Form 4: Verve Therapeutics Officer Converts Equity Holdings Following Eli Lilly Merger

Andrew D. Ashe, President, COO, and General Counsel of Verve Therapeutics, Inc., converted all his common stock, stock options, and restricted stock units into cash and contingent value rights as a result of the company's merger with Eli Lilly and Company.

Summary

• Verve Therapeutics, Inc. completed its merger with Eli Lilly and Company's indirect wholly-owned subsidiary, Ridgeway Acquisition Corporation, effective July 25, 2025.
• As part of the merger, tendering stockholders received $10.50 per share in cash (Cash Consideration) plus one non-tradable contingent value right (CVR) for up to $3.00 per CVR upon achievement of a specified milestone.
• Following the merger, Verve Therapeutics, Inc. became a wholly-owned subsidiary of Eli Lilly and Company.
• Andrew D. Ashe, a reporting officer, disposed of all his directly held common stock, resulting in 0 shares beneficially owned after the transaction.
• All outstanding stock options with an exercise price less than the Cash Consideration were cancelled, with holders receiving cash equal to the excess of the Cash Consideration over the exercise price, multiplied by the number of shares, plus one CVR per share.
• All unvested Restricted Stock Units (RSUs) were cancelled, with holders receiving cash equal to the Cash Consideration multiplied by the number of shares subject to the RSU, plus one CVR per RSU.
• Stock options with an exercise price equal to or greater than the Cash Consideration and less than the sum of the Cash Consideration and the Milestone Payment were cancelled, entitling holders to a cash payment based on the CVR value, provided the sum of Cash Consideration and Milestone Payment exceeded the exercise price.
• Specific derivative holdings converted include stock options with exercise prices of $6.01 (225,000 shares), $8.24 (107,997 shares), $2.87 (153,278 shares), $1.48 (26,999 shares), and $12.75 (150,000 shares), as well as Restricted Stock Units (40,000 and 27,000 units).

Sentiment

Score: 7

Explanation: The sentiment is positive as the merger successfully closed, providing shareholders with immediate cash and potential future upside via CVRs, representing a successful exit for Verve Therapeutics as an independent entity.

Positives

• The merger provides immediate cash consideration of $10.50 per share to Verve Therapeutics shareholders.
• Shareholders and equity holders receive a Contingent Value Right (CVR) with potential for an additional $3.00 per CVR, offering future upside tied to a specific milestone.
• The acquisition by Eli Lilly, a major pharmaceutical company, provides a clear exit strategy and valuation for Verve Therapeutics' assets and technology.

Negatives

• Verve Therapeutics, Inc. ceases to be an independent publicly traded entity, becoming a wholly-owned subsidiary of Eli Lilly and Company.
• The full value of the CVR is contingent upon the achievement of a specified milestone, introducing an element of uncertainty for the total consideration received.

Risks

• The Contingent Value Right (CVR) payment of up to $3.00 per CVR is not guaranteed and is contingent upon the achievement of a certain specified milestone relating to Verve Therapeutics' business.

Future Outlook

The future outlook for former Verve Therapeutics shareholders includes the potential to receive an additional contingent payment of up to $3.00 per CVR, which is dependent on the achievement of a specific business milestone.

Industry Context

This acquisition reflects a broader trend in the pharmaceutical and biotechnology industries where larger, established pharmaceutical companies like Eli Lilly acquire innovative biotech firms, particularly those with promising gene-editing technologies, to bolster their pipelines and expand into new therapeutic areas. Such mergers often involve a combination of upfront cash and contingent value rights to account for the developmental stage and inherent risks of biotech assets.

Comparison to Industry Standards

• The use of a Contingent Value Right (CVR) in this merger is a common mechanism in biotech acquisitions, especially when the acquired company's value is tied to future clinical or regulatory milestones. This structure allows the acquirer to mitigate risk while providing potential upside to the selling shareholders.
• The cash consideration of $10.50 per share, combined with a potential $3.00 CVR, provides a total potential value of $13.50 per share, which can be compared to recent acquisition premiums in the gene-editing or cardiovascular disease therapeutic areas.
• Similar transactions in the gene-editing space have seen varying structures, but the combination of immediate cash and milestone-based payments is a standard approach to bridge valuation gaps between buyers and sellers for pre-commercial assets.

Stakeholder Impact

• Shareholders of Verve Therapeutics received cash and CVRs for their shares, converting their investment into a definitive payout and a contingent future payment.
• Employees, including the reporting officer, had their equity compensation converted into cash and CVRs, aligning their financial interests with the merger's terms.

Next Steps

• Achievement of the specified milestone for the Contingent Value Right (CVR) payment.

Key Dates

Keywords

Verve Therapeutics, Eli Lilly, Merger, Acquisition, Form 4, Insider Trading, Stock Options, Restricted Stock Units, Contingent Value Right, Biotechnology, Pharmaceuticals