause to be taken, all actions, to file, or cause to be filed, all documents, and to do, or cause to be done, and to assist and cooperate with the other parties in

 

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doing, all things necessary, proper, or advisable under applicable Antitrust Laws or Foreign Direct Investment Laws to consummate and make effective the Transactions as soon as reasonably practicable, including:

 

   

the obtaining of all necessary actions or nonactions, waivers, consents, clearances, decisions, declarations, approvals and, expirations, or terminations of waiting periods from governmental bodies and the making of all necessary registrations and filings and the taking of all steps as may be reasonably necessary to obtain any such consent, decision, declaration, approval, clearance, or waiver, or expiration or termination of a waiting period by or from, or to avoid a legal proceeding by, any governmental body in connection with any Antitrust Law or Foreign Direct Investment Laws;

 

   

the giving of all notices and the obtaining of all necessary consents, authorizations, approvals, or waivers from third parties; and

 

   

the execution and delivery of any additional instrument reasonably necessary to consummate the Transactions.

Without limiting the generality of the foregoing Landos, AbbVie, Parent and Merger Sub will each use its reasonable best efforts to:

 

   

cooperate in all respects and consult with the other parties in connection with any filing or submission in connection with any investigation or other inquiry, including allowing the other parties to have a reasonable opportunity to review in advance and comment on drafts of filings and submissions;

 

   

give the other parties prompt notice of the making or commencement of any request, inquiry, investigation, action, or legal proceeding brought by a governmental body or brought by a third party before any governmental body, in each case, with respect to the Transactions;

 

   

keep the other parties informed as to the status of any such request, inquiry, investigation, action, or legal proceeding;

 

   

promptly inform the other parties of any material communication to or from the DOJ, FTC, or any other governmental body in connection with any such request, inquiry, investigation, action, or legal proceeding;

 

   

on request, promptly furnish to the other party a copy of such communications, subject to a confidentiality agreement limiting disclosure to outside legal counsel and consultants retained by such counsel, and subject to redaction of documents (i) as necessary to comply with contractual arrangements or address attorney-client or other privilege concerns and (ii) to remove references to valuation of Landos or its subsidiaries;

 

   

to the extent reasonably practicable, consult in advance and cooperate with the other parties and consider in good faith the views of the other parties in connection with any substantive communication, analysis, appearance, presentation, memorandum, brief, argument, opinion, or proposal to be made or submitted in connection with any such request, inquiry, investigation, action, or legal proceeding; and

 

   

except where prohibited by any governmental body, permit authorized representatives of the other parties to be present at each meeting and telephone or video conference arising out of or relating to such request, inquiry, investigation, action, or legal proceeding.

Each of Landos, AbbVie, and Merger Sub, will supply as promptly as practicable following written request therefor such information, documentation, other material, or testimony that may be requested by any governmental body, including by using reasonable best efforts to respond promptly to any reasonable written request for additional information, documents or other materials, including any “second request” under the HSR Act, received by any party or any of their respective subsidiaries from any governmental body in connection with such applications or filings for the Transactions. Any of Landos, AbbVie, Parent and Merger Sub may, as it deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other parties as “outside counsel only.” Such materials and the information contained therein will be given only to the

 

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outside legal counsel of the recipient and will not be disclosed by such outside legal counsel to employees, officers, or directors of the recipient, unless express written permission is obtained in advance from the source of the materials. Each of Landos, AbbVie, Parent and Merger Sub will use reasonable best efforts to share information protected from disclosure under the attorney-client privilege, work product doctrine, joint defense privilege, or any other privilege pursuant to the Merger Agreement so as to preserve any applicable privilege. Neither AbbVie, nor Parent, nor Merger Sub, on one hand, or Landos, on the other, will pull and refile under any applicable Antitrust Laws or Foreign Direct Investment Laws, without the prior written consent of the other. All filing fees under the HSR Act or for any filing required under other Antitrust Laws or Foreign Direct Investment Laws (if any) will be paid by AbbVie.

Under the Merger Agreement, each of Landos, AbbVie, Parent and Merger Sub will (and will cause their respective affiliates, if applicable, to) (i) as promptly as reasonably practicable, make all filings, notifications or other consents as may be required to be made or obtained by the relevant party under Antitrust Laws or Foreign Direct Investment Laws in those jurisdictions identified in the Landos disclosure schedule, (iii) cooperate with each other in determining whether, and promptly preparing and making, any other filing or notification or other consent required to be made with, or obtained from, any other governmental body in connection with the Transactions, and (iv) cooperate with each other and use their respective reasonable best efforts to contest and resist any legal proceeding that is in effect and that prohibits, prevents or restricts consummation of the Transactions.

AbbVie, after prior consultation in good faith with Landos, will have the principal and sole responsibility for devising and implementing the strategy for obtaining any necessary clearances under the Antitrust Laws and Foreign Direct Investment Laws and will control and take the lead in all meetings and communications with any governmental body in connection therewith. In furtherance of the foregoing, Landos will use its reasonable best efforts to consult in advance with AbbVie, obtain AbbVie’s prior written consent (such consent may be withheld, conditioned or delayed in AbbVie’s sole discretion) and to address all of AbbVie’s views and comments prior to taking any substantive position with respect to (i) the filings under the HSR Act or required by any other governmental body under any applicable Antitrust Laws or Foreign Direct Investment Laws and (ii) any written submission or, to the extent practicable, any discussion with any governmental body in connection with obtaining any necessary clearance under the HSR Act or any other Antitrust Law or any Foreign Direct Investment Law.

Notwithstanding anything to the contrary in the Merger Agreement in no event will AbbVie, Parent, Merger Sub or any of their respective affiliates or subsidiaries be obligated to undertake or commit or agree to undertake any of the following actions: (i) negotiating, committing to, and effecting, by consent decree, hold separate order, or otherwise, the sale, lease, license, divestiture, or disposition of any asset, right, product or product line, or business of Landos, AbbVie, or any of their respective affiliates, (ii) terminating any existing relationship, contractual right, or obligation of Landos, AbbVie, or any of their respective affiliates, (iii) terminating any venture or other arrangement, (iv) creating any relationship, contractual right, or obligation of Landos, AbbVie, or any of their respective affiliates, (v) effectuating any other change or restructuring of Landos, AbbVie, or any of their respective affiliates, (vi) undertaking or agreeing to any requirement or obligation to provide prior notice to, or obtain prior approval from, any governmental body with respect to any transaction, (vii) otherwise taking or committing to take any action with respect to the businesses, product lines, or assets of Landos, AbbVie, or any of their respective affiliates, and (viii)  any sale, divestiture, disposition or other remedial measure pursuant to the applicable sections of the Merger Agreement.

Other Covenants

Stockholders Meeting

Subject to the provisions the Merger Agreement and as promptly as practicable after this Proxy Statement is cleared by the SEC, or the date that is ten (10) calendar days after filing the Proxy Statement in preliminary form if, prior to such date, the SEC does not provide comments or indicates that it does not plan to provide comments,

 

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Landos will (i) take all action required by the DGCL and Landos’ certificate of incorporation and bylaws to duly call, give notice of, convene, and hold the Special Meeting for the purpose of obtaining (A) the Required Company Stockholder Vote and (B) if so desired and mutually agreed, a vote upon other matters of the type customarily brought before a meeting of stockholders in connection with the approval of a merger agreement or the transactions contemplated by such agreement, it being understood that the Special Meeting may also be Landos’ annual meeting of stockholders, with the record date and meeting date of the Special Meeting to be selected after reasonable consultation with Parent, and (ii) use reasonable best efforts to solicit from its stockholders proxies in favor of the approval of the adoption of the Merger Agreement. Additionally, (x) Landos may adjourn, recess, or postpone, and at the request of Parent it will adjourn, recess, or postpone, the Special Meeting for a reasonable period to solicit additional proxies, if Landos or Parent, respectively, reasonably believes there will be insufficient shares represented (either in person or by proxy) to constitute a quorum necessary to obtain the Required Company Stockholder Vote (provided that, unless agreed in writing by Landos and Parent, all such adjournments, recesses or postponements will be for periods of no more than ten (10) business days each) and (y) Landos may adjourn, recess, or postpone the Special Meeting if (I) Landos is required to do so by applicable law or order or request from the SEC or its staff, (II) subject to the Merger Agreement, Landos has notified Parent the Board of Directors intends to make a Change in Recommendation and the applicable notice period thereunder will not have expired prior to the then-scheduled date and time of the Special Meeting or (III) the Board of Directors has determined in good faith (after consultation with outside legal counsel) that such adjournment, recess or postponement is necessary to ensure Landos stockholders have sufficient time to evaluate any information or disclosure that Landos has sent or otherwise made available (including by issuing a press release, filing materials with the SEC or otherwise) to Landos stockholders in advance of the Special Meeting.

Stockholder Litigation

During the Pre-Closing Period, Landos has agreed to, as promptly as possible after obtaining knowledge thereof, notify Parent of any legal proceeding brought by security holders of Landos against Landos or its directors arising out of or relating to the Transactions and provide accurate and complete copies of all pleadings and correspondence relating to such legal proceedings. Landos will control any such legal proceeding brought by security holders of Landos against Landos or its directors arising out of or relating to the Transactions; provided that Landos will give Parent the opportunity to (i) participate in and consult with Landos with respect to any such legal proceeding and (ii) consult on any settlement, release, waiver or compromise of any such legal proceeding, and Landos will in good faith take any comments into account. Landos has also agreed not to enter into any such settlement without Parent’s prior written consent (such consent not to be unreasonably withheld, conditioned, or delayed), except to the extent the settlement is fully covered by Landos’ insurance policies (other than any applicable deductible), but only if such settlement would not result in the imposition of any restriction on the business or operations of Landos.

Conditions to the Closing of the Merger

The obligations of Landos, AbbVie, Parent and Merger Sub, as applicable, to consummate the Merger are subject to the satisfaction or waiver, at or prior to the Effective Time, of customary conditions, including the following:

 

   

obtaining the Required Company Stockholder Vote;

 

   

no injunction or similar order by any governmental body having jurisdiction over AbbVie, Parent, Merger Sub, Landos, or any of their respective subsidiaries that prohibits the consummation of the Merger and the other Transactions will have been entered and will continue to be in effect;

 

   

no law will have been enacted, entered, promulgated or enforced, and remain in effect, by any governmental body having competent jurisdiction over AbbVie, Parent, Merger Sub, Landos, or any of their respective subsidiaries that, in any case, prohibits or makes illegal the Transactions;

 

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if, prior to the Effective Time, AbbVie, in consultation with Landos, reasonably determines that a filing under the HSR Act is required in connection with the Merger and other transactions contemplated by the Merger Agreement, then the expiration or earlier termination of all applicable waiting periods the HSR Act;

 

   

if there is voluntary commitment or agreement with the DOJ or FTC not to effect the Closing, then the expiration or earlier termination of all applicable waiting periods under such voluntary commitment or agreement;

 

   

if, prior to the Effective Time, the CMA indicates in writing to AbbVie that it has decided to formally investigate the Merger and, accordingly, requests AbbVie to submit a merger notice in the form prescribed under the Enterprise Act 2002, then the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods, as the case may be, under the applicable Antitrust Laws of the United Kingdom; and

 

   

if, prior to the Effective Time, the EC indicates in writing to AbbVie that a member state of the European Union or the EC is making, or has made, a referral of the Merger to the EC under Article 22 of the EU Merger Regulation, then the making, expiration, termination, or obtaining of all authorizations, consents, orders, approvals, filings, proceedings, declarations, and expirations of waiting periods, as the case may be, under the applicable Antitrust Laws of the European Union.

Additionally, the obligations of AbbVie, Parent and Merger Sub, as applicable, to consummate the Merger are subject to the satisfaction or waiver of customary conditions, including, the following:

 

   

the representations and warranties of Landos set forth in the Merger Agreement, other than those relating to due organization, good standing, subsidiaries, compliance with Landos’ certificate of incorporation and bylaws, certain aspects of Landos’ capitalization, authority, binding nature of the Merger Agreement, the absence of conflicts with Landos’ organizational documents, any third party consents to the Transactions, the Required Company Stockholder Vote, the inapplicability of Section 203 of the DGCL matters, the absence of a Material Adverse Effect, the absence of actions taken without Parent’s consent that would result in a breach of certain covenants in the Merger Agreement (excluding activities conducted in the ordinary course of Landos’ business), certain aspects of Landos owned intellectual property, and the opinion of Jefferies, being true and correct in all respects without giving effect to the words “materially” or “material” or to any qualification based on the defined term “Material Adverse Effect,” as of the date of the Merger Agreement and as of the Effective Time as if made as of such date (except for those representations and warranties which are expressly made as of an earlier date, in which case as of such earlier date), except where the failure to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect;

 

   

the representations and warranties of Landos set forth in the Merger Agreement relating to due organization, good standing, subsidiaries, compliance with Landos’ certificate of incorporation and bylaws, certain aspects of Landos’ capitalization, authority, binding nature of the Merger Agreement, the absence of conflicts with Landos’ organizational documents, any third party consents to the Transactions, the Required Company Stockholder Vote, and the inapplicability of Section 203 of the DGCL matters (i) that are qualified by “materiality” or “Material Adverse Effect” will be true and correct, both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date) and (ii) that are not qualified by “materiality” or “Material Adverse Effect” will be true and correct in all material respects, both when made and at and as of the Closing Date, as if made at and as of such time (except for those representations and warranties which are expressly made as of an earlier date, in which case as of such earlier date);

 

   

the representations and warranties of Landos set forth in the Merger Agreement relating to certain aspects of Landos’ capitalization, specifically Landos outstanding equity awards as of the Reference Date, the absence of a Material Adverse Effect, the absence of actions taken without Parent’s consent

 

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that would result in a breach of certain covenants in the Merger Agreement (excluding activities conducted in the ordinary course of Landos’ business) and the opinion of Jefferies, being true and correct as of the date of the Merger Agreement and as of the Effective Time as if made as of such date (except for those representations and warranties which are expressly made as of an earlier date, in which case as of such earlier date);

 

   

the representations and warranties of Landos set forth in the Merger Agreement relating to certain aspects of Landos’ capitalization, specifically Landos’ capitalization as of the Reference Date, being true and correct subject only to de minimis variations, as of the date of the Merger Agreement and as of the Effective Time as if made as of such date (except for those representations and warranties which are expressly made as of an earlier date, in which case as of such earlier date);

 

   

the representation and warranties relating to certain aspects of Landos owned intellectual property being true and correct as of the date of the Merger Agreement and as of the Effective Time as if made as of such date;

 

   

Landos having performed and complied with, in all material respects, its agreements and covenants required to be complied with or performed by Landos under the Merger Agreement at or prior to the Effective Time;

 

   

the absence of any Material Adverse Effect having occurred since the date of the Merger Agreement that is continuing as of the Effective Time; and

 

   

the receipt by Parent of a Landos certificate dated as of the date of the Closing and signed on Landos’ behalf by its Chief Executive Officer or another senior officer, certifying that the conditions set forth in the preceding six (7) bullets have been satisfied.

Lastly, the obligations of Landos to consummate the Merger are subject to the satisfaction or waiver of customary conditions, including, the following:

 

   

the representations and warranties of Parent and Merger Sub set forth in the Merger Agreement relating to due organization, authority, the binding nature of the Merger Agreement, the non-contravention of legal obligations, any third party consents to the Transactions, and the absence of ownership of Landos’ capital stock being true and correct in all material respects as of the date of the Merger Agreement and as of the Effective Time as if made as of such date (except for those representations and warranties which address matters only as of an earlier date which will have been true and correct as of such earlier date);

 

   

the representations and warranties of Parent and Merger Sub set forth in the Merger Agreement, not related to due organization, authority, the binding nature of the Merger Agreement, the non-contravention of legal obligations, any third party consents to the Transactions, and the absence of ownership of Landos’ capital stock, being true and correct without giving effect to the words “materially” or “material” or to any qualification based on the defined term “Parent Material Adverse Effect” as of the date of the Merger Agreement and as of the Effective Time as if made as of such date (except for those representations and warranties which address matters only as of an earlier date which will have been true and correct as of such earlier date) except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, have a “Parent Material Adverse Effect;”

 

   

Parent and Merger Sub having complied with, or performed, in all material respects all of the covenants and agreements they are required to comply with or perform under the Merger Agreement prior to the Effective Time; and

 

   

the receipt by Landos of a certificate of Parent dated as of the date of the Closing and validly executed for and on behalf of Parent and in their respective names by its Chief Executive Officer or another senior officer thereof, certifying that the conditions described in the preceding three (3) bullets have been satisfied.

 

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Termination of the Merger Agreement

The Merger Agreement may be terminated and the Merger and other transactions contemplated hereby may be abandoned at any time prior to the Effective Time, whether before or after the Required Company Stockholder Vote is obtained:

 

   

by mutual written consent of Parent and Landos.

 

   

by either Parent or Landos:

 

  o

if the Effective Time has not occurred on or before September 24, 2024 (the “End Date”); however, the End Date may be extended three times by a period of three (3) months in each case if the failure for the Closing to have occurred is solely due to the failure of conditions to Closing with respect to Antitrust Laws have not been met. The right to terminate the Merger Agreement in accordance with the foregoing will not be available to any party if the failure of the Closing to have occurred prior to the End Date is primarily attributable to the failure on the part of such party to perform in any material respect any covenant or obligation in the Merger Agreement required to be performed by such party;

 

  o

if any governmental body having competent jurisdiction over AbbVie, Parent or Landos has issued a legal restraint, and such legal restraint has become final and nonappealable. The right to terminate the Merger Agreement in accordance with the foregoing will not be available to any party if the imposition of such legal restraint or the failure of such legal restraint to be resolved or lifted is primarily attributable to the failure on the part of such party to perform in any material respect any covenant or obligation in the Merger Agreement required to be performed by such party; or

 

  o

if the Required Company Stockholder Vote has not been obtained at the Special Meeting duly convened therefor or at any adjournment or postponement thereof. However, the right to terminate the Merger Agreement in accordance with the foregoing will not be available to any party if the failure to obtain the Required Company Stockholder Vote is primarily attributable to the failure on the part of such party to perform in any material respect any covenant or obligation in the Merger Agreement required to be performed by such party.

 

   

by Parent if:

 

  o

if there has been a breach by Landos of, (i) Section 5.3 of the Merger Agreement, in any material respect, (ii) any representation, warranty, covenant, or agreement in the Merger Agreement, in each case, which breach (A) would result in a failure of certain conditions to Closing and (B) cannot be cured by the End Date or, if curable, is not cured with thirty (30) business days following Parent’s delivery of written notice to Landos stating Parent’s intention to terminate the Merger Agreement and the basis for such termination. However, Parent may not terminate the Merger Agreement pursuant to the foregoing if Parent or Merger Sub is in breach of any representation, warranty, agreement, or covenant in the Merger Agreement that would result in a failure of certain conditions to Closing; or

 

  o

if at any time prior to the Required Company Stockholder Vote, the Board of Directors has effected a Change in Recommendation.

 

   

by Landos:

 

  o

if Parent or Merger Sub has breached in any representation, warranty, covenant, or agreement in the Merger Agreement, in each case, which breach (i) would result in a failure of certain conditions to Closing and (ii) cannot be cured by the End Date or, if curable, is not cured within thirty (30) business days following Landos’ delivery of written notice to AbbVie stating Landos’ intention to terminate the Merger Agreement and the basis for such termination. However, Landos may not terminate the Merger Agreement pursuant to the foregoing if Landos is then in breach of

 

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  any representation, warranty, agreement, or covenant in the Merger Agreement that would result in a failure of certain conditions to Closing; or

 

  o

at any time prior to the receipt of the Required Company Stockholder Vote, in order to accept a Superior Proposal and immediately thereafter enter into a binding written definitive acquisition agreement providing for the consummation of a transaction constituting a Superior Proposal; so long as, Landos has complied in all material respects with the requirements of the Merger Agreement with respect to such Superior Proposal and, concurrently with such termination, pays (or causes to be paid) the Landos Termination Fee.

In the event of any termination of the Merger Agreement pursuant to the termination rights discussed immediately above (i) the terminating party will give prompt written notice thereof to the other parties, specifying the provision of the Merger Agreement pursuant to which such termination is made, (ii) the Merger Agreement will be of no further force or effect and the Transactions will be abandoned, each as of the date of termination, and (iii) there will be no liability on the part of any party to the Merger Agreement following any such termination except (a) certain sections of the Merger Agreement will survive the termination of the Merger Agreement and will remain in full force and effect, (b) the AbbVie NDA will survive the termination of the Merger Agreement and will remain in full force and effect, in each case, in accordance with its terms, and (iii) notwithstanding any provision of the Merger Agreement, the termination of the Merge Agreement will not relieve any party from any liability for fraud or willful breach of any of its representations, warranties, covenants or agreements set forth in the Merger Agreement.

Effect of Termination; Termination Fees

The Merger Agreement contains certain remedies in the event of a termination. If Parent terminates the Merger Agreement due to a Change in Recommendation, or after Landos’ failure to obtain the Required Company Stockholder Vote after a Change in Recommendation, Landos has agreed to pay to AbbVie the Landos Termination Fee. If Landos terminates the Merger Agreement due to Landos accepting a Superior Proposal, Landos has also agreed, in connection with and as a condition to such termination, to pay AbbVie the Landos Termination Fee.

The Merger Agreement further provides that Landos will pay to AbbVie the Landos Termination Fee if (i) either of Parent or Landos, as applicable, terminates the Merger Agreement (A) on or after the End Date (if the Effective Time has not occurred prior to such date), (B) due to the Required Company Stockholder Vote having not been obtained at the Special Meeting, or (C) due to a breach by Landos of the Merger Agreement such that certain conditions would not be satisfied, and (ii) at or prior to the Special Meeting (in the case of a termination due to the Required Company Stockholder Vote having not been obtained at the Special Meeting) or at or prior to the time of such termination (in the case of a termination due to the Effective Time having not occurred prior to the End Date or due to a breach by Landos of the Merger Agreement such that certain conditions would not be satisfied), any person has publicly made or announced (and has not subsequently withdrawn), or any person has publicly announced an intention (whether or not conditional) to make (and has not subsequently withdrawn), a Landos Alternative Transaction, and (iii) within twelve (12) months after the date of the termination of the Merger Agreement, Landos or any of its subsidiaries enters into a definitive agreement with respect to a Landos Alternative Transaction or consummates a Landos Alternative Transaction.

Specific Performance

Each of AbbVie, Parent, Merger Sub and Landos is entitled to an injunction or injunctions, specific performance, or other non-monetary equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions thereof in the Court of Chancery of the State of Delaware and any state appellate court therefrom or, if such court lacks subject matter jurisdiction, any other state or federal court in the State of Delaware, without proof of damages or otherwise, in addition to any other remedy to which they are entitled under the Merger Agreement.

 

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Fees and Expenses

Except in certain circumstances specified in the Merger Agreement, all fees and expenses incurred in connection with the Merger Agreement and the Transactions will be paid by the party incurring such expenses, whether or not the Transactions are consummated.

Amendment

Subject to compliance with applicable law, prior to the Effective Time, the Merger Agreement may be amended or supplemented with the approval of each of the Board of Directors and AbbVie; except that after receipt of the Required Company Stockholder Vote, if any such amendment or waiver would require further approval of Landos’ stockholders, the effectiveness of such amendment or waiver will be subject to the approval of Landos’ stockholders.

Governing Law

The Merger Agreement is governed by Delaware law.

Form of Contingent Value Rights Agreement

The Merger Agreement requires that, at or immediately prior to the Effective Time, AbbVie, Parent and the rights agent will enter into the CVR Agreement, substantially in the form attached as Exhibit D to the Merger Agreement (and attached to this proxy statement as Annex B), subject to such changes thereto as permitted under the Merger Agreement. The CVR Agreement will govern the terms of the CVRs.

While no guarantee can be given that any proceeds will be received, each CVR represents a non-tradeable contractual contingent right to receive $11.14, without interest and subject to applicable tax withholdings, upon the achievement of the Milestone prior to the Milestone Achievement Outside Date. There can be no assurance that the Milestone will be achieved prior to the Milestone Achievement Date or that Parent or AbbVie will be required to make the Milestone Payment to holders of CVRs.

The CVRs are contractual rights only and are not transferable except under limited circumstances, specified in the CVR Agreement. The CVRs will not be evidenced by a certificate or other instrument and will not be registered with the SEC or listed for trading. The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in Parent, any constituent corporation party to the Merger Agreement or any of their respective affiliates or subsidiaries. No interest will accrue on any amounts payable on the CVRs.

Except for the rights of the rights agent set forth in the CVR Agreement, only holders of not less than 50% of the outstanding CVRs as set forth in the register kept by the rights agent will have the sole right, on behalf of all holders of CVRs, by virtue of or under any provision of the CVR Agreement, to institute any action or proceeding with respect to the CVR Agreement, and no individual holder of CVRs or other group of holders will be entitled to exercise such rights. However, the CVR Agreement will not limit the ability of an individual CVR holder to seek the Milestone Payment upon the achievement of the Milestone solely to the extent such payment amount has been finally determined in accordance with the terms of the CVR Agreement and has not been paid within the period contemplated by the CVR Agreement. Additionally, the only rights and interests of the CVR holders (or any person seeking the benefit of any CVR) in respect of a CVR will be those set forth in the CVR Agreement and no CVR holder (or any person acting on their behalf or for their benefit) may enforce any other right or interest against any person in respect of a CVR.

The CVR Agreement will be terminated, and no payments will be required to be made, upon the earliest to occur of (a) the payment by the rights agent to each holder of CVRs of the Milestone Payments (if any) required to be paid under the terms of the CVR Agreement and (b) the failure to achieve the Milestone on or before the

 

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Milestone Achievement Outside Date. For the avoidance of doubt, the right of any CVR holder to receive the Milestone Payment with respect to the Milestone, and any covenants and obligations of Parent (other than in relation to any undistributed Milestone Payments in accordance with the terms of the CVR Agreement), will be terminated and of no force or effect if the Milestone is not achieved before the Milestone Achievement Outside Date.

Voting Agreement

Concurrently with the entry into and in connection with the Merger Agreement, on March 24, 2024, Parent and Landos entered into the Voting Agreement with Xontogeny, LLC and Perceptive Advisors LLC and certain of their affiliates, pursuant to which such stockholders have agreed to vote their aggregate shares in favor of the adoption of the Merger Agreement and approval of the Merger at the Special Meeting. As of March 22, 2024, Xontogeny, LLC and Perceptive Advisors LLC and certain of their affiliates beneficially owned an aggregate of approximately 57.6% of the outstanding shares of Landos common stock. The Voting Agreement will terminate upon termination of the Merger Agreement and certain other specified events.

The Board of Directors unanimously recommends, on behalf of Landos, that you vote “FOR” this proposal.

 

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PROPOSAL 2: THE ADJOURNMENT PROPOSAL

We are asking you to approve a proposal to adjourn the Special Meeting to a later date or dates if the Board of Directors determines that it is necessary or appropriate, including to solicit additional proxies if there are insufficient votes to adopt the Merger Agreement at the time of the Special Meeting. If the Board of Directors determines that it is necessary or appropriate, we will ask our stockholders to vote only on this Adjournment Proposal and not to vote on the proposal to adopt the Merger Agreement.

In the Adjournment Proposal, we are asking our stockholders to approve a proposal to authorize the Board of Directors, in its discretion, to adjourn the Special Meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies to approve the proposal to adopt the Merger Agreement if there are insufficient votes to adopt the Merger Agreement at the Special Meeting. If stockholders approve the Adjournment Proposal, we could adjourn the Special Meeting and any adjourned session of the Special Meeting and use the additional time to solicit additional proxies, including soliciting proxies from stockholders that have previously returned properly executed proxies voting against adoption of the Merger Agreement. Among other things, approval of the Adjournment Proposal could mean that, even if we had received proxies representing a sufficient number of votes against adoption of the Merger Agreement such that the proposal to adopt the Merger Agreement would be defeated, we could adjourn the Special Meeting without a vote on the adoption of the Merger Agreement and seek to convince the holders of those shares to change their votes to votes in favor of adoption of the Merger Agreement. Additionally, we may seek to adjourn the Special Meeting if a quorum is not present or otherwise at the discretion of the chairman of the Special Meeting.

Vote Required and Board of Directors Recommendation

Approval of the Adjournment Proposal requires either (i) if a quorum is present, the affirmative vote of the majority of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the Special Meeting and entitled to vote generally on the subject matter or (ii) if a quorum is not present, the vote of the holders of a majority of the shares represented at the Special Meeting. Assuming the Special Meeting is held solely by means of remote communication, as it is currently scheduled to be, no shares will be present in person at the Special Meeting, and only shares present virtually or represented by proxy at the Special Meeting will be able to be voted.

For the purpose of the Adjournment Proposal, (i) a failure to vote virtually or by proxy at the Special Meeting (including failure to give instruction to brokers, banks or other nominees on any of the proposals to be voted on at the Special Meeting for shares held in “street name”) will have no effect on the outcome of the Adjournment Proposal (but such shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting, which may make it harder to establish a quorum for the transaction of business at the Special Meeting), and (ii) abstentions will have the same effect as a vote “AGAINST” the Adjournment Proposal, whether or not a quorum is present. If your shares are deemed present or represented by proxy at the Special Meeting, then a failure to vote your shares will have no effect on the outcome of the Adjournment Proposal if a quorum is present but will have the same effect as a vote “AGAINST” the Adjournment Proposal if a quorum is not present. Shares of Landos common stock represented by properly executed, timely received and unrevoked proxies will be voted in accordance with the instructions indicated thereon. If a stockholder returns a properly signed and dated proxy card without indicating voting preferences on such proxy card, the shares of Landos common stock represented by that proxy will be counted as present for purposes of determining the presence of a quorum for the Special Meeting and all of such shares will be voted as recommended by the Board of Directors.

We do not expect any “broker non-votes” on the Adjournment Proposal, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are “broker non-votes,” each broker non-vote will have no effect on the Adjournment Proposal.

The Board of Directors unanimously recommends, on behalf of Landos, that you vote “FOR” approval of this proposal.

 

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MARKET PRICES AND DIVIDEND DATA

Our common stock is listed on Nasdaq under the symbol “LABP.” As of    , 2024 there were      shares of common stock outstanding held by approximately      stockholders of record. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. We have never declared or paid any cash dividends on our common stock.

On    , 2024 the latest practicable trading day before the printing of this proxy statement, the closing price for our common stock on Nasdaq was $   per share. You are encouraged to obtain current market quotations for our common stock.

Following the Merger, there will be no further market for our common stock and it will be delisted from Nasdaq and deregistered under the Exchange Act. As a result, following the Merger we will no longer file periodic reports with the SEC. In the event that the Merger is not consummated, our payment of any future dividends would be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects, and other factors our Board of Directors may deem relevant.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of our capital stock as of March 31, 2024 by:

 

   

each person or group of affiliated persons, who we know to beneficially own more than five percent (5%) of our outstanding common stock, each of whom we refer to as a five percent (5%) owner;

 

   

each of our named executive officers, including certain former named executive officers;

 

   

each of our current directors; and

 

   

all of our current named executive officers and directors as a group.

Information given below regarding beneficial owners of more than five percent (5%) of Landos’ outstanding capital stock is based solely on information provided by such persons in filings with the SEC on Schedules 13D, 13G and other filings made with the SEC on or before March 31, 2024. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares issuable pursuant to stock options and other rights to purchase shares of our common stock exercisable within sixty (60) days of March 31, 2024. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

Unless otherwise noted below, the address of each of the individuals and entities named in the table below is in care of Corporate Secretary, Landos Biopharma, Inc., P.O. Box 11239, Blacksburg, Virginia 24062. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted.

 

     Shares of
Common Stock
Beneficially Owned(1)
 
Name of Beneficial Owner    Number      Percent  

Greater than 5% Stockholders:

     

Entities Affiliated with Perceptive(2)

     1,486,991        47.7

Xontogeny, LLC(3)

     309,092        9.9

Named Executive Officers and Directors:

     

Gregory Oakes(4)

     94,241        *  

Fabio Cataldi(5)

     22,054        *  

Patrick Truesdell(6)

     6,615        *  

Christopher Garabedian(7)

     5,400        *  

Fred Callori(8)

     8,700        *  

Tiago Girão(9)

     9,000        *  

Roger Adsett(10)

     6,200        *  

Alka Batycky(11)

     1,200        *  

Tim M. Mayleben(12)

     32,548        *  

All current directors and executive officers as a group (8 persons)

     179,343        5.4

 

*

Less than one percent (1%)

(1)

This information is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, Landos believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 3,116,729 shares outstanding on March 31, 2024, adjusted as required by rules promulgated by the SEC.

 

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(2)

This information has been obtained from a Schedule 13D/A filed on March 30, 2023 by Perceptive Advisors LLC. The amount reflected in the table has been adjusted to account for one-for-ten (1:10) Reverse Stock Split of our outstanding common stock completed on May 25, 2023. As of the filing of the Schedule 13D/A consisted of (a) 7,299,751 shares of common stock held by Perceptive Life Sciences Master Fund, Ltd. (b) 5,799,564 shares of common stock held by Perceptive Xontogeny Venture Fund, LP and (c) 1,770,600 shares of common stock held by PX Venture (A), LLC. Perceptive Life Sciences Master Fund Ltd., Perceptive Advisors LLC and Joseph Edelman have shared voting and dispositive power with respect to the shares held by Perceptive Life Sciences Master Fund Ltd. and PX Venture (A), LLC and Perceptive Advisors LLC and Joseph Edelman have shared voting and dispositive power with respect to the shares held by Perceptive Xontogeny Venture Fund, L.P. Perceptive Advisors LLC serves as the investment manager to Perceptive Life Sciences Master Fund Ltd. and may be deemed to beneficially own the securities directly held by Perceptive Life Sciences Master Fund Ltd. Mr. Edelman is the managing member of Perceptive Advisors LLC and may be deemed to beneficially own the securities directly held by Perceptive Life Sciences Master Fund Ltd. The principal address of Perceptive Advisors LLC is 51 Astor Place, 10th Floor New York, NY 10003.

(3)

This information has been obtained from a Schedule 13D/A filed on March 30, 2023 by Xontogeny, LLC. The principal address of Xontogeny, LLC is 240 Newbury Street, Suite 201, Boston, MA 02116. The amount reflected in the table has been adjusted to account for one-for-ten (1:10) Reverse Stock Split of our outstanding common stock completed on May 25, 2023.

(4)

Consists of 94,241 shares of common stock issuable to Mr. Oakes upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(5)

Consists of 22,054 shares of common stock issuable to Dr. Cataldi upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(6)

Consists of 6,615 shares of common stock issuable to Mr. Truesdell upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(7)

Consists of 5,400 shares of common stock issuable to Mr. Garabedian upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(8)

Consists of 8,700 shares of common stock issuable to Mr. Callori upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(9)

Consists of 9,000 shares of common stock issuable to Mr. Girão upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(10)

Consists of 6,200 shares of common stock issuable to Mr. Adsett upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(11)

Consists of 1,200 shares of common stock issuable to Dr. Batycky upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

(12)

Consists of 32,548 shares of common stock issuable to Mr. Mayleben upon the exercise of outstanding options exercisable within 60 days of March 31, 2024.

 

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OTHER MATTERS

Other Matters

Our Board of Directors knows of no other business that will be presented for consideration at the Special Meeting. If other matters are properly brought before the Special Meeting, however, it is the intention of the persons named in the proxy to vote the shares represented thereby on such matters in accordance with their best judgment.

Future Stockholder Proposals

If the Merger is completed, we will have no public stockholders and there will be no public participation in any future meetings of stockholders of Landos. If, however, the Merger is not completed, stockholders will continue to be entitled to attend and participate in stockholder meetings.

Landos will hold a regular annual meeting of its stockholders in 2024 only if the Merger is not completed and will announce the date of this meeting in accordance with its bylaws for purposes of allowing stockholders to propose to bring business at the annual meeting.

Stockholder Proposals for 2024 Annual Meeting of Stockholders (if any)

In the event that we hold a 2024 annual meeting of stockholders, and such meeting is held less than 30 days before and less than 30 days after the one-year anniversary of the 2023 annual meeting of stockholders, then, for notice by the stockholder to be timely for a stockholder proposal to be considered for inclusion in the proxy materials for such meeting, your proposal must have been submitted in writing by December 21, 2023 to P.O. Box 11239, Blacksburg, Virginia 24062. Pursuant to our bylaws, if we hold a 2024 annual meeting of stockholders and you wish to nominate an individual for election at, or bring business other than through a stockholder proposal before, such meeting such notice must have been delivered to our Corporate Secretary at the address above between January 24, 2024 and February 23, 2024. Any such notice to the Corporate Secretary must have set forth information specified in our Bylaws, including your name and address and the class and number of shares of our stock that you beneficially own.

In the event that we hold the 2024 annual meeting of stockholders and such meeting is held more than 30 days before or more than 30 days after the one-year anniversary of the 2023 annual meeting of stockholders, then, for notice by the stockholder to be timely, it must be received by the Corporate Secretary at P.O. Box 11239, Blacksburg, Virginia 24062 not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting, or the 10th day following the day on which public announcement of the date of such annual meeting is first made.

If you propose to bring business before an Annual Meeting of Stockholders other than a director nomination, your notice must also include, as to each matter proposed, the following: (1) a brief description of the business desired to be brought before such Annual Meeting and the reasons for conducting that business at the Annual Meeting and (2) any material interest you have in that business. If you propose to nominate an individual for election as a director, your notice must also include, as to each person you propose to nominate for election as a director, the following: (1) the name, age, business address and residence address of the person, (2) the principal occupation or employment of the person, (3) the class and number of shares of our stock that are owned of record and beneficially owned by the person, (4) the date or dates on which the shares were acquired and the investment intent of the acquisition, (5) a statement as to whether such nominee, if elected, intends to tender, promptly following such person’s failure to receive the required vote for election or re-election at the next meeting at which such person would face election or re-election, an irrevocable resignation effective upon acceptance of such resignation by the Board of Directors and (6) any other information concerning the person as would be required to be disclosed in a proxy statement soliciting proxies for the election of that person as a

 

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director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated under the Exchange Act, including the person’s written consent to being named as a nominee and to serving as a director if elected. We may require any proposed nominee to furnish other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as an independent director or that could be material to a reasonable stockholder’s understanding of the independence, or lack of independence, of the proposed nominee.

In addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must have provided in their notice any additional information required by Rule 14a-19(b) under the Exchange Act by no later than March 24, 2024. In the event that we hold the 2024 annual meeting of stockholders and such meeting is held more than 30 days before or more than 30 days after the one-year anniversary of the 2023 annual meeting of stockholders, then, for notice by the stockholder to be timely, it must be provided by the later of 60 days prior to the date of the annual meeting or the 10th day following the date on which public disclosure of the date of such meeting is first made by us.

For more information, and for more detailed requirements, please refer to our Amended and Restated Bylaws, filed as Exhibit 3.4 to our Registration Statement on Form S-1 (File No. 333-252083), filed with the SEC on January 28, 2021.

Householding of Special Meeting Materials

The SEC’s rules permit companies and intermediaries (such as brokers) to satisfy the delivery requirements for proxy statements, annual reports and Internet Notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement and one (1) annual report or Internet Notice addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially results in a reduced usage of natural resources and cost savings for companies.

A number of brokers with account holders who are our stockholders will be “householding” our proxy materials. A single proxy statement and one (1) annual report or Internet Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from one or more of the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Any stockholder at a shared address to which a single copy of the documents or Internet Notice was delivered and who wishes to receive a separate copy of the documents or Internet Notice can request a copy of such documents or notice by sending a written request to Corporate Secretary, Landos Biopharma, Inc., P.O. Box 11239, Blacksburg, Virginia 24062, or by contacting our Corporate Secretary at (540) 218-2232 and we will promptly deliver the requested documents or notice. Also, if, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report or Internet Notice in the future, please notify your broker or direct your written request to Corporate Secretary, Landos Biopharma, Inc., P.O. Box 11239, Blacksburg, Virginia 24062, or contact our Corporate Secretary at (540) 218-2232. Stockholders who currently receive multiple copies of the proxy statement and annual report or Internet Notice at their address and would like to request “householding” of their communications should contact their broker.

 

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public at the SEC website at www.sec.gov. You also may obtain free copies of the documents we file with the SEC, including this proxy statement, by going to the investor relations page of our website at https://ir.landosbiopharma.com. Our website address is provided as an inactive textual reference only. The information provided on our website is not part of this proxy statement, and therefore is not incorporated herein by reference.

Any person, including any beneficial owner of shares of Landos common stock, to whom this proxy statement is delivered may request copies of proxy statements or other information concerning us by written or telephonic request directed to Landos’ address below. If you would like to request documents from us, please do so as soon as possible, to receive them before the Special Meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt method, within one (1) business day after we receive your request.

Landos Biopharma, Inc.

Attention: Corporate Secretary

P.O. Box 11239

Blacksburg, VA 24062

If you have any questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of this proxy statement or need help voting your shares of common stock, please contact our proxy solicitor:

MacKenzie Partners, Inc.

1407 Broadway, 27th Floor

New York, New York 10018

(212) 929-5500 (Call Collect)

Or

Call Toll-Free (800) 322-2885

Email: proxy@mackenziepartners.com

 

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MISCELLANEOUS

You should rely only on the information contained in this proxy statement, the annexes to this proxy statement and the documents that we incorporate by reference in this proxy statement in voting on the Merger. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated    , 2024. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date (or as of an earlier date if so indicated in this proxy statement), and the mailing of this proxy statement to stockholders does not create any implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make a proxy solicitation.

 

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Annex A

 

 

AGREEMENT AND PLAN OF MERGER

among:

BESPIN SUBSIDIARY, LLC,

BESPIN MERGER SUB, INC.,

LANDOS BIOPHARMA, INC., and

ABBVIE INC.,

solely for the limited purposes set forth herein.

Dated as of March 24, 2024

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  
ARTICLE I THE MERGER      A-2  

Section 1.1

  

The Merger

     A-2  

Section 1.2

  

Closing

     A-2  

Section 1.3

  

Effective Time

     A-2  

Section 1.4

  

Effects of the Merger

     A-2  

Section 1.5

  

Organizational Documents of the Surviving Corporation

     A-2  

Section 1.6

  

Directors of the Surviving Corporation

     A-2  

Section 1.7

  

Officers of the Surviving Corporation

     A-2  
ARTICLE II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES      A-3  

Section 2.1

  

Effect on Capital Stock

     A-3  

Section 2.2

  

Exchange of Certificates

     A-4  

Section 2.3

  

Treatment of Company Equity Awards

     A-6  

Section 2.4

  

Treatment of Company Warrants

     A-7  
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY      A-7  

Section 3.1

  

Due Organization; Subsidiaries

     A-7  

Section 3.2

  

Certificate of Incorporation and Bylaws

     A-8  

Section 3.3

  

Capitalization

     A-8  

Section 3.4

  

Authority; Binding Nature of Agreement

     A-9  

Section 3.5

  

Non-Contravention; Consents

     A-9  

Section 3.6

  

Vote Required

     A-10  

Section 3.7

  

Section 203 of the DGCL

     A-10  

Section 3.8

  

SEC Filings; Financial Statements

     A-10  

Section 3.9

  

Absence of Changes

     A-12  

Section 3.10

  

Title to Assets

     A-12  

Section 3.11

  

Real Property

     A-12  

Section 3.12

  

Intellectual Property; Data Privacy and Security

     A-13  

Section 3.13

  

Contracts

     A-15  

Section 3.14

  

Liabilities

     A-17  

Section 3.15

  

Compliance with Laws

     A-18  

Section 3.16

  

Regulatory Matters

     A-18  

Section 3.17

  

Certain Business Practices

     A-20  

Section 3.18

  

Governmental Authorizations

     A-20  

Section 3.19

  

Tax Matters

     A-21  

Section 3.20

  

Employee Matters; Employee Plans

     A-22  

Section 3.21

  

Environmental Matters

     A-23  

Section 3.22

  

Insurance

     A-24  

Section 3.23

  

Legal Proceedings; Orders

     A-24  

Section 3.24

  

Information Supplied

     A-24  

Section 3.25

  

Personal Property

     A-24  

Section 3.26

  

Transactions With Affiliates

     A-25  

Section 3.27

  

Major Suppliers

     A-25  

Section 3.28

  

Opinion of Financial Advisor

     A-25  

Section 3.29

  

Financial Advisors

     A-25  

Section 3.30

  

No Other Representation

     A-25  

 

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Table of Contents
          Page  
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB      A-26  

Section 4.1

  

Due Organization

     A-26  

Section 4.2

  

Parent and Merger Sub

     A-26  

Section 4.3

  

Authority; Binding Nature of Agreement

     A-26  

Section 4.4

  

Non-Contravention; Consents

     A-26  

Section 4.5

  

Information Supplied

     A-27  

Section 4.6

  

Absence of Litigation

     A-27  

Section 4.7

  

Funds

     A-27  

Section 4.8

  

Ownership of Company Common Stock

     A-27  

Section 4.9

  

Investment Intention

     A-28  

Section 4.10

  

Brokers and Other Advisors

     A-28  

Section 4.11

  

No Other Representations or Warranties

     A-28  
ARTICLE V COVENANTS OF THE PARTIES      A-28  

Section 5.1

  

Access to Information

     A-28  

Section 5.2

  

Operation of the Company’s Business

     A-29  

Section 5.3

  

No Solicitation; Change in Recommendation

     A-32  

Section 5.4

  

Preparation of Proxy Statement; Company Stockholders’ Meeting

     A-36  

Section 5.5

  

Filings, Consents, and Approvals

     A-38  

Section 5.6

  

Employee Benefits

     A-40  

Section 5.7

  

Indemnification of Officers and Directors

     A-41  

Section 5.8

  

Securityholder Litigation

     A-43  

Section 5.9

  

Additional Agreements

     A-43  

Section 5.10

  

Disclosure

     A-44  

Section 5.11

  

Takeover Laws

     A-44  

Section 5.12

  

Section 16 Matters

     A-44  

Section 5.13

  

Merger Sub Stockholder Consent

     A-44  

Section 5.14

  

Stock Exchange Delisting; Deregistration

     A-44  

Section 5.15

  

Notification

     A-44  

Section 5.16

  

Regulatory Matters

     A-45  

Section 5.17

  

CVR Agreement

     A-45  
ARTICLE VI CONDITIONS PRECEDENT TO THE CLOSING      A-46  

Section 6.1

  

Conditions to Obligation of Each Party to Effect the Closing

     A-46  

Section 6.2

  

Conditions to Obligation of the Company to Effect the Closing

     A-46  

Section 6.3

  

Conditions to Obligations of Parent and Merger Sub to Effect the Closing

     A-47  

Section 6.4

  

Frustration of Closing Conditions

     A-47  
ARTICLE VII TERMINATION      A-47  

Section 7.1

  

Termination and Abandonment

     A-47  

Section 7.2

  

Effect of Termination; Survival

     A-49  

Section 7.3

  

Termination Fee

     A-49  
ARTICLE VIII MISCELLANEOUS PROVISIONS      A-50  

Section 8.1

  

Amendment

     A-50  

Section 8.2

  

Waiver

     A-50  

Section 8.3

  

Entire Agreement; Counterparts

     A-51  

Section 8.4

  

Applicable Laws; Jurisdiction; Specific Performance; Remedies

     A-51  

Section 8.5

  

Assignability

     A-52  

 

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          Page  

Section 8.6

  

No Third-Party Beneficiary

     A-52  

Section 8.7

  

Notices

     A-52  

Section 8.8

  

Severability

     A-53  

Section 8.9

  

Expenses

     A-53  

Section 8.10

  

Guarantee of Guarantor

     A-53  

Section 8.11

  

Transfer Taxes

     A-54  

Section 8.12

  

Company Disclosure Schedule

     A-54  

Section 8.13

  

Construction

     A-54  

EXHIBIT

 

Exhibit A

  

Definitions

     A-57  

Exhibit B

  

Voting Agreement

     A-69  

Exhibit C

  

Certificate of Incorporation of the Surviving Corporation

     A-79  

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of March 24, 2024, by and among: Bespin Subsidiary, LLC, a Delaware limited liability company and a wholly owned Subsidiary of Guarantor (“Parent”); Bespin Merger Sub, Inc., a Delaware corporation and a wholly owned Subsidiary of Parent (“Merger Sub”); Landos Biopharma, Inc., a Delaware corporation (the “Company”); and solely for the purposes of Section 2.2(b)(iii), Section 2.3(b), Section 5.1(b), Section 5.5, Section 5.10, Section 5.11, Section 8.4, Section 8.5, Section 8.7 and Section 8.10, AbbVie Inc., a Delaware corporation (“Guarantor”). Certain capitalized terms used in this Agreement are defined in Exhibit A.

RECITALS

A. Parent desires to acquire the Company on the terms and subject to the conditions set forth in this Agreement.

B. In furtherance of such acquisition of the Company by Parent, and on the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), Merger Sub shall be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned Subsidiary of Parent (the “Surviving Corporation”).

C. The board of directors of the Company (the “Company Board”) has unanimously (a) determined that the consummation of the Merger, the transactions contemplated by this Agreement, the CVR Agreement and the other Ancillary Agreements (such transactions, together with the Merger, the “Transactions”) are advisable and fair to, and in the best interests of, the Company and its stockholders, (b) authorized and approved the execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company and approved the Merger, (c) recommended the adoption of this Agreement by the holders of Company Common Stock (the “Company Board Recommendation”), and (d) directed that such matter be submitted for consideration by the Company stockholders at the Company Stockholders’ Meeting.

D. The boards of directors of Parent and Merger Sub have unanimously approved the execution, delivery, and performance of this Agreement and the consummation of the Transactions, including the Merger, and declared it advisable for Parent and Merger Sub, respectively, to enter into this Agreement.

E. On the terms and subject to the conditions set forth in this Agreement, at or prior to the Effective Time, Guarantor, Parent and the Rights Agent will enter into the CVR Agreement.

F. Concurrently with the execution and delivery of this Agreement and as an inducement to Parent’s willingness to enter into this Agreement, each of Perceptive Advisors LLC and Xontogeny LLC, a holder of shares of Company Common Stock, is entering into a voting and support agreement in the form attached as Exhibit B hereto (the “Voting Agreement”), pursuant to which, and subject to the terms and conditions thereof, among other things, each such stockholder agrees to vote the shares of Company Common Stock beneficially owned by it in favor of the adoption of this Agreement and approval of the Merger at the Company Stockholders’ Meeting.

G. Immediately following the execution and delivery of this Agreement, Parent, as the sole stockholder of Merger Sub, shall approve and adopt this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants, and agreements in this Agreement, and intending to be legally bound, Parent, Merger Sub, and the Company and for the limited purposes set forth herein, Guarantor, agree as follows:

 

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ARTICLE I

THE MERGER

Section 1.1 The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall merge with and into the Company, the separate corporate existence of Merger Sub shall cease, and the Company shall continue its corporate existence under the laws of the State of Delaware (“Delaware Law”) as the Surviving Corporation and a wholly owned Subsidiary of Parent.

Section 1.2 Closing. The closing of the Merger (the “Closing) shall take place (a) remotely by electronic exchange of executed documents, commencing at 10:00 a.m., New York City time, on the date that is two (2) business days after the date on which all conditions set forth in Article VI shall have been satisfied or waived (other than those conditions that by their nature are to be satisfied by actions to be taken at the Closing, but subject to the satisfaction or waiver thereof at or prior to the Closing) or (b) at such other place, time, and date as the Company and Parent may agree in writing. The date on which the Closing actually occurs is referred to as the “Closing Date.

Section 1.3 Effective Time. Subject to the provisions of this Agreement, at the Closing, the Company, Parent, and Merger Sub shall cause a certificate of merger (the “Certificate of Merger) to be filed with the Secretary of State of the State of Delaware and make all other filings or recordings required by the DGCL in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later date or time as may be agreed by the Company and Parent and specified in the Certificate of Merger in accordance with the DGCL (the effective time of the Merger being referred to as the “Effective Time).

Section 1.4 Effects of the Merger. The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL.

Section 1.5 Organizational Documents of the Surviving Corporation.

(a) At the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated to conform to EXHIBIT C until, subject to Section 5.7, thereafter amended in accordance with the applicable provisions of the DGCL and such certificate of incorporation.

(b) The Parties shall take all necessary action such that the bylaws of Merger Sub as in effect immediately prior to the Effective Time shall become the bylaws of the Surviving Corporation (except that all references in such bylaws of Merger Sub to its name, date of incorporation, registered office or registered agent shall instead refer to the name, date of incorporation, registered office and registered agent, respectively, of the Surviving Corporation) until, subject to Section 5.7 thereafter amended in accordance with the applicable provisions of the DGCL, the certificate of incorporation of the Surviving Corporation and such bylaws.

Section 1.6 Directors of the Surviving Corporation. The Parties shall take all necessary action such that the directors of Merger Sub as of immediately prior to the Effective Time shall become the only directors of the Surviving Corporation and such directors shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation, or removal.

Section 1.7 Officers of the Surviving Corporation. The officers of the Company as of immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, incapacitation, retirement, resignation, or removal.

 

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ARTICLE II

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

Section 2.1 Effect on Capital Stock.

(a) At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub, or the holders of any security of the Company or Merger Sub:

(i) Conversion of Company Common Stock. Each share of Company Common Stock (each, a “Share”) that is outstanding immediately prior to the Effective Time, but excluding Cancelled Shares and Dissenting Shares, shall be converted automatically into the right to receive (A) $20.42 per Share in cash (the “Closing Amount”), plus (B) one (1) contractual contingent value right per Share representing the right to receive a contingent payment in cash, without interest, upon the achievement of the Milestone set forth in the CVR Agreement (a “CVR”) ((A) and (B), collectively, the “Merger Consideration”). All Shares that have been converted into the right to receive the Merger Consideration as provided in this Section 2.1(a) shall cease to exist and no longer being outstanding, and any holder of Book-Entry Shares, or Certificates that immediately prior to the Effective Time represented such Shares, shall cease to have any right with respect to such Shares other than the right to receive the Merger Consideration.

(ii) Cancellation of Shares. Each Share that is (a) owned by the Company or any wholly owned Company Subsidiary as treasury stock or otherwise, including Shares reserved for issuance under any of the Company Equity Plans or the Company ESPP, but excluding for the avoidance of doubt any Share held by any Employee Plan or trust related thereto, or (b) held, directly or indirectly, by Guarantor, Parent, Merger Sub, or any other wholly owned Subsidiary of Guarantor immediately prior to the Effective Time (the “Cancelled Shares), shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(iii) Conversion of Merger Sub Common Stock. Each share of common stock, par value $0.001 per share, of Merger Sub outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid, and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation with the same rights, powers, and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates representing the common stock of Merger Sub shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.

If, between the date of this Agreement and the Effective Time, the outstanding Company Shares are changed in accordance with this Agreement into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction, then the amount of cash into which each Company Share is converted in the Merger shall be adjusted to the extent appropriate. For the avoidance of doubt, the Company Warrants outstanding immediately prior to the Effective Time shall be treated in accordance with Section 2.4 in connection with the Merger.

(b) Appraisal Rights. Notwithstanding anything to the contrary in this Agreement, to the extent required by the DGCL, any Share that is issued and outstanding immediately prior to the Effective Time and that is held by a holder who has not voted in favor of the adoption of this Agreement or consented thereto in writing and is entitled to demand and properly demands appraisal of such Share, as applicable (a “Dissenting Share), pursuant to, and who has properly exercised and perfected his or her demand for appraisal rights under and complies in all respects with, Section 262 of the DGCL (the “Appraisal Rights) shall not be converted into the right to receive the Merger Consideration but instead shall entitle the holder thereof only to such rights as are granted to holders of Dissenting Shares pursuant to Section 262 of the DGCL; provided, however, that any Dissenting Share held by a holder who shall have failed to perfect or otherwise shall have waived, withdrawn, or

 

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otherwise lost his or her Appraisal Rights in respect of such Dissenting Share, then such Dissenting Share shall be deemed no longer to be a Dissenting Share and be treated as if it had been converted into, and become exchangeable solely for, as of the Effective Time the right to receive, without interest or duplication, the Merger Consideration pursuant to Section 2.1(a). The Company shall give prompt written notice to Parent of any demand received by the Company for the appraisal of any Share (or any written threat thereof), of any withdrawal (purported or otherwise) of any such demand and of any other document or instrument served pursuant to the DGCL and received by the Company arising under Section 262 of the DGCL and any alleged dissenter’s right. Parent shall have the right to participate in any and all negotiations and Legal Proceedings with respect to any such demand. During the Pre-Closing Period, the Company shall not, without the prior written consent of Parent, make any payment or demand with respect to, or settle or compromise or offer to settle or compromise, any such payment or demand, or agree to do any of the foregoing.

(c) Certain Adjustments. If, during the Pre-Closing Period, the outstanding Shares of the Company shall have been changed into a different number of Shares or a different class of shares by reason of any stock dividend, subdivision, reorganization, reclassification, recapitalization, stock split, reverse stock split, combination, or exchange of Shares, the Merger Consideration shall be equitably adjusted, without duplication, to proportionally reflect such change.

Section 2.2 Exchange of Certificates.

(a) Paying Agent. No later than the Effective Time, Parent shall deposit, or shall cause to be deposited, with a U.S. bank or trust company that shall be appointed to act as a paying agent hereunder and approved in advance by the Company in writing (the “Paying Agent), in trust for the benefit of holders of the Shares, cash in U.S. dollars sufficient to pay the aggregate Closing Amount in exchange for all of the Shares outstanding immediately prior to the Effective Time (other than the Cancelled Shares), payable upon due surrender of the certificates that, immediately prior to the Effective Time, represented Shares (“Certificates) (or effective affidavits of loss in lieu thereof) or uncertificated Shares represented by book-entry (“Book-Entry Shares) pursuant to the provisions of this Article II (such cash being referred to as the “Exchange Fund). For the avoidance of doubt, Parent shall not be required to cause to be deposited any funds related to any CVR with the Rights Agent unless and until such deposit is required pursuant to the CVR Agreement.

(b) Payment Procedures.

(i) As soon as reasonably practicable after the Effective Time and in any event not later than the third (3rd) business day following the Closing Date, Parent shall cause the Paying Agent to mail to each holder of record of Shares whose Shares were Certificated and converted into the right to receive Merger Consideration pursuant to Section 2.1(a), (A) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to Certificates shall pass, only upon delivery of Certificates (or effective affidavits of loss in lieu thereof) to the Paying Agent and shall be in such form and have such other provisions as Parent and the Company may mutually reasonably agree) and (B) instructions for use in effecting the surrender of Certificates (or effective affidavits of loss in lieu thereof) in exchange for Merger Consideration.

(ii) Upon (A) surrender of Certificates (or effective affidavits of loss in lieu thereof) to the Paying Agent, together with such letter of transmittal, duly completed, and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Paying Agent in the case of Shares that are Certificated or (B) receipt of an “agent’s message” by the Paying Agent (or such other evidence, if any, of transfer as the Paying Agent may reasonably request) in the case of a book-entry transfer of Book-Entry Shares, the holder of such Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares shall be entitled to receive in exchange therefor (x) an amount in cash equal to the product of (1) the number of Shares represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares and (2) the Closing Amount; and (y) a number of CVRs equal to the number of Shares represented by such holder’s properly surrendered

 

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Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares. Notwithstanding anything to the contrary in this Agreement, no holder of Book-Entry Shares will be required to provide a Certificate or an executed letter of transmittal to the Paying Agent in order to receive the payment that such holder is entitled to receive pursuant to Section 2.1(a). No interest shall be paid or accrued on any amount payable upon due surrender of Certificates (or effective affidavits of loss in lieu thereof). In the event of a transfer of ownership of Shares that is not registered in the stock transfer books of the Company, payment of Merger Consideration (including payment in the form of or with respect to any CVR) upon due surrender of a Certificate may be paid to such a transferee if the Certificate formerly representing such Shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer Taxes have been paid or are not applicable.

(iii) Notwithstanding anything in this Agreement to the contrary, each of Guarantor, Parent, the Company, their respective Affiliates and the Paying Agent, as applicable, shall be entitled to deduct and withhold from any amount otherwise payable under this Agreement (including pursuant to Section 2.3) or the CVR Agreement such amounts as are required to be withheld or deducted under the Code, or under any provision of state, local, or non-U.S. Tax Law, with respect to the making of such payment. Any amounts so deducted or withheld shall be timely paid over to the appropriate Governmental Body. To the extent that amounts are so deducted or withheld and timely paid over to the relevant Governmental Body, such deducted or withheld amounts shall be treated for all purposes of this Agreement or the CVR Agreement as having been paid to the Person in respect of which such deduction or withholding was made.

(c) Closing of Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfer on the stock transfer books of the Surviving Corporation of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation or the Paying Agent for transfer or any other reason, the holder of any such Certificate or Book-Entry Share shall be given a copy of the letter of transmittal referred to in Section 2.2(b) and instructed to comply with the instructions in that letter of transmittal in order to receive the cash to which such holder is entitled pursuant to this Article II.

(d) Termination of Exchange Fund. Any portion of the Exchange Fund (including the proceeds of any investment thereof) that remains undistributed to the former holders of Shares on the 12-month anniversary of the Effective Time shall thereafter be delivered to the Surviving Corporation upon demand, and any former holder of Shares who has not surrendered their Shares in accordance with this Article II shall thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration, without any interest thereon, upon due surrender of their Shares.

(e) No Liability. Notwithstanding anything to the contrary in this Agreement, none of the Company, Guarantor, Parent, Merger Sub, the Surviving Corporation, the Paying Agent, or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat, or similar Law.

(f) Investment of Exchange Fund. The Paying Agent shall invest all cash included in the Exchange Fund as reasonably directed by Parent; provided, however, that no such investment or loss thereon shall affect the amounts payable to holders of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares pursuant to this Article II, and following any loss from any such investment, Parent shall promptly provide additional funds to the Paying Agent for the benefit of the holders of Shares of the Company. Any interest and other income resulting from such investments that is not required to satisfy payments to holders of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares pursuant to this Article II shall be paid to the Surviving Corporation or Parent, as directed by Parent, on the earlier of (i) one (1) year after the Effective Time or (ii) the full payment of the Exchange Fund.

(g) Lost Certificates. In the case of any Certificate that has been lost, stolen, or destroyed, upon the making of an affidavit in customary form of that fact by the Person claiming such Certificate to be lost, stolen, or

 

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destroyed and, if required by the Paying Agent, the posting by such Person of a bond in reasonable and customary amount as Parent or the Paying Agent may direct, as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Paying Agent shall issue in exchange for such lost, stolen, or destroyed Certificate a check in the amount of the number of Shares represented by such lost, stolen, or destroyed Certificate multiplied by the Merger Consideration (including payment in the form of or with respect to any CVR).

Section 2.3 Treatment of Company Equity Awards.

(a) As of the Effective Time, by virtue of the Merger and without any further action on the part of the holders thereof, Guarantor, Parent, Merger Sub, or the Company (other than as set out in Section 2.3(d)), each then-outstanding Company Equity Award shall be treated as follows:

(i) each Company Option outstanding immediately prior to the Effective Time (whether vested or unvested) having an exercise price per Share that is less than or equal to the Closing Amount shall be cancelled and converted into the right to receive (A) cash in an amount, without interest, equal to the product of (x) the total number of Shares subject to such Company Option immediately prior to the Effective Time, multiplied by (y) the excess of (I) the Closing Amount over (II) the exercise price payable per Share under such Company Option, which amount, if any, shall be paid in accordance with Section 2.3(c) and (B) one (1) CVR for each Share subject to such Company Option;

(ii) each Company Option outstanding immediately prior to the Effective Time (whether vested or unvested) having an exercise price per Share that is greater than the Closing Amount shall be cancelled without any consideration being payable in respect thereof, and have no further force or effect; and

(iii) each outstanding award of Company Restricted Stock Units outstanding immediately prior to the Effective Time shall fully vest, be cancelled, and convert into the right to receive (A) a lump sum cash payment, without interest, equal to the product of (x) the Closing Amount multiplied by (y) the number of Shares subject to such award of Company Restricted Stock Units and (B) a number of CVRs equal to the number of Shares subject to such award of Company Restricted Stock Units.

(b) With respect to any amount payable under Section 2.3(a) that constitutes nonqualified deferred compensation subject to Section 409A of the Code, to the extent that payment of such amount would otherwise cause the imposition of a Tax or penalty under Section 409A of the Code, such payment shall instead be made at the earliest time permitted under this Agreement and the terms of the corresponding award that will not result in the imposition of such Tax or penalty. The Parties and Guarantor intend, to the extent consistent with applicable Law, to treat any payments made in respect of a CVR received with respect to any Company Equity Awards for all U.S. federal and applicable state and local income Tax purposes as compensation payments (and not to treat the issuance of the CVR to a holder of a Company Equity Award as a payment itself).

(c) All payments described in Section 2.3(a) shall be paid through the payroll system or payroll provider of the Surviving Corporation or its applicable Affiliate in the next regularly scheduled payroll of the Company that is at least five (5) days following the Effective Time, except as provided in Section 2.3(b). Notwithstanding anything to the contrary in the foregoing, if any such payment cannot be made through such payroll system or payroll provider, then the Surviving Corporation or its applicable Affiliate will issue a check for such payment at the same time that the payments are made through payroll, except as provided in Section 2.3(b). The terms of the CVRs to be issued to any holder of Company Options or Company Restricted Stock Units pursuant to Section 2.3(a) and the circumstances in which any payment is made in respect thereof, shall be governed solely by the CVR Agreement.

(d) Prior to the Effective Time, the Company Board (or, if appropriate, any appropriate committee thereof) shall adopt such resolutions or take such other necessary actions:

(i) to effect the treatment described in Section 2.3(a); and

 

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(ii) to make such other changes to the Company Equity Plans as are appropriate to give effect to the Merger.

(e) Prior to the Effective Time (but subject to the consummation of the Transaction), the Company Board (or, if appropriate, any appropriate committee thereof) shall adopt such resolutions or take such other necessary actions to terminate the Company ESPP.

Section 2.4 Treatment of Company Warrants. Pursuant to Section 9(c) of the Warrant Agreement, the Company Warrants shall be deemed to have been exercised in full in a “cashless exercise” pursuant to Section 10 of the Warrant Agreement effective immediately prior to and contingent upon the Closing. At the Effective Time, each Company Warrant shall be converted automatically into the right to receive (a) an amount in cash equal to the Closing Amount multiplied by (x) the total number of Shares underlying the Company Warrant as of immediately prior to the Effective Time multiplied by (y)(A)(1) the Closing Sale Price (as defined in the Warrant Agreement) per share of Common Stock as of the Trading Day (as defined in the Warrant Agreement) on the date immediately preceding the Closing Date (the “Applicable Closing Price”) minus (2) the Exercise Price (as defined in the Warrant Agreement) per Share of such Company Warrant, divided by (B) the Applicable Closing Price and (b) a number of CVRs equal to the total number of Shares underlying the Company Warrant as of immediately prior to the Effective Time.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub that, except as (A) set forth in the Company Disclosure Schedule delivered by the Company to Parent and Merger Sub prior to the execution of this Agreement or (B) expressly disclosed in any Company SEC Documents filed with, or furnished to, the SEC and publicly available on or after February 4, 2021 and at least one (1) business day prior to the date of this Agreement, other than all risk factor disclosures, disclosures about market risk, or other cautionary, predictive or forward-looking disclosures contained therein that do not relate to specific historical events or circumstances affecting the Company (provided that nothing disclosed in the Company SEC Documents shall be deemed to be a qualification of, or modification to, (i) the representations and warranties set forth in Section 3.1, Section 3.3, Section 3.4, Section 3.5 and Section 3.9(a) and (c); or (ii) representations and warranties the relevance of that disclosure as an exception to (or a disclosure for purposes of) is not reasonably apparent on the face of such disclosure):

Section 3.1 Due Organization; Subsidiaries.

(a) The Company is a corporation duly organized, validly existing, and in good standing under the Delaware Law and has all necessary power and authority to (i) conduct its business in the manner in which its business is currently being conducted and (ii) own, lease and operate its assets and properties in the manner in which its assets and properties are currently owned and used. The Company is duly qualified, registered, licensed or otherwise authorized to do business, and is in good standing, in each jurisdiction where the nature of its business requires such qualification, registration, licensing or other authorization and has all the authorizations required to own, lease and operate its properties and assets, except where the failure to be so qualified, registered, licensed or otherwise authorized to do business, or be in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger by the End Date.

(b) The Company does not own any capital stock of, any other equity interest of, or any equity interest of any nature in any other equity-linked or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity, equity-linked or similar interest in any other Entity other than the Company Subsidiaries. The Company has not agreed and is not obligated to make, and is not bound by any Contract under which it may become obligated to make, any future investment in or capital contribution to any other Entity.

 

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(c) Section 3.1(c) of the Company Disclosure Schedule identifies each Subsidiary of the Company (each, a “Company Subsidiary,” and collectively, the “Company Subsidiaries”) and indicates its jurisdiction of organization. Each Company Subsidiary is a corporation or other business entity duly incorporated, formed or organized (as applicable), validly existing, and in good standing (to the extent a concept of “good standing” is applicable) under the Laws of its jurisdiction of incorporation, formation or organization and has full corporate or other organizational power and authority required to own, lease, or operate, as appropriate, the assets and properties that it purports to own, lease, and operate and to carry on its business as now conducted, and is qualified to do business in each jurisdiction where such qualification is necessary, except, in each case, where any failure thereof would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger by the End Date. All outstanding shares of capital stock or voting securities of, or other equity interests in, each Company Subsidiary have been duly authorized, validly issued and are fully paid and nonassessable and owned by the Company, by another Company Subsidiary, or by the Company and another Company Subsidiary, free and clear of all Encumbrances other than restrictions imposed by applicable Securities Laws or the organizational documents of any such Subsidiary.

Section 3.2 Certificate of Incorporation and Bylaws. The Company has made available to Parent or its Representatives accurate and complete copies of the Organizational Documents of the Company and of each Company Subsidiary, including all amendments thereto, as in effect on the date of this Agreement. None of the Company or any Company Subsidiary is in violation of any provision of its Organizational Documents except for violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger by the End Date.

Section 3.3 Capitalization.

(a) The authorized capital stock of the Company consists of (i) 20,000,000 shares of Company Common Stock, of which 3,116,729 shares of Company Common Stock have been issued or are outstanding as of the close of business on March 22, 2024 (the “Reference Date”), (ii) 10,000,000 shares of Company Preferred Stock, none of which are issued or outstanding as of the close of business on the Reference Date. All of the outstanding Shares have been duly authorized, validly issued and are fully paid and nonassessable. Since the Reference Date through the date hereof, the Company has not (A) issued any Company Common Stock or incurred any obligation to make any payments based on the price or value of any Company Common Stock, except for Company Common Stock issued upon the exercise of Company Options or Company Warrants or in settlement of Company Restricted Stock Units, in each case, as set forth in Section 3.3(c), or (B) established a record date for, declared, set aside for payment or paid any dividend on, or made any other distribution in respect of, any shares of Company Common Stock.

(b) As of the date of this Agreement: (i) no outstanding Share is entitled or subject to any preemptive right, right of repurchase or forfeiture, right of participation, right of maintenance, or any similar right; (ii) no outstanding Share is subject to any right of first refusal in favor of the Company; (iii) no outstanding bond, debenture, note, or other Indebtedness of the Company has a right to vote on any matter on which the Company stockholders have a right to vote; and (iv) no Company Contract relates to the voting or registration of, or restricts any Person from purchasing, selling, pledging, or otherwise disposing of (or from granting any option or similar right with respect to), any Share. The Company is not under any obligation, nor is it bound by any Contract pursuant to which it may become obligated, to repurchase, redeem, or otherwise acquire any outstanding Share. The Company Common Stock constitutes the only outstanding class of securities of the Company registered under the Securities Laws.

(c) As of the close of business on the Reference Date: (i) 480,131 Shares were issuable upon the exercise of outstanding Company Options; (ii) 254,238 Shares were subject to Company Restricted Stock Units; (iii) 150,545 Shares were reserved and available for issuance under the Company ESPP; and (iv) 3,090,908

 

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Shares were issuable upon the exercise of outstanding Company Warrants. The Company has made available to Parent or its Representatives copies of all Company Equity Plans covering the Company Equity Awards outstanding and the forms of all award agreements evidencing such Company Equity Awards, in each case, as of the date of this Agreement. Each Company Option was granted in accordance with the terms of the applicable Company Equity Plan and in compliance with all applicable Laws, and no Company Option will trigger any liability to the holder thereof under Section 409A of the Code. All Company Warrants are made on the terms of the Warrant Agreement. Except as set forth on Section 3.3(c) of the Company Disclosure Schedule, no Shares are subject to (x) Company Performance Stock Units or (y) any offering period under the Company ESPP.

(d) Section 3.3(d) of the Company Disclosure Schedule sets forth a correct and complete list of all Company Equity Awards and Company Warrants outstanding as of the Reference Date, including with respect to each such Company Equity Award and Company Warrant: (i) the name of the holder thereof; (ii) the number of Shares subject (or allocated) to such Company Equity Award; (iii) the grant or issuance date; (iv) any applicable vesting schedule; (v) with respect to each Company Option and Company Warrant, the exercise price; and (vi) with respect to each Company Option, the expiration date.

(e) Except as set forth in this Section 3.3, as of the close of business on the Reference Date, there is no: (i) outstanding share of capital stock or other equity interest in the Company or any of its Subsidiaries; (ii) outstanding subscription, option, call, warrant, right (whether or not currently exercisable) agreement or commitment of any character to acquire any share of capital stock, restricted stock unit, stock-based performance unit, or any other right that is linked to, or the value of which is in any way based on or derived from the value of any share of capital stock or other securities of the Company or any of its Subsidiaries, in each case, issued by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is bound; (iii) outstanding security, instrument, bond, debenture, note, or obligation that is or may become convertible into or exchangeable for any share of the capital stock or other securities of the Company or any of its Subsidiaries; or (iv) stockholder rights plan (or similar plan commonly referred to as a “poison pill”) or Contract under which the Company or any of its Subsidiaries is or may become obligated to sell or otherwise issue any share of its capital stock or any other security.

Section 3.4 Authority; Binding Nature of Agreement. The Company has the necessary corporate power and authority to enter into and to perform its obligations under this Agreement and any applicable Ancillary Agreements and to consummate the Transactions, subject, in the case of the consummation of the Merger, only to the adoption of this Agreement by the Required Company Stockholder Vote. The Company Board (at a meeting duly called and held) on or prior to the date of this Agreement has unanimously: (a) determined that the Transactions, including the Merger are advisable and fair to, and in the best interests of, the Company and its stockholders; (b) authorized and approved the execution, delivery, and performance of this Agreement and any applicable Ancillary Agreements by the Company and unanimously approved the Merger; and (c) recommended the adoption of this Agreement by the holders of Company Common Stock and directed that this Agreement be submitted for adoption by the Company’s stockholders at the Company Stockholders’ Meeting. This Agreement has been duly executed and delivered by the Company and, assuming due execution and delivery by Parent and Merger Sub, constitutes the valid and binding agreements of the Company, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions. No other corporate action on the part of the Company or any Company Subsidiaries is required to authorize the execution, delivery and performance of this Agreement and the consummation of the Transactions.

Section 3.5 Non-Contravention; Consents.

(a) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation by the Company of the Transactions will not, (i) conflict with or violate the Company’s Organizational Documents, (ii) assuming that all consents, approvals, and other authorizations described in Section 3.5(b) have been obtained and that all filings and other actions described in Section 3.5(b) have been made or taken and the Required Company Stockholder Vote has been obtained, conflict

 

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with or violate any Law applicable to the Company or by which any property or asset of the Company is bound, or (iii) result in any breach or violation of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) by the Company or any Company Subsidiary under, or give to others any right of termination, amendment, acceleration, or cancellation of, or result in the loss of any benefit under, or the creation of any Encumbrance on the properties or assets of the Company pursuant to, any Material Contract, except, with respect to each of the foregoing clauses (ii) and (iii), for any such conflict, violation, breach, default, or other occurrence that would not, individually or in the aggregate, have a Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger by the End Date.

(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation by the Company of the Transactions will not, require any consent, approval, authorization, or permit of, or filing with or notification to any Governmental Body except for (i) applicable requirements, if any, of the Exchange Act, (ii) the filing with the SEC of the Proxy Statement, (iii) any filing required under the rules and regulations of NASDAQ Global Market, (iv) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (v) any consent, approval, order, authorization, authority, transfer, waiver, disclaimer, registration, declaration, or filing set forth in Section 3.5(b) of the Company Disclosure Schedule, and (vi) any other consent, approval, order, authorization, authority, transfer, waiver, disclaimer, registration, declaration, or filing, which, in each case, if not obtained or made would not, individually or in the aggregate, have a Material Adverse Effect.

Section 3.6 Vote Required. The affirmative vote of the holders of a majority of the shares of Company Common Stock outstanding on the record date for the Company Stockholders’ Meeting in favor of adopting this Agreement (the “Required Company Stockholder Vote”) is the only vote of the holders of any class or series of the Company’s capital stock, or any holder of any other security of the Company, necessary to adopt this Agreement and approve the Merger.

Section 3.7 Section 203 of the DGCL. The Company Board has taken all actions so that the restrictions applicable to business combinations in Section 203 of the DGCL shall be inapplicable to the execution, delivery, and performance of this Agreement and to the consummation of the Merger and the other Transactions.

Section 3.8 SEC Filings; Financial Statements.

(a) Since February 4, 2021, the Company has filed or furnished on a timely basis all reports, schedules, forms, statements, and other documents (including exhibits and all other information incorporated therein) required to be filed or furnished by the Company with or to the SEC (the “Company SEC Documents”). As of their respective dates (in the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates or, if amended prior to the date hereof, the date of the filing of such amendment, with respect to the portions that are amended (in the case of all other Company SEC Documents), the Company SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act, or the Sarbanes-Oxley Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder and applicable to such Company SEC Documents or the Company and, except to the extent that information in such Company SEC Document has been revised, amended, modified, or superseded (prior to the date of this Agreement) by a later filed Company SEC Document, none of the Company SEC Documents when filed or furnished contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No Company Subsidiary is required to file or furnish any report, statement, schedule, form, registration statement, proxy statement, certification, or other document with, or make any other filing with, or furnish any other material to, the SEC.

(b) The consolidated financial statements (including related notes and schedules) contained or incorporated by reference in the Company SEC Documents: (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) were prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods

 

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