29 December 2022 - - US-based Sesen Bio, Inc. (NASDAQ: SESN) and clinical stage biopharmaceutical company Carisma Therapeutics Inc have amended their previously announced merger agreement dated September 20, 2022, the companies said.

Under the terms of the amended merger agreement, which has been unanimously approved by the boards of directors of both companies, the one-time special cash dividend expected to be paid to Sesen Bio stockholders will be increased to approximately USD 70m, or approximately USD 0.34 per share, representing the amount of excess cash available after Sesen Bio meets a required net cash minimum of USD 75m and represents an increase from the previously said up to USD 25m special cash dividend, or up to USD 0.12 per share.

Carisma's previously announced approximately USD 30m financing remains committed and is expected to close concurrently with the merger.

As part of the amended merger agreement, the contingent value right payable to Sesen Bio stockholders has been amended to also include proceeds from any sale of Vicineum and Sesen Bio's other preclinical assets, in addition to any proceeds from the milestone payment under the Roche Asset Purchase Agreement.

The issuance of the special cash dividend and CVR remain contingent on the closing of the pending transaction.

Following completion of the incremental financing from Carisma's key investors and subsequent completion of the merger, Sesen Bio stockholders are expected to own 25.2% of the pro forma company consistent with the exchange ratio formula set forth in the original merger agreement.

The merger and related financing are expected to close in the first quarter of 2023, subject to approval by Sesen Bio stockholders and other customary closing conditions.

On November 18, 2022, Bradley Radoff and Michael Torok and their affiliates disclosed beneficial ownership of 5.7% of Sesen Bio's outstanding common stock, indicated to Sesen Bio that it would not support the pending merger with Carisma on the terms set forth in the merger agreement and subsequently demanded the payment of a special cash dividend to Sesen Bio stockholders in the amount of USD 0.50 per share or approximately USD 100m.

On December 1, 2022, the Investor Group disclosed ownership of 7.4% of Sesen Bio's outstanding common stock.

Both Sesen Bio, Carisma, and the companies' respective advisors have engaged with the Investor Group in an attempt to foster a constructive dialogue and reach an amicable resolution regarding the pending merger.

During such discussions, Sesen Bio and Carisma offered to significantly increase the amount of the special cash dividend by USD 45m to approximately USD 70m.

This would increase the immediate value paid to Sesen Bio stockholders while providing the go-forward combined company with the necessary net cash of USD 75m to fund its operations, based on an expected Sesen Bio net cash as of immediately prior to close and before issuance of the cash dividend of approximately USD 145m.

SVB Securities is acting as exclusive financial advisor to Sesen Bio for the transaction and Hogan Lovells US LLP is serving as its legal counsel.

Evercore is serving as lead financial advisor to Carisma for the transaction and BofA Securities, Inc. is also serving as financial advisor to Carisma for the transaction. Wilmer Cutler Pickering Hale and Dorr LLP is serving as legal counsel to Carisma.

BofA Securities, Inc. and Evercore are serving as co-placement agents for Carisma's concurrent financing and Shearman & Sterling LLP is serving as the placement agents' legal counsel.