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CM Life Sciences III Inc.

CM Life Sciences III Inc.

Feb 25, 2021 by Kristi Marvin

PROPOSED BUSINESS COMBINATION: EQRx, Inc.

ENTERPRISE VALUE: $3.538 Billion
ANTICIPATED SYMBOL: EQRX

CM Life Sciences III, Inc. proposes to combine with EQRx, Inc., a new type of pharmaceutical company committed to developing and delivering important new medicines to patients at radically lower prices.

EQRx is purpose-built, at scale, to develop and deliver innovative medicines to patients at radically lower prices through a late-stage and growing product pipeline across high-cost therapeutic categories and emerging partnerships with leading payers and healthcare providers.

EQRx is building a pipeline of innovative new drug candidates to address diseases like cancer and inflammatory conditions that are the top categories of drug spend today and in the future. By leveraging proven druggable targets and a focus on efficiency, together with building deep strategic partnerships with health systems and payers, EQRx anticipates a higher probability of regulatory success, a lower risk-adjusted cost of drug development and a more streamlined access model.

EQRx’s growing pipeline of 10+ programs includes two pre-registrational oncology assets that have shown promising Phase 3 data (aumolertinib and sugemalimab) and multiple other clinical-stage programs. In addition, EQRx is further expanding its portfolio through drug engineering collaborations with leading drug discovery companies including Exscientia and AbCellera Biologics Inc.

TRANSACTION

  • The transaction is expected to provide up to $1.8 billion in cash proceeds to EQRx (assuming no redemptions).
  • Upon completion of the transaction, EQRx expects to have up to $2.0 billion in cash available from the transaction ($1.8 billion from the transaction, plus existing cash on its balance sheet anticipated at closing, assuming no redemptions) to fund operations and support business initiatives.
  • The financing includes approximately $552 million of cash held in CM Life Sciences III’s trust account (assuming no redemptions), and a fully committed private placement of common stock (PIPE) of $1.2 billion at $10.00 per share from top-tier healthcare investors, led by SB Northstar LP, a fund managed by SB Management Limited, a 100% subsidiary of SoftBank Group Corp. and including funds advised by Casdin Capital and Corvex Management.
      • Participants in the PIPE include leading institutional life science, growth, and strategic investors that include:
        • Fidelity Management & Research Company LLC, Franklin Templeton, Invus, Rock Springs Capital, Bain Capital Life Sciences, BVF Partners L.P., Boxer Capital, LLC, Avidity Partners, Andreessen Horowitz (a16z), Mubadala Investment Company and its asset management subsidiary, Mubadala Capital, Verily and strategic partners spanning the healthcare ecosystem of integrated delivery networks, health insurers, health systems, and therapeutic developers.
  • The transaction values EQRx at a pre-transaction enterprise value of $3.65 billion with an additional $500 million potential performance-based earnout.

CM Life Sciences III Transaction Overview

PIPE

  • Fully committed PIPE of $1.2 billion at $10.00 per share from top-tier healthcare investors, led by SB Northstar LP, a fund managed by SB Management Limited, a 100% subsidiary of SoftBank Group Corp. and including funds advised by Casdin Capital and Corvex Management.
    • Participants in the PIPE include leading institutional life science, growth, and strategic investors that include:
      • Fidelity Management & Research Company LLC, Franklin Templeton, Invus, Rock Springs Capital, Bain Capital Life Sciences, BVF Partners L.P., Boxer Capital, LLC, Avidity Partners, Andreessen Horowitz (a16z), Mubadala Investment Company and its asset management subsidiary, Mubadala Capital, Verily and strategic partners spanning the healthcare ecosystem of integrated delivery networks, health insurers, health systems, and therapeutic developers.

EARNOUT

  • “Triggering Event I” shall occur if at any time during the period beginning on the 12-month anniversary of the Closing and ending on the date that is the 36-month anniversary of the Closing (the “Earn-Out Period”), the closing price of the Class A Common Stock for a period of at least 20 days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination is greater than or equal to $12.50 per share.
    • Upon the occurrence of Triggering Event I, CMLSIII will issue to each EQRx stockholder and certain employees or individual service providers of EQRx, 35,000,000 shares of Class A Common Stock.
  • “Triggering Event II” shall occur if at any time within the Earn-Out Period, the Common Share Price of CMLSIII’s Class A Common Stock is greater than $16.50 per share.
    • Upon the occurrence of Triggering Event II, CMLSIII will issue to each EQRx stockholder and Earn-Out Service Provider an additional (one-time issuance) of 15,000,000 shares of Class A Common Stock.
  • Triggering Event I and Triggering Event II may be achieved at the same time or over the same overlapping trading days.

SPONSOR FORFEITURE

  • Sponsor has agreed to forfeit up to 50% of its shares of class B common stock of CMLSIII

LOCK-UP

  • The Sponsor and Seller has agreed not to transfer any of its shares of Parent Class A Stock during the period beginning on the date of the Closing (the “Closing Date”) and ending on the earlier of the date that is 180 calendar days from the Closing Date.

FORWARD PURCHASE

  • CMLS III entered into separate forward purchase agreements with affiliates of the sponsor, Casdin Capital, LLC and Corvex Management LP, to purchase up to an aggregate amount of 15,000,000 shares of Class A common stock, or the forward purchase shares, for $10.00 per forward purchase share, or an aggregate amount of up to $150,000,000 in a private placement that will close concurrently with the closing of our initial business combination.
  • The announcement documents imply an FPA of $200M (20,000,000 shares) but there is no documentation to-date.

SUBSCRIPTION AGREEMENT

  • In connection with the Transactions, certain other “qualified institutional buyers” or institutional “accredited investors” have entered into separate subscription agreements with the Issuer, pursuant to which such investors have agreed to purchase Class A Shares on the Closing Date at the Per Share Price (the “Other Acquired Shares”);
    •  The aggregate amount of Class A Shares to be sold by Issuer pursuant to this Subscription Agreement and the Other Subscription Agreements as of the date hereof equals 100,000,000 Class A Shares.
    • The aggregate amount of proceeds to the Issuer in connection with the purchase and sale of the Acquired Shares and the Other Acquired Shares as of the date hereof equals $1,000,000,000.

NOTABLE CONDITIONS TO CLOSING

  • The amount of available cash at Closing being at least $1,000,000,000.

NOTABLE CONDITIONS TO TERMINATION

  • By either CMLSIII or EQRX if the Business Combination is not consummated by March 31, 2022 (the “Outside Date”).

ADVISORS

  • J.P. Morgan Securities, LLC is acting as the lead financial advisor.
  • Goldman Sachs & Co. LLC also acted as a financial advisor.
  • PJT Partners LP is also acting as a financial advisor.
  • Goodwin Procter LLP is serving as the legal advisor to EQRx.
  • Jefferies LLC and Cowen and Company, LLC are acting as joint capital markets advisors.
  • White & Case LLP is serving as legal advisor to CM Life Sciences III.
  • Jefferies LLC, Cowen and Company, LLC and J.P. Morgan Securities LLC are acting as joint placement agents.

MANAGEMENT & BOARD

Executive Officers

Eli D. Casdin, 47
Chief Executive Officer and Director

Mr. Casdin founded Casdin Capital, LLC, an investment firm focused on the life sciences and healthcare industry, in November 2011 and currently serves as its Chief Investment Officer. Since July 2020 and December 2020, he also serves as the Chief Executive Officer of CM Life Sciences, Inc. (Nasdaq: CMLF) and CM Life Sciences II Inc., respectively, both blank check companies. Mr. Casdin has served on the boards of directors of CM Life Sciences, Inc. and CM Life Sciences II Inc., since July 2020 and December 2020, respectively. Mr. Casdin holds a B.S. degree from Columbia University School of General Studies and an MBA from Columbia Business School.

Brian Emes, 38
Chief Financial Officer and Secretary

Mr. Emes is also the Chief Financial Officer of Corvex Management LP, a New York based investment manager, which he joined in January 2013, and the Chief Financial Officer of CM Life Sciences, Inc. and CM Life Sciences II Inc., since July 2020 and December 2020, respectively. Mr. Emes holds a B.S. degree in finance and marketing from Elon University’s Martha & Spencer Love School of Business, and is a licensed certified public accountant.

Shaun Rodriguez, 42
Chief Strategy Officer

Mr. Rodriguez joined Casdin Capital, LLC, an investment firm focused on the life sciences and healthcare industry, in July 2015 as a Senior Research Analyst and currently serves as its Director of Life Science Research. His coverage universe at Casdin Capital, LLC focuses on life science tools, diagnostics, health technology and services, and industrial applications of biotechnology. Mr. Rodriguez also serves as Chief Strategy Officer of CM Life Sciences, Inc. and CM Life Sciences II Inc., since July 2020 and December 2020, respectively. From February 2011 to July 2015, Mr. Rodriguez served as Director and Senior Research Analyst in the healthcare equity research group of Cowen Inc. (Nasdaq: COWN), an investment bank and financial services company. Mr. Rodriguez holds a Ph.D. in biological sciences from Harvard University.

Board of Directors

Keith A. Meister, 47
Chairman

Mr. Meister founded Corvex Management LP, a New York based investment manager, in December 2010 and since its inception has served as its Managing Partner and Chief Investment Officer. From 2003 to 2010, Mr. Meister served as Chief Executive Officer and then Principal Executive Officer and Vice Chairman of the Board of Icahn Enterprises L.P. (Nasdaq: IEP), the primary investment vehicle for Carl Icahn. Mr. Meister currently serves on the board of directors of MGM Resorts International (NYSE: MGM), a global hospitality and entertainment company, and its affiliate Roar Digital. Mr. Meister also serves as Chairman of the boards of directors of CM Life Sciences, Inc. and CM Life Sciences II Inc. Mr. Meister has previously served on the Board of Directors of numerous other public companies in his career, including Yum! Brands Inc. (NYSE: YUM), The Williams Companies, Inc. (NYSE: WMB), ADT, Inc. (NYSE: ADT), Ralcorp Holdings, Inc. and Motorola, Inc. (now Motorola Solutions, Inc., NYSE: MSI/Motorola Mobility, Inc.). He is Chairman of the board of the Harlem Children’s Zone and also serves on the board of trustees of the American Museum of Natural History. Mr. Meister holds a B.A. degree in government from Harvard College where he graduated cum laude.

Christian Henry, 53
Director Nominee

Mr. Henry is Chairman of the Board of Pacific Biosciences of California, Inc. (Nasdaq: PACB), since 2020, Chairman of the Board of WAVE Life Sciences Ltd. (Nasdaq: WVE), since October 2017, and a director of Gingko Bioworks. Mr. Henry previously served as Executive Vice President & Chief Commercial Officer of Illumina, Inc. (Nasdaq: ILMN), an applied genomics technology company, from 2015 through January 2017, and previously served as Senior Vice President & Chief Commercial Officer from 2014 to 2015, Senior Vice President & General Manager Genomic Solutions from 2012 to 2014, Senior Vice President, Chief Financial Officer & General Manager Life Sciences from 2010 to 2012, Senior Vice President, Corporate Development & Chief Financial Officer from 2009 to 2010, Senior Vice President & Chief Financial Officer from 2007 to 2009, and Vice President & Chief Financial Officer from 2005 to 2006. Prior to joining Illumina. Inc., Mr. Henry served as the Chief Financial Officer of Tickets.com, Inc., an online ticket provider, from 2003 to 2005. From 1999 to 2003, Mr. Henry served as Vice President, Finance & Corporate Controller of Affymetrix, Inc. (acquired by Thermo Fisher Scientific in 2016). In 1997, Mr. Henry joined Nektar Therapeutics (formerly Inhale Therapeutic Systems, Inc.), as Corporate Controller, and later as its Chief Accounting Officer from 1997 to 1999. In 1996, Mr. Henry served as General Accounting Manager of Sugen, Inc. Mr. Henry began his career in 1992 at Ernst & Young LLP, where he was a Senior Accountant through 1996. Mr. Henry holds a B.A. in biochemistry and cell biology from the University of California, San Diego and an M.B.A., with a concentration in finance, from the University of California, Irvine.

Kwame Owusu-Kesse, 36
Director Nominee

Mr. Owusu-Kesse is Chief Executive Officer of Harlem Children’s Zone, an anti-poverty non-profit organization, since July 2020, and previously served as Harlem Children’s Zone’s Chief Operating Officer from June 2014 to June 2020 and Senior Manager from July 2012 to June 2014. Prior to Harlem Children’s Zone, Mr. Owusu-Kesse worked as an investment banking analyst at Morgan Stanley, multinational investment bank and financial services company. Mr. Owusu-Kesse received a B.A. in economics from Harvard College, an M.B.A. from Harvard Business School, and a master’s in public policy from Harvard Kennedy School.

Chad Robins, 46
Director Nominee

Mr. Robins is Chief Executive Officer, Co-Founder and Chairman of Adaptive Biotechnologies Corp. (Nasdaq: ADPT), a commercial stage biotechnology company that aims to translate the genetics of the adaptive immune system into clinical products to diagnose and treat disease, since 2009. In addition to serving as Chairman of the Board for Adaptive Biotechnologies Corp., he also holds board positions with AltPep Corporation, AdvaMedDx, and HeadLight Technologies, Inc. Mr. Robins also serves on the executive board of Life Science Washington and the steering committee of the Coalition for 21st Century Medicine. Prior to Adaptive Biotechnologies Corp., Mr. Robins held executive-level positions in medical technology, investment and real estate companies. Mr. Robins holds an M.B.A. from The Wharton School at the University of Pennsylvania and a B.S. in Managerial Economics from Cornell University.

Harlan Robins, 47
Director Nominee

Dr. Robins is Chief Scientific Officer and Co-Founder of Adaptive Biotechnologies Corp. (Nasdaq: ADPT), since 2009. Prior to co-founding Adaptive Biotechnologies Corp., Harlan served in various roles in the Computational Biology Program at Fred Hutchinson Cancer Research Center, a cancer research institute, including as an Assistant Faculty Member from 2006 to 2011, as an Associate from 2011 to April 2016, and as a Full Member and the Head of the program from April 2016 to June 2019. Dr. Robins holds a B.S. in Physics from Harvard University and a Master’s degree and Ph.D. in Physics from the University of California, Berkeley, with a visiting appointment to the California Institute of Technology. Harlan received postdoctoral appointments in the particle theory group at the Weizmann Institute of Science in Israel and at the Institute for Advanced Study in Princeton, NJ.

 

ByKristi Marvin