Locust Walk Acquisition Corp.
PROPOSED BUSINESS COMBINATION: eFFECTOR Therapeutics, Inc.
ENTERPRISE VALUE: $419 million
ANTICIPATED SYMBOL: EFTR
Locust Walk Acquisition Corp. proposes to combine with eFFECTOR Therapeutics, Inc., a biopharmaceutical company focused on pioneering the development of selective translation regulation inhibitors (STRIs) for the treatment of cancer.
eFFECTOR is a clinical-stage biopharmaceutical company focused on pioneering the development of a new class of oncology drugs referred to as selective translation regulator inhibitors (STRIs). eFFECTOR’s STRI product candidates target the eIF4F complex and its activating kinase, mitogen-activated protein kinase 1/2 (MNK 1/2). The eIF4F complex is a central node where two of the most frequently mutated signaling pathways in cancer, the PI3K-AKT and RAS-MEK pathways, converge to activate the translation of select messenger RNA into proteins that are frequent culprits in key disease driving processes. Each of eFFECTOR’s product candidates is designed to act on a single protein that drives the expression of multiple functionally related proteins, including oncoproteins and immunosuppressive proteins in T cells, that together control tumor growth, survival and immune evasion. eFFECTOR’s lead product candidate, tomivosertib, is a MNK 1/2 inhibitor. KICKSTART, a randomized, double-blind, placebo controlled Phase 2b trial of tomivorsertib in NSCLC in combination with pembrolizumab is currently open for enrollment. Zotatifin, eFFECTOR’s inhibitor of eIF4A, is currently in the dose-escalation portion of a Phase 1/2 trial, with Phase 2a expansion cohorts expected to initiate in the second half of 2021. eFFECTOR has a global collaboration with Pfizer to develop inhibitors of a third target, eIF4E. eFFECTOR plans to evaluate zotatifin as a potential host-directed anti-viral therapy in patients with mild to moderate COVID in collaboration with University of California, San Francisco, under a $5 million grant sponsored by the Defense Advanced Research Projects Agency.
Proceeds from the transaction are expected to provide eFFECTOR with the capital to further develop its pipeline, advancing it through multiple clinical milestones, including the following:
- Report topline data from the randomized Phase 2b KICKSTART clinical trial of eFFECTOR’s lead product candidate, tomivorsertib, an oral small-molecule inhibitor of mitogen-activated protein kinases 1 and 2 (MNK) 1/2, in combination with pembrolizumab in metastatic non-small cell lung cancer (NSCLC), both in the frontline extension and frontline settings; this study is open for enrollment.
- Initiate multiple Phase 2a expansion cohorts for zotatifin, a small-molecule inhibitor of eIF4A, in patients with breast cancer and NSCLC in the second half of 2021.
- Support expansion of both tomivosertib and zotatifin into additional indications.
TRANSACTION
- Upon the closing of the business combination, and assuming no redemptions of shares of LWAC by its public stockholders, eFFECTOR would be expected to have cash resources of approximately $210 million (less any redemptions), and a total enterprise valuation of $419 million.
- The transaction includes up to $175 million in trust at LWAC (less any redemptions by existing LWAC stockholders) and a concurrent, fully committed $60 million PIPE financing of common stock issued at $10.00 per share from new and existing leading healthcare investors including founding Series A investors Abingworth, SR One, The Column Group and U.S. Venture Partners, as well as Altitude Life Science Ventures, Sectoral Asset Management, Pfizer Ventures, Alexandria Venture Investments, BioMed Ventures and Osage University Partners.
PIPE
- Fully committed $60 million PIPE financing of common stock issued at $10.00 per share from new and existing leading healthcare investors including founding Series A investors Abingworth, SR One, The Column Group and U.S. Venture Partners, as well as Altitude Life Science Ventures, Sectoral Asset Management, Pfizer Ventures, Alexandria Venture Investments, BioMed Ventures and Osage University Partners.
LOCK-UP
The Sponsor has agreed not to transfer any of its shares of LWAC Common Stock during the period beginning on the date of the Closing (the “Closing Date”) and ending on the earlier of:
- (x) 270 days after the Closing Date
- (y) the date on which the price of LWAC Common Stock equals or exceeds $12.00 for any 20 trading days within any 30 trading day period following the 90th day after the Closing Date
- (z) a Change of Control (as defined in the Sponsor Lock-up Agreement).
- The Earn-Out Shares and any shares of LWAC Common Stock issuable upon exercise of Assumed Options, during the period beginning on the Closing Date and ending on the earlier of
- (a) 270 days after the Closing Date
- (b) the date on which the price of LWAC Common Stock equals or exceeds $12.00 for any 20 trading days within any 30 trading day period following the 90th day after the Closing Date
- (c) a Change of Control.
EARNOUT
- Former holders of shares of eFFECTOR Common Stock (including shares received as a result of the conversion of eFFECTOR Preferred Stock and exercise of the eFFECTOR Warrants) and eFFECTOR stock options will be entitled to receive their pro rata share of up to 5,000,000 additional shares of LWAC Common Stock (the “Earn-Out Shares”)
- If, within a two-year period following the Closing (the “Earn-Out Period”), the closing share price of LWAC Common Stock equals or exceeds $20.00 over at least 20 trading days within a 30-day trading period (the “Triggering Event”) and, in respect of each former holder of eFFECTOR stock options, such holder continues to provide services to LWAC or one of its subsidiaries at the time of such Triggering Event.
- The Earn-Out Shares will also be earned and issuable in the event of a change in control of LWAC during the Earn-Out Period that results in the holders of LWAC Common Stock receiving a per-share price equal to or in excess of $20.00.
NOTABLE CONDITIONS TO CLOSING
- The amount of Closing Parent Cash being equal to or exceeding $100,000,000.
NOTABLE CONDITIONS TO TERMINATION
- By either LWAC or eFFECTOR if the Merger is not consummated on or before November 26, 2021 (the “Outside Date”)
ADVISORS
- Credit Suisse and Stifel are acting as lead PIPE placement agents
- Credit Suisse is also acting as capital markets advisor to eFFECTOR.
- Locust Walk Securities is also acting as PIPE placement agent.
- Latham & Watkins LLP is acting as legal counsel to eFFECTOR.
- Cantor Fitzgerald is acting as the lead capital markets advisor to LWAC.
- JMP Securities and Mizuho Securities are also acting as capital markets advisors to LWAC.
- Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is serving as legal counsel to LWAC.
MANAGEMENT & BOARD
Executive Officers
Chris Ehrlich, 50
Chief Executive Officer and Director
Since May 2013, Mr. Ehrlich has served as Senior Managing Director and Head of Locust Walk Partners’ Global Biopharma team. Prior to joining Locust Walk Partners in 2013, Mr. Ehrlich served as a Managing Director at InterWest Partners, a venture capital firm focused on healthcare and information technology, from 2000 to 2013. At InterWest, he served on the boards of KAI Pharmaceuticals, a privately held pharmaceutical company (acquired by Amgen in 2012), Biomimetic Therapeutics, Inc., a biotechnology company (acquired by Wright Medical Technologies in 2013), InvuitY, Inc., a medical technology company acquired by Stryker in 2018) and Xenon Pharmaceuticals, a biopharmaceutical company (NASDAQ: XENE). Prior to joining InterWest, Mr. Ehrlich was the Director of Licensing and Business Development at Purdue Pharma, a private pharmaceutical firm, where he was responsible for developing a biologic oncology franchise, including in-licensing key intellectual properties, establishing and managing collaborations with biotechnology companies and leading the commercial operations of Purdue BioPharma, a biotechnology company. Prior to joining Purdue BioPharma, Mr. Ehrlich worked in business development at Genentech, a biotechnology company, in venture capital at the U.S. Russia Investment Fund, and in biotechnology strategy development at L.E.K. Consulting. Since 2014, Mr. Ehrlich has served on the Board of Directors of Prostate Management Diagnostics, Inc., a diagnostics company, on the Advisory Board of the Peter Michael Foundation, a charity focused on prostate cancer where he has been a Senior Advisor since 2012, and on the Healthcare at Kellogg Advisory Board at Northwestern University since 2019. He received his undergraduate degree from Dartmouth College and a MBA from the Kellogg School of Management at Northwestern University. He is also a registered representative with FINRA, holding his Series 79, 63 and 24 licenses.
Daniel Geffken, 63
Chief Financial Officer
Mr. Geffken has been an executive in the life sciences industry since 1993. Mr. Geffken is a founder and managing director at Danforth Advisors, LLC, a management consulting firm to the life science industries, where he has served since 2011. Through Danforth, Mr. Geffken has served as Chief Financial Officer for ProMIS Neurosciences (TSX: PMN; OTCQB: ARFXF), a biotechnology company focused on the discovery and development of antibody therapeutics for neurodegenerative diseases, since March 2017, and is currently chief financial officer of various life sciences companies including Matrivax Research & Development Corp., Vaxxinity, Prilenia Therapeutics Development Corp., Apic Bio Inc., Clear Creek Bio, Inc., Windgap Medical, Inc., Zikani Therapeutics, Inc., Artax BioPharma Inc., Palvella Therapeutics, Inc., Apnimed, Inc., Elicio Therapeutics Inc., Dermbiont, Inc., Vigeo Therapeutics, Inc., AnTolRx, Inc., Privo Technologies Inc., Nemucore Medical Innovations and Calcimedica Inc. Since 2013, he has participated in 10 initial public offering filings and has assisted in raising more than $1 billion in debt and equity securities. Since 2019, Mr. Geffken has been a member of the board of directors of Windtree Therapeutics (NASDAQ: WINT), a biopharmaceutical company and, from May 2013 to October 2017, he was a member of the board of directors of Alcobra Ltd., a public biotechnology company that merged with Arcturus Therapeutics, Inc. (NASDAQ: ARCT). From November 2017 until May 2018, Mr. Geffken served on the board of directors of Arcturus. Mr. Geffken holds a B.S. in Economics from The Wharton School, University of Pennsylvania, and a M.B.A. from Harvard Business School.
Board of Directors
Brian G. Atwood, 68
Director
Mr. Atwood serves as a Managing Director for Versant Ventures, a healthcare-focused venture capital firm that he co-founded in 1999. In 2015, Mr. Atwood co-founded Cell Design Labs, Inc., a biotechnology company focused on developing human cell engineering technology for the treatment of multiple diseases, including cancer, where he served as President and Chief Executive Officer until 2017, when it was acquired by Gilead Sciences. Mr. Atwood serves on the board of directors of Clovis Oncology, Inc. (NASDAQ: CLVS), and Atreca, Inc. (NASDAQ: BCEL), where he is Chairman. He also served on the board of directors of Immune Design Corp. from May 2008 until June 2016 (acquired by Merck in 2019), Veracyte, Inc., from its founding in 2008 until December 2016, OpGen Inc., from July 2007 until December 2017, Five Prime Therapeutics, from 2002 until March 2016, Cadence Pharmaceuticals, Inc. from March 2006 until its acquisition in March 2014, Helicos Biosciences from 2003 until September 2011, Pharmion Corporation from 2000 until its acquisition in March 2008 and Trius Therapeutics, Inc. from February 2007 until its acquisition in September 2013. Mr. Atwood holds a B.S. in Biological Sciences from the University of California, Irvine, a M.S. in Ecology from the University of California, Davis, and an M.B.A. from Harvard Business School.
Elizabeth P. Bhatt, 53
Director
Since September 2019, Ms. Bhatt has served as the Chief Business and Strategy Officer of Applied Molecular Transport Inc. (NASDAQ: AMTI), a publicly traded clinical-stage biopharmaceutical company. Before that, Ms. Bhatt was at Achaogen, Inc., a biopharmaceutical company, where she served as Chief Operating Officer from July 2018 to June 2019 and Chief Business Officer from September 2017 to June 2019. In April 2019, Achaogen filed a petition for bankruptcy in federal court seeking protection under Chapter 11 of the Bankruptcy Code. Prior to Achaogen, Ms. Bhatt held various roles at Gilead Sciences, Inc. (NASDAQ: GILD), a publicly traded research-based biopharmaceutical company, from July 2006 to September 2017, including Vice President, Corporate Development from January 2016 to September 2017 and Senior Director, Corporate Development from May 2011 to December 2015. Ms. Bhatt holds a B.A. in Chemistry from Pomona College, an M.S. in Biomedical Sciences from the University of California, San Diego and a M.B.A. from the Kellogg School of Management at Northwestern University.
Barbara A. Kosacz, 62
Director
Since July 2020, Ms. Kosacz has served as the Chief Operating Officer and General Counsel of Kronos Bio, Inc. (NASDAQ: KRON), a publicly traded clinical-stage biopharmaceutical company. Prior to that, Ms. Kosacz was a Partner at the international law firm of Cooley LLP from January 1997 to December 2000, and again from February 2002 until July 2020, where she led the international Life Sciences Practice. Ms. Kosacz has more than 25 years of experience in counseling clients in the life sciences arena, ranging from early stage startups to larger public companies, venture funds, investment banks, and non-profit institutions. She has served as a member of the BIO Emerging Companies’ Section Governing Board, is a member of the Board of Trustees of the Keck Graduate Institute, an advisory board member of Locust Walk Partners, and has been a speaker at multiple life sciences-related conferences, as well as guest lecturer at the University of California, Berkeley, and Stanford University about biotechnology law, biotechnology business models, corporate partnering negotiations and deal structures, and bioethics. Recognized by Best Lawyers in America since 2008 and most recently as Biotechnology Lawyer of the Year in 2018, Ms. Kosacz was listed as a “leading lawyer” for healthcare and life sciences in the 2018 Legal 500, as a “Band 1” attorney in the 2018 edition of Chambers USA: America’s Leading Lawyers for Business and recognized as a “highly recommended transactions” lawyer by IAM Patent 1000 for her “nearly three decades advising diverse companies in the industry at a deeply strategic and commercial level and overseeing their most complex and profitable deals.” Ms. Kosacz is currently senior counsel at Cooley LLP and a member of the board of directors of Xoma Corp. (NASDAQ: XOMA), a biotechnology company. Ms. Kosacz received her received B.A. from Stanford University and her J.D. from the University of California, Berkeley School of Law.
Caroline M. Loewy, 54
Director
Ms. Loewy serves on public company boards, provides strategic advisory services to life science companies, and has more than 25 years of experience in the biopharmaceutical industry. She co-founded and served as Chief Financial Officer and Chief Business Officer of Achieve Life Sciences, Inc., a specialty pharmaceuticals company, from 2015 to 2017. Prior to Achieve Life Sciences, she served as Chief Financial Officer of several life sciences companies, including Tobira Therapeutics, Inc. from 2012 to 2014, Corcept Therapeutics Inc. from 2008 to 2011 and Poniard Pharmaceuticals, Inc. from 2006 to 2008. Prior to that, Ms. Loewy was a senior biotechnology equity research analyst at Morgan Stanley, Inc. from 2000 to 2004 and Prudential Securities, Inc. from 1996 to 1999. She began her career as a financial analyst at BankAmerica Corporation. Ms. Loewy is a founding board member of the Global Genes Project and a member of the Steering Committee of the Forum for Collaborative Research in Rare Diseases. She is also a founding board member of the KCNQ2 Cure Alliance Foundation. Ms. Loewy currently serves on the boards of directors of, Zogenix, Inc., CymaBay Therapeutics Inc., Aptose Biosciences Inc. and PhaseBio Pharmaceuticals, Inc. Ms. Loewy holds a B.A. from the University of California, Berkeley, and a M.B.A./M.S. degree from Carnegie Mellon University.