Form 4: RA Capital Exits 89bio Stake in Roche Merger

RA Capital Management and its affiliated funds disposed of their holdings in 89bio, Inc. following its acquisition by Roche Holdings, Inc. for $14.50 cash plus a contingent value right.

Summary

• The merger of 89bio, Inc. with Bluefin Merger Subsidiary, Inc., a wholly-owned subsidiary of Roche Holdings, Inc., became effective on October 30, 2025.
• The tender offer price for 89bio shares was $14.50 per share in cash (the "Closing Amount") plus one non-tradeable Contingent Value Right (CVR) representing the right to receive up to an aggregate of $6.00 per share upon achievement of specified milestones.
• RA Capital Management, L.P., RA Capital Healthcare Fund, L.P., and RA Capital Nexus Fund, L.P. disposed of their beneficial ownership in 89bio, Inc. as a result of the merger.
• This included the disposition of 19,554,319 shares of common stock held by RA Capital Healthcare Fund, L.P. and 335,364 shares of common stock held by RA Capital Nexus Fund, L.P.
• 4,331,081 pre-funded warrants with an exercise price of $0.001 were automatically exercised and converted into cash (Closing Amount minus exercise price) and one CVR per share.
• Various stock options were cancelled and converted into cash and/or CVRs, depending on their exercise price relative to the $14.50 Closing Amount and a $20.50 threshold.
• Options with an exercise price equal to or greater than $20.50 were cancelled without any payment.

Sentiment

Score: 8

Explanation: The filing details the successful completion of a merger where 89bio, Inc. was acquired by Roche Holdings, Inc., providing a clear liquidity event for shareholders at a defined cash price with potential additional upside through CVRs. This represents a positive outcome for the reporting persons and former 89bio shareholders.

Positives

• The successful completion of the acquisition of 89bio, Inc. by Roche Holdings, Inc. provides a clear liquidity event for former shareholders.
• Shareholders received a guaranteed cash payment of $14.50 per share, providing immediate value.
• The inclusion of a Contingent Value Right (CVR) offers potential additional payments of up to $6.00 per share, providing upside potential based on future milestone achievements.

Negatives

• 89bio, Inc. is no longer an independent publicly traded company, transitioning to a wholly-owned subsidiary of Roche Holdings, Inc.
• Stock options with an exercise price equal to or greater than $20.50 were cancelled without any payment, resulting in a loss for holders of those specific options.
• Out-of-the-money options (exercise price >= $14.50 but < $20.50) only received CVRs, with cash payments contingent on future milestones and exceeding the exercise price, introducing uncertainty.

Risks

• The Contingent Value Rights (CVRs) are non-tradeable, limiting the ability of holders to monetize them before milestone achievement.
• CVR payments are contingent on the achievement of specified milestones, meaning there is no guarantee of receiving the full $6.00 per share or any payment at all.
• The value and timing of CVR payments are subject to the terms of the CVR Agreement and the success of future clinical or regulatory events.

Future Outlook

89bio, Inc. will operate as a wholly-owned subsidiary of Roche Holdings, Inc., with its future strategic direction and operations integrated into Roche's broader corporate framework. Former shareholders who received CVRs have a future outlook tied to the achievement of specific milestones that will trigger contingent payments, which are subject to the terms of the CVR Agreement.

Management Comments

• RA Capital Management, L.P., as the investment manager, and its general partner, RA Capital Management GP, LLC, disclaim beneficial ownership of any reported securities except to the extent of their pecuniary interest therein.
• Dr. Peter Kolchinsky and Mr. Rajeev Shah, as managing members of the Adviser GP, also disclaim beneficial ownership except for their pecuniary interest.
• Dr. Derek DiRocco, a Partner of the Adviser and former director, held options for the benefit of the Fund and Nexus Fund and is obligated to turn over any net cash or stock received upon exercise to the Adviser to offset advisory fees.

Industry Context

The acquisition of 89bio by Roche Holdings, Inc. reflects a broader industry trend of larger pharmaceutical companies acquiring smaller biotech firms to expand their pipelines and gain access to innovative therapies. This strategy allows established players to integrate promising assets and technologies, mitigating R&D risks while bolstering their market position in key therapeutic areas.

Comparison to Industry Standards

• The deal structure, combining an upfront cash payment ($14.50 per share) with a Contingent Value Right (CVR) for potential future payments (up to $6.00 per share), is a common mechanism in biotech acquisitions. This approach allows the acquirer (Roche) to manage risk by tying a portion of the consideration to the successful achievement of clinical or regulatory milestones, while providing target shareholders (89bio) with potential upside beyond the initial cash offer.
• Comparable transactions in the biotech sector frequently utilize CVRs, especially for companies with late-stage clinical assets, to bridge valuation gaps between buyers and sellers and align incentives for post-acquisition success.

Management Changes

Corporate Governance

Related Party Transactions

• Dr. DiRocco's stock options were held for the benefit of the RA Capital Healthcare Fund and RA Capital Nexus Fund. He is obligated to turn over any net cash or stock received upon exercise of these options to the Adviser to offset advisory fees owed by the Funds to the Adviser.

Stakeholder Impact

• **Shareholders (former 89bio):** Received cash consideration and CVRs, ending their direct equity ownership in 89bio, Inc.
• **Employees (89bio):** Now employees of a Roche subsidiary, potentially subject to changes in compensation, benefits, and corporate culture as part of the integration.
• **RA Capital Management:** Successfully exited an investment, realizing value through the merger terms.
• **Roche Holdings, Inc.:** Expanded its pipeline and market presence through the acquisition of 89bio's assets and capabilities.

Next Steps

• Monitoring the achievement of specified milestones for the Contingent Value Rights (CVRs) to determine eligibility for additional payments.
• Integration of 89bio, Inc. into Roche Holdings, Inc.'s operations as a wholly-owned subsidiary.

Key Dates

Keywords

Merger, Acquisition, Tender Offer, 89bio, ETNB, Roche, RA Capital, Form 4, Beneficial Ownership, CVR, Contingent Value Right, Stock Options, Warrants, Biotech