Form 4: Verve Therapeutics Director's Stock Options Cashed Out Following Eli Lilly Merger

Lonnel Coats' stock options in Verve Therapeutics were cancelled and converted to cash and non-tradeable contingent value rights as part of the company's merger with Eli Lilly and Company.

Summary

• Lonnel Coats, a Director of Verve Therapeutics, Inc. (VERV), reported the cancellation of his stock options.
• The cancellation occurred on July 25, 2025, which was the effective time of the merger between Verve Therapeutics, Inc. and Eli Lilly and Company.
• The merger was pursuant to an Agreement and Plan of Merger dated June 16, 2025, involving Verve, Eli Lilly and Company ('Parent'), and Parent's indirect wholly owned subsidiary, Ridgeway Acquisition Corporation.
• Each outstanding stock option with an exercise price less than $10.50 per share ('Cash-Out Stock Option') was automatically cancelled.
• Holders of Cash-Out Stock Options received cash equal to the product of (a) the excess of the $10.50 Cash Consideration over the applicable exercise price, multiplied by (b) the total number of shares subject to the option.
• Additionally, holders received one non-tradeable contingent value right (CVR) for each share subject to such Cash-Out Stock Option.
• Lonnel Coats' options included 136,139 shares at an exercise price of $5.02 and 42,200 shares at an exercise price of $5.73.
• Following the transaction, Lonnel Coats beneficially owns 0 derivative securities.

Sentiment

Score: 7

Explanation: The filing confirms the successful completion of a merger, providing a cash payout for in-the-money options, which is a positive for option holders. However, the non-tradeable nature of the contingent value rights introduces uncertainty regarding their future value.

Positives

• Lonnel Coats received a cash payout for his in-the-money stock options, reflecting the value created by the merger.
• The transaction provides liquidity for the vested and unvested options that qualified as Cash-Out Stock Options.

Negatives

• The stock options were cancelled, meaning Lonnel Coats no longer holds equity upside in Verve Therapeutics.
• The contingent value rights (CVRs) received are non-tradeable, limiting their liquidity and immediate value realization.
• The future value of the CVRs is uncertain and dependent on future events or milestones, which are not detailed in this filing.

Risks

• The contingent value rights (CVRs) are non-tradeable, meaning their value cannot be realized through market sale.
• The ultimate value of the CVRs is uncertain and could be zero, depending on the achievement of specific milestones or conditions not detailed in this filing.

Future Outlook

The filing confirms the completion of the merger, indicating that Verve Therapeutics, Inc. is now an indirect wholly-owned subsidiary of Eli Lilly and Company. The future value for former option holders is now tied to the non-tradeable contingent value rights.

Industry Context

This transaction is a standard outcome in pharmaceutical and biotechnology mergers and acquisitions, where outstanding equity awards like stock options are typically cashed out or converted based on the terms of the merger agreement. The inclusion of contingent value rights (CVRs) is also common in biotech deals, allowing for additional payouts if certain clinical or regulatory milestones are achieved post-acquisition.

Comparison to Industry Standards

• The mechanism of cashing out in-the-money stock options at the effective time of a merger is a standard practice in corporate acquisitions, aligning with typical deal structures in the biotech and pharmaceutical sectors.
• The use of contingent value rights (CVRs) as part of the consideration is also a common feature in biotech M&A, particularly when there is uncertainty regarding the future value or success of pipeline assets, similar to deals involving companies like Acceleron Pharma (acquired by Merck) or MyoKardia (acquired by Bristol Myers Squibb) where CVRs were part of the consideration.

Stakeholder Impact

• Shareholders who held stock options with an exercise price below $10.50 per share received a cash payout for the intrinsic value of their options.
• Option holders also received non-tradeable contingent value rights, tying a portion of their potential future returns to the achievement of specific milestones by the acquired assets under Eli Lilly's ownership.

Key Dates

Keywords

Verve Therapeutics, Eli Lilly, Merger, Acquisition, Stock Options, Form 4, Insider Transaction, Corporate Governance, Biotech, Pharmaceutical, Contingent Value Right