Form 4: HilleVax Director Disposes Shares Post-Merger

HilleVax Director Jaime Sepulveda disposed of all common stock holdings following the company's acquisition by XOMA Royalty Corporation.

Summary

• Jaime Sepulveda, a Director of HilleVax, Inc., reported a change in beneficial ownership on September 17, 2025.
• The transaction occurred following the completion of a merger where HilleVax, Inc. was acquired by XOMA Royalty Corporation and its subsidiary, XRA 4 Corp.
• The acquisition was completed via a tender offer, after which Merger Sub merged into HilleVax, making HilleVax a wholly-owned subsidiary of XOMA Royalty Corporation.
• HilleVax shareholders received $1.95 in cash per share plus one Contingent Value Right (CVR) for each share.
• Outstanding Restricted Stock Units (RSUs) vested fully and were canceled, with holders receiving equivalent cash and CVRs.
• Jaime Sepulveda disposed of 59,224 shares of HilleVax Common Stock.
• Following the transaction, Sepulveda beneficially owns 0 shares of HilleVax.

Sentiment

Score: 7

Explanation: The filing reports the successful completion of a merger, providing liquidity and potential future value (via CVRs) to shareholders. While HilleVax ceases to be independent, the transaction itself is a positive resolution for the company's equity holders, as it represents a successful exit strategy.

Positives

• The merger provides HilleVax shareholders with a defined cash payment of $1.95 per share.
• Shareholders also receive Contingent Value Rights (CVRs), offering potential future cash payments based on specific contingencies.
• The transaction provides liquidity for HilleVax shareholders.

Negatives

• HilleVax, Inc. ceases to be an independent publicly traded entity, becoming a wholly-owned subsidiary.
• Existing shareholders no longer hold direct equity in HilleVax, limiting future upside potential beyond the CVRs.
• The reporting person, a Director, no longer holds any beneficial ownership in the company.

Risks

• The value of the Contingent Value Rights (CVRs) is subject to future contingent cash payments, which may not materialize or may be less than anticipated.
• Shareholders are exposed to the risks associated with the CVR Agreement and the performance of the underlying contingencies.

Future Outlook

HilleVax, Inc. will operate as a wholly-owned subsidiary of XOMA Royalty Corporation, indicating a change in its corporate structure and strategic direction under new ownership. The future financial performance and strategic initiatives will be integrated within XOMA Royalty Corporation's operations.

Industry Context

This acquisition reflects ongoing consolidation within the biotechnology or pharmaceutical sector, where larger entities acquire smaller companies for their assets, pipelines, or market position. Such mergers often aim to streamline operations, expand portfolios, or achieve synergies. The use of CVRs is a common mechanism in biotech M&A to bridge valuation gaps and share future risks/rewards related to contingent events like regulatory approvals or sales milestones.

Comparison to Industry Standards

• The use of a tender offer followed by a merger is a standard acquisition structure in the U.S. market, particularly for public companies.
• The inclusion of Contingent Value Rights (CVRs) as part of the consideration is a common practice in biotech and pharmaceutical M&A, especially when the target company has pipeline assets with uncertain future value. For example, similar structures have been seen in acquisitions like Sanofi's acquisition of Principia Biopharma or Bristol Myers Squibb's acquisition of Celgene, where CVRs were used to compensate for specific drug development milestones.
• The cash component of $1.95 per share provides immediate value, while the CVR offers potential upside, aligning with typical risk-sharing mechanisms in such deals.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Received cash and CVRs for their shares, providing liquidity and potential future value. No longer hold direct equity in HilleVax.
• Management/Directors: Jaime Sepulveda, a director, disposed of all shares, indicating a change in his relationship with the company post-merger.

Next Steps

• HilleVax, Inc. will operate as a wholly-owned subsidiary of XOMA Royalty Corporation.
• The CVR Agreement will govern the potential future contingent cash payments to CVR holders.

Key Dates

Recommendation

The filing confirms the completion of the merger, where HilleVax, Inc. became a wholly-owned subsidiary of XOMA Royalty Corporation. As a result, HilleVax common stock is no longer publicly traded, and shareholders have received the merger consideration of $1.95 cash plus one CVR per share. Therefore, there is no longer a public market for HilleVax shares to 'buy' or 'hold,' and the transaction represents a final 'sell' or 'exit' for existing shareholders.

Keywords

HilleVax, HLVX, XOMA Royalty Corporation, Merger, Acquisition, Tender Offer, Contingent Value Right, CVR, Form 4, Insider Trading, Director, Jaime Sepulveda