8-K: HilleVax Acquired by XOMA Royalty, Delists from Nasdaq

HilleVax, Inc. has completed its acquisition by XOMA Royalty Corporation for $1.95 cash plus a contingent value right per share, leading to its delisting from Nasdaq.

Summary

• HilleVax, Inc. (the Company) has been acquired by XOMA Royalty Corporation (Parent) and its subsidiary, XRA 4 Corp. (Merger Sub), completing a merger agreement dated August 4, 2025.
• The tender offer, which commenced on August 18, 2025, expired on September 15, 2025, with 39,214,689 shares, or approximately 77.48% of outstanding shares, validly tendered.
• The acquisition was completed on September 17, 2025, making HilleVax a wholly-owned subsidiary of XOMA Royalty Corporation.
• Shareholders received $1.95 in cash plus one non-transferable contractual contingent value right (CVR) per share.
• In-the-money stock options were converted into cash and CVRs, while out-of-the-money options were cancelled for no consideration. Restricted stock units were converted into cash and CVRs.
• HilleVax shares are expected to be delisted from The Nasdaq Global Select Market on September 17, 2025, with trading suspended prior to market open on that date.
• The Company intends to terminate its SEC registration and reporting obligations.
• The CVRs represent a right to potential future cash payments derived from 'Legacy Assets' (Intellectual Property Rights and assets related to HIL-216, including the Kangh License Agreement) and 'Legacy Receivable Amounts' (e.g., security deposit return, lease savings).
• A 'Legacy Assets and Expense Fund' of $250,000 was established from Closing Net Cash, with $25,000 allocated to the Representative.
• The CVRs are highly speculative, non-transferable (except for Permitted CVR Transfers), and do not represent an equity or ownership interest.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the delisting, loss of liquidity, and the highly speculative nature of the CVRs, which offer no guaranteed future payments. While a cash component was provided, the overall outcome for public shareholders, particularly those with out-of-the-money options or relying on future CVR value, is unfavorable.

Positives

• Shareholders received a cash payment of $1.95 per share.
• Shareholders also received a Contingent Value Right (CVR) per share, offering potential future cash payments tied to the performance and disposition of the Company's 'Legacy Assets' (HIL-216 related intellectual property and the Kangh License Agreement) and 'Legacy Receivable Amounts' (e.g., lease savings, security deposit return).
• In-the-money stock options were converted into cash and CVRs, providing value to holders.
• The acquisition provides a clear exit for existing shareholders at a defined price.

Negatives

• HilleVax, Inc. will be delisted from The Nasdaq Global Select Market, and its shares will be deregistered, eliminating public trading liquidity.
• Out-of-the-money stock options were cancelled for no consideration, resulting in a loss for those holders.
• The CVRs are non-transferable (except for limited 'Permitted CVR Transfers'), meaning holders cannot easily sell or trade them.
• The CVRs are explicitly stated as 'highly speculative' with 'no assurance that Holders will receive any payments.'
• The CVRs do not carry voting or dividend rights and do not represent an equity interest in the acquiring entity.
• The amended bylaws impose significant restrictions on the transfer of shares (requiring corporate consent, right of first refusal), which would severely limit liquidity for any remaining shares not tendered.

Risks

• **CVR Speculation:** The CVRs are 'highly speculative,' and there is 'no assurance that Holders will receive any payments' under the agreement.
• **Lack of Liquidity for CVRs:** CVRs are non-transferable, except for limited 'Permitted CVR Transfers,' severely restricting a holder's ability to monetize them.
• **Parent's Discretion:** Parent and its affiliates retain control over the 'Legacy Assets' and may act in their own best interests and those of their stockholders, which may not align with the interests of CVR holders.
• **Legacy Assets Transaction Uncertainty:** There is a possibility that 'no Legacy Assets Transaction will occur during the Legacy Assets Transaction Period,' which would prevent CVR payments from that source.
• **Tax Implications:** The tax treatment of CVRs is complex, and the Buyer Entities and Representative intend for CVRs related to common stock to be treated as additional consideration and Equity Award CVR payments as compensation, but no representation or warranty is made regarding tax liability.
• **Limited Enforcement Rights:** Individual CVR holders cannot initiate actions to enforce rights; only 'Acting Holders' (30% of outstanding CVRs) can direct the Representative to do so.
• **Indemnification for Representative:** The Representative Group is indemnified by Holders for expenses incurred without gross negligence, fraud, or willful misconduct, which can be recovered from the Legacy Assets and Expense Fund or directly from Holders.

Future Outlook

The future outlook for HilleVax, Inc. as an independent entity is terminated due to the acquisition. For CVR holders, the future outlook is tied to the 'Legacy Assets' (HIL-216 related intellectual property and the Kangh License Agreement) and 'Legacy Receivable Amounts.' XOMA Royalty Corporation is obligated to use commercially reasonable efforts to pursue 'Legacy Assets Transactions' and maintain the 'Legacy Assets' during the 'Legacy Assets Transaction Period' (two years post-closing). However, the CVRs are explicitly stated as highly speculative, with no assurance of payments, and XOMA Royalty Corporation will act in its own best interests.

Management Comments

• The CVRs represent the contractual rights of Holders to receive contingent cash payment of the aggregate CVR Proceeds from the Buyer Entities pursuant to this Agreement.
• The CVRs and the possibility of any payment hereunder with respect thereto are highly speculative and subject to numerous factors outside of Parents control, and there is no assurance that Holders will receive any payments under this Agreement or in connection with the CVRs.
• It is hereby acknowledged and agreed that it is possible that no Legacy Assets Transaction will occur during the Legacy Assets Transaction Period and that there will not be any Gross Proceeds that may be the subject of a CVR Payment Amount.

Industry Context

This acquisition represents a consolidation within the biotechnology or pharmaceutical sector, where larger entities often acquire smaller companies for their specific assets, such as intellectual property or pipeline candidates. The use of Contingent Value Rights (CVRs) is a common mechanism in such transactions, allowing the acquirer to pay a lower upfront cash amount while providing former shareholders with potential upside tied to the future success of specific assets, often those that are early-stage or have uncertain commercialization paths. The delisting and deregistration are standard procedures for a company transitioning from public to private ownership following an acquisition.

Comparison to Industry Standards

• The use of CVRs in this acquisition aligns with industry standards for biotech/pharma M&A, particularly when the acquired company's value is heavily tied to specific, uncommercialized assets like HIL-216. Similar structures have been used in acquisitions like Sanofi's acquisition of Principia Biopharma or Bristol Myers Squibb's acquisition of MyoKardia, where CVRs provided additional consideration contingent on regulatory approvals or sales milestones of specific drug candidates.
• The cash component of $1.95 per share, combined with a CVR, suggests a valuation that reflects the early-stage nature or perceived risk of HilleVax's assets, typical for companies with a primary asset like HIL-216. Without specific financial performance data for HilleVax or HIL-216, a direct comparison to other companies' acquisition multiples is not possible from this filing alone.
• The delisting from Nasdaq and subsequent deregistration are standard post-acquisition steps for a public company becoming a wholly-owned private subsidiary.

Management Changes

Corporate Governance

Related Party Transactions

• The Contingent Value Rights Agreement names Dr. Robert Hershberg, the Company's former Chairman, President, and CEO, as the initial representative, agent, and attorney-in-fact for the CVR holders. He also receives $25,000 at closing as compensation for this role.

Stakeholder Impact

• **Shareholders (who tendered):** Received $1.95 cash per share and a CVR, providing an immediate return and potential future upside, but losing public market liquidity.
• **Shareholders (who did not tender):** Their shares were converted into the same cash and CVR consideration, but they will lose public market liquidity and face severe transfer restrictions under the new bylaws.
• **Option Holders (in-the-money):** Received cash and CVRs, realizing value from their options.
• **Option Holders (out-of-the-money):** Their options were cancelled for no consideration, resulting in a complete loss of value.
• **Employees (management):** Former Chairman, President, and CEO Robert Hershberg and CFO Shane Maltbie ceased employment and received severance and retention bonuses. Other officers of Merger Sub became officers of the Surviving Corporation.
• **Customers/Suppliers:** No direct impact mentioned, but the change in ownership could lead to strategic shifts that might indirectly affect these relationships.
• **CVR Holders:** Have a highly speculative right to future payments, subject to the performance of Legacy Assets and the discretion of the acquiring entity, with no liquidity for the CVRs themselves.

Next Steps

• Nasdaq is expected to file Form 25 with the SEC on September 17, 2025, to delist HilleVax shares.
• Trading of HilleVax shares is expected to be suspended prior to the open of trading on September 17, 2025.
• The Company intends to file a Form 15 with the SEC to terminate registration of its shares and suspend reporting obligations.
• XOMA Royalty Corporation will manage the 'Legacy Assets' (HIL-216 related IP and Kangh License Agreement) and pursue 'Legacy Assets Transactions' during the 'Legacy Assets Transaction Period' (two years post-closing).
• CVR holders will await potential future cash payments from CVR Proceeds, which are contingent on the success of Legacy Assets Transactions and realization of Legacy Receivable Amounts.
• Parent will recalculate 'Final Net Cash' within 90 days of the Merger Closing Date.

Key Dates

Keywords

HilleVax, XOMA Royalty Corporation, Merger, Acquisition, Delisting, Contingent Value Rights (CVR), HIL-216, Biotechnology, Pharmaceutical, SEC Filing, Corporate Governance, Tender Offer, Nasdaq