DEFM14A: Mural Oncology to be Acquired by XOMA Royalty

Mural Oncology plc shareholders to vote on a scheme of arrangement for acquisition by XOMA Royalty Corporation, offering $2.035 to $2.24 per share in cash.

Summary

• Mural Oncology plc (Mural) entered into a Transaction Agreement on August 20, 2025, to be acquired by XOMA Royalty Corporation (Bidder) and its subsidiary XRA 5 Corp. (Sub) via a scheme of arrangement under Irish law.
• Mural shareholders will receive a base cash price of $2.035 per share.
• An additional cash amount of up to $0.205 per share (totaling up to $2.24 per share) may be paid if Mural's closing net cash exceeds an estimated $36.2 million.
• Mural Options with an exercise price equal to or greater than the Scheme Consideration will be cancelled without payment, while Mural Restricted Stock Units (RSUs) will be converted into the right to receive the Scheme Consideration.
• The Mural Board unanimously recommends shareholders vote FOR all proposals related to the acquisition.
• The acquisition values Mural's entire issued and to be issued share capital at approximately $36.2 million, excluding any Additional Price Per Share.
• The offer represents a 13.1% premium to Mural's closing share price of $1.80 on August 19, 2025, and a 97.6% premium to its undisturbed closing share price of $1.03 on April 14, 2025.
• The acquisition is expected to close by the end of 2025, subject to shareholder and Irish High Court approvals.
• Mural announced on March 25, 2025, that its Phase 3 ARTISTRY-7 trial for nemvaleukin alfa did not meet its primary endpoint, leading to the discontinuation of all clinical development of nemvaleukin.
• On April 15, 2025, Mural initiated an exploration of strategic alternatives, including a workforce reduction of approximately 90% (104 positions), and ceased all remaining preclinical development activities on June 3, 2025.

Sentiment

Score: 3

Explanation: The company's core drug development programs have failed, leading to a complete cessation of clinical and preclinical activities and a significant workforce reduction. This acquisition, while offering a premium over recent trading prices, is essentially a structured wind-down, reflecting the failure of the core business strategy. The guaranteed cash exit is a positive given the circumstances, but the overall situation is very unfavorable.

Positives

• Shareholders are guaranteed a base cash price of $2.035 per share, providing immediate and certain value.
• There is a potential for an additional cash amount of up to $0.205 per share, based on excess net cash.
• The offer represents a 13.1% premium over the closing share price on August 19, 2025 ($1.80).
• The offer represents a 97.6% premium over the undisturbed closing share price on April 14, 2025 ($1.03), prior to the strategic review announcement.
• The all-cash consideration provides liquidity and certainty for shareholders.
• The acquisition offers a more timely return of value compared to a protracted voluntary liquidation process, which Mural management estimated could extend until late 2028 or beyond.
• Bidder has sufficient cash and cash equivalent resources to fund the acquisition.
• The acquisition is structured as a scheme of arrangement, which is expected to result in a relatively short period before shareholders receive consideration.
• The Mural Board unanimously recommends the acquisition, advised by Lucid Capital Markets, LLC, who deemed the terms fair from a financial point of view.

Negatives

• There is no certainty of receiving the Additional Price Per Share; it will be zero if closing net cash does not exceed the estimated $36.2 million.
• The Additional Price Per Share is capped at $0.205, meaning shareholders may not receive 100% of any excess cash beyond this cap.
• Mural is not permitted to terminate the Transaction Agreement if the Additional Price Per Share is zero.
• Certain directors and executive officers have interests in the acquisition that are in addition to, or different from, general shareholders' interests (e.g., equity awards, severance, retention bonuses, indemnification).
• The Transaction Agreement contains non-solicitation provisions that may discourage other companies from making superior offers.
• Mural may be required to pay an expense reimbursement to Bidder under certain termination circumstances (up to 1% of aggregate Scheme Consideration).
• The gain realized by Mural shareholders as a result of the acquisition will generally be taxable for U.S. federal income tax purposes.
• Mural shareholders will not have appraisal or dissenters rights under Irish law.
• The company's lead product candidate, nemvaleukin alfa, failed its primary endpoint in the ARTISTRY-7 trial and all clinical development of nemvaleukin has been discontinued.
• Mural has ceased all preclinical development activities.
• Mural implemented a workforce reduction of approximately 90% (104 positions).
• Mural's financial condition raises substantial doubt about its ability to continue as a going concern if a strategic transaction is not completed.

Risks

• Uncertainty regarding the amount of Scheme Consideration, as the Additional Price Per Share is not guaranteed and is capped at $0.205.
• Risk that conditions to the acquisition are not satisfied or waived, leading to non-consummation or delays.
• Transaction Agreement provisions may discourage superior alternative offers.
• If the Transaction Agreement is terminated, Mural may not be able to negotiate another strategic transaction on comparable or better terms.
• Interests of Mural's directors and executive officers in the acquisition may differ from general shareholders.
• Potential for securities litigation or shareholder derivative litigation, which could divert management attention and reduce closing net cash.
• Mural shareholders do not have appraisal or dissenters rights under Irish law.
• Ongoing costs could cause Closing Net Cash to be lower than estimated, resulting in a zero Additional Price Per Share.
• The process of a voluntary liquidation could be protracted, potentially not completing until the end of 2028 at the earliest, with uncertain actual cash distributions.
• Mural's indemnification obligations to Alkermes under the Tax Matters Agreement are not limited in amount or subject to any cap, posing a substantial theoretical liability.
• Uncertainty regarding the impact of a prolonged government shutdown or changes in presidential administration on regulatory agencies (FDA, SEC) and their ability to review submissions.
• Risks associated with operating internationally, including unfavorable political/tax conditions, trade laws, and geopolitical tensions.
• Loss of key management personnel due to intense competition for skilled personnel or employee attrition following the workforce reduction.
• Potential for costly and damaging product liability claims, even if insurance is maintained.
• Failure to comply with environmental, health, and safety laws and regulations.
• Impact of catastrophic events (terrorist attack, war, pandemic, natural disaster) on operations.
• Compliance with state, national, and international privacy and data security requirements, including GDPR, could result in additional costs and liabilities.
• Security breaches or failures of computer systems could harm reputation and business.
• Changes in tax law could adversely affect the business and financial condition.
• Broad discretion of management regarding the use of cash, cash equivalents, and marketable securities.
• The company's financial condition raises substantial doubt about its ability to continue as a going concern.

Future Outlook

The acquisition is expected to be completed by the end of 2025. Following completion, Mural will become an indirect wholly-owned subsidiary of Bidder. Bidder intends to execute an orderly wind-down of substantially all of Mural's legacy operations, including consolidating corporate functions into Bidder's existing operations and disposing of Mural's tangible and intangible assets. There is no certainty that the Closing Net Cash will exceed the Estimated Closing Net Cash, and thus no certainty of the Additional Price Per Share being paid.

Management Comments

• The Mural Board recommends unanimously that you vote FOR all proposals.
• The Mural Board has determined that the Transaction Agreement and the transactions contemplated by the Transaction Agreement, including the Scheme, are fair to and in the best interests of Mural and the Mural Shareholders and that the terms of the Scheme are fair and reasonable.
• In considering the recommendation of the Mural Board, you should be aware that certain directors and executive officers of Mural may have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders.
• On behalf of the Mural Board, thank you for your consideration and continued support. (Caroline Loew, Ph.D., Chief Executive Officer and Scott Jackson, Chair of the Board of Directors)
• Mural management concluded that a liquidator, acting pursuant to relevant Irish law, may be unwilling to complete a liquidation and distribute all residual cash to the Mural Shareholders prior to December 31, 2028.

Industry Context

The acquisition by XOMA Royalty Corporation, a biotechnology royalty aggregator, aligns with its strategy to enhance its profile by contributing to capital formation in the life sciences industry. XOMA's approach involves acquiring public companies for cash and promptly liquidating them to return cash to stockholders, avoiding a traditional, potentially more expensive and protracted liquidation process. This trend is notable given that 25% of U.S.-listed biotech companies had a negative enterprise value as of March 14, 2025. Mural's decision to pursue this acquisition follows the failure of its lead product candidate, nemvaleukin alfa, in late-stage clinical trials and the discontinuation of all clinical and preclinical development, reflecting a broader industry challenge for clinical-stage biotech companies when lead assets fail.

Comparison to Industry Standards

• The transaction fee payable to Bidder ($5.5 million, inclusive of $1 million capped expenses) falls within the range of transaction fees observed in comparable precedent cash acquisitions of biopharmaceutical companies, which ranged from $5.1 million to $31.2 million, with a median of $6.8 million and an average of $10.4 million.
• The proposed cash consideration of up to $2.24 per share represents an approximate 23% premium to Mural's trading price of $1.82 per share as of August 18, 2025, which is a positive indicator for shareholders in a distressed asset sale.
• The implied estimated present value of a projected liquidation payment of $2.24 per Mural Share (based on a 2028 liquidation discounted to 2025) is comparable to the maximum Scheme Consideration, suggesting the acquisition offers a similar or potentially better outcome than a prolonged, uncertain liquidation process.
• The acquisition provides a significantly faster return of value to shareholders compared to a voluntary liquidation, which Mural management estimated would not be completed until the end of 2028 at the earliest.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of the proxy statement, Mural is not aware of any lawsuits challenging the Acquisition.
• Potential for securities litigation or shareholder derivative litigation frequently follows the announcement of significant business transactions, which could divert management attention and resources.

Related Party Transactions

• Mural entered into a Tax Matters Agreement with Alkermes plc (its former parent company) on November 13, 2023, which governs tax-related rights, responsibilities, and obligations. This agreement imposes restrictions designed to preserve the tax-free status of the distribution of Mural Shares to Alkermes shareholders.
• Mural's indemnification obligations to Alkermes under the Tax Matters Agreement are not limited in amount or subject to any cap, posing a substantial theoretical liability if the tax-free status is compromised due to Mural's actions.

Stakeholder Impact

• Shareholders: Will receive cash consideration ($2.035 to $2.24 per share) and a premium over recent trading prices, providing a certain exit from a company facing significant challenges. Will lose ownership and voting rights in Mural.
• Employees: A workforce reduction of approximately 90% (104 positions) has occurred. Remaining employees may be engaged on a consulting basis for wind-down. Severance benefits and retention bonuses are detailed for executive officers.
• Directors and Executive Officers: Will receive consideration for their equity awards (options with strike price above max consideration will be cancelled without payment). Severance benefits and retention bonuses are applicable for executive officers. Non-executive directors will resign. Indemnification and liability insurance coverage will be maintained for six years.
• Customers/Suppliers: The wind-down of operations implies cessation of existing business relationships, potentially impacting suppliers and any remaining customers.
• Creditors: Liabilities will be satisfied as part of the liquidation process, with reasonable provision for contingent and unknown obligations.

Next Steps

• Mural shareholders to vote on the Scheme of Arrangement at the Scheme Meeting on October 24, 2025.
• Mural shareholders to vote on supporting resolutions and an amendment to the Articles of Association at the EGM on October 24, 2025.
• Irish High Court application to sanction the Scheme, anticipated to be heard on November 3, 2025.
• Completion of the Acquisition is expected by the end of 2025.
• Following completion, Mural shares will be delisted from Nasdaq and deregistered under the Exchange Act.
• Bidder intends to execute an orderly wind-down of substantially all of Mural's legacy operations.
• Bidder plans to consolidate Mural's remaining corporate functions into its existing operations.
• Bidder expects to redeploy, monetize, or otherwise dispose of substantially all of Mural's legacy tangible or intangible assets.
• Mural's existing corporate lease will be assigned, sub-leased, or terminated.
• Bidder may seek a reduction of capital for Mural, requiring separate Irish High Court confirmation.

Key Dates

Recommendation

The company's core drug development programs have failed, leading to a complete cessation of clinical and preclinical activities and a significant workforce reduction. The proposed acquisition by XOMA Royalty Corporation, while offering a premium over recent trading prices, is essentially a structured wind-down, providing a cash exit for shareholders. Given the fundamental failure of the business and the substantial doubt about its ability to continue as a going concern, accepting the cash offer and exiting the position is the most prudent course of action for investors. The alternative of a prolonged, uncertain liquidation process carries higher risks and potentially lower returns.

Keywords

Mural Oncology, XOMA Royalty, Acquisition, Scheme of Arrangement, Biotechnology, Oncology, SEC Filing, Proxy Statement, Shareholder Vote, Cash Acquisition, Corporate Governance, Risk Factors, Financial Metrics, Nemvaleukin, ARTISTRY-7, ARTISTRY-6, Clinical Trials, Strategic Alternatives, Liquidation Analysis, Ireland Companies Act, Irish Takeover Rules, Nasdaq, MURA