Form 4: APLT Director Exits Post-Merger, Options Worthless

Applied Therapeutics Director Teena Lerner reported the disposition of all her common stock and out-of-the-money stock options following the company's merger with AT2B, Inc.

Summary

• Teena Lerner, a Director of Applied Therapeutics, Inc. (APLT), reported transactions related to a merger.
• The merger, effective January 28, 2026, involved Applied Therapeutics, Inc., Cycle Group Holdings Limited, and AT2B, INC. (Purchaser), with APLT surviving.
• Each outstanding share of APLT common stock was converted into $0.088 cash and one non-tradeable contingent value right (CVR).
• All outstanding Restricted Stock Units (RSUs), whether vested or unvested, were vested and converted into the merger consideration.
• Stock options with an exercise price equal to or exceeding the $0.088 closing amount (Out-of-the-Money Options) were fully vested and then cancelled for no consideration.
• Teena Lerner disposed of 22,500 shares and 82,922 shares of common stock on February 3, 2026, receiving the merger consideration.
• Teena Lerner also disposed of all her stock options (totaling 287,131 shares underlying options) on February 3, 2026, as they were out-of-the-money and cancelled for no consideration.
• Following these transactions, Teena Lerner beneficially owns 0 shares of common stock and 0 derivative securities.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly negative event for shareholders and option holders, given the very low cash consideration and the cancellation of out-of-the-money options for no value, indicating a distressed acquisition.

Positives

• The merger was successfully completed, providing a definitive outcome for the company and its shareholders.
• Outstanding Restricted Stock Units (RSUs) were vested and converted into the merger consideration, providing some value to RSU holders.

Negatives

• Common stockholders received a very low cash consideration of $0.088 per share, plus a non-tradeable contingent value right, indicating a significant loss of value.
• All stock options held by the director were out-of-the-money and cancelled for no consideration, resulting in a complete loss of potential value for option holders.
• The director no longer holds any beneficial ownership in the company, signaling a complete exit from the company's equity.

Risks

• The non-tradeable nature of the contingent value right (CVR) introduces illiquidity and uncertainty regarding future value realization for former shareholders.
• The extremely low cash consideration of $0.088 per share suggests a substantial decline in shareholder value prior to the merger, indicating potential financial distress or a 'take-under' scenario.

Future Outlook

The filing indicates the completion of a merger, which typically concludes the company's independent public trading status. The future value for former shareholders is tied to the non-tradeable contingent value rights, the realization of which is uncertain.

Management Comments

• Pursuant to the terms of that certain Agreement and Plan of Merger (the 'Merger Agreement') dated as of December, 11, 2025, among the Issuer, Cycle Group Holdings Limited and AT2B, INC. ('Purchaser'), Purchaser completed a tender offer for shares of Issuer and thereafter merged with and into the Issuer (the 'Merger'), effective as of January 28, 2026, with the Issuer surviving the Merger.
• At the effective time of the Merger (the 'Effective Time'), each outstanding share of Issuer common stock was cancelled and converted into the right to receive (i) $0.088 per share of common stock, net to the seller in cash, without interest (the 'Closing Amount') plus (ii) one non-tradeable contingent value right, in accordance with the terms and subject to the conditions of a contingent value rights agreement (the 'Merger Consideration').
• Pursuant to the Merger Agreement, at the Effective Time, each outstanding RSU (whether vested or unvested) was deemed to have vested and was cancelled and automatically converted into the right to receive the Merger Consideration.
• Pursuant to the Merger Agreement, at the Effective Time, each option to purchase shares of common stock (each a 'Stock Option') that has a per share exercise price that equals or exceeds the Closing Amount as of immediately prior to the Effective time (each such Stock Option, an 'Out-of-the-Money Option'), to the extent not vested, was fully vested as of prior to the Effective Time. Any Out-of-the-Money Options that remained outstanding and unexercised as of the Effective Time were cancelled for no consideration at the Effective Time.

Industry Context

StockSavvy.ai notes that mergers and acquisitions are common in the biotechnology and pharmaceutical sectors, often driven by strategic realignment, asset acquisition, or financial distress. The low cash consideration and cancellation of out-of-the-money options suggest a challenging period for Applied Therapeutics prior to the merger, potentially indicating a 'take-under' scenario rather than a premium acquisition.

Comparison to Industry Standards

• The cash consideration of $0.088 per share is significantly lower than typical acquisition premiums seen in healthy biotech mergers, which often range from 30% to 100% or more over pre-announcement stock prices. For example, recent acquisitions like Pfizer's acquisition of Seagen (a premium of ~33%) or Amgen's acquisition of Horizon Therapeutics (a premium of ~47%) involved substantially higher per-share values.
• The cancellation of out-of-the-money stock options for no consideration is standard practice when the exercise price exceeds the acquisition price, but it highlights the lack of intrinsic value for these options at the time of the merger, contrasting with scenarios where options might be rolled over or cashed out at a positive value.
• The inclusion of a non-tradeable CVR is a common mechanism in biotech mergers, particularly when there is uncertainty about future clinical or regulatory milestones, as seen in deals like Sanofi's acquisition of Kadmon or Bristol Myers Squibb's acquisition of MyoKardia, where CVRs were used to bridge valuation gaps based on future drug approvals or sales. However, the non-tradeable nature limits liquidity for former shareholders.

Management Changes

Stakeholder Impact

• Shareholders: Received $0.088 cash per share plus a non-tradeable CVR, indicating a significant loss of value for those who bought at higher prices.
• Option Holders: Out-of-the-money options were cancelled for no consideration, resulting in a complete loss of value for these equity incentives.
• Employees (with RSUs): RSUs vested and converted into merger consideration, providing some value.

Next Steps

• Former shareholders will await potential future value from the non-tradeable contingent value rights.

Key Dates

Recommendation

The merger terms, including a very low cash consideration of $0.088 per share and the cancellation of all out-of-the-money stock options for no value, represent a significant loss for shareholders and option holders. The non-tradeable contingent value right offers uncertain future value. This outcome strongly suggests a 'strong sell' recommendation for any remaining exposure or as a confirmation of a highly unfavorable exit for investors.

Keywords

Applied Therapeutics, APLT, Merger, Form 4, Insider Transaction, Stock Options, Contingent Value Right, CVR, Director, Beneficial Ownership