CALCIMEDICA, INC. Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangement of Certain
Officers.
On February 28, 2023 , the Board of Directors of Graybug Vision, Inc. ("Graybug")
determined it to be in Graybug's best interests to terminate Parisa Zamiri's
employment in advance of the anticipated closing date of the Merger (as defined
below), and to provide her the payments to which she is entitled under Graybug's
Change in Control Severance Policy (the "CIC Severance Policy"). In connection
with Dr. Zamiri ceasing to serve as Graybug's Chief Medical Officer, Graybug
entered into a separation agreement with Dr. Zamiri , dated February 28, 2023 ,
pursuant to which, following Dr. Zamiri's execution of a general release of
claims in favor of Graybug , she will receive (i) $829,084 , less applicable state
and federal payroll deductions, equal to 15 months of her current base salary
and 1.25 times her bonus target rate of 40% of her annual base salary,
(ii) payment of the premiums for her continued health insurance under COBRA for
up to 15 months and (iii) 100% acceleration of outstanding stock awards, subject
to the settlement restrictions set forth in the Merger Agreement (as defined
below). The foregoing payments and benefits are consistent with those that would
have been payable under the CIC Severance Policy had her employment terminated
on the actual closing date of the Merger. On February 28, 2023 , Dr. Zamiri also
entered into a consulting agreement with Graybug , pursuant to which she will be
paid $350 per hour for any work requested by Graybug up to a maximum of 8 hours
per week, unless otherwise mutually agreed by Graybug and Dr. Zamiri . The
consulting agreement terminates upon the earlier of 15 days prior notice by
Graybug or May 21, 2023 .
Item 8.01 Other Events.
As previously announced, on November 21, 2022 , Graybug , Camaro Merger Sub, Inc.
("Merger Sub") and CalciMedica, Inc. entered into an Agreement and Plan of
Merger, as amended on February 10, 2023 (the "Merger Agreement"), pursuant to
which, among other matters, and subject to the satisfaction or waiver of the
conditions set forth in the Merger Agreement, Merger Sub will merge with and
into CalciMedica with CalciMedica continuing as a wholly owned subsidiary of
Graybug and the surviving corporation of the merger (the "Merger").
In connection with the Merger, Graybug filed with the Securities and Exchange
Commission (the "SEC") a definitive proxy statement, dated February 9, 2023 (the
"Proxy Statement"), which Graybug commenced mailing to its stockholders on or
about February 13, 2023 . Set forth below are supplemental disclosures relating
to the Merger.
SUPPLEMENTAL DISCLOSURE
Graybug is hereby supplementing the Proxy Statement with the information set
forth below (the "Supplemental Disclosure") solely to eliminate the burden and
expense of the Stockholder Litigation and Demand Letters (described in the
"Legal Proceedings" section, below), and to avoid any possible disruption to the
Merger. The Supplemental Disclosure contained below should be read in
conjunction with the Proxy Statement, which is available on the Internet site
maintained by the SEC at http://www.sec.gov. To the extent that information in
the Supplemental Disclosure differs from or updates information contained in the
Proxy Statement, you should rely on the information in the Supplemental
Disclosure, which supersedes or supplements the Proxy Statement. References to
sections below are references to the corresponding sections of the Proxy
Statement; page references below are references to pages in the Proxy Statement
prior to any additions or deletions resulting from the Supplemental Disclosure;
and any capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Proxy Statement.
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The Supplemental Disclosure is datedMarch 3, 2023 , and you should not assume that the information contained in the Supplemental Disclosure is accurate as of any other date, except as otherwise specified in the Supplemental Disclosure.
The Supplemental Disclosures are as follows:
Background of the Merger
The following additional information supplements the information disclosed under the heading "The Merger - Background of the Merger," which begins on page 96:
The 15 preliminary proposals contained a range of economic terms. Ten proposed reverse mergers, and of those, the value ascribed toGraybug was between$25 million and$50 million , with associated pro forma ownership of 33% to 14%, respectively, of common stock of the combined company. Two of the proposals were for divestitures ofGraybug assets and ranged from a$2 million upfront payment with no royalties to no upfront payment and royalties of between 5% and 7% on net sales from the acquired asset, depending on the use of certain claims. Two proposed merger transactions, each to be paid in the acquirer's equity with pro forma ownership of 9% to 45%, respectively, of common stock of the combined company.
Certain Unaudited Financial Projections and Liquidation Analysis
Under the heading "The Merger - Certain Unaudited Financial Projections and Liquidation Analysis" the final table of this section, which begins on page 122, is hereby amended and restated as follows (with new text in bold):
FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
Total Revenue1 - - - - $ 1 $ 23 $ 90 $ 192 $ 338 $ 478 $ 545 $ 576 $ 599 $ 622 $ 645 $ 668
Gross Profit - - - - $ (0 ) $ 17 $ 73 $ 169 $ 315 $ 459 $ 528 $ 63 $ 58 $ 60 $ 63 $ 67 $ 70 $ 73 $ 77 $ 81 $ 85 $ 89 $ 93 EBITDA2 ($ 19 ) ($ 29 ) ($ 45 ) ($ 52 ) ($ 64 ) ($ 41 )$ 12 $ 105 $ 249 $ 389 $ 455 $ 482 $ 501 $ 518 $ 536 $ 555 Cash Taxes Payable3 - - - - - -$ 1 $ 5 $ 12 $ 89 $ 114
($ 64 ) ($ 41 )$ 12 $ 100 $ 237 $ 300 $ 341 $ 361 $ 375 $ 389 $ 402 $ 416
(1) Reflects assumptions regarding probability of success (including regulatory
approvals) and of commercialization.
(2) EBITDA means earnings before interest, taxes, depreciation and amortization.
(3) Assumes tax rate of 25% and NOL beginning balance of
(4) Represents EBITDA less cash taxes payable.
Opinion of
Under the heading "The Merger - Opinion ofGraybug's Financial Advisor" and the subheading "Financial Review ofGraybug " the first and only paragraph of this subsection, which begins on page 109, is hereby amended and restated as follows (with new text in bold): Piper Sandler reviewed, among other things, the current implied equity and enterprise valuations, capitalization and cash balances, and projected closing capitalization and cash balances ofGraybug . The analysis indicated, among other things, thatGraybug had diluted shares outstanding as ofSeptember 30, 2022 of approximately 25.1 million calculated using the treasury stock method ("TSM") and based on the closing stock price ofGraybug onNovember 18, 2022 , cash, cash equivalents and short-term investments on hand (referred to herein as net cash) as ofSeptember 30, 2022 of approximately$43.6 million , a current implied enterprise value of approximately$(19.8) million , and estimated net cash at the consummation of the merger of approximately$26.5 million (the "Graybug Closing Cash"). References below to an assumedGraybug intrinsic value are references to an assumed intrinsic value of$1.06 per share, based on the quotient of the Graybug Closing Cash and such number of diluted shares. -------------------------------------------------------------------------------- Under the heading "The Merger - Opinion ofGraybug's Financial Advisor" and the subheading "Financial Analyses of CalciMedica-Selected Public Companies Analysis" the fourth and fifth paragraphs of this subsection, which begin on page 109, are hereby amended and restated as follows (with new text in bold): For the selected biotech public companies analysis, Piper Sandler derived a range of implied enterprise values forCalciMedica based on the implied enterprise value range for the selected public companies referred to above and then adjusted for net cash of approximately$11.5 million , to calculate an implied range ofCalciMedica equity values. Piper Sandler then derived an implied number of shares ofGraybug common stock to be issued in the merger, based on aGraybug intrinsic value of$1.06 per share. Piper Sandler also calculated an implied pro forma equity value for the combined company by adjusting the implied enterprise value forCalciMedica for pro forma net cash at the consummation of the merger of approximately$11.5 million forCalciMedica and the Graybug Closing Cash forGraybug . This analysis did not account for any assumed additional cash needs ofCalciMedica to fund its business plan. Based on the minimum, 25th percentile, median, mean, 75th percentile, and maximum implied equity values forCalciMedica derived above, Piper Sandler then calculated the corresponding (a) implied ownership percentages range forGraybug stockholders in the combined company and (b) implied exchange ratios range for the merger, calculated by dividing the shares contemplated to be issued toCalciMedica stockholders in the merger (of approximately 44 - 722 million based on the range of implied equity values ofCalciMedica from this selected public companies analysis) byCalciMedica's diluted shares outstanding as ofSeptember 30, 2022 of approximately 147 - 175 million calculated using TSM and in the manner described above: Under the heading "The Merger - Opinion ofGraybug's Financial Advisor" and the subheading "Financial Analyses of CalciMedica-Selected IPOs Analysis" the fourth and fifth paragraphs of this subsection, which begin on page 111, are hereby amended and restated as follows (with new text in bold): For the selected biotech IPO companies analysis, Piper Sandler derived a range of implied enterprise values forCalciMedica based on the implied adjusted pre-money enterprise value range for the selected IPO companies referred to above and then adjusted for net cash of approximately$11.5 million , to calculate an implied range ofCalciMedica equity values. Piper Sandler then derived an implied number of shares ofGraybug common stock to be issued in the merger, based on aGraybug intrinsic value of$1.06 per share. Piper Sandler also calculated an implied pro forma equity value for the combined company by adjusting the implied enterprise value forCalciMedica for pro forma net cash at the consummation of the merger of approximately$11.5 million forCalciMedica and the Graybug Closing Cash forGraybug . This analysis did not account for assumed additional cash needs ofCalciMedica to fund its business plan. Based on the minimum, 25th percentile, median, mean, 75th percentile, and maximum implied equity values forCalciMedica derived above, Piper Sandler then calculated the corresponding (a) implied ownership percentages range forGraybug stockholders in the combined company and (b) implied exchange ratios range for the merger, calculated by dividing the shares contemplated to be issued toCalciMedica stockholders in the merger (of approximately 124 - 239 million based on the range of implied equity values ofCalciMedica from this selected IPOs analysis) byCalciMedica's diluted shares outstanding as ofSeptember 30, 2022 of approximately 159 - 168 million calculated using TSM and in the manner described above: Under the heading "The Merger - Opinion ofGraybug's Financial Advisor" and the subheading "Financial Analyses of CalciMedica-Discounted Cash Flows Analysis" the second paragraph of this subsection, which begins on page 115, is hereby amended and restated as follows (with new text in bold): Based on the minimum, 25th percentile, median, mean, 75th percentile, and maximum implied equity values forCalciMedica derived above, Piper Sandler then calculated the corresponding (a) implied ownership percentages range forGraybug stockholders in the combined company and (b) implied exchange ratios range for the merger, calculated by dividing the shares contemplated to be issued toCalciMedica stockholders in the merger (of approximately 129 - 505 million based on the range of implied equity values ofCalciMedica from this discounted cash flow analysis) byCalciMedica's diluted shares outstanding as ofSeptember 30, 2022 of approximately 160 - 173 million calculated using TSM and in the manner described above: -------------------------------------------------------------------------------- Under the heading "The Merger - Opinion ofGraybug's Financial Advisor" and the subheading "Financial Analyses of CalciMedica-Subsequent Developments" the second paragraph of this subsection, which begins on page 118, is hereby amended and restated as follows (with new text in bold): Subsequent to theNovember 21, 2022 Graybug Board meeting, Piper Sandler was informed that the diluted share information forCalciMedica provided to it byCalciMedica's management, which was used in conducting the foregoing financial analyses, included an incorrect assumption and Piper Sandler was provided with the corrected diluted share information. Such corrected diluted share information resulted in ranges of diluted shares outstanding of 146 - 174 million, 158 - 167 million, and 159 - 172 million for the selected public companies analysis, the selected IPOs analysis and the discounted cash flow analysis, respectively (none of which impacted the range of shares ofGraybug common stock contemplated to be issued toCalciMedica stockholders in the merger). This discovery did not result in any change to Piper Sandler's fairness opinion or its conclusion. Piper Sandler did, however, provide the Graybug Board with the revised exchange ratio analyses reflecting the corrected diluted share information, which indicated the implied exchange ratios set forth below. These revisions did not impact the implied ownership percentages forGraybug stockholders in the combined company or the implied per share values ofGraybug common stock. Under the heading "The Merger - Opinion ofGraybug's Financial Advisor" and the subheading "Information about Piper Sandler" the second paragraph of this subsection, which begins on page 118, is hereby amended and restated as follows (with new text in bold): Piper Sandler acted as a financial advisor toGraybug in connection with the merger and will receive a fee of$3,000,000 fromGraybug for providing its services, which is contingent upon the consummation of the merger, except for (i)$100,000 of such fee which has been earned by Piper Sandler upon execution of its engagement letter withGraybug (the "retainer fee"), and (ii)$750,000 of such fee which has been earned by Piper Sandler for rendering its fairness opinion (the "opinion fee"), each of which are creditable against the total fee. The retainer fee and opinion fee were not contingent upon the consummation of the merger or the conclusions reached in Piper Sandler's opinion.Graybug has also agreed to indemnify Piper Sandler against certain liabilities and reimburse Piper Sandler for certain expenses in connection with its services. Piper Sandler has, in the past, provided financial advisory and financing services toGraybug , as well as to certain stockholders ofGraybug , including affiliates ofDeerfield Management Company, L.P. (along with its affiliates, "Deerfield") and affiliates ofOrbiMed Advisors LLC (along with its affiliates, "OrbiMed"), and has received fees for the rendering of such services. In particular, sinceJanuary 1, 2020 Piper Sandler has (i) acted asGraybug's joint book-running manager in connection withGraybug's initial public offering inSeptember 2020 for which Piper Sandler received a fee of approximately$2,200,000 , (ii) provided certain financial advisory services to Deerfield in connection with (a) approximately 4 merger and acquisitions transactions and (b) approximately 20 capital markets transactions, for which Piper Sandler received aggregate fees of approximately$52,000,000 , and (iii) provided certain financial advisory services to OrbiMed in connection with (a) approximately 7 merger and acquisitions transactions and (b) approximately 50 capital markets transactions, for which Piper Sandler received aggregate fees of approximately$105,000,000 . In addition, in the ordinary course of its business, Piper Sandler and its affiliates may actively trade securities ofGraybug for their own account or the account of their customers and, accordingly, may at any time hold a long or short position in such securities. SinceJanuary 1, 2020 , Piper Sandler had not received any revenue in respect of any financial advisory or financing services provided toCalciMedica . Piper Sandler may also, in the future, provide investment banking and financial advisory services toGraybug ,CalciMedica or entities that are affiliated withGraybug orCalciMedica , for which Piper Sandler would expect to receive compensation.
Legal Proceedings
Under the heading "Graybug's Business - Legal Proceedings", which begins on page 186, that subsection is hereby amended and restated as follows (with new text in bold): Four lawsuits have been filed in federal courts againstGraybug and its directors: Bushansky v.Graybug Vision, Inc. , et al., 3:22-cv-09131 (N.D. Cal .), Connelly v.Graybug Vision, Inc. , et al., 3:23-cv-00028 (N.D. Cal .), Plumley v.Graybug Vision, Inc. , et al., 1:23-cv-00169 (D. Del.), andFranchi v.Graybug Vision, Inc. , et al., No. 1:23-cv-1390 (S.D.N.Y.) (collectively, the "Stockholder Litigation"). The complaints nameGraybug and the Graybug Board as defendants. The complaints assert claims under Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-19 -------------------------------------------------------------------------------- promulgated thereunder, and generally allege that the proxy statement misrepresents and/or omits certain purportedly material information relating to the merger, including allegations relating to the financial projections and analyses of our financial advisor. The complaints seek a variety of equitable and injunctive relief including, among other things, an injunction enjoining the consummation of the merger, rescission of the merger if it is consummated, rescissory damages and costs and attorneys' fees. We have not yet responded to the complaints filed in the Stockholder Litigation. In addition, nine purported stockholders ofGraybug sent demand letters regarding the proxy statement (the "Demand Letters"). Based on the same core allegations as the Stockholder Litigation, the Demand Letters request that we disseminate corrective disclosures in an amendment or supplement to the proxy statement. We believe the Stockholder Litigation and the Demand Letters are without merit, but there can be no assurance that we will ultimately prevail in the Stockholder Litigation or all such lawsuits. Further, additional lawsuits may be filed and demand letters may be sent before the Special Meeting and/or the consummation of the merger. For a description of other material legal proceedingsGraybug is party to, please refer to the section entitled "Item 3. Legal Proceedings" set forth inGraybug's Annual Report on Form 10-K for the year endedDecember 31, 2021 as filed with theSEC onMarch 11, 2022 , as updated by the subsequent quarterly reports on Form 10-Q. Annex A
Exhibit 2.1 to
Important Additional Information
In connection with the Merger,Graybug has filed with theU.S. Securities and Exchange Commission (the "SEC") a definitive proxy statement relating to the proposed Merger. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT, ANY AMENDMENTS OR SUPPLEMENTS THERETO, AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT AS THEY CONTAIN IMPORTANT INFORMATION ABOUT GRAYBUG, CALCIMEDICA AND THE PROPOSED MERGER. Investors and security holders may obtain free copies of these documents on theSEC's web site at www.sec.gov, onGraybug's website at https://investors.graybug.vision/ or by contactingGraybug's Investor Relations via email at IR@graybug.vision or by telephone at (650) 487-2409.
Participants in the Solicitation
Graybug and its directors and certain of its executive officers may be deemed participants in the solicitation of proxies from the stockholders ofGraybug in connection with the proposed Merger and any other matters to be voted on at the special meeting. Information regarding the names, affiliations and interests of such directors and executive officers are included in the definitive proxy statement. Information regarding the persons who may, underSEC rules, be deemed participants in the solicitation of proxies ofGraybug's stockholders in connection with the proposed Merger and any other matters to be voted upon at the special meeting is be set forth in the definitive proxy statement for the Merger.
These documents are available free of charge as described in the preceding paragraph.
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