6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the Month of May 2023

Commission File Number: 001-38281

 

 

ERYTECH Pharma S.A.

(Translation of registrant’s name into English)

 

 

60 Avenue Rockefeller

69008 Lyon France

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

☒  Form 20-F             ☐  Form 40-F

 

 

 


INCORPORATION BY REFERENCE

This Report on Form 6-K and Exhibits 99.1 and 99.2 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statements on Form F-3 (File Nos. 333-248953 and 333-259690) and registration statements on Form S-8 (File Nos. 333-222673, 333-232670, 333-239429, 333-255900 and 333-265927), of ERYTECH Pharma S.A. (the “Company”) (including any prospectuses forming a part of such registration statements) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.


INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K

On May 23, 2023, ERYTECH Pharma S.A. filed a document d’exemption (the “exemption document”) with the Autorité des marchés financiers (AMF) in France in connection with its previously announced business combination with PHERECYDES Pharma S.A. (“PHERECYDES”). An English translation version of the exemption document is attached as Exhibit 99.1 to this Report on Form 6-K and incorporated herein by reference.

The exemption document incorporates by reference, among others, PHERECYDES’ 2022 annual financial report published on April 27, 2023 (the “PHERECYDES 2022 Annual Financial Report”), including report of the Board of Directors of PHERECYDES on corporate governance included therein. An English translation version of the PHERECYDES 2022 Annual Financial Report is attached as Exhibit 99.2 to this Report on Form 6-K and incorporated herein by reference.

EXHIBIT INDEX

 

Exhibit

  

Description

99.1    Document d’exemption (English translation).
99.2    PHERECYDES 2022 Annual Financial Report (English translation).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    ERYTECH Pharma S.A.
Date: May 24, 2023     By:   /s/ Eric Soyer
      Name Eric Soyer
      Title: Chief Financial Officer and Chief Operating Officer
EX-99.1

Exhibit 99.1

MERGER-ABSORPTION OF

 

LOGO

BY

 

LOGO

EXEMPTION DOCUMENT PREPARED IN CONNECTION WITH THE MERGER BY ABSORPTION OF PHERECYDES PHARMA BY ERYTECH PHARMA

This exemption document (the “Exemption Document”) is available free of charge at the registered office of Erytech Pharma (60 Avenue Rockefeller, 69008 Lyon, France) and on its website (http://www.erytech.com/).

The Exemption Document is also available in electronic format on the AMF’s website (https://www.amf-france.org/).

The Exemption Document incorporates by reference:

 

   

with respect to ERYTECH Pharma (“Erytech”): the 2022 universal registration document filed with the French financial markets authority (Autorité des marchés financiers) (the “AMF”) on March 28, 2023 under number D.23-0172 (the “Erytech 2022 Universal Registration Document”);

 

   

with respect to Pherecydes Pharma: the 2022 annual financial report published on April 27, 2023 (the “Pherecydes 2022 Annual Financial Report”), the Pherecydes board of directors’ report on corporate governance included in the Pherecydes 2022 Annual Financial Report (the “Pherecydes 2022 Corporate Governance Report”).]

In accordance with point 1.5 of Annex I of the Delegated Regulation n°2021-528, it is stated that:

 

   

the Exemption Document does not constitute a prospectus within the meaning of Regulation (EU) 2017/1129;

 

   

the Exemption Document has not been subject to the scrutiny and approval by the relevant competent authority in accordance with Article 20 of Regulation (EU) 2017/1129.

 

1


Definitions:

In this Exemption Document, and unless otherwise indicated:

 

“ADS”    means the “American Depositary Shares” admitted to trading on the Nasdaq Capital Market.
“Merger”    means the merger by absorption of Pherecydes into Erytech as described in Section 3 of the Exemption Document.
“Erytech Group”    means the group of companies consisting of Erytech and its subsidiary, ERYTECH Pharma, Inc., whose registered office is located at PO Box 507 Lunenburg, MA 02462, United-States of America.
“Nasdaq”    means The Nasdaq Securities Market LLC.
Memorandum of Understanding”    means the memorandum of understanding entered into on February 15, 2023 by and between Erytech and Pherecydes by which Erytech and Pherecydes have agreed on the terms of the negotiations relating to the Merger.
“Absorbing Company” or “Erytech”    means ERYTECH Pharma, a public limited liability company (société anonyme), having its registered office at 60, avenue Rockefeller, 69008 Lyon, registered in the Lyon Trade and Companies Register under number 479 560 013.
“Absorbed Company” or “Pherecydes”    means Pherecydes Pharma, a public limited liability company (société anonyme), having its registered office at 22, boulevard Benoni Goullin, 44200 Nantes, registered in the Nantes Trade and Companies Register under number 493 252 266.
“Contribution Agreement”    means the contribution agreement entered into by and between Erytech Pharma and FCPI OUEST VENTURES III, AURIGA IV BIOSEEDS and the POOL GUY RIGAUD (as set forth in Annex 1 of the Merger Agreement) on May 5, 2023.
“Merger Agreement”    means the merger agreement entered into by and between Erytech and Pherecydes on May 15, 2023.

 

2


TABLE OF CONTENTS

 

1.

  PERSONS RESPONSIBLE FOR DRAWING UP THE EXEMPTION DOCUMENT, THIRD PARTY INFORMATION AND EXPERT REPORTS      7  

1.1

  IDENTIFICATION OF PERSONS RESPONSIBLE FOR DRAWING UP THE EXEMPTION DOCUMENT      7  

1.1.1

  FOR ERYTECH, ABSORBING COMPANY      7  

1.1.2    

  FOR PHERECYDES, ABSORBED COMPANY      7  

1.2

  RESPONSIBILITY STATEMENT      7  

1.2.1

  FOR ERYTECH, ABSORBING COMPANY      7  

1.2.2

  FOR PHERECYDES, ABSORBED COMPANY      7  

1.3

  EXPERT’S STATEMENT OR REPORT      7  

1.4

  INFORMATION SOURCED BY A THIRD PARTY      8  

2.

  INFORMATION ON THE ISSUER AND ON THE ABSORBED COMPANY      8  

2.1

  INFORMATION ON ERYTECH, THE ABSORBING COMPANY      8  

2.1.1

  GENERAL INFORMATION      8  

2.1.2

  BUSINESS OVERVIEW      9  

2.1.3

  INVESTMENTS      10  

2.1.4

  CORPORATE GOVERNANCE      10  

2.1.5

  FINANCIAL INFORMATION      14  

2.1.6

  LEGAL AND ARBITRATION PROCEEDINGS      14  

2.1.7

  SUMMARY OF INFORMATION DISCLOSED UNDER REGULATION (EU) N° 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL      15  

2.2

  INFORMATION ON PHERECYDES, THE ABSORBED COMPANY      18  

 

3


2.2.1

  GENERAL INFORMATION      18  

2.2.2

  BUSINESS OVERVIEW      18  

2.2.3

  INVESTMENTS      21  

2.2.4

  CORPORATE GOVERNANCE      22  

2.2.5

  FINANCIAL INFORMATION      23  

2.2.6

  LEGAL AND ARBITRATION PROCEEDINGS      24  

2.2.7    

  SUMMARY OF INFORMATION DISCLOSED UNDER REGULATION (EU) N° 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL      24  

3.

  DESCRIPTION OF THE MERGER      27  

3.1

 

PURPOSE AND OBJECTIVES OF THE MERGER

     27  

3.1.1

  PURPOSE OF THE MERGER FOR THE ABSORBING COMPANY AND ITS SHAREHOLDERS      27  

3.1.2

  PURPOSE OF THE MERGER FOR THE ABSORBED COMPANY AND ITS SHAREHOLDERS      28  

3.1.3

  DESCRIPTION OF THE ANTICIPATED BENEFITS RESULTING FROM THE MERGER      28  

3.2

 

CONDITIONS OF THE MERGER

     29  

3.2.1

  LEGAL ASPECTS OF THE MERGER      30  

3.2.2

  MERGER CONTROL      34  

3.2.3

  MERGER CONSIDERATION      35  

3.2.3.7

  BREAK-UP FEES AND PENALTIES      40  

3.2.4

  NOTIFICATIONS AND REQUESTS FOR AUTHORIZATION      40  

3.2.5

  INFORMATION ON THE FINANCING STRUCTURE OF THE MERGER      40  

3.2.6

  MERGER TIMETABLE      40  

3.3

 

RISK FACTORS RELATED TO THE MERGER

     41  

3.4

 

CONFLICTS OF INTERESTS

     43  

3.5

 

MERGER CONSIDERATION

     43  

4.

  EQUITY SECURITIES ADMITTED TO TRADING ON A REGULATED MARKET FOR THE PURPOSE OF THE MERGER      44  

4.1

 

RISK FACTORS RELATED TO EQUITY SECURITIES

     44  

4.2

 

NET WORKING CAPITAL STATEMENT

     45  

 

4


4.3

 

INFORMATION CONCERNING THE EQUITY SECURITIES TO BE ADMITTED TO TRADING

     45  

4.3.1

  NATURE, CLASS, AMOUNT AND CURRENCY OF ISSUE OF SECURITIES ADMITTED TO TRADING      45  

4.3.2

  RESOLUTIONS, AUTHORIZATIONS AND APPROVALS PURSUANT TO WHICH THE SECURITIES WILL BE CREATED AND/OR ISSUED      45  

4.3.3

  RESTRICTIONS ON THE FREE NEGOTIABILITY OF SECURITIES      46  

4.3.4

  TAKEOVER BIDS LAUNCHED BY THIRD PARTIES IN RESPECT OF THE ABSORBING COMPANY’S SECURITIES WHICH HAVE OCCURRED DURING THE LAST AND CURRENT FINANCIAL YEARS      46  

4.4

 

ADMISSION TO TRADING AND DEALING ARRANGEMENTS

     46  

4.4.1    

  ADMISSION TO TRADING      46  

4.4.2

  LIQUIDITY COMMITMENT, PLACEMENT AND UNDERWRITING      46  

4.4.3

  LOCK-UP AGREEMENT - ABSTENTION AND/OR RETENTION UNDERTAKING      46  

4.5

 

DILUTION

     46  

4.5.1

  STRUCTURE CHART      48  

4.6

 

COUNSELORS

     48  

5.

  IMPACT OF THE MERGER ON THE ISSUER      48  

5.1

 

STRATEGY AND OBJECTIVES

     48  

5.2

 

MATERIAL CONTRACTS

     48  

5.3

 

DISINVESTMENT

     49  

5.4

 

CORPORATE GOVERNANCE

     49  

5.5

 

PARTICIPATION

     53  

5.5.1

  SHAREHOLDING      53  

5.6

 

PRO FORMA FINANCIAL INFORMATION

     54  

5.7

 

REPORT OF THE STATUTORY AUDITORS OF ERYTECH ON THE PRO FORMA FINANCIAL INFORMATION

     73  

6.

  AVAILABLE DOCUMENTS      75  

 

5


ANNEX 1.

 

MERGER AGREEMENT

     77  

ANNEX 2.

 

REPORTS OF THE MERGER AUDITOR

     124  

ANNEX 3.

 

TEXT OF THE RESOLUTIONS OF THE GENERAL MEETINGS OF THE SHAREHOLDERS OF ERYTECH AND PHERECYDES

     104  

ANNEX 4.

 

EXTRACTS FROM THE RESOLUTIONS OF THE BOARDS OF DIRECTORS OF ERYTECH AND PHERECYDES AUTHORIZING THE MERGER PROJECT

     130  

ANNEX 5.

 

CONCORDANCE TABLE

     139  

 

6


1.

PERSONS RESPONSIBLE FOR THE EXEMPTION DOCUMENT, THIRD PARTY INFORMATION AND EXPERT REPORTS

 

1.1

IDENTIFICATION OF PERSONS RESPONSIBLE FOR THE EXEMPTION DOCUMENT

 

1.1.1

For Erytech, Absorbing Company

Mr. Gil Beyen, Chief Executive Officer of Erytech

Persons responsible for the financial information:

Mr. Gil Beyen, Chief Executive Officer and Mr. Eric Soyer, Deputy Chief Executive Officer, Chief Financial Officer and Chief Operating Officer

Phone number: +33 4 78 74 44 38

Fax: +33 4 78 75 56 29

e-mail: investors@erytech.com

 

1.1.2

For Pherecydes, Absorbed Company

Mr. Thibaut du Fayet, Chief Executive Officer of Pherecydes

e-mail : investors@pherecydes-pharma.com

 

1.2

RESPONSIBILITY STATEMENT

 

1.2.1

For Erytech, Absorbing Company

“I certify that the information contained in the Exemption Document relating to Erytech Pharma is, to the best of my knowledge, in accordance with the facts and contains no omission likely to affect its import.”

Mr. Gil Beyen

Chief Executive Officer

 

1.2.2

For Pherecydes, Absorbed Company

“I certify that the information contained in the Exemption Document relating to Pherecydes Pharma is, to the best of my knowledge, in accordance with the facts and contains no omission likely to affect its import.”

Mr. Thibaut du Fayet

Chief Executive Officer

 

1.3

EXPERT’S STATEMENT OR REPORT

Ruling on the joint request of Erytech and Pherecydes, the President of the Commercial Court of Lyon has, by order of February 28, 2023, appointed Finexsi as merger auditor (commissaire à la fusion), a French public limited liability company (société anonyme) whose registered office is located at 14 rue de Bassano, 75116 Paris, France, represented by Mr. Christophe Lambert, whose mission, in accordance

 

7


with Article L. 236-10 of the French Commercial Code (Code de commerce), is to (i) verify that the relative values attributed to the shares of the companies participating in the Merger are relevant and that the exchange ratio is fair and (ii) to prepare a report that will be made available to the shareholders of Erytech and Pherecydes (the “Merger Auditor”).

The reports of the Merger Auditor dated May 15, 2023 are attached as ANNEX 2 of the Exemption Document, and are made available to the shareholders of Erytech and Pherecydes.

The reports of the Merger Auditor have also been filed with the registry of the Commercial Courts of Lyon and Nantes in accordance with the regulations in force.

 

1.4

INFORMATION SOURCED BY A THIRD PARTY

The Exemption Document contains information relating to the companies’ activities and the markets in which they operate. This information is derived from studies carried out either by internal or external sources (e.g. industry publications, specialized studies, information published by market research companies, analysts’ reports). Other information contained in the Exemption Document is publicly available information. The companies believe that this information provides an accurate picture of their reference markets and their competitive position in these markets.

To the best of the companies’ knowledge, such information has been accurately reproduced and no facts have been omitted that would make it inaccurate or misleading. However, this information has not been verified by an independent expert and the companies cannot guarantee that a third party using different methods to collect, analyze or calculate market data would obtain the same results.

 

2.

INFORMATION ON THE ISSUER AND ON THE ABSORBED COMPANY

 

2.1

INFORMATION ON ERYTECH, THE ABSORBING COMPANY

 

2.1.1

General information

 

2.1.1.1

Commercial name, registered office, date of incorporation, law, legal form and legal entity identifier

ERYTECH Pharma is a public limited liability company incorporated under the laws of France on October 26, 2004, having its registered office at 60, avenue Rockefeller, 69008 Lyon and registered with the Lyon Trade and Companies Register under number 479 560 013.

Legal Entity Identifier (LEI): 969500U8ZZCODU8A9374

Website: http://www.erytech.com/ - The contents of this website are not part of the Exemption Document, unless expressly incorporated by reference.

Phone number: + 33 4 78 74 44 38

 

2.1.1.2

Statutory auditors

Statutory Auditors

 

8


KPMG S.A., public limited liability, Nanterre Trade and Companies Register 775 726 417, 2 Avenue Gambetta Tour Eqho, Paris la Défense 92066 Nanterre Cedex.

Date of first appointment: June 24, 2016.

Expiry date of the mandate: General Meeting of shareholders approving the financial statements of the financial year ending December 31, 2027.

KPMG Audit Rhône Alpes Auvergne has been the statutory auditor since June 11, 2010 and until its replacement by KPMG S.A. on June 24, 2016 at the end of its mandate.

RSM Paris S.A.S., a simplified joint stock company, Paris Trade and Companies Register 792 111 783, 26, rue Cambacérès, 75008 Paris.

Date of first appointment: June 21, 2019.

Expiry date of the mandate: General Meeting of shareholders approving the financial statements of the financial year ending December 31, 2025.

RSM Rhône Alpes has been the statutory auditor since June 17, 2014 and until its replacement by RSM Paris on June 21, 2019.

 

2.1.2

Business overview

 

2.1.2.1

Principal activities

Erytech is a clinical-stage biotechnology company, founded in 2004, which develops innovative therapies, resulting from the internal conduct of research and development programs, to cure patients suffering from diseases in therapeutic areas whose needs are not currently met and which are based in particular on red blood cells.

The principal activities of Erytech are presented in Sections 1.1 “Présentation Générale”, 1.2 “Stratégie du Groupe”, 1.3 “Plateformes technologiques”, 1.4 “Tableau des produits en développement”, 1.5 “Eryaspase, une approche unique du traitement en oncologie” and 1.6 “Autres programmes thérapeutiques potentiels de la société” of the Erytech 2022 Universal Registration Document.

 

9


The table below set forth Erytech’s products candidates pipeline that will evolve following the final completion of the Merger:

 

LOGO

 

2.1.2.2

Important events concerning the activities

Any significant changes affecting Erytech’s operations and principal activities that have occurred since December 31, 2022 are described in Section 1.1 “Présentation Générale” of the Erytech 2022 Universal Registration Document.

 

2.1.2.3

Principal markets

Erytech’s principal markets are described in Section 1.8 “Commercialisation” of the Erytech 2022 Universal Registration Document.

 

2.1.3

Investments

None.

 

2.1.4

Corporate Governance

 

2.1.4.1

Administrative and management bodies

The administrative and management bodies of Erytech are described in Section 3.1.1.2 “Organes d’administration et de direction” of the Erytech 2022 Universal Registration Document.

 

10


As of the date of the Exemption Document, the composition of the board of directors of Erytech is as follows:

 

Name, first name,
nationality, function,
age, address

 

1st nomination

 

Term of mandate

 

Independant
director

 

Audit
Committee

 

Clinical
Strategy
Commitee

 

Compensation
and
Nomination
Committee

 

Experience of
directors

Jean-Paul Kress

French

Chairman of the board of directors

57 y.o

50 Gray Street Boston
MA 02116 (United-States)

 

  General Meeting of June 21, 2019 and Board of directors of June 21, 2019  

Ordinary General Meeting to be held

in 2025 to approve the financial statements for the year ending December 31, 2024.

 

  Yes   NA   NA   Member  

The experience of the following directors is presented in Section

3.1.1.2.3 of the Erytech 2022 Universal Registration Document: Jean-Paul Kress;

Gil Beyen; Sven Andréasson; Philippe Archinard; Martine Ortin George; Hilde Windels BV, represented by Hilde Windels.

Gil Beyen

Belgian

Director and Chief Executive Officer

61 y.o

96 South ST #4, Boston, MA 02111 (United-States)

 

 

General Meeting of April 2, 2013

(having been Chairman of the Supervisory Board since 2012)

 

Ordinary General Meeting to be held

in 2025 to approve the financial statements for the year ending December 31, 2024.

 

  No   NA   NA   NA

Sven Andréasson

Swedish

Director

70 y.o

3528 Reservoir Road NW, Washington D.C 20007 (United-States)

 

Cooptation at the meeting of the Board of directors of January 4, 2022

(Chairman of the Supervisory Board from 2009 to 2011, Vice-Chairman of the Supervisory Board since 2011)

 

 

Ordinary General Meeting to be held

in 2025 to approve the financial statements for the year ending December 31, 2024.

  Yes   Member   NA   Member

Philippe Archinard

French

Director

63 y.o

47 rue Professeur
Deperet, 69160 Tassin-la-Demi-Lune (France)

 

General Meeting of April 2, 2013

(Member of the Supervisory Board since 2005)

 

Ordinary General Meeting to be held

in 2025 to approve the financial statements for the year ending December 31, 2024.

 

  Yes   Member   Member   Member and Chairman

Martine Ortin George

French

Director

74 y.o

24 Albert way Princeton, NJ 08540 (United-States)

 

  General Meeting of June 17, 2014  

General Meeting of Shareholders to be held in 2023 to approve the financial statements for the year ending December 31, 2022.

 

  Yes   NA   Member and Chairman   NA

Hilde Windels BV represented by Hilde Windels

Belgian

Director

57 y.o

Kasteellaan 89

9000 Gent (Belgium)

 

  General Meeting of June 27, 2017   General Meeting of Shareholders to be held in 2023 to approve the financial statements for the year ending December 31, 2022.   Yes   Member and Chairman   NA   NA  

Didier Hoch

French

Director

66 y.o

1508 route de
Bellegarde 42210 Saint-Cyr-les-Vignes

  Cooptation at the meeting of the Board of directors of May 15, 2023 ratified by the General Meeting of June 23, 2023             The experience of the following directors is presented in Chapter 2 of the report on corporate

 

11


Name, first name,
nationality, function,
age, address

 

1st nomination

 

Term of mandate

 

Independant
director

 

Audit
Committee

 

Clinical
Strategy
Commitee

 

Compensation
and
Nomination
Committee

 

Experience of
directors

GO Capital, SAS

represented by Mrs. Leila Nicolas

French

Director

1 rue Louis Braille

Hall-a-Cap

Courrouze 35136 St Jacques de la Lande

  Cooptation at the meeting of the Board of directors of May 15, 2023 ratified by the General Meeting of June 23, 2023             governance, included in the Pherecydes 2022 Annual Financial Report: Didhier Hoch, Go Capital, represented by Leïla Nicolas

 

2.1.4.2

Identity of major shareholders

The identity of the major shareholders of Erytech is presented in Section 4.1 “Répartition du capital et des droits de vote” of the Erytech 2022 Universal Registration Document.

Since the publication of the Erytech 2022 Universal Registration Document, the Company has received the following threshold crossing declaration: “On April 14, 2023, Akkadian Partners (18 rue Robert Stümper, L-2557 Luxembourg), acting on behalf of the fund Akkadian Partners Fund, of which it ensures the management, declared that on April 13, 2023, it had exceeded the threshold of 5% of the Company’s share capital and that it held, on behalf of the said fund, 1,570,000 shares in the Company representing the same number of voting rights, i.e. 5.06% of the share capital and 4.83% of the voting rights.

 

12


As of the date of the Exemption Document, the distribution of the share capital is as follows:

 

     May 15, 2023  
     SHARES      % of capital     Total voting rights      Voting rights
percentage
 

MANAGEMENT & EMPLOYEES

     25830        0,08 %      37806        0,11 % 

Gil BEYEN

     4 840        0,01     7 308        0,02

Jérôme BAILLY

     3 798        0,01     5 619        0,02

Eric SOYER

     6 264        0,02     8 574        0,02

Anne-Cecile FUMEY

     864        0,00     1 333        0,00

Karine CHARTON

     400        0,00     695        0,00

Other employees

     9 664        0,03     14 277        0,04

INVESTISSEURS FINANCIERS/PE FUNDS

     1449246        4,25 %      2898492        8,14 % 

AURIGA Partners

     1018212        2,98     2036424        5,72

RECORDATI ORPHAN DRUGS

     431 034        1,26     862 068        2,42

Directors

     10 303        0,03     20 606        0,06

GALENOS

     1        0,00     2        0,00

Philippe ARCHINARD

     10 300        0,03     20 600        0,06

Hilde WINDELS

     1        0,00     2        0,00

Martine GEORGE

     1        0,00     2        0,00

Luc DOCHEZ

     0        0,00     0        0,00

Melanie ROLLI

     0        0,00     0        0,00

Other shareholders

     42 655        0,13     74 219        0,21

Shareholders inferior or equal to 0,5%

     42 655        0,13     74219        0,21
  

 

 

    

 

 

   

 

 

    

 

 

 

AK1 total

     3101745        9,09     3101745        8,71
  

 

 

    

 

 

   

 

 

    

 

 

 

Pool Guy Rigaud

     500 535        1,47     500 535        1,41

Auriga IV Bioseeds

     1 542 675        4,52     1 542 675        4,33

FPCI Ouest Ventures III

     1058535        3,10     1058535        2,97
  

 

 

    

 

 

   

 

 

    

 

 

 

SUB-TOTAL NOMINATIF

     4629779        13,57 %      6132868        17,22 % 
  

 

 

    

 

 

   

 

 

    

 

 

 

Treasury Shares—ERYP

     2 500        0,01     0        0,00

Unidentified (flottant)

     29390681        86,14     29390681        82,51

BVF Partners L.P.

     97 338        0,29     97 338        0,27
  

 

 

    

 

 

   

 

 

    

 

 

 

SUB-TOTAL PORTEUR*

     29490519        86,43 %      29488019        82,78 % 
  

 

 

    

 

 

   

 

 

    

 

 

 

Total net

     34120298        100,00     35620887        100,0
  

 

 

    

 

 

   

 

 

    

 

 

 

 

*

On the basis of threshold declarations

Elaia Partners, Go Capital and the pool of shareholders of Pherecydes represented by Mr. Guy Rigaud have declared that they intend, together with AURIGA Partners, to act in concert with respect to Erytech. To the best of the Company’s knowledge, there are no other actions in concert nor shareholder agreement.

 

2.1.4.3

Number of employees

The number of employees of Erytech is set forth in Section 1.13.1.1 “Personnel” of the Erytech 2022 Universal Registration Document.

As of the date of the Exemption Document, Erytech has 38 employees.

 

13


2.1.5

Financial information

 

2.1.5.1

Annual financial statements for the twelve months preceding the publication of the Exemption Document

The financial statements of Erytech as at December 31, 2022 and the corresponding auditors’ report are presented in Sections 5.3.3 “Comptes sociaux établis (normes françaises) pour l’exercice clos le 31 décembre 2022” and 5.3.4 “Rapport des commissaires aux comptes sur les comptes sociaux établis pour l’exercice clos le 31 décembre 2022” of the Erytech 2022 Universal Registration Document.

The consolidated financial statements as at December 31, 2022 of the Erytech Group and the corresponding auditors’ report are set out in Sections 5.3.1 “Comptes consolidés établis en normes IFRS pour l’exercice clos le 31 décembre 2022” and 5.3.2 “Rapport des commissaires aux comptes sur les comptes consolidés établis en normes IFRS pour l’exercice clos le 31 décembre 2022” of the Erytech 2022 Universal Registration Document.

 

2.1.5.2

Accounting standards

The financial statements of Erytech presented in the Erytech 2022 Universal Registration Document are prepared in accordance with accounting standards applicable in France.

The consolidated financial statements of the Erytech Group presented in the Erytech 2022 Universal Registration Document are prepared in accordance with the IFRS accounting standards adopted by the European Union.

 

2.1.5.3

Significant changes since the end of the last financial year

Any significant changes having an impact on Erytech’s operations and principal activities that have occurred since December 31, 2022 are described:

 

   

in Section 5.3.6 “Changement significatif de la situation financière ou commerciale” of the Erytech 2022 Universal Registration Document;

 

   

in Section 2.1.7 of the Exemption Document for the press releases published after the date of availability of the Erytech 2022 Universal Registration Document.

 

2.1.5.4

Management report

The management report is incorporated into the Erytech 2022 Universal Registration Document as per the cross-reference table appearing on pages iv and v of the Erytech 2022 Universal Registration Document.

 

2.1.6

Legal and arbitration proceedings

To the best of Erytech’s knowledge, there are no administrative, legal or arbitration proceedings (including any pending or threatened proceedings) that are likely to have or have had, in the 12 months prior to the date of the Exemption Document, a material effect on the financial position or profitability of Erytech.

 

14


2.1.7

Summary of information disclosed under Regulation (EU) N° 596/2014 of the European Parliament and of the Council

Announcements relating to changes in Erytech’s strategy following the FDA’s feedbacks:

 

   

Announcement of the sale of the cell therapy manufacturing facility in the United States to Catalent for a total consideration of 44.5 million dollars and update on the progress of clinical programs

On April 25, 2022, Erytech announced the sale of Erytech’s state-of-the-art commercial-scale cell therapy manufacturing facility in Princeton, New Jersey, for a total consideration of $44.5 million. Catalent proposed to retain the Erytech’s staff at the site, representing approximately 40 people. Erytech announced that it will retain its manufacturing site in Lyon, and its expertise and capabilities in manufacturing process science to continue innovating in cell therapy manufacturing.

Erytech also provided an update on the progress of its clinical programs (including the BLA application in hypersensitive ALL, based on results of NOPHO-sponsored Phase 2 trial and rESPECT, the Phase 1 investigator-sponsored trial in first-line metastatic pancreatic cancer).

 

   

Announcement of the end of Graspa® application for the treatment of patients with ALL hypersensitivity to pegylated asparaginase

The Company received feedback from the FDA on its iPSP, submitted in July 2022. On August 24, 2022, Erytech announced its decision, following the feedback from the U.S. Food and Drug Administration’s (FDA), to no longer seek approval for Graspa® for the treatment of patients with ALL with hypersensitivity to pegylated asparaginase. Erytech announced that it has appointed a specialized advisor to evaluate strategic options to leverage its ERYCAPS® platform with complementary assets and/or a broader corporate transaction. Multiple options are under review, and the Company expects to give further updates on these strategic initiatives in the fourth quarter of this year.

 

   

Announcement of the sale of the U.S. cell therapy manufacturing facility to Catalent and the discontinuation of operations in preparation for the submission of an application for approval of Graspa® for the treatment of patients with Acute Lymphoblastic Leukemia (ALL)

On September 12, 2022, during its financial update for the first half of 2022, Erytech confirmed the sale of its U.S. cell therapy manufacturing facility to Catalent.

Erytech also confirmed that it has stopped activities to submit an application for approval of Graspa® for the treatment of patients with hypersensitive ALL, following recent feedback from the FDA.

Erytech further announced the suspension of enrollment in the TRYbeCA-2 trial, which evaluates eryaspase in combination with gemcitabine and carboplatin chemotherapy, compared to chemotherapy alone, in metastatic TNBC (first and second lines), following the disappointing results of eryaspase in the TRYbeCA-1 trial in second-line pancreatic cancer. The trial’s Steering Committee met in September 2022 to review the results of the 25 evaluable patients. No clinical benefit was demonstrated, which could be attributed to the immature closure of the trial and the small number of patients.

 

15


   

Announcement of the halt of the lead program Graspa and deep restructuring implementation announced on the occasion of the publication of the third quarter of 2022 results

On November 21, 2022, Erytech, on the occasion of the publication of its quarterly results, announced the halt of the program Graspa after FDA feedback on envisaged BLA submission in hypersensitive ALL and following inconclusive results from clinical studies, its intention to focus on its most promising preclinical programs. As a result, Erytech has announced that it has undertaken a restructuring of its staff with the implementation of a job preservation plan and has obtained the approval of the labor authorities in September 2022. Combined with the approximately 40 people who transferred to Catalent after the sale of the Company’s manufacturing facility in Princeton, the global team size will be less than 25% compared to the start of the year 2022. Erytech retains its R&D team and its expertise in key functional areas to keep the ability to restart a pipeline of partnered development programs and maintain a fully operational dual listed company.

Announcements relating to the Merger project:

 

   

Announcement of the proposed combination between Erytech and Pherecydes intending to create a global leader in extended phage therapy

On February 15, 2023, Erytech and Pherecydes announced the strategic combination of their two companies in order to build on complementary expertise and capabilities of both companies to accelerate development of extended phage therapies for antimicrobial resistance, in particular via the phase II PhagoDAIR study conducted by PHERECYDES, as well as other anti-infective fields and therapeutic areas with high unmet medical needs.

The transaction, supported by key shareholders of each of Pherecydes and Erytech will result in former Pherecydes shareholders holding approximately 49% of the combined entityand will extend the combined company cash runway into third quarter of 2024, with a consolidated cash position of approximately 41 million euros as of December 31, 2022, and would enable funding of existing and novel programs through multiple clinical milestones.

 

   

Announcement of first quarter 2023 results and update on the merger project with Pherecydes

On May 9, 2023, Erytech published its first quarter 2023 results. As of March 31, 2023, Erytech had cash and cash equivalents totaling 30.5 million euros (approximately 33.7 million dollars), compared to 38.8 million euros as of December 31, 2022.

In addition, Erytech indicated that on May 1, 2023, Akkadian Partners had informed the Board of directors that it intended to oppose the project of merging with Pherecydes and take de facto control of Erytech with a view to pursue alternative acquisition projects with Erytech’s cash. In that context, the Management and Board of Erytech have reviewed and assessed the ideas of acquisitions projects mentioned by Akkadian, with the assistance of external financial and legal advisers. After due consideration, Erytech determined that these ideas, were not in the best interest of Erytech and its stakeholders, and remote from Erytech’s strategy and identity, with significant uncertainty and risks associated with these projects. Erytech, while confirming its strategic decision to merge with Pherecydes, will oppose any financial predation project which would not be in the best interest of the company and its stakeholders.

 

16


   

Update on the announced combination with Pherecydes

On May 16, 2023, Ertytech announced that it have entered into the Merger Agreement with Pherecydes on May 15, 2023. In addition, Erytech announced that Erytech’s board of directors approved on May 15, 2023, the contribution by Elaia Partners, Go Capital and a pool of Pherecydes shareholders represented by Mr. Guy Rigaud, of 827,132 Pherecydes shares to Erytech in consideration of 3,101,745 newly issued Erytech shares. The exchange ratio for the Contribution is the same as for the Proposed Merger. Furthermore, Didier Hoch and Go Capital (represented by Mrs Leila Nicolas) have been appointed by the board of directors of Erytech by way of cooptation. Finally, Erytech announced that it intends to file a request with the President of the Commercial Court of Lyon soliciting the appointment of an ad hoc agent (mandataire ad hoc) who will represent absent Erytech shareholders to ensure that the required quorum is satisfied and the shareholders’ general meeting is allowed to validly resolve on all resolutions set forth on the agenda.

Announcements relating to the approval of the transfer of Erytech’s listing to the Nasdaq:

 

   

Announcement of the receipt by Erytech of the Nasdaq Stock Market LLC’s notice

On October 13, 2022, Erytech announced that it received a “Notification Letter” from the Nasdaq dated October 7, 2022, indicating that, based upon a closing bid price of less than $1.00 per share for the Company’s ADS for the prior 30 consecutive business day period, the Company no longer satisfies Nasdaq Listing Rule 5450(a)(1). Erytech benefited from the applicable grace period of 180 days to regain compliance, or until April 5, 2023. In the event the Company does not regain compliance within the 180-day grace period, and it meets all other listing standards and requirements, the Company may be eligible for an additional 180-day grace period. Erytech confirmed that it intended to regain compliance within the applicable compliance period and to evaluate its options to do so. During this time, the Company’s ADSs will continue to be listed and trade on The Nasdaq Global Select Market and the Company’s business and operations are not affected by the receipt of the Notification Letter.

 

   

Announcement of the approval of the transfer of Erytech’s listing to the Nasdaq Capital Market

On April 17, 2023, Erytech announced that it received approval from the Nasdaq Stock Market LLC on April 12, 2023 to transfer the listing of its American Depositary Shares from the Nasdaq Global Select Market to the Nasdaq Capital Market. The transfer became effective at the opening of business on April 14, 2023.

In connection with the transfer to the Nasdaq Capital Market, Nasdaq granted the Company an additional 180-day period (or until October 2, 2023) to regain compliance with the requirement set forth in Nasdaq Listing Rule 5450(a)(1) that the bid price of the Company’s ADS meet or exceed $1.00 per ADS for at least ten consecutive business days. If at any time during this additional time period the closing bid price of the Company’s security is at least $1 per share for a minimum of 10 consecutive business days, Nasdaq will provide written confirmation of compliance and this matter will be closed.

 

17


2.2

INFORMATION ON PHERECYDES, THE ABSORBED COMPANY

 

2.2.1

General information

 

2.2.1.1

Commercial name, registered office, date of incorporation, law, legal form and legal entity identifier

Pherecydes Pharma is a public limited liability company incorporated under the laws of France on December 12, 2006, having its registered office at 22, boulevard Benoni Goullin, 44200 Nantes, and registered with the Nantes Trade and Companies Register under number 493 252 266.

Legal Entity Identifier (LEI): 894500LYT3UUN58X3I68

Website: http://www.pherecydes-pharma.com/ - The contents of this website are not part of the Exemption Document, unless expressly incorporated by reference.

Phone number: +33 1 84 86 16 13

 

2.2.1.2

Statutory auditors

Statutory Auditor

PricewaterhouseCoopers Audit, a simplified joint stock company, Nanterre Trade and Companies Register 672 006 483, 63 Rue de Villiers, 92200 Neuilly-sur-Seine.

Date of first appointment: December 12, 2006.

Expiry date of the mandate: General Meeting of shareholders approving the financial statements of the financial year ending December 31, 2025.

Alternate statutory auditor :

Mr. Patrice Morot, 63 Rue de Villiers, 92200 Neuilly-sur-Seine.

Date of first appointment: May 28, 2021.

Expiry date of the mandate : General Meeting of shareholders approving the financial statements of the financial year ending December 31, 2025.

 

2.2.2

Business overview

 

2.2.2.1

Principal activities

Pherecydes is a clinical-stage biotechnology company, created in 2006, which develops innovative treatments, resulting from the internal conduct of research and development programs, to cure patients suffering from diseases in therapeutic areas whose needs are not currently met and which are based in particular on bacteriophages.

 

18


The principal activities of Pherecydes are presented in Chapter 1 “Activité de la société et évolution des affaires au cours de l’exercice clos le 31 décembre 2022” of the Pherecydes 2022 Annual Financial Report, in particular in Sections 1.1 “Présentation Générale de l’activité de la Société”, 1.2 “Situation de l’activité et analyse de l’évolution des affaires au cours de l’exercice 2022” and 1.4 “Activité en matière de R&D”.

The table set forth below presents Pherecydes’ product candidate pipeline, which will evolve following the completion of the Merger:

 

LOGO

 

2.2.2.2

Important events concerning the activities

Any significant changes having an impact on Pherecydes’ operations and principal activities that have occurred since December 31, 2022 are described:

 

   

in Section 1.7 “Evènements importants survenus entre la date de clôture et la date d’établissement du rapport” of the Pherecydes 2022 Annual Financial Report;

 

   

in Section 2.2.7 of the Exemption Document for the press releases published after the date of availability of the Pherecydes 2022 Annual Financial Report.

 

2.2.2.3

Principal markets

Pherecydes focuses its activity on the development of treatments against three specific bacterial species identified by the WHO as the bacteria for which new treatments are most urgently needed and which together account for more than two thirds of the incidence of antibiotic-resistant infections, namely

 

   

Staphylococcus aureus (S. aureus);

 

   

Pseudomonas aeruginosa (P. aeruginosa); and

 

   

Escherichia coli (E. coli).

 

19


LOGO

According to the U.S. Centers for Disease Control and Prevention (CDC), the three bacterial infections targeted by Pherecydes alone accounted for 3.7 billion dollars in healthcare costs in 20171.

In its report on 2020, the ECDC estimates that the health cost is about 1.8 billion euros. According to this report, the most common bacterium in Europe is E. coli (44.2%), followed by S. aureus (20.6%). P. aeruginosa comes in 5th position with a rate of 5.6%. Applying the above percentages, the health cost in Europe would therefore be 1.3 billion euros for S. aureus, E. coli and P. aeruginosa alone, the bacteria targeted by Pherecydes.

The first bacterium against which Pherecydes develops treatments is the S. aureus bacterium. This bacterium is resistant to methicillin and is recognized as one of the most dangerous pathogens, classified as a serious threat by the CDC and priority 2 out of 3 “high” by the WHO. It is a common bacterium that spreads in healthcare facilities and the general population.

Pherecydes has selected two active phages to treat infections caused by this bacterium in three different clinical indications, namely osteoarticular prosthesis infections (OAI), diabetic foot ulcers (DFU) and infective endocarditis (IE, heart valve infections).

The second bacterium against which Pherecydes is developing treatments is P. aeruginosa, recognized as one of the most dangerous pathogens, classified as a serious threat by the CDC and priority 1 of 3 “critical” by the WHO. P. aeruginosa causes many types of healthcare-associated respiratory infections (nosocomial diseases), including pneumonia, bloodstream infections, and surgical site infections.

 

1 

https://www.marketresearchfuture.com/reports/hospital-acquired-infections-market-2576

 

20


Pherecydes has selected four phages active on the P. aeruginosa bacterium with a focus on a pulmonary indication: ventilator-associated pneumonia (VAP), and potentially mucovisidosis (CF, Cystic Fibrosis).

Finally, the third bacterium against which Pherecydes is developing treatments is E. coli, also recognized as one of the most dangerous pathogens, also classified as a serious threat by the CDC and priority 1 out of 3 “critical” by the WHO. E. coli is a digestive tract bacterium of the Enterobacteriaceae family, frequently responsible for infections in human health (UTIs, especially complex urinary tract infections) and in animal health. This bacterium is easily transmitted when hygiene measures are insufficiently respected.

Pherecydes has selected four phages active on E. coli bacteria targeting complicated urinary tract infections (CTI).

The impact of these different clinical positions in Europe (5) and the United States is described thereafter.

 

LOGO

 

2.2.3

Investments

Pherecydes has not made any material investments since December 31, 2022 that are in progress and/or for which firm commitments have been made.

 

21


2.2.4

Corporate governance

 

2.2.4.1

Administrative and management bodies

The administrative and management bodies of Pherecydes are described in chapter 1 of the Pherecydes 2022 Corporate Governance Report:

 

Name

   Mandate   Age     Independent
member (1)
    Member of
the Audit
Committee
    Member of
the
Compensation
Committee
    Date of entry on
the Board of
directors
     Expiry date
of the
current
mandate
 

Didier Hoch

   Chairman
of the
Board of
directors
    66             2022        2026  

Maryvonne Hiance

   Director     74           X       2022        2026  

Go Capital – represented by Leila Nicolas

   Director     42           X       2022        2026  

Elaia Partners reprensented by Franck Lescure, Director

   Director     54             2022        2026  

Guy Rigaud

   Director     75         X         2022        2026  

Robert Sebbag

   Director     72       X           2022        2026  

Eric Leire

   Director     65       X       X         2022        2026  

 

(1)

With regard to recommendation no. 9 of the Middlenext corporate governance code for small and mid-sized companies of September 2021.

The composition of the administrative and management bodies of Pherecydes have not changed since December 31, 2022.

 

2.2.4.2

Identity of major shareholders

The identity of the major shareholders of Pherecydes is presented in Section 6.1 of the Pherecydes 2022 Annual Financial Report.

 

Shareholder

   Number of
shares
     % of share
capital
    Number of
voting rights
     % voting rights  

Member of the board of directors and of the management*

     4 483        0.06     4 483        0.06

ACE

     1 384 564        17.44     1 384 564        17.44

Omnes Capital

     242 598        3.06     242 598        3.06

Participations Besançon

     243 819        3.07     243 819        3.07

Treasury shares

     25 142        0.32     25 142        0.32

Auriga IV Bioseeds

     1 436 977        18.10     1 436 977        18.10

Ouest Venture III

     986 009        12.42     986 009        12.42

Pool GR

     466 369        5.87     466 369        5.87

Erytech

     827 132        10.42     827 132        10.42

Floating capital

     2 322 086        29.25     2 322 086        29.25
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     7 939 179        100.00     7 939 179        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

*

Given the termination of the functions of Mr. Guy-Charles Fanneau de La Horie, previously Chairman of the Board of Directors, on May 23, 2022, and of Mr. Philippe Rousseau, previously a member of the Board of directors, on March 31, 2022, the shares of the Company that they hold as of December 31, 2022 are not included in this number of shares. This number corresponds to the shares held personally by Mr. Guy Rigaud, not included in the “Pool GR” line below, and by Mr. Didier Hoch, Chairman of the Board of Directors. The shares owned by Elaia Capital and Go Capital are shown in the corresponding lines of the table.

 

22


Pherecydes holds 25,142 of its own shares as of the date hereof, i.e. 0.32% of its share capital, under a liquidity contract entrusted to Portzamparc. This contract has been temporarily suspended at the end of the trading session on May 5, 2023.

In addition, the shareholders of the Guy Rigaud Pool entered into a voting agreement on December 22, 2017. This voting agreement entails concerted action.

 

2.2.4.3

Number of employees

Pherecydes currently employs 29 people (full-time employees).

 

2.2.5

Financial information

 

2.2.5.1

Annual and half-yearly financial statements for the twelve months preceding the publication of the Exemption Document

The financial statements of Pherecydes as at December 31, 2022 (pages 67 et seq.) and the corresponding auditor’s report (pages 91 et seq.) are presented in the appendix to the Pherecydes 2022 Annual Financial Report.

 

2.2.5.2

Accounting standards

The financial statements of Pherecydes presented in the Pherecydes 2022 Annual Financial Report have been prepared in accordance with accounting standards applicable in France.

 

2.2.5.3

Significant changes since the end of the last financial year

Any significant changes in the financial position of Pherecydes since December 31, 2022 are described:

 

   

in Section 1.7 “Evènements importants survenus entre la date de clôture et la date d’établissement du rapport” and in Section 3.2 of the notes to the financial statements for the year ended December 31, 2022 included in the Pherecydes 2022 Annual Financial Report;

 

   

in Section 2.2.7 of the Exemption Document for the press releases published after the date of availability of the Pherecydes 2022 Annual Financial Report.

 

2.2.5.4

Management report

The management report is incorporated into the Pherecydes 2022 Annual Financial Report in the first part of the document (pages 3 et seq.).

 

23


2.2.6

Legal and arbitration proceedings

To the best of Pherecydes’ knowledge, there are no administrative, legal or arbitration proceedings (including any pending or threatened proceedings), that are likely to have or have had, in the 12 months prior to the date of the Exemption Document, a material effect on the financial position or profitability of Pherecydes.

 

2.2.7

Summary of information disclosed under Regulation (EU) N° 596/2014 of the European Parliament and of the Council

Elements related to the activity

 

   

Announcement of the first international approval of a compassionate treatment with its phages—The Swedish Medical Products Agency (SMPA) has given its approval to treat a compassionate case of osteoarticular infection on prosthesis joint with anti-S. aureus phages

On April 28, 2022, Pherecydes announced that it had received the first international approval of a compassionate treatment with its phages, in Sweden. The Swedish Medical Products Agency (SMPA) has given its approval to treat a case of osteoarticular infection of a prosthetic joint with Pherecydes Pharma’s anti-S. aureus phages.

 

   

Announcement of the obtention of the Compassionate Access Authorization (AAC) Early Access Program approval from the ANSM (Agence Nationale de Sécurité du Médicament et des produits de santé) for its anti-Staphylococcus aureus phages

On May 30, 2022, Pherecydes announced that it had been granted Compassionate Access Authorization (AAC) Early Access Program from the ANSM (Agence Nationale de Sécurité du Médicament et des produits de santé, the French National Agency for the Safety of Medicines and health products) for its anti-Staphylococcus aureus (S. aureus) phages.

The AAC system allows certain categories of sick patients in France with no therapeutic solutions to benefit from drugs yet to be granted marketing approval. The AAC scheme allows Pherecydes Pharma to make its anti-S. aureus phages available to larger populations and thus generate the first revenue in the Company’s history.

 

   

Announcement of the enrollment of the first patient in the phase II study PhagoDAIR for the treatment of osteoarticular infections caused by Staphylococcus aureus

On June 15, 2022, Pherecydes announced the enrollment of the first patient in the phase II study PhagoDAIR.

PhagoDAIR is the world’s first phage therapy study conducted in osteoarticular infections on prostheses caused by Staphylococcus aureus (S. aureus). Its protocol has been approved by the French National Agency for the Safety of Medicines and health products (ANSM) in December 2021 and by the French Committee for the Protection of Individuals (CPP) in February 2022.

 

24


   

Announcement of positive preclinical results of inhaled phage therapy presented to the Reanimation 2022 conference

On June 27, 2022, Pherecydes announced that the results of a preclinical study undertaken with its phages have been presented at the Reanimation 2022 conference organized by the SRLF (Société de Réanimation de Langue Française, the French intensive care society) and held in Paris from June 22 to 24, 2022.

The study was carried out within the framework of the Pneumophage project, associating the UMR1100 and the Diffusion Technique Française company, aimed at demonstrating the effectiveness of inhaled phage therapy in treating ventilator-associated infections.

The results obtained also demonstrate the feasibility of delivering large quantities of active phages by nebulization during mechanical ventilation and the rapid control of the infection in situ in a respiratory model close to humans.

 

   

Announcement of a first registration of the phagogram as an in vitro diagnostic test in accordance with EC Directives

On September 12, 2022, Pherecydes Pharma announced the registration of its phagogram as an in vitro diagnostic test (“Phagogram 1.5”) in accordance with Directive 98/79/EC.

The phagogram is an in vitro diagnostic test to verify the sensitivity of patients’ bacterial strains to Pherecydes phages.

 

   

Announcement of the creation of an international Medical Advisory Board

On September 15, 2022, Pherecydes announced the setting up of a Medical Advisory Board comprising prominent international scientific and clinical experts in infectious diseases. This Board will support Pherecydes consolidate its clinical development strategy in phage therapy.

 

   

Announcement of positive recommendation of the DSMB for the continuation of its phase II clinical study PhagoDAIR in osteoarticular infections caused by Staphylococcus aureus

On November 29, 2022, Pherecydes announced that it had received a unanimous recommendation from the Data Safety Monitoring Board (DSMB) to continue without modification the phase II clinical study PhagoDAIR in osteoarticular infections of prostheses caused by Staphylococcus aureus (S. aureus).

The DSMB is an independent expert committee responsible for the open-label review of the PhagoDAIR study safety data and will meet twice a year during the study. Following its first meeting, the committee recommended that the study continue without modification.

 

   

Announcement of the presentation of Phagogram 1.5 at the ECCMID congress

On April 15, 2023, Pherecydes presented part of its analytical performance plan adapted to its Phagogram 1.5 in vitro diagnostic test to verify the sensibility of patients’ bacterial strains to Pherecydes phages, at the 33rd European Congress of Clinical Microbiology & Infectious Diseases (ECCMID) in Copenhagen (Denmark).

 

25


Changes in governance

 

   

The general assembly of Pherecydes approves the evolution of its governance towards a company with a Board of Directors—Appointment of Didier Hoch as Chairman and CEO and Thibaut du Fayet as Deputy CEO

On May 23, 2022, Pherecydes announced that the Combined General Meeting held on May 19, 2022 approved the change of the company’s management and administration by adopting a Board of Directors and a General Management.

The current members of the Supervisory Board were appointed as the first directors of Pherecydes. Mr. Didier Hoch was appointed Chairman and CEO and Mr. Thibaut du Fayet was appointed Deputy CEO.

 

   

Separation of the functions of Chief Executive Officer and Chairman of the Board of Directors

On December 15, 2022, following the Combined General Meeting of Pherecydes shareholders, the Board of Directors adopted the following decisions: the functions of Chief Executive Officer and Chairman of the Board of Directors were separated, Mr. Thibaut du Fayet, previously Deputy Chief Operating Officer, was appointed Chief Executive Officer and Mr. Didier Hoch, previously Chairman and Chief Executive Officer, was appointed Chairman of the Board of Directors.

Significant financial transactions and announcement of the Merger

 

   

Announcement of a capital increase of approximately 3 million euros to pursue its clinical development program in phagotherapy

On September 22, 2022, Pherecydes announced the success of its capital increase, launched on September 21, 2022, for a total amount of 3.1 million euros, of which 2.6 million euros from institutional investors and 0.5 million euros from individuals.

 

   

Announcement of the proposed combination between Erytech and Pherecydes to create global leader in extended phage therapies

On February 15, 2023, Erytech and Pherecydes announced the combination of their two companies (please refer to Section 2.1.7 above for more details on the communication made).

 

   

Announcement of the completion of a 1.5 million euros capital increase reserved to its historical shareholders

On February 17, 2023, Pherecydes announced the completion of the capital increase for a total amount of 1.5 million euros, fully subscribed by Auriga IV Bioseeds, Ouest Ventures III2 and the pool of shareholders represented by Mr. Guy Rigaud, historical shareholders of Pherecydes.

 

2 

See section 3.2.1.6 of this Exemption Document for a description of the relationship between Auriga IV Bioseeds, Ouest Ventures III and Erytech.

 

26


The funds raised through this capital increase will provide Pherecydes Pharma with sufficient resources to finance its cash requirements until the completion of the merger, expected no later than June 30, 2023.

 

   

Announcement of 2022 annual financial results

On March 30, 2023, Pherecydes presented its 2022 annual financial results. As of December 31, 2022, Pherecydes had cash and cash equivalents of 1 million euros (approximately 1.1 million dollars), compared to 5.4 million euros as of December 31, 2021. In addition to this cash, the capital increase completed on February 17, 2023 for a total amount of 1.5 million euros, is part of the merger project of Pherecydes Pharma into Erytech Pharma announced on February 15, 2023. The current cash position allows Pherecydes Pharma to cover its cash needs until the end of the first half of 2023, when the merger with Erytech is expected.

 

   

Pherecydes strengthens its corporate links with Erytech to prepare the strategic combination

On May 16, 2023, Pherecydes announced the entering into the Merger Agreement with Erytech on May 15, 2023. In addition, Pherecydes announced that the contribution by Elaia Partners, Go Capital and a pool of Pherecydes shareholders represented by Mr. Guy Rigaud, of 827,132 Pherecydes shares to Erytech in consideration of 3,101,745 newly issued Erytech shares has been approved by Erytech’s board of directors on May 15, 2023, which also approved the appointment of Mr. Didier Hoch and Ms. Leila Nicolas, representing Go Capital, as directors.

 

3.

DESCRIPTION OF THE MERGER

 

3.1

PURPOSE AND OBJECTIVES OF THE MERGER

 

3.1.1

Purpose of the Merger for the Absorbing Company and its shareholders

The Merger is part of a strategic combination aimed at creating a global leader in phage therapy by capitalizing on the financial resources and teams of both the Absorbed Company and the Absorbing Company to both accelerate and expand Pherecydes’ existing phage therapy development programs, launch new phage candidates and potentially broaden the scope of application to new therapeutic modalities by leveraging both companies’ advanced technology platforms and expertise.

The Merger would close the strategic evaluation process announced by Erytech on several occasions since November 2021, and would represent the outcome of its effort to find strategic alternatives and a new direction for Erytech. Following the failure of its phase 3 trial in pancreatic cancer, Erytech has sought to leverage its corporate structure and capabilities by adding a clinical stage asset to its business in an area of significant unmet need. Antibiotic resistance is a major medical challenge worldwide and the phage therapy programs developed by Pherecydes represent a promising approach to targeting pathogenic bacteria such as S. aureus, E. coli and P. aeruginosa, which together are responsible for more than 800,000 resistant infections per year in the United States and Europe.

Erytech’s capabilities, expertise and assets, and in particular its late-stage clinical oncology experience, would complement and reinforce the efforts of Pherecydes’ teams to help create value. As part of the Merger, it is planned to relocate all teams to Erytech’s premises in Lyon, France, where they will benefit from a location within a major European center in the field of infectious diseases.

 

27


3.1.2

Purpose of the Merger for the Absorbed Company and its shareholders

Erytech and Pherecydes are expected to combine key expertise and capabilities to drive Pherecydes’ research and development programs, an experienced and highly complementary management team, and an international position that provides access to U.S. investors and stakeholders, particularly given Erytech’s listing on Nasdaq. These assets will allow to accelerate the clinical development plan of Pherecydes with international randomized controlled studies, aiming at establishing the clinical proof of concept of phagotherapy.

The shareholders of Pherecydes will receive, in the context of the Merger, Erytech shares, according to an exchange ratio of four (4) shares of Pherecydes for fifteen (15) shares of Erytech (determined as described in Section 3.5 of the Exemption Document). Upon completion of the Merger, the shareholders of Pherecydes will hold approximately 49% of the share capital and voting rights of Erytech3. Please refer to Section 5.5.2 of the Exemption Document for more details.

 

3.1.3

Description of the anticipated benefits resulting from the Merger

The Merger will allow to benefit from the complementarity between the resources offered by Erytech and the expertise of Pherecydes, with regard to the opportunities represented by the phage market.

Thanks to Erytech’s current cash position (38.8 million euros as of December 31, 2022), the financial visibility of the Absorbing Company, following the completion of the Merger, would extend to the 3rd quarter of 2024, with a consolidated unaudited cash position of approximately 41 million euros by December 31, 2022, and would fund multiple clinical milestones in its existing and future programs.

Other potential complementarities and synergies brought by Erytech are:

 

   

A process and infrastructure at an advanced stage of development, and R&D and production capabilities potentially complementary to those of Pherecydes;

 

   

A presence and experience in the United States, notably through its dual listing on Nasdaq and Euronext Paris.

Pherecydes would bring its ambitious clinical development plan in antibiotic resistance, including a phase II study and several phase I/II clinical studies, and other potential activities: development beyond antibiotic resistance (One Health, cosmetics) and phagogram (IVD diagnostic test).

 

3 

On the basis of the share capital of Pherecydes and Erytech diluted only with the respective instruments (mainly BSCPE and free shares) in the currency and taking into account the capital increase of Pherecydes completed on February 17, 2023

 

28


The goal of the new entity in 2023 and 2024 would be to focus on the following objectives:

 

   

Expansion of the ongoing phase II PhagoDAIR study in patients suffering from Staphylococcus aureus (S. aureus) infections of knee or hip joints, by opening new clinical centers in Europe, with results expected in the first half of 2024.

 

   

Expansion of Pherecydes’ clinical portfolio in phage therapy with two additional phase II studies funded by the company, one in patients with S. aureus endocarditis, which is expected to start in mid-2023, and the second in patients with complex urinary tract infections due to Escherichia coli (E. coli), which is expected to start in the 1st quarter of 2024.

 

   

Development of a research and development strategy based on Erytech’s platforms and expertise, including drug delivery solutions using red blood cells (ERYCAPS) or red blood cell derived vesicles (ERYCEV), formulation expertise in oncology to support phage and endolysin-based therapeutic approaches in anti-infective areas such as antibiotic resistance and beyond, such as food, cosmetics and animal health, or the development of new carriers.

 

   

Extension of the Pherecydes portfolio to include two new phages complementary to the three already existing (S. aureus, P. aeruginosa, E. Coli), essential to develop a complete clinical portfolio of targets in the fight against resistant bacterial infections.

 

   

Capitalize on Erytech’s presence in the United States to facilitate access to North American investors and clinical and regulatory players for future clinical development.

The pipeline of product candidates following the completion of the Merger is presented below:

 

LOGO

 

3.2

CONDITIONS OF THE MERGER

This Section includes the main elements required by Article 91 (2) of Directive (EU) 2017/1132 contained in the Merger Agreement, a copy of which is reproduced in full in ANNEX 1 of the Exemption Document.

 

29


3.2.1

Legal aspects of the Merger

 

3.2.1.1

Legal framework of the Merger

The Merger consists of a merger of Pherecydes into Erytech. The Merger Agreement is governed by French law and in particular by articles L. 236-1 et seq. of the French Commercial Code.

No special benefits are granted in accordance with the provisions of Article 91(2) of Directive (EU) 2017/1132.

 

  (a)

Date of the meeting of the governance bodies having approved the Merger operation

The boards of directors of Erytech and Pherecydes have agreed on the terms of the Merger Agreement by decision dated May 5, 2023.

The Merger Agreement was signed on May 15, 2023.

 

  (b)

Closing date of the accounts used for the determination of the exchange ratio of the Merger

The terms and conditions of the Merger are established on the basis of:

 

   

with respect to the Absorbing Company: the annual accounts for the financial year ending on December 31, 2022, as approved by the Board of directors of the Absorbing Company on March 22, 2023 and certified by the statutory auditors on March 28, 2023, as set forth in Annex 6(a) to the Merger Agreement; and

 

   

with respect to the Absorbed Company: the annual accounts for the financial year ending on December 31, 2022, as approved by the Board of directors of the Absorbed Company on March 31, 2023 and certified by the statutory auditors on April 26, 2023, as set forth in Annex 6(b) to the Merger Agreement.

 

3.2.1.2

Retroactive date and completion date of the Merger, conditions precedent to the effectiveness of the Merger, including any guarantee

 

  (a)

Effective date of the Merger from an accounting and tax point of view

From an accounting and tax perspective, the Merger will be effective retroactively as of January 1, 2023 (the “Effective Date”) in accordance with the provisions of Article L. 236-4 of the French Commercial Code, so that all active and passive transactions carried out by the Absorbed Company from the Effective Date until the Completion Date (as defined below) will be deemed to have been carried out for the benefit of, or at the expense of, the Absorbing Company.

 

30


Thus:

 

   

the assets and liabilities of the Absorbed Company will be transferred to the Absorbing Company in the state in which they will be on the Completion Date, as a result of the universal transfer of assets and liabilities, which, by express consent, will mean that the Absorbing Company will take over all the corporate operations, without any reservation, carried out by the Absorbed Company from the Effective Date until the Completion Date; and

 

   

the Absorbing Company will become debtor of the creditors of the Absorbed Company in place of the latter, without such substitution entailing novation in their respect.

As the Merger involves the transfer of the universality of the assets of the Absorbed Company to the Absorbing Company, the contributions and the liabilities encumbering these contributions will relate to the generality of the elements composing the assets of the Absorbed Company, even if not specifically designated or omitted in the nomenclature established on the basis of the annual accounts of the Absorbed Company. As a result, this nomenclature is merely declarative and not restrictive.

 

  (b)

Date of completion of the Merger

The Merger and the resulting dissolution of the Absorbed Company will only be completed on the date of satisfaction of the last of the conditions precedent set forth below (the “Completion Date”).

 

  (c)

Conditions precedent

The Merger is subject to the following conditions precedent:

 

   

the delivery by the statutory auditor of the Merger of (i) a report on the value of the contributions and (ii) a report on the terms and conditions of the Merger confirming the fairness of the exchange ratio retained;

 

   

the approval by the extraordinary shareholders’ meeting of (i) the Absorbed Company of the Merger, and of the resulting dissolution of the Absorbed Company, and (ii) the Absorbing Company, of the Merger, and of the corresponding capital increase of the Absorbing Company in consideration of the Merger; and

 

   

the approval by the Extraordinary General Meeting of the shareholders of the Absorbing Company of the resolutions relating to the appointment of the directors appointed by Pherecydes and the amendment of the articles of association of Erytech relating to the removal of the casting vote of the chairman of the Board of directors.

In any event, it is specified that if the conditions precedent are not fulfilled before July 31, 2023 at midnight at the latest, the Merger Agreement will be automatically terminated, without any indemnity on either side, unless both parties waive the Merger Agreement.

 

31


3.2.1.3

Main amendments to the articles of association of the Absorbing Company

No modification of the articles of association is planned other than those resulting from the adaptation of the bylaws of the Absorbing Company as a consequence of the Merger, namely:

 

   

the modification of the corporate name of the Absorbing Company provided for in article 2 of the articles of association of the Absorbing Company;

 

   

the addition of a paragraph summarizing the capital increase resulting from the Merger to article 6 of the articles of association of the Absorbing Company;

 

   

the update of the new amount of the share capital following the Merger as provided for in article 7 of the article of association of the Absorbing Company;

 

   

the deletion of the age limit for the duties of censor provided for in article 18 of the articles of association of the Absorbing Company; and

 

   

the deletion of the stipulation stating that in the event of a tie vote within the board of directors, the Chairman of the meeting shall have the casting vote, as provided for in article 19 of the articles of association of the Absorbing Company.

3.2.1.4 Opinion of the social and economic committee of the Absorbing Company

The social and economic committee of Erytech has been informed about the Merger and has issued a favorable advisory opinion on the Merger on March 20, 2023.

 

3.2.1.5

Tax regime of the Merger

From a tax and accounting perspective, the Merger will take effect retroactively as of the Effective Date, i.e. on January 1, 2023.

From a corporate income tax perspective, the Merger is placed under the preferential regime of article 210 A of the French General Tax Code (Code general des impôts). To this end, Erytech has made, in the Merger Agreement, all the commitments provided for in the said article.

With regards to registration duties, in accordance with articles 635, 1-5° and 816 of the French General Tax Code, the Merger will be registered free of charge within a period of one month following the Completion Date. If applicable, the transfer of any title deed of real estate will however be subject, upon its registration, to a real estate security contribution at the rate of 0.1% on the market value of such real estate, in accordance with articles 879 and 881 K of the same code.

 

3.2.1.6

Pre-existing links between the companies involved in the Merger

 

  (a)

Capital links

 

   

Ownership of the Absorbed Company by the Absorbing Company

On May 5, 2023, Elaia Partners (acting on behalf of Auriga IV Bioseeds), Go Capital (acting on behalf of Ouest Ventures III) and certain shareholders of the Absorbed Company led by Mr. Guy Rigaud, shareholders representing together approximately 46.814% of the share capital and voting rights of the Absorbed Company, together with the Absorbing Company, entered into a contribution in kind agreement pursuant to which they agreed to contribute, prior to the Completion Date, 827,132 ordinary shares of the Absorbed Company (the “Contributions in Kind”).

 

4 

Prior to the completion of the Contributions in Kind.

 

32


These Contributions in Kind are made in accordance with the support commitments entered into in the context of the signature of the Memorandum of Understanding, pursuant to which these shareholders of the Absorbed Company have undertaken to contribute these shares before the Completion Date (as defined below in Section 3.2.1.2) in exchange for newly issued Erytech shares, at the same exchange ratio as the Merger.

A share capital increase of the Absorbing Company by issuance of 3,101,745 new Erytech shares as consideration for the contribution of the 827,132 ordinary shares of the Absorbed Company referred to above has been decided by the meeting of the Board of directors of the Absorbing Company held in May 15, 2023 in accordance with the delegation of powers granted by the general meeting of shareholders of the Absorbing Company held on June 24, 2022 (29th resolution)

Upon completion of the Contribution in Kind, Erytech holds 827,132 shares of Pherecydes, i.e. 10.42% of the share capital and voting rights of Pherecydes, and undertakes to maintain this shareholding unchanged until the Completion Date.

The report of the statutory auditors was filed with the clerk of the Commercial Court of Lyon in accordance with the regulations in force.

 

   

Ownership of the Absorbing Company by the Absorbed Company

The Absorbed Company does not hold any shares of the Absorbing Company to date.

 

  (b)

Other links

 

   

Common corporate officers

At the close of the Board of directors’ meeting of May 15, 2023, the Board of Directors co-opted Mr. Didier Hoch and the company Go Capital, represented by Mrs. Leila Nicolas, as directors of the Absorbing Company.

 

   

Guarantee

As of the date of this Exemption Document, neither the Absorbing Company nor the Absorbed Company has guaranteed each other.

 

   

Regulated agreements

As of the date of this Exemption Document, no agreement has been entered into between the Absorbing Company and the Absorbed Company, except for the (i) Memorandum of Understanding and the (ii) Merger Agreement.

It should be noted that, at the date of its conclusion, the Contribution Agreement, did not constitute a regulated agreement within the meaning of article L. 225-38 of the French Commercial Code.

 

33


3.2.1.7

Financial instruments giving access to the share capital of the Absorbed Company

Pursuant to articles L. 225-197-1 and L. 228-98 to L. 228-106 of the French Commercial Code and article 6.3.2 of the regulations of the free share allocation plan adopted by the board of directors of the Absorbed Company on May 19, 2022, the Absorbing Company will automatically replace the Absorbed Company in its obligations towards the beneficiaries of free Pherecydes Shares and the beneficiaries of warrants for subscription to business creator shares (the “BSPCE”).

The rights of the beneficiaries will therefore be transferred to new shares of the Absorbing Company in application of the exchange ratio referred to in Section 3.2.3.2 below, according to the following formalities: the number of shares of the Absorbed Company to which each beneficiary would be entitled in the case of the same allocation plan will correspond to the number of shares of the Absorbing Company to which he would have been entitled under this plan multiplied by the exchange ratio applicable to the shareholders referred to in Section 3.2.3.2 below, the number thus obtained being rounded down to the nearest whole number. It is specified that the beneficiaries of BSPCE and free shares will be notified of the above conditions by the Absorbed Company, before the planned Completion Date.

The other provisions provided for by the regulations and plans for the allocation of free shares and BSPCE, and in particular the provisions relating to the vesting and retention periods, for their remaining duration on the Completion Date, remain applicable to the rights and allocations and to the new shares of the Absorbing Company received in exchange by the beneficiaries.

The extraordinary general meeting of the Absorbing Company called to rule on the Merger will take note of the obligations of the Absorbing Company resulting from this assumption of the commitments of the Absorbed Company and will waive the preferential subscription right to the ordinary shares that will be issued by the Absorbing Company as a result of the exercise of the BSPCE and the definitive allocation of the free shares.

 

3.2.2

Merger control

 

3.2.2.1

Dates of the corporate bodies called to approve the Merger

The approval of the Merger will be subject to the decision of the general meeting of the shareholders of Erytech and Pherecydes on June 23, 2023. Please refer to Section 4.3.2 “Resolutions, authorizations and approvals pursuant to which the securities will be created and/or issued” of this Exemption Document.

Auriga Partners (acting on behalf of Auriga Ventures III) and Recordati SpA, which together represent approximately 4.24 % of the share capital and 8.14 % of the voting rights of Erytech, have confirmed their support for the Merger and their commitment to vote in favor of the related resolutions.

Elaia Partners (acting on behalf of Auriga IV Bioseeds), Go Capital (acting on behalf of Ouest Ventures III) and certain shareholders of Pherecydes led by Mr. Guy Rigaud, representing together approximately 46.81% of the share capital and voting rights of the Absorbed Company, have contributed, on May 15, 2023, 827.132 Pherecydes shares to the Absorbing Company in consideration of newly issued 3,101,745 Erytech shares. These shareholders have committed to (i) in their capacity as shareholders of Erytech, vote in favor of the Merger project at the general meeting of shareholders of Erytech and (iii) in their capacity as shareholders of Pherecydes, vote in favor of the Merger project at the general meeting of shareholders of Pherecydes.

 

34


It is specified that, in accordance with Erytech’s press release dated May 16, 2023, that in view of the next general meeting of the shareholders of Erytech, Erytech intends to file a request with the President of the Commercial Court of Lyon to appoint an ad hoc agent (mandataire ad hoc).

The ad hoc agent will represent the shareholders absent at the General Meeting to ensure that the required quorum is satisfied and the shareholders’ general meeting is allowed to validly resolve on all resolutions set forth on the agenda.

In accordance with the terms of the order to be issued by the President of the Commercial Court of Lyon, the ad hoc agent will exercise the voting rights attached to the shares of the absent shareholders to the extent necessary to reach the required quorum, so that its vote will be neutral (proportion of 50% positive votes and 50% negative votes with respect to ordinary resolutions; proportion of 2/3 positive votes and 1/3 negative votes with respect to extraordinary resolutions). Consequently, the voting rights exercised by the ad hoc agent will have no impact on the outcome of the vote of the general meeting of shareholders of Erytech.

 

3.2.2.2

Merger Auditor

Ruling on the joint request of Erytech and Pherecydes, the President of the Commercial Court of Lyon, by order of February 28, 2023, has appointed the firm Finexsi as Merger Auditor, represented by Mr. Christophe Lambert.

Please refer to Section 1.3 “Expert’s Statement or Report” of the Exemption Document.

 

3.2.3

Merger Consideration

 

3.2.3.1

Beneficiaries of Erytech actions

The Erytech shares will be allocated to the Pherecydes shareholders as consideration for the Merger.

 

3.2.3.2

Exchange ratio, amount of any cash payment and number of shares offered

As consideration for the Merger, the Absorbing Company will issue 26,575,893 new shares based on the exchange ratio retained in the context of the Merger which is fifteen (15) shares of the Absorbing Company for four (4) shares of the Absorbed Company.

 

3.2.3.3

Remuneration of contributions

 

  (a)

Share capital increase

The Absorbed Company holds 25,142 of its own shares as of the date hereof, i.e. 0.32% of its share capital.

Pursuant to the provisions of Article L. 236-3 II of the French Commercial Code, neither the exchange of the shares of the Absorbed Company that will be held by the Absorbing Company as a result of the Contributions in Kind (as defined in the Merger Agreement), nor the exchange of the treasury shares held by the Absorbed Company, which will be cancelled by operation of law on the Completion Date, will take place.

 

35


As consideration for the Merger, the Absorbing Company will proceed, on the Completion Date, pursuant to the exchange ratio, to an increase of its share capital by an amount of 2,657,589.30 euros, by the creation of 26,575,893 new shares having the same nominal value (i.e., 0.10 euro each) as the existing shares (the “New Shares”), which will be directly allocated to the shareholders of the Absorbed Company, other than the Absorbing Company, in accordance with the applicable exchange ratio.

It is specified that the final number of New Shares to be issued and, accordingly, the nominal amount of the resulting share capital increase will be adjusted by operation of law according to the exact number of Pherecydes shares to be remunerated pursuant to the Merger, in case, among other things, the amount of the New Shares to be issued and the nominal amount of the resulting share capital increase would be adjusted as a result of an inter-company transaction between the date of the Merger Agreement and the Completion Date.

No fractional shares will be issued. Each shareholder of the Absorbed Company will be credited with a number of ordinary shares of the Absorbing Company corresponding to the integer equal to or immediately lower than the product of the number of shares of the Absorbed Company that he/she will hold at the Completion Date by the exchange ratio provided in Article 14 of the Merger Agreement.

It is specified that the holders of shares of the Absorbed Company who do not own the necessary number of shares of the Absorbed Company to obtain a whole number of shares of the Absorbing Company will receive a cash payment for the fractional part. The amount of this cash payment will be determined as follows:

 

   

the rights forming fractional shares will not be negotiable or transferable. Therefore, in accordance with the provisions of articles L. 228-6-1 and R. 228-12 of the French Commercial Code, when the number of Erytech shares to which a Pherecydes shareholder is entitled does not correspond to a whole number of Erytech shares, the shareholder will receive the number of Erytech shares immediately below, plus of a cash balance resulting from the price at which the Erytech shares corresponding to the fractional shares will have been sold by the financial intermediaries, within a period of thirty (30) days as from the latest of the dates of registration, in the account of the Pherecydes shareholders, of the whole number of Erytech shares allocated.

 

  (b)

Date of dividend—date of trading and admission to listing

The New Shares, that will be immediately assimilated to the existing shares of the Absorbing Company, will carry dividend rights as from their date of issue and will give the right to the benefit of all distributions of dividends or reserves decided as from this date. A double voting right will be attributed in accordance with the legal conditions to all fully paid-up shares for which proof of registration for at least two years is provided. The New Shares will all be negotiable as soon as the capital increase of the Absorbing Company remunerating the merger is completed, in accordance with article L. 228-10 of the French Commercial Code, and will immediately be the subject of an application for admission to trading on the regulated market of Euronext Paris.

 

36


It is specified that, on the Completion Date, the New Shares will not be registered with the Securities Exchange Commission or be the subject of an application for admission to trading on Nasdaq. Such registration shall be made within twelve (12) months after completion of the Merger.

 

3.2.3.4

Accounting for the Merger

Pursuant to the regulation of the French accounting standards authority (Autorité des normes comptables) n° 2014-03 of June 5, 2014, relating to the general chart of accounts as last amended by the ANC regulation n° 2022-01 of March 11, 2022, the contributions made in the context of the Merger shall be valued on the basis of their fair market value, determined according to the valuation methods described in Section 3.2.3.6 of this Exemption Document.

 

  (a)

Designation and value of assets contributed and liabilities assumed

Designation and value of the contributed assets

The Merger of the Absorbed Company includes all the assets of this company for their real value as determined hereinafter (the net book value being given for information purposes only):

 

Asset

   Net carrying amount
(€)
     Fair market value
(€)
 

Intangible assets

     9 071 772        18 087 000  

Goodwill

     0        1 017 000  

Other intangible fixed assets

     3 763 640        0  

Formation expenses

     0        0  

Development costs

     5 277 049        17 070 000  

Concessions, patents and similar assets

     31 083        0  

Advances on intangible fixed assets

     0        0  
  

 

 

    

 

 

 

Tangible fixed assets

     559 184        559 184  

Land

     0        0  

Constructions

     0        0  

Industrial machinery

     135 094        135 094  

Other tangible fixed assets

     424 090        424 090  

Fixed assets in progress

     0        0  

Advances payments and accounts

     0        0  
  

 

 

    

 

 

 

Financial fixed assets

     149 825        149 825  

Participation valued according to the equity method

     0        0  

Other equity interests

     

Receivables from equity interests

     

Other fixed equity securities

     

 

37


Loans

     0        0  

Other financial assets

     0        0  
     25269        25269  
     0        0  
     124556        124556  
  

 

 

    

 

 

 

Total fixed assets

     9 780 782        18 796 009  
  

 

 

    

 

 

 

Inventory

     0        0  

Raw materials, supplies

     0        0  

Work in progress of goods

     0        0  

Intermediate and finished goods

     0        0  

Goods for resale

     0        0  
  

 

 

    

 

 

 

Receivables

     2 367 790        2 367 790  

Advances payments on accounts on orders

     0        0  

Customers—Trade receivables and related accounts

     126 604        126 604  

Other receivables

     2 241 186        2 241 186  

Subscribed called-up unpaid capital

     0        0  
  

 

 

    

 

 

 

Availability

     1 035 127        1 035 127  

Marketable securities

     0        0  

Availabilities

     1 035 127        1 035 127  
  

 

 

    

 

 

 

Prepaid expenses

     32 412        32 412  
  

 

 

    

 

 

 

Total current assets

     3 435 329        3 435 329  
  

 

 

    

 

 

 

Asset translation differences

     0        0  

The fair market value of the assets included in the contribution therefore amounts to 22,231,338 euros.

Designation and value of liabilities supported

The Merger of the Absorbed Company is granted and accepted in consideration of the assumption by the Absorbing Company of all the liabilities of the Absorbed Company, namely:

 

Liabilities

   Net carrying amount
(€)
     Fair market value
(€)
 

Provisions for liabilities and expenses

     0        0  

Provisions for liabilities

     0        0  

Provisions for expenses

     0        0  
  

 

 

    

 

 

 

Financial debts

     3 070 146        3 070 146  
  

 

 

    

 

 

 

 

38


Convertible debenture loans

     0        0  

Other bond loans

     360 000        360 000  

Loans and debts from lending institutions

     2 178 264        2 178 264  

Other loans and financial debts

     531 882        531 882  
  

 

 

    

 

 

 

Operating liabilities

     2 383 806        2 383 806  

Advances payments on account received on orders in progress

     0        0  

Suppliers debts—Accounts payable and related accounts

     1 589 993        1 589 993  

Tax and social security liabilities

     791 278        791 278  

Fixed assets debts—Accounts payable on related accounts

     0        0  

Other debts

     2 535        2 535  
  

 

 

    

 

 

 

Deferred income

     240 000        240 000  
  

 

 

    

 

 

 

Total liabilities

     5 693 952        5 693 952  
  

 

 

    

 

 

 

Unrealized exchange gains—Liabilities

     0        0  

The total amount of the liabilities included in the contribution is therefore supported for an amount of 5,693,952 euros.

The net assets contributed by the Absorbed Company and remunerated by the Absorbing Company pursuant to article L. 236-3 II of the French Commercial Code therefore amount to 16,537,386 euros.

(b) Details of the calculation of the merger bonus

The difference between the net assets contributed by Pherecydes of 16,537,386 euros (i.e. net assets contributed of 16,479,810.89 euros after deduction of the treasury shares) and (i) the completion of the Contribution in Kind (1,894,132 euros) and (ii) the nominal amount of the capital increase of Erytech relating to the Merger (2,657,589.90 euros, accompanied by a total compensation of 0.42 euros) i.e. 12,099,841.12 euros, represents the merger premium and will be credited to an account “merger premium”.

 

3.2.3.5

Conditional considerations

There are no future events that condition the grant of additional securities to the shareholders of the Absorbed Company in connection with the Merger.

 

3.2.3.6

Evaluation method

The exchange ratio retained for the issuance of 26,575,893 newly issued ordinary shares by the Absorbing Company to the benefit of the shareholders of the Absorbed Company, was assessed according to a multi-criteria approach based on valuation methods usually used for the valuation of companies in the healthcare sector.

 

39


A summary description of these methods can be found in Annex 14.1 of the Merger Agreement (in Annex 1 of the Exemption Document).

 

3.2.3.7

Break-up fees and penalties

No break-up fee or any other penalty has been provided for in the Merger Agreement in the event that the Merger is not completed.

 

3.2.4

Notifications and requests for authorization

No third party notification or authorization request is required for the completion of the Merger, except for the approval of the extraordinary general meeting of the Absorbing Company and the Absorbed Company (please refer to Section 3.2.1. of the Exemption Document).

 

3.2.5

Information on the financing structure of the Merger

The implementation of the Merger does not require any specific structure for its financing that should be the subject of any presentation.

 

3.2.6

Merger Timetable

 

Meeting of the Board of Directors of Erytech having approved the terms of the Merger Agreement    May 5, 2023
Meeting of the Board of Directors of Pherecydes having approved the terms of the Merger Agreement    May 5, 2023
Signature of the Merger Agreement    May 15, 2023
Availability of the reports of the Merger Auditor    May 15, 2023
Filing of the Merger Agreement with the Registries of the Commercial Court of Nantes and the Commercial Court of Lyon    May 16, 2023
Publication on the website of both companies of a notice relating to the Merger    May 17, 2023
General Meeting of Erytech called to approve the Merger and the change of the corporate name of Erytech    June 23, 2023
General Meeting meeting of Pherecydes called to approve the Merger and the change of the corporate name of Erytech    June 23, 2023
Meeting of the Board of Directors of Erytech acknowledging the final completion of the Merger and deciding on the subsequent capital increase, acting upon delegation of powers    June 23, 2023

 

40


Euronext notice relating to the issuance of the shares issued in consideration of the Merger    June 23, 2023
Settlement and admission to trading on Euronext Paris of the shares issued as consideration for the Merger    June 29, 2023
Registration with the SEC and listing on Nasdaq of the shares issued as consideration for the Merger    June 29, 2024 at the latest

 

3.3

RISK FACTORS RELATED TO THE MERGER

In addition to the risk factors relating to the Group and its business described in Chapter 2 “Facteurs de risque” of the Erytech 2022 Universal Registration Document , the investor is invited to take into account the following risk factors and other information contained in the Exemption Document before deciding to invest in Erytech shares. An investment in the shares of Erytech involves risks.

As of the date of the Exemption Document, Erytech has not identified any significant risks other than those described in the Erytech 2022 Universal Registration Document and the Exemption Document.

The risk factors described below are specific to the Merger and are presented from the most important to the least important. The risk factors related to the equity securities to be issued by Erytech in connection with the Merger are set forth in Section 4.1 “Risk Factors Related to Equity Securities” of the Exemption Document.

Risk related to the absence of variation of the number of new Erytech shares issued in consideration of the Merger with respect to the evolution of the share price of the Erytech and Pherecydes

As at the date of signature of the Merger Agreement, the exchange ratio was set at four (4) shares of Pherecydes for fifteen (15) shares of Erytech (as indicated in Section 3.5 of the Exemption Document). As no adjustment mechanism is provided for, the exchange ratio will remain unchanged and the Merger will be completed even if the market prices of the Erytech and/or Pherecydes shares would change after the execution of the Merger Agreement. However, the share prices of the Erytech and/or Pherecydes shares could vary or have varied significantly upwards or downwards on the Completion Date as compared to the date on which the exchange ratio of the Merger was set by the respective boards of directors of Erytech and Pherecydes on June 23, 2023. The Merger will therefore be completed at the initial exchange ratio even if the share prices of Erytech and/or Pherecydes would change significantly after the execution of the Merger Agreement.

 

41


Impact of the Merger on the share price of Erytech

The completion of the Merger could have an adverse effect on the share price of Erytech on the regulated market of Euronext Paris and on the trading price of the Erytech ADS on Nasdaq.

A significant and sustained decline in the share price of Erytech could have a material adverse effect on Erytech’s business, prospects, results, financial condition, reputation and development.

Risk related to the non-realization of certain conditions precedent

The completion of the Merger is subject to the satisfaction of several conditions precedent provided for in the Merger Agreement, namely:

 

   

the delivery by the Merger Auditor of (i) a report on the value of the contributions and (ii) a report on the terms and conditions of the Merger confirming the fairness of the exchange ratio retained;

 

   

the approval by the extraordinary general meeting of the shareholders of (i) the Absorbed Company of the Merger, and of the resulting dissolution of the Absorbed Company, and (ii) the Absorbing Company, of the Merger, and of the corresponding capital increase of the Absorbing Company in consideration of the Merger; and

 

   

the approval by the extraordinary general meeting of the shareholders of the Absorbing Company of the resolutions relating to the appointment of the directors appointed by Pherecydes and the amendment of the articles of association of Erytech relating to the removal of the casting vote of the chairman of the board of directors.

If these conditions are not fulfilled by midnight on July 31, 2023 at the latest, the Merger Agreement will be deemed to be null and void, without any indemnity on either side, unless waived by both Parties. The Merger would therefore not be completed and the development plans presented could not be realized immediately. Such events could have a material adverse effect on Erytech’s and Pherecydes’ business, results, financial condition and prospects.

Risk related to the integration of the activities of the two companies, to the costs related to integration and to the realization of synergies

The success of the Merger operation will be built as much in the preparation of the envisaged operation as in the integration process that will follow the legal completion of this operation. The two key points will be the ability of the new merged group to realize the synergies and to integrate the respective cultures. The realization of synergies will not be automatic. The new merged group may not have the tools and organization in place to identify the best practices of Erytech and Pherecydes. Moreover, a certain operational integration is necessary to obtain cost reductions, but it is not excluded that this integration could lead to a destruction of a certain value and competences necessary to its competitiveness. Indeed, the group thus formed might not have, or might not have sufficiently, evaluated, developed and worked on the compatibility of the organizations, the degree of transformation they can support and the management of this process. It could be difficult to reconcile the operational requirements and the strategic vision of the new entity. In addition, the Merger will lead to the relocation of Pherecydes’ activities currently located in Nantes to Erytech’s premises in Lyon, which may lead to the departure of certain key employees. The occurrence of one or more of these risks could have a significant adverse effect on the business of the new merged group, its results, its financial condition and its prospects.

 

42


Risk related to the need to retain management and key personnel following the Merger

The success of the new group formed as a result of the Merger will largely depend on its ability to retain and attract key executives and personnel of both companies. The inability of the merged group to retain, attract and retain key personnel could prevent it from achieving its objectives overall and thus have a material adverse effect on its business, results, financial condition and prospects.

Risk related to the U.S. regulatory compliance due to dual listing

As a result of the Merger, the shareholders of Pherecydes will become shareholders of a dual listed company. The listing of its shares, in the form of American Depositary Shares (ADS), in the United States on the Nasdaq Stock Market results in the Company being subject to a series of standards and regulations, including the reporting requirements of the Securities Exchange Act. All information concerning Pherecydes’ business will therefore be subject to regulatory disclosure requirements. Legal proceedings could be initiated by competitors or third parties on the basis of this information concerning the clinical programs developed by Pherecydes. If such claims are successful, the company’s business and operating results could be affected. Even if such legal actions do not result in a conviction against the Company, these proceedings, and the time and resources required to resolve them, may require the Company to use resources that should have been allocated to the company’s business. This would have a material adverse effect on the company’s business, financial condition, results, reputation or development.

 

3.4

CONFLICTS OF INTERESTS

The fund Auriga IV Bioseeds, a professional private equity fund represented by its management company Elaia Partners, a simplified joint stock company (société par actions simplifiée), whose registered office is located at 21 rue d’Uzès, 75002 Paris, France, registered with the Paris Trade and Companies Register under number 443 990 668, shareholder of Pherecydes, and the company Auriga Partners, a simplified joint stock company (société par actions simplifiée), whose registered office is located at 250 B rue du Faubourg Saint-Honoré, 75008 Paris, registered with the Paris Trade and Companies Register under number 419 156 351, shareholder of Erytech, are two separate and distinct entities, and invest from time to time in the same business sectors.

Elaia Partners and Auriga Partners have partnered in several joint investment projects.

Franck Lescure, partner at Elaia Partners and member of the board of directors of Pherecydes, was previously a partner at Auriga Partners and was a member of the board of directors of Erytech from December 2006 to January 2013.

 

3.5

MERGER CONSIDERATION

Please refer to paragraph 3.2.3 “Merger Consideration” of this Exemption Document.

 

43


4.

EQUITY SECURITIES ADMITTED TO TRADING ON A REGULATED MARKET FOR THE PURPOSE OF THE MERGER

 

4.1

RISK FACTORS RELATED TO EQUITY SECURITIES

The risk factors described below are listed from most to least significant.

The present section of the Exemption Document identifies the risks specific to the issuance of new equity securities that may adversely affect Erytech and its equity securities.

Risk of an influx of Erytech shares for sale on the market

The shareholders of Pherecydes who will receive Erytech shares as consideration for the Merger may wish to sell their Erytech shares, which would result in an increase in the number of Erytech shares available for sale and affect the Erytech’s share price. The Company cannot predict the possible effects on the market price of the Company’s shares of potential sales of shares by its shareholders.

Risk related to the issuance of new shares in the context of the Merger resulting in a dilution of the existing shareholders of Erytech

The issuance of the new Erytech shares in the context of the Merger involves the issuance of 29,677,638 shares (of which 26,575,893 in respect of the Merger and 3,101,745 shares pursuant to the Contribution in Kind) to the benefit of the shareholders of Pherecydes, whereas the share capital of Erytech was composed of 31,018,553 shares before the Contribution in Kind. A shareholder holding 1% of the share capital of Erytech prior to the Contribution in Kind will therefore hold, upon completion of the Merger, 0.51% of the share capital of Erytech. The dilution that may result from the issuance of the new Erytech shares is described in Section 4.5 of this Exemption Document.

Risk related to the volatility and liquidity of the shares following the Merger

The stock markets have experienced significant fluctuations in recent years that have often been unrelated to the results of the companies whose shares are traded. Market fluctuations and health, geopolitical and economic conditions could increase the volatility of Erytech’s shares. Erytech’s share price could fluctuate significantly in response to various factors and events, including the Merger.

As an example, upon the announcement in August 2022 of the discontinuation of activities to submit an application for approval for Graspa in the treatment of patients with ALL, the share price fell by 25% compared to the average of the previous 20 share prices. In addition, in the event that liquidity for the market of shares admitted to trading on Euronext Paris is not sustained, the price of the ordinary share could be more volatile and it would become more difficult to buy or sell ordinary shares on the Euronext Paris market than to buy or sell ADS on the Nasdaq market. The dual listing of Erytech’s shares in two different currencies (euro and US dollar) opens the possibility of an arbitrage strategy between the two stock exchanges that could have an impact on the respective prices of the ADSs and the shares. It is however specified that the New Shares will neither be registered with the Securities and Exchange Commission (the “SEC”) nor be the subject of an application for admission to trading on Nasdaq. Such registration shall be made within twelve (12) months after completion of the Merger

 

44


4.2

NET WORKING CAPITAL STATEMENT

Erytech certifies that, in its opinion, Erytech’s net working capital is sufficient to meet its current obligations for a period of twelve (12) months as of the date of issuance of the Exemption Document and that, after taking into account the completion of the Merger, Erytech’s working capital will be sufficient to meet its current obligations for a period of twelve (12) months as of the date of issuance of the Exemption Document.

Descriptive and financial information about the material effects that the Merger will have on its financial statements is presented in Section 5.6 of the Exemption Document.

 

4.3

INFORMATION CONCERNING THE EQUITY SECURITIES TO BE ADMITTED TO TRADING

 

4.3.1

Nature, class, amount and currency of issue of securities admitted to trading

The 26,575,893 New Shares issued as consideration for the Merger, the admission of which to trading on Euronext Paris is requested, correspond to the maximum number of new shares with a nominal value of 0.10 euro. The dilution that may be generated as a result of the issuance of these new shares is presented in Section 4.5 of the Exemption Document.

The New Shares will carry current dividend rights and will be entitled to all distributions decided by the Absorbing Company as from their issue.

They will immediately be the subject of an application for admission to trading on the regulated market of Euronext in Paris (compartment C), on the same quotation line as the existing shares under the same ISIN FR0011471135, at the earliest on the date indicated in the indicative timetable set out in Section 3.2.6 of the Exemption Document.

It is specified that, on the Completion Date, the New Shares will not be registered with the SEC nor will they be the subject of an application for admission to trading on Nasdaq. Such registration shall be made within twelve (12) months after completion of the Merger.

The new shares will be denominated in euro.

 

4.3.2

Resolutions, authorizations and approvals pursuant to which the securities will be created and/or issued

The resolutions of the boards of directors of the Absorbing Company and the Absorbed Company dated May 5, 2023, authorizing the signature of the Merger Agreement are set forth in Annex 1 of this Exemption Document.

The General Meeting of the Absorbed Company will meet on June 23, 2023 to approve among others the resolutions set in Annex 3 of the Exemption Document, including the extraordinary resolution n° 5 and n°6 relating to the Merger.

The General Meeting of the Absorbing Company will meet on June 23, 2023 to approve among others the resolutions set out in Annex 3 of the Exemption Document, including the extraordinary resolutions n°17 to n°20 relating to the Merger.

 

45


4.3.3

Restrictions on the free negotiability of securities

No clause in the articles of association limits the free trading of the shares comprising the capital of the Absorbing Company.

 

4.3.4

Takeover bids launched by third parties in respect of the Absorbing Company’s securities which have occurred during the last and current financial years

No takeover bid was initiated for the shares of the Absorbing Company during the year ended December 31, 2022, nor during the current year.

 

4.4

ADMISSION TO TRADING AND DEALING ARRANGEMENTS

 

4.4.1

Admission to trading

The 26,575,893 New Shares issued in consideration of the Merger will be immediately admitted to trading on the regulated market of Euronext Paris (“Euronext Paris”) (compartment C), on the same quotation line as the existing shares under the same ISIN FR0011471135, it being specified that these shares will be admitted to trading at the earliest on June 29, 2023, as indicated in the indicative timetable set forth in Section 3.2.7 of this Exemption Document.

The new shares may be converted into ADS pursuant to the terms of the Deposit Agreement between Erytech and Bank of New York Mellon. Once converted, the ADS may be traded on Nasdaq in the same way as the existing ADS. The conversion into ADS may not be completed until 12 months after the closing of the Merger unless, following the completion of the Merger, the Company files a registration statement with the SEC to allow the registration of the ADS. As part of the Memorandum of Understanding, it was agreed that the company would use its best efforts to file a registration statement within 12 months following the Merger.

 

4.4.2

Liquidity commitment, placement and underwriting

As of the date of this Exemption Document, there are no firm commitments with entities that would like to act as intermediaries on the secondary markets and guarantee the liquidity of the new shares by acting as buyers and sellers.

 

4.4.3

Lock-up agreement—abstention and/or retention undertaking

As of the date of the Exemption Document, there are no lock-up agreements relating to the shares of the Absorbing Company.

 

4.5

DILUTION

For information purposes, the impact of the issuance of the New Shares in the context of the Merger on:

 

   

the equity per share of the Absorbing Company (calculations based on the equity resulting from the IFRS accounts of the Absorbing Company as of December 31, 2022),

 

   

the participation in the capital of a shareholder of the Absorbing Company holding 1% of the share capital of the Absorbing Company, and

 

   

the number of voting rights of a shareholder of the Absorbing Company holding 1% of the voting rights of the Absorbing Company

 

46


(x) prior to the completion of the Contribution in Kind and to the issuance of the New Shares (calculated on the basis of the number of shares composing the share capital of the Absorbing Company and of the number of voting rights as of April 30, 2023) and (y) subsequent to the completion of the Contribution in Kind and of the Merger is as follows:

 

     Share of
consolidated

equity per share
(in €)
     Shareholder
participation (in %)
    Shareholder voting
rights (in %)
 
   Non-diluted
basis
     Diluted
basis*
     Non-diluted
basis
    Diluted
basis*
    Non-diluted
basis
    Diluted
basis*
 

Before the Contribution in Kind and the Merger

     0.757        0.757        1.00     1.00     1.00     1.00

After the Contribution in Kind and the Merger

     0.387        0.383        0.51     0.51     0.52     0.52

(a) : after the Merger, the 684,273 shares to which the 123,950 warrants issued by the Absorbed Company prior to the present and which were, prior to the signature of the Memorandum of Understanding, exercisable and in the money, and the 58,523 ordinary shares allocated free of charge by the Absorbed Company prior to the present are taken into account in the calculation of the number of shares and voting rights of the Absorbing Company on a diluted basis.

(b) : after the Merger, the number of shares and voting rights of the Absorbing Company on a diluted basis does not take into account the shares to which all the dilutive instruments issued by the Absorbing Company give entitlement, as these were not in the money on the date of signature of the Memorandum of Understanding, it being specified that the warrants attached to the ABSAs are no longer exercisable as of the date of the Registration Document (the dilutive instruments of the Absorbing Company are described in Sections 3.1.2.1.3 and 3.3 of the Erytech 2022 Universal Registration Document).

Insofar as Pherecydes does not have double voting rights, its shareholders cannot benefit from this double voting right immediately after the completion of the Merger (even if they meet the two-year holding period at the time of the exchange) and will have to wait for the expiration of the holding period provided for in the articles of association of Erytech to be able to exercise the double voting right, since they cannot claim the benefit of article L. 225-124, paragraph 2 of the French Commercial Code.

 

47


4.5.1

Structure chart

The chart below shows the structure of the Absorbing Company after the completion of the Merger:

 

LOGO

* The new corporate name will be voted at the extraordinary general meeting of June 23, 2023.

4.5.2 Concurrent offering of equity securities of the same class

None

 

4.6

ADVISORS

In the context of the Merger, ODDO BHF SCA acted as financial advisor.

 

5.

IMPACT OF THE MERGER ON THE ISSUER

 

5.1

STRATEGY AND OBJECTIVES

The strategy and objectives of Erytech after completion of the Merger are described in Section 1.2 “Stratégie du Groupe” of the Erytech 2022 Universal Registration Document and in Section 3.1 of the Exemption Document.

 

5.2

MATERIAL CONTRACTS

It is specified that, as of May 5, 2023, Bpifrance has given its consent to the continuation within the Absorbing Company of the following contracts entered into by the Absorbed Company: (i) the State-guaranteed loan agreement dated April 27, 2021 for an amount of 2 million euros, as amended in January 2022 in order to benefit from an additional one-year deferral of repayment and a four-year repayment thereafter and (ii) the agreement dated February 22, 2022 for the financing of the PhagEcoli program for an amount of 1,687,800 euros, divided 60% in the form of a grant and 40% in the form of a reimbursable advance, to be paid at each milestone and conditional on the provision of certain elements by Pherecydes Pharma.

In addition, on May 5, 2023, (i) Société Générale has agreed to the continuation of the State-guaranteed loan entered into by the Absorbing Company on November 5, 2020, for a principal amount of 5 million euros and (ii) Bpifrance Financement has agreed to the continuation of the State-guaranteed loan entered into by the Absorbing Company on November 10, 2020, for a principal amount of 5 million euros.

As of the date of the Exemption Document, there are no other material contracts entered into within the Absorbing Company and/or within the Absorbed Company that would be impacted by the Merger.

 

48


5.3

DISINVESTMENT

None.

 

5.4

CORPORATE GOVERNANCE

 

5.4.1

Composition of the Board of directors and general management

Under the terms of the Memorandum of Understanding, and as announced in the press releases of Erytech and Pherecydes dated the February 15, 2023 (please refer to Sections 2.1.7 and 2.2.7), upon completion of the Merger, Mr. Jean-Paul Kress, Chairman of Erytech, will resign from his position and Mr. Didier Hoch, Chairman of Pherecydes, will become Chairman of the Board of Directors of Erytech.

Mr. Thibaut du Fayet, currently Chief Executive Officer of Pherecydes, will become Chief Executive Officer of Erytech, while Mr. Gil Beyen, currently Chief Executive Officer of Erytech, will become Vice-Chairman of the Board of Directors of Erytech (and will remain Executive Chairman of ERYTECH Pharma, Inc., Erytech’s U.S. subsidiary). Mr. Eric Soyer will remain Chief Operating Officer and Chief Financial Officer of Erytech. Mr. Jérôme Bailly will retain his position as Deputy Chief Executive Officer following the Merger.

On May 15, 2023, the Board of Directors of the Absorbing Company, which approved the final completion of the Contributions in Kind, also co-opted Mr. Didier Hoch and the company Go Capital, represented by Mrs. Leila Nicolas, as directors of the Absorbing Company. In addition, Mrs. Mélanie Rolli and Mr. Luc Dochez have resigned from their positions on the Board of Directors of Erytech. These co-optations are decided subject to ratification by the next annual general meeting of Erytech and for the remaining term of office of Mrs. Mélanie Rolli and Mr. Luc Dochez. Mr. Sven Andréasson will resign from his position as director upon completion of the Merger.

It is also specified that the composition of the committees of the board of directors will be modified to take into account new appointments and resignations.

 

49


Following the completion of the Merger, the members of the board of directors of Erytech will be the following:

 

Last name, first name or

corporate name, sex

  

Mandate before

the merger

  

Independent

Director

  

Committees

  

Shareholder
of the
company
(after the
Completion
Date)

Didier Hoch

Man

   Pherecydes Pharma    No   

Member and Chairman of the Strategy Committee

Member of the Clinical Committee

Member and Chairman of the Compensation and Nomination Committee

   Yes

Gil Beyen

Man

   Erytech Pharma    No   

Member of the Audit Committee

Member and Chairman of the Strategy Committee

   Yes

Eric Leire

Man

   Pherecydes Pharma    No    Member of the Audit Committee    No

GO Capital SAS,

represented by Madam Leila Nicolas

Woman

   Pherecydes Pharma    No    Member of the Audit Committee    Yes

Robert Sebbag

Man

   Pherecydes Pharma    Yes    Member of the Clinical Committee    No

Hilde Windels BV,

represented by Madam Hilde Windels

Woman

   Erytech Pharma    Yes   

Member and Chairman of the Audit Committee

Member and President of the Compensation and Nomination Committee

   Yes

Martine Ortin George

Woman

   Erytech Pharma    Yes    Member and President of the Clinical Committee    Yes

Philippe Archinard

Man

   Erytech Pharma    Yes   

Member of the Clinical Committee

Member and Chairman of the Compensation and Nomination Committee

   Yes

Guy Rigaud (censor)

Man

   Pherecydes Pharma    N/A    Member of the Audit Committee    Yes

Erytech and Pherecydes have agreed to establish a strategic steering committee that supervises the execution of the Memorandum of Understanding, and in particular the implementation of the Merger and the operational integration of the two companies. This strategic steering committee is composed of two representatives of Pherecydes, namely Mr. Didier Hoch and Mr. Thibault du Fayet, and two representatives of Erytech, namely Mr. Gil Beyen and Mr. Eric Soyer. It meets at least every two weeks since the signature of the Memorandum of Understanding and whenever an emergency situation requires it.

Didier Hoch, director

Didier Hoch was coopted as a director of Board of directors of Erytech during its meeting on May 15 2023. He served as Chairman of the former Supervisory board of Pherecydes and then, since January 2019, as Chairman of the Board of Directors. Didier Hoch is a physician and is also a director of a listed company, OSE Immunotherapeutics, and was previously director of DBV Technologies and Genticel. From 2011 to 2013 he was Chairman of Pevion Biotech and then from 2013 to 2018 of the Biovision Forum and of the startup gas pedal “Big Booster”. Didier Hoch was, from 2000 to 2010, Chairman of Sanofi-Pasteur- MSD, a joint-venture dedicated to vaccines, between Sanofi & Merck. Didier Hoch has also held various management positions at Rhône Poulenc Rorer, then Aventis (“VP Middle East -Africa”, Vice President Middle East & Africa). Former President of the Vaccine Europe association of vaccine manufacturers “Vaccine Europe” and Chairman of the Biotechnology Committee of LEEM.

 

50


Robert Sebbag, director

Robert Sebbag was a member of the former Supervisory board of Pherecydes and then, since December 2020, a member of the Board of Directors. Robert Sebbag is a physician and a member of the Paris Hospitals’ Infectious and Tropical Diseases Department at the Pitié Salpêtrière Hospital. He is also director and founding member of Action Contre la Faim and director of Fondation Mérieux. From 2006 to 2016 he was Vice President Access to Medicines at Sanofi. Previously he held various positions at Rhône Poulenc Santé, Fondation Elf, and Aventis-Pasteur. Former member of the Executive Committee of the CEO round table of the Gate Foundation and Director of Leem (Les entreprises du médicament).

Eric Leire, director

Eric Leire is physician and currently chairman and chief executive officer of Genflow Biosciences, Eric Leire is also a director of listed and non-listed biotechnology companies (Immunethep, BSIM Therapeutics and Inhatarget Therapeutics). Dr. Leire has served as CEO of several publicly and privately held US biotechnology companies. He has contributed to several IPOs of biotechnology companies on various markets (OMX.Nasdaq; OTC.QB and Nasdaq). He was a research partner at the Harvard AIDS Institute and partner at Biofund Venture Capital. He has an MD from the University of Grenoble and an MBA from HEC and Kellogg School of Management, Northwestern University. He is also the inventor of several patents in the pharmaceutical field.

GO Capital SAS, represented by Leila Nicolas, director

GO Capital SAS, represented by Leila Nicolas, was co-opted as a director by the Board of directors of Erytech during the meeting of the Board of directors on May 15, 2023 and served on the former Supervisory board and then as a director of the Board of directors between December 2017 and June 2023. Leila Nicolas started her career in 2004 as a product manager at Bayer Schering Pharma in the field of multiple sclerosis and oncology. She then joined the Biotechnology and Life Sciences world as strategic marketing manager of a start-up in Alsace (Polyplus-transfection). Leila Nicolas concluded several licensing agreements and acquired a strong sensitivity to intellectual property. Leila Nicolas then participated in the creation of a company that develops and sells environmental health analysis kits before joining Go Capital in late 2013.

Gil Beyen, Chief Executive Officer

Gil Beyen is Chief Executive Officer of Erytech since May 2013 and served as Erytech’s Chairman of the Board from May 2013 until June 2019. Gil Beyen has assisted Erytech since 2012 as a consultant and also served as Chairman of the Supervisory Board of Eyrtech from August 2012 to May 2013. Between 2000 and 2013, Mr. Beyen was Chief Executive Officer and Director of TiGenix (Euronext: TIG), a company he co-founded. He previously served as the head of the Life Sciences division of Arthur D. Little, an international management consulting firm, in Brussels. Mr. Beyen holds a MSc in Bioengineering from the University of Leuven (Belgium) and an M.B.A. from the University of Chicago.

 

51


Hilde Windels BV, represented by Hilde Windels, director

Hilde Windels has served as a member of the board of directors since 2014 and has served as the representative of Hilde Windels BV, the legal entity that holds this seat, since 2017. She has over 20 years of experience in corporate finance, capital markets and strategic initiatives. She currently serves as Chief Executive Officer of Antelope Dx BV and Director of MDx Health NV and Celyad SA. Prior to Antelope Dx BV, she was executive chairman of the board of directors and co-Chief Executive Officer of Mycartis NV, a private immune diagnostics company in Belgium and a spin-out of Biocartis Group NV. Ms. Windels initially joined Biocartis in August 2011 as its Chief Financial Officer, a position she held until September 2015 when she was appointed co-Chief Executive Officer, a position she held until early 2017, when she became interim Chief Executive Officer of Biocartis until September 2017. From early 2009 to mid-2011, she worked as an independent chief financial officer for several private biotechnology companies. Ms. Windels served as Chief Financial Officer of Devgen from 1999 to 2008 and as a member of its board of directors from 2001 to 2008. Ms. Windels holds a Masters in Economics from the University of Leuven (Belgium).

Martine Ortin George, director

Martine Ortin George has served as a member of the board of directors since 2014. Doctor of Medecine, Martine George has extensive experience in the United States in clinical research, medical affairs and regulatory matters with both large and small oncology companies. She currently serves as principal and senior executive consultant-life sciences for Global Development Inc. Dr. George held the position of Vice President in charge of Global Medical Affairs for Oncology at Pfizer from 2010 to 2015. Previously, Dr. George held the positions of Senior Vice President and Chief Medical Officer at GPC Biotech and Senior Vice President, Head of the Oncology Department at Johnson & Johnson. She is a qualified gynecologist and oncologist, trained in France and in Montreal. Dr. George began her career as Chief of Service at the Institut Gustave Roussy (France), was a visiting professor at the Memorial Sloan Kettering Cancer Center, and then held positions of increasing responsibility at Lederle Laboratories (a predecessor company to Pfizer Inc.), Sandoz (now a division of Novartis AG) and Rhône-Poulenc Rorer (today part of Sanofi).

Philippe Archinard, director

Philippe Archinard has served as a member of the board of directors since 2013 and was previously a member of the Supervisory Board from 2007 to 2013. Dr. Archinard is Deputy CEO, Innovation and Scientific Partnerships of the Institut Mérieux. He was General Manager, Chief Executive Officer and director of Transgene from 2004 to 2020, after spending 15 years in various senior positions with bioMérieux, including directing its U.S. subsidiary. Prior to joining Transgene, he served as chief executive officer of Innogenetics N.V., from 2000 to December 2004. Dr. Archinard is a chemical engineer, holds a Ph.D. in biochemistry from the University of Lyon (France), and completed Harvard Business School’s Program of Management PMD.

Guy Rigaud, observer

Guy Rigaud has 30 years of experience in private equity in more than 300 young regional companies (more than half of them in the technology sector). Founder and chairman of the Board of directors of Rhône Alpes Création from 1990 to 2012, Guy Rigaud has participated in five IPOs on Euronext in Paris and two on Nasdaq (in the context of industrial disposals). Guy Rigaud was a member of the Board of directors for 12 years of the April Group (insurance), a company listed on the regulated market of Euronext in Paris. Since 2012, Guy Rigaud is the founder and Managing Partner of a seed capital fund created with four family offices.

 

52


5.4.2

Conflicts of interests

To the best of Erytech’s knowledge, there is no conflict of interests between the duties performed on behalf of the Absorbing Company by the members of its administrative and management bodies and the private interests or other duties of these members.

 

5.4.3

Restrictions on the disposal of securities held

To the best of Erytech’s knowledge, there are no restrictions accepted by the members of the administrative and management bodies of Erytech regarding the transfer, within a certain period of time after the Merger, of the equity securities of the Absorbing Company that they hold.

 

5.4.4

Compliance with the Middlenext code

As of the date of the Exemption Document, the Absorbing Company complies with the Middlenext code, as detailed in Section 3.1.1.1 “La mise en oeuvre du Code Middlenext par la Société” of the Erytech 2022 Universal Registration Document. Upon completion of the Merger, the new entity intends to comply with the Middlenext code.

 

5.4.5

Compensation and benefits

In case of appointment of new corporate officers or renewal of the mandate of a corporate officer in the context of the definitive completion of the Merger, the compensation policy described in section 3.1.2.2 “Politique de rémunération des mandataires sociaux pour l’exercice 2023” of the Erytech 2022 Universal Registration Document will be applicable to them mutatis mutandis, subject to a possible decrease of the fixed, variable or exceptional remuneration decided by the board of directors and/or adjustments of certain other elements of remuneration according to the profile of the concerned persons.

The Absorbing Company intends to adjust the performance criteria upon completion of the Merger.

 

5.5

PARTICIPATION

 

5.5.1

Shareholding

The following table presents the capital structure of the Absorbing Company after completion of the Merger on the basis of the shareholding structure of the companies following the completion of the Contributions in Kind:

 

Shareholders

   Number of Shares      %  

Management

     25 830        0,04

Auriga Partners

     1 018 212        1,68

Recordati Orphan Drugs

     431 034        0,71

Directors

     10 303        0,02

Other shareholders

     42 655        0,07

Treasury shares

     2 500        0,00

BVF Partners L.P.

     97 338        0,16

 

53


Free float E

     29 390 681        48,42

Pherecydes’ shareholders contribution

     3 101 745        5,11

ELAIA Partners

     1 542 675        2,54

Go Capital

     1 058 535        1,74

Guy R Pool

     500 535        0,82
  

 

 

    

 

 

 

Erytech

     34 120 298        56,21
  

 

 

    

 

 

 

ELAIA Partners

     5 388 663        8,88

Go Capital

     3 697 533        6,09

Guy R Pool

     1 748 883        2,88

ACE

     5 192 115        8,55

Omnes Capital

     909 742        1,50

Management

     16 811        0,03

Free float P

     8 707 822        14,35

Participations Besançon

     914 321        1,51
  

 

 

    

 

 

 

Pherecydes

     26 575 890        43,79
  

 

 

    

 

 

 

Total

     60 696 188        100,00
  

 

 

    

 

 

 

 

5.6

NON AUDITED PRO FORMA FINANCIAL INFORMATION AS OF DECEMBER 31, 2022

INTRODUCTION

ERYTECH Pharma (“ERYTECH” or “the Company” or “the Absorbing Company”) and PHERECYDES Pharma (“PHERECYDES” or “the Absorbed Company”) announced the signing on February 15, 2023 of a Memorandum of Understanding (“MOU”) to enter into a strategic combination agreement (“Merger”) to create a global leader in phage therapy.

ERYTECH is a clinical-stage biotechnology company, founded in 2004, which develops innovative treatments, resulting from internal research and development programs, by encapsulating drugs in red blood cells.

PHERECYDES is a clinical-stage biotechnology company, founded in 2010, which develops innovative treatments, resulting from internal research and development programs, specialized in precision phage therapy for the treatment of resistant and/or complicated bacterial infections, using bacteriophages.

The strategic combination would leverage the complementary expertise and resources of the two companies to accelerate the development of phage therapy to fight antibiotic resistance, in particular through the PhagoDAIR Phase II study conducted by PHERECYDES, and its extension to other anti-infective and therapeutic areas with significant unmet medical needs.

The merger is expected to be completed by the end of the second quarter of 2023 with the vote of shareholders at the extraordinary general meetings of the two companies on June 23, 2023.

The proposed transaction aims to capitalize on ERYTECH’s financial resources and teams to both accelerate and expand PHERECYDES’ existing phage therapy development programs, launch new phage candidates, and potentially broaden the scope of application to new therapeutic modalities by leveraging both companies’ advanced technology platforms and expertise.

 

54


ERYTECH and PHERECYDES aim to merge their activities and relocate all teams to ERYTECH’s premises in Lyon, France, where they will benefit from a location within a major European cluster in the field of infectious diseases.

ERYTECH has received commitments from Auriga Partners (acting on behalf of Auriga Ventures III) and Recordati SpA, which together represent approximately 4.67% of the share capital and 8.91% of the voting rights of ERYTECH, to vote in favor of the resolutions related to the transaction at the ERYTECH EGM. Similarly, PHERECYDES has received commitments from Elaia Partners (acting on behalf of Auriga IV Bioseeds), Go Capital (acting on behalf of Ouest Ventures III) and the pool of shareholders represented by Mr. Guy Rigaud, who together represent approximately 41.5% of the share capital and voting rights of PHERECYDES, to contribute their PHERECYDES shares to ERYTECH in exchange for ERYTECH shares and to vote in favor of the resolutions related to the transaction at the ERYTECH EGM.

The completion of the merger is subject to the following conditions:

 

   

the delivery by the Merger Auditor of (i) a report on the value of the contributions and (ii) a report on the terms and conditions of the Merger confirming the fairness of the exchange ratio retained;

 

   

the approval by the general shareholders’ meeting of the Absorbed Company of the Merger and the resulting dissolution of the Absorbed Company;

 

   

the approval by the general shareholders’ meeting of the Absorbing Company of the Merger as well as of the capital increase allowing the remuneration of the PHERECYDES contributions (as set forth in Article 14.3 of the merger agreement); and

 

   

the approval by the general shareholders’ meeting of the Absorbing Company of the resolutions relating to the appointment of the directors designated by PHERECYDES and the modification of the by-laws of Erytech relating to the suppression of the casting vote of the chairman of the board of directors.

As of the date of this document, the Company considers that the conditions listed above are highly probable.

The date of final completion of the Merger and of the capital increase of the Absorbing Company will be the date of completion of the last of the conditions referred to above. The deadline for the fulfillment of the conditions is set at midnight on July 31, 2023 at the latest, after which the merger agreement will lapse.

MAIN TERMS OF THE MERGER PROJECT

The transaction is structured as a merger by absorption of PHERECYDES into ERYTECH, whereby PHERECYDES shareholders will receive newly issued shares of ERYTECH common stock in consideration for the contribution of PHERECYDES’ assets and liabilities. Upon completion of the merger, all of PHERECYDES’ assets and liabilities will be transferred to ERYTECH and PHERECYDES will be dissolved.

On February 15, 2023, ERYTECH and PHERECYDES have entered into a memorandum of understanding and plan to sign a definitive merger agreement to merge the companies in a full share exchange transaction. PHERECYDES shareholders will receive 15 new ERYTECH shares for 4 PHERECYDES shares. At the end of the transaction, PHERECYDES shareholders will hold approximately 49.5% of the share capital and voting rights of ERYTECH.

 

55


The terms and conditions of the Merger are established on the basis of the annual accounts of the financial year ending on December 31, 2022 of both companies. No control situation existed in 2022 between the initiating Company (ERYTECH) and the target Company (PHERECYDES). The two companies were totally independent and did not have any business relationship. After examining all the facts and circumstances related to the transaction as well as the provisions of the memorandum of understanding and the merger agreement, the management of ERYTECH and PHERECYDES determined that ERYTECH would be the acquirer for accounting purposes within the meaning of IFRS 3 “Business combinations”. The absorbing company is ERYTECH, the absorbed company is PHERECYDES.

As this is a conventional merger, involving entities under separate control, as defined by IFRS 3, the value of the assets contributed by the absorbed Company in the context of the acquisition of PHERECYDES by ERYTECH will be the real value. The terms of the contribution in kind of PHERECYDES shares to ERYTECH are as follows:

 

   

The proposed merger provides for the conclusion of a contribution in-kind agreement, prior to the completion of the merger, between the shareholders of the absorbed company: Auriga IV Bioseeds (represented by Elaia Partners), Ouest Ventures III (represented by Go Capital) and the shareholder pool represented by Mr. Guy Rigaud, on the one hand, and the merging company ERYTECH, on the other.

 

   

The shareholders of the Absorbed Company have agreed to contribute, before the Completion Date, 827,132 PHERECYDES shares to the Absorbing Company in consideration of newly issued ERYTECH shares, according to the same exchange ratio as the Merger and to (ii) participate in the general shareholders’ meeting of the Absorbing Company convened to approve the Merger Proposal and to vote in favor of the Merger Proposal at such meeting.

 

   

The value of the contributed PHERECYDES shares has been set in the contribution agreement at €1,894,132, i.e. €2.29 per share, by reference to the spot market price of PHERECYDES on January 19, 2023, corresponding to the date of signature of the letter of intent (“LOI”) and of the determination of the parity in the context of the Merger. In order to remunerate this contribution, ERYTECH will proceed to a capital increase by issuing 3,101,745 new shares. This capital increase of ERYTECH has been included in the pro forma consolidated statement of financial position.

 

   

Realization at the date of the merger of a capital increase of ERYTECH for a total amount of €25.3M, in remuneration of the contribution of 7,086,905 PHERECYDES shares held by the shareholders of the absorbed company. This capital increase results in the issue of 26,575,894 new shares with a nominal value of 10 cents (€0.1).

CAPITAL INCREASE CARRIED OUT BY PHERECYDES PRIOR TO THE MERGER

On February 17, 2023, PHERECYDES completed a capital increase for a total amount of €1.5 million, fully subscribed by the Company’s historical shareholders: Auriga IV Bioseeds (represented by Elaia Partners), Ouest Ventures III (represented by Go Capital) and the pool of shareholders represented by Mr. Guy Rigaud, for a subscription amount of €747K, €512K and €241K respectively. The realization of this capital increase allows PHERECYDES to fulfill one of the conditions of the merger, i.e. to finance the cash needs of PHERECYDES until the completion of the merger.

 

56


The €1.5M capital increase will result in the issuance of 717,702 new shares with a par value of one euro (€1) each, based on a subscription price of €2.09 per share. The subscription price represents a discount of 21.4% on the closing price on February 17, 2023.

The share capital of PHERECYDES after the increase amounts to €7,939,179, divided into 7,939,179 shares.

BASIS OF PREPARATION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The Pro Forma Financial Information is defined as the unaudited pro forma consolidated financial information of the ERYTECH Group after taking into account the effects of the merger by absorption of PHERECYDES, which is expected to be completed by the end of the second quarter of 2023, and of the capital increase completed in February 2023 by PHERECYDES (together, the “Transactions”). The Pro Forma Financial Information has been prepared as if the Transactions had become effective as of January 1, 2022 for the pro forma consolidated statement of net income and as of December 31, 2022 for the pro forma consolidated statement of financial position, and includes a pro forma consolidated statement of net income covering the period from January 1, 2022 to December 31, 2022 and a pro forma consolidated statement of financial position as of December 31, 2022.

The Pro Forma Financial Information is prepared in accordance with the accounting principles used for the preparation of ERYTECH’s audited historical consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”).

The Pro Forma Financial Information is prepared in accordance with the provisions of the Delegated Regulation (EU) 2021-528 on exemption documents, the ESMA guidance on prospectuses of July 2020 and the AMF recommendations on pro forma financial information included in the guide for the preparation of universal registration documents of January 2022.

The Pro Forma Financial Information is intended to present the anticipated effects of the Transactions on the historical financial statements of the Erytech Group for the year ending December 31, 2022. It is not necessarily indicative of the financial position and performance that would have occurred had the Transactions actually occurred on January 1, 2022.

The Pro Forma Financial Information consists of the unaudited pro forma financial statements as of December 31, 2022 (the “Pro Forma Consolidated Financial Statements”), i) Pro Forma Consolidated Statement of Net Income and ii) Pro Forma Consolidated Statement of Financial Position, and explanatory notes.

The Pro Forma Financial Information of the Erytech Group has been prepared on the basis of the assumptions summarized below and should be read in conjunction with the following documents:

 

   

The historical consolidated financial statements of the ERYTECH Group for the year ended December 31, 2022 prepared in accordance with IFRS as adopted by the European Union (EU) and audited by the auditors KPMG and RSM; and

 

   

The financial statements included in the Annual Financial Report of PHERECYDES for the year ended December 31, 2022, prepared in accordance with French GAAP and audited by PricewaterhouseCoopers Audit.

The pro forma adjustments taken into account in preparing the Pro Forma Financial Information are limited to those directly attributable to the Transactions and which can be supported by facts, and are based on assumptions that ERYTECH considers reasonable as of the date of this document and in the context of the Transactions.

 

57


The Pro Forma Financial Information does not include any consequences of the expected synergies and does not provide any indication of the future results and condition of the business or of the reorganization and integration costs that may be incurred as a result of the Transactions.

No reciprocal transactions have been identified in the historical financial data of ERYTECH and PHERECYDES.

The pro forma adjustments presented below are based on information available to date and on assumptions and estimates that ERYTECH considers reasonable.

The Pro Forma Financial Information is presented in thousands of euros.

 

58


UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF THE ERYTECH GROUP AS OF DECEMBER 31, 2022

Pro forma consolidated statement of net income as of December 31, 2022 - Unaudited

 

(in K€)    ERYTECH
Published
    PHERECYDES
in
    IFRS transition
adjustments
    Pro forma
adjustments
    Transaction
costs
    Pro forma
accounts
 
     IFRS     ERYTECH     PHERECYDES                 31/12/2022  
    

 

    presentation    

 

   

 

   

 

   

 

 

Notes

     1       2       3       4       8    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

     —         —         —         —         —      

Other income

     30,998       3,763       (1,751     —         —         33,010  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating IncomeOperating income

     30,998       3,763       (1,751     —         —         33,010  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and development costs

     (19,907     (6,831     72       (157     —         (26,823

Selling, general and administrative expenses

     (13,887     (3,111     (74     —         (3,073     (20,144
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     (33,794     (9,942     (2     (157     (3,073     (46,968
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (2,796     (6,179     (1,753     (157     (3,073     (13,958
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial income

     4,453       1       —         —         —         4,454  

Financial expenses

     (1,364     (65     (57     —         —         (1,485
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial income (loss)

     3,089       (64     (57     —         —         2,969  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax (*)

     (521     1,388       (1,388     —         —         (521
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (228     (4,854     (3,198     (157     (3,073     (11,510
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(*)

the tax impacts of IFRS transition adjustments and pro forma adjustments are described in note 5.

 

59


Pro Forma Consolidated Statement of Financial Position as of December 31, 2022—Unaudited: ASSETS

 

(in K€)    ERYTECH
Published
IFRS
     PHERECYDES
in ERYTECH
presentation
     IFRS transition
adjustments
PHERECYDES
    Pro forma
adjustments
    Capital
increase
PHERECYDES
     Business
combination
     Transaction
costs
     Pro forma
accounts
 
    

 

    

 

    

 

   

 

   

 

    

 

    

 

     31/12/2022  

Notes

     1        2        3       4       5        7        8     
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

ASSETS

                     

Non-current assets

                     

Intangible assets

     5        9,072        (9,041                36  

Goodwill

     —          —          —              29,197           29,197  

Property, plant and equipment

     393        559        —         (148              804  

Right of use

     2,584        —          1,438       (846              3,175  

Other non-current assets

     195        150        (25          —             319  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total non-current assets

     3,177        9,781        (7,628     (995     —          29,197           33 532  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Current assets

                     

Trade and other receivables

     76        127        —                    202  

Other current assets

     3,769        2,273        —                    6,042  

Cash and cash equivalents

     38,789        1,035        —           1,500              41,324  
  

 

 

    

 

 

    

 

 

     

 

 

          

 

 

 

Total current assets

     42,634        3,434        —         —         1,500        —             47,569  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     45,811        13,215        (7,628     (995     1,500        29,197           81,100  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

 

60


Pro forma consolidated statement of financial position as of December 31, 2022—Unaudited: LIABILITIES & SHAREHOLDERS’ EQUITY

 

(in K€)    ERYTECH
Published
IFRS
    Pherecydes
in
ERYTECH
presentation
    IFRS transition
adjustments
PHERECYDES
    Pro forma
adjustments
    Capital
increase
PHERECYDES
     Buisness
combination
    Transaction
costs
    Pro forma
accounts
 
    

 

   

 

   

 

   

 

   

 

    

 

   

 

    31/12/2022  

Notes

     1       2       3       4       5        7       8    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND EQUITY

                 

Shareholders’ equity

                 

Share capital

     3 102       7,221       —           718        (4,971       6,070  

Premiums related to share capital

     48,975       8,904       —           782        15,629         74,290  

Reserves

     (29,765     (3,749     (5,923     22          9,649         (29,765

Translation reserves

     1,402       —         —              —           1,402  

Net loss for the period

     (227     (4,854     (3,198     (158        8,210       (3,073     (3,301
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     23,486       7,522       (9,121     (136     1,500        28,517       (3,073     48,696  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Non-current liabilities

                 

Provisions—non-current portion

     419       —         75       (33            461  

Financial liabilities—non-current portion

     7,547       2,540       —                  10,086  

Lease liabilities—non-current portion

     2,680       —         1,170       (856            2,994  

Total non-current liabilities

     10,646       2,540       1,245       (889     —          —         —         13,541  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Current liabilities

                 

Provisions—current portion

     314       —         —                  314  

Financial liabilities—current portion

     2,565       531       (59              3,037  

Lease liabilities—current portion

     775       —         306       30              1,112  

Trade and other payables

     5,115       1,590       —              680       3,073       10,459  

Current income tax liabilities

     512       —         —                  512  

Other current liabilities

     2,397       1,033       —                  3,429  
  

 

 

   

 

 

   

 

 

            

 

 

 

Total current liabilities

     11,678       3,153       248       30       —          680       3,073       18,863  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

     45,811       13,215       (7,628     (995     1,500        29,197       —         81,100  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

(*)

Financial liabilities due in more than one year include 5 million euros of the PGE BPI ERYTECH loan and 2 million euros of the PGE BPI PHERECYDES loan, the contract of which provides for an early repayment clause in the event of a change of control. The post-merger loan was granted by BPI.

 

61


EXPLANATORY NOTES TO THE PRO FORMA FINANCIAL INFORMATION

Note 1: ERYTECH Published IFRS

The historical data in this column is derived from the audited IFRS consolidated financial statements of the Erytech Group as published in the Universal Registration Document for the year ending December 31, 2022 and audited by KPMG and RSM.

Note 2: PHERECYDES in ERYTECH Presentation

The data in this column is taken from the individual financial statements of PHERECYDES prepared in accordance with French GAAP and audited by PricewaterhouseCoopers Audit as published in the annual financial report for the year ended December 31, 2022. Presentation adjustments have been applied to align with the presentation applied by the ERYTECH group.

A detailed reconciliation of the income statement published by PHERECYDES to the ERYTECH presentation is presented on the following page.

The transition from the published PHERECYDES income statement to the ERYTECH presentation is as follows:

 

           ERYTECH Presentation  

(in K€)

   Published
PHERECYDES
historical data
    Other
income
     Research
and
development
costs
    Selling,
general and
administrative
expenses
    Operating
expenses
    Operating
loss
    Financial
income
(loss)
    Income
tax
     Net
income
 

OPERATING INCOME

     3 167       3 167            —         3,167            3,167  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Operating expenses

              —             

Other purchases and external expenses

     5,961          4,396       1,565       5,961       5,961       —            5,961  

Taxes and similar payments

     79          42       38       79       79       —            79  

Wages and salaries

     2,331          1,398       932       2,331       2,331       —            2,331  

Social security expenses

     991          594       396       991       991       —            991  

Depreciation and amortization on fixed assets

     444          400       44       444       444       —            444  

Other expenses

     51          0       51       51       51       —            51  
  

 

 

      

 

 

   

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

OPERATING EXPENSES

     9,857       —          6,831       3,026       9,857       9,857       —         —          9,857  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

OPERATING RESULT

     (6,690     3,167        (6,831     (3,026     (9,857     (6,690     —         —          (6,690
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Financial income

                    

Other interest and similar income

     1              —         —         1          1  

Foreign Currency Gains

     0              —         —         0          0  
  

 

 

          

 

 

   

 

 

   

 

 

      

 

 

 

FINANCIAL INCOME

     1       —          —         —         —         —         1       —          1  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Financial expenses

                    

Financial amortization, depreciation and provisions

     12              —         —         12          12  

Interest and similar expenses

     53              —         —         53          53  

Foreign currency losses

     0              —         —         0          0  
  

 

 

          

 

 

   

 

 

   

 

 

      

 

 

 

FINANCIAL EXPENSES

     65       —          —         —         —         —         65       —          65  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

FINANCIAL RESULT

     (64     —          —         —         —         —         (64     —          (64
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

CURRENT RESULT BEFORE TAX

     (6,754     3,167        (6,831     (3,026     (9,857     (6,690     (64     —          (6,754
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

62


Extraordinary income

                    

On management operations

     240       240            —         240       —            240  

On capital transactions

     356       356            —         356       —            356  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

EXTRAORDINARY INCOME

     596       596        —         —         —         596       —         —          596  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Extraordinary expenses

                  —         

On capital transactions

     85            85       85       85       —            85  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

EXTRAORDINARY EXPENSES

     85       —          —         85       85       85       —         —          85  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

EXTRAORDINARY RESULT

     511       596        —         (85     (85     511       —         —          511  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Income taxes (*)

     1,388              —         —           1,388        1,388  
  

 

 

          

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

PROFIT OR LOSS

     (4,854     3,763        (6,831     (3,111     (9,942     (6,179     (64     1,388        (4,854
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Corresponds with line-by-line reconciliation of the pro forma consolidated statement of net income as of December 31, 2022—Unaudited (Page 5)

 

 

PHERECYDES in ERYTECH presentation

       3,763        (6,831     (3,111     (9,942     (6,179     (64     1,388        (4,854
    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

(*)

Research tax credit presented as a positive amount in the application of the sign convention used in the ERYTECH accounts.

The following presentation changes have been made to restore consistency with the ERYTECH presentation:

 

   

The published income statement of PHERECYDES has undergone a change in the presentation of expenses, by nature to a presentation by function, more consistent with the presentation of the ERYTECH income statement.

 

   

Operating expenses totaling €9,857,000 were allocated between research for €6,831,000 and development and selling , general and administrative expenses for€3,026,000.

 

   

The extraordinary result of €511K includes subsidies for €596K presented in other income and €85K of expenses related to the loss of value on treasury shares presented in selling, general and administrative expenses.

In the published balance sheet of PHERECYDES, the items “conditional advances” (presented under “other equity” in the annual financial statement) for €532K, “loans and debts to credit institutions” for €360K and “loans and miscellaneous financial debts” for €2,169K, i.e. a total of €3,071K, are broken down into non-current financial for €2,540K and current financial debts for €531K.

This standardization exercise is carried out on a preliminary basis, based on the information available at this stage, and may therefore be subject to subsequent adjustments after the merger has been completed.

Note 3: IFRS transition adjustments PHERECYDES

This column presents the transition adjustments from French GAAP to IFRS identified in relation to the PHERECYDES individual financial statements on the basis of analyses conducted to date. Details of the adjustments identified as of the date of the Pro Forma Financial Information are summarized in the tables below.

Note 3: Details of the IFRS PHERECYDES adjustments for the pro forma consolidated statement of net income as of December 31, 2022—Unaudited

 

63


(in K€)    IAS 19     IAS 20     IAS 38     IAS 32     IFRS 2     IFRS 9     IFRS
16
    IFRS
adjustments
 

Revenues

     —         —         —         —         —         —         —         —    

Other income

     —         1,388       (3,155     (0     —         17       —         (1,751
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     —         1,388       (3,155     (0     —         17       —         (1,751
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and development

     15       —         325       —         (306     (3     40       72  

Selling, general and administrative

     (13     —         —         86       (146     —         —         (74
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     2       —         325       86       (451     (3     40       (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2       1,388       (2,831     85       (451     14       40       (1,753
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial income

     —         —         —         —         —         —         —         —    

Financial expenses

     —         —         —         12       —         (15     (55     (57
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial income (loss)

     —         —         —         12       —         (15     (55     (57
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

     —         (1,388     —         —         —         —         —         (1,388
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     2       —         (2,831     97       (451     (1     (14     (3,198
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note 3: Details of IFRS PHERECYDES adjustments in the pro forma consolidated statement of financial position as of December 31, 2022—Unaudited—ASSETS

 

(in K€)    IAS 19      IFRS 2      IAS 32     IFRS 16      IAS 38     IFRS 9      IFRS
adjustments
 

ASSETS

                  

Non-current assets

                  

Intangible assets

     —          —          —         —          (9,041     —          (9,041

Goodwill

     —          —          —         —          —         —          —    

Property, plant and equipment

     —          —          —         —          —         —          —    

Right of use

     —          —          —         1,438        —         —          1,438  

Other non-current assets

                   (25                  —          (25
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total non-current assets

     —          —          (25     1,438        (9,041     —          (7,628
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Current assets

                  

Inventories

     —          —          —         —          —         —          —    

Trade and other receivables

     —          —          —         —          —         —          —    

Other current assets

     —          —          —         —          —         —          —    

Cash and cash equivalents

     —          —          —         —          —         —          —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total current assets

     —          —          —         —          —         —          —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

TOTAL ASSETS

     —          —          (25     1,438        (9,041     —          (7,628
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

64


Note 3: Details of IFRS PHERECYDES adjustments in the pro forma consolidated statement of financial position as of December 31, 2022 - Unaudited - LIABILITIES AND SHAREHOLDERS’ EQUITY

 

(in K€)    IAS 19     IFRS 2     IAS 32     IFRS 16     IAS 38     IFRS 9     IFRS
adjustments
 

LIABILITIES AND EQUITY

              

Shareholders’ equity

              

Share capital

     —         —         —         —         —         —         —    

Premiums related to share capital

     —         —         —         —         —         —         —    

Reserves

     (77     451       (122     (25     (6,210     59       (5,923

Translation reserves

     —         —         —         —         —         —         —    

Net income (loss)

     2       (451     97       (14     (2,831     (1     (3,198
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     (75     —         (25     (39     (9,041     59       (9121
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities

              

Provisions - non-current portion

     75       —         —         —         —         —         75  

Financial liabilities - non-current portion

     —         —         —         —         —         —         —    

Derivative liabilities - non-current portion

     —         —         —         —         —         —         —    

Lease liabilities - non-current portion

     —         —         —         1,170       —         —         1,170  

Deferred tax liability

     —         —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     75       —         —         1,170       —         —         1,245  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Current liabilities

              

Provisions - current portion

     —         —         —         —         —         —         —    

Financial liabilities - current portion

     —         —         —         —         —         (59     (59

Derivative liabilities - current portion

     —         —         —         —         —         —         —    

Lease liabilities - current portion

     —         —         —         306       —         —         306  

Trade and other payables

     —         —         —         —         —         —         —    

Current income tax liabilities

     —         —         —         —         —         —         —    

Other current liabilities

     —         —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     —         —         —         306       —         (59     247  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

         (25     1,438       (9,041       (7,628
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjustment of grants (IAS 20)

PHERECYDES recognized a tax income of €1,388K on December 31, 2022. This tax income relates to the research tax credit, which according to IAS 20 has been reclassified as other operating income, in accordance with the accounting principles applied by Erytech.

Adjustment of the pension liability (IAS 19)

Taking into account the assumptions made by PHERECYDES as of December 31, 2022, the liability for pension commitments under IFRS is €75,000.

 

65


Adjustment of share-based payments (IFRS 2)

The assumptions used by PHERECYDES to calculate the founder’s share warrants (otherwise known as bons de souscription de parts de créateurs d’entreprise, or BSPCE) and free share plans in the process of vesting on December 31, 2022, have led to the recognition of an expense of €451K against reserves. The charge in the pro forma consolidated statement of net income was broken down between research and development costs and selling, general and administrative expenses for €306K and €146K respectively.

Adjustment of lease obligations (IFRS 16)

The analysis of PHERECYDES’ lease contracts led to the recognition of a right of use with a net value of €1,438K, a lease liability of €1,476K, a decrease in research and development costs of €40K and a financial expense of €55K.

Adjustment of intangible assets (IAS 38)

Research and development costs for PHERECYDES’ programs in progress that have not received marketing approval from the health authorities, recorded in the parent company financial statements as intangible assets as of December 31, 2022 for a gross value of €10,582K and a net value of €9,041K, have been neutralized under IFRS, resulting in an amount of €6,210K in reserves and €2,831K on the income statement for the year. The impact on the income statement consists of the neutralization of i) the capitalized production (other income) related to these programs for €3,155 K€ and ii) the amortization expense related to capitalized development costs for €325K (presented in research and development expenses).

Note 4: Pro forma adjustments

The adjustments recorded in connection with the transition from French GAAP to IFRS of the PHERECYDES individual financial statements have been subject to consistency adjustments in the context of the merger. These pro forma adjustments also include the effect of fair value measurements of rights of use, lease liabilities and pension obligations, taking into account the changes announced in connection with the merger.

Details of the adjustments by standard are summarized in the tables below:

Note 4: Details of pro forma PHERECYDES adjustments to the Pro forma Consolidated Statement of Net Income as of December 31, 2022 - Unaudited

 

(in K€)    IAS 19      IFRS 16      Pro forma
adjustments
 

Revenues

     —          —          —    

Other income

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Operating income

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Research and development

     22        (180      (157

Selling, general and administrative

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Operating expenses

     22        (180      (157
  

 

 

    

 

 

    

 

 

 

Other operating income and expenses

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Operating income (loss)

     22        (180      (157
  

 

 

    

 

 

    

 

 

 

Financial income

     —          —          —    

Financial expenses

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Financial result

     —          —          —    

Income tax

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Net income (loss)

     22        (180      (157
  

 

 

    

 

 

    

 

 

 

 

66


The total pro forma adjustments to the Consolidated Statement of Net Income amounted to €(157)K and consisted mainly of :

 

   

€22K for the homogeneity adjustment of the pension commitment recalculated on the basis of Erytech’s calculation assumptions;

 

   

€ (180)K for the adjustment of the duration of commitments on the Nantes and Romainville premises, consisting of a decrease in rights of use of €846K and a decrease in lease liabilities of €826K linked to the shortening of rental periods and €148K of additional depreciation on tangible fixed assets linked to the shortening of the lifespan of the fittings in Nantes.

Note 4: Details of pro forma PHERECYDES adjustments to the Pro Forma Consolidated Statement of Financial Position as of December 31, 2022 - Unaudited - ASSETS

 

(in K€)    IAS 19      IFRS 16      Pro forma
adjustments
 

ASSETS

        

Non-current assets

        

Intangible assets

     —          —          —    

Goodwill

     —          —          —    

Property, plant and equipment

     —          (148      (148

Right of use

     —          (846      (846

Other non-current assets

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total non-current assets

     —          (995      (995
  

 

 

    

 

 

    

 

 

 

Current assets

        

Inventories

     —          —          —    

Trade and other receivables

     —          —          —    

Other current assets

     —          —          —    

Cash and cash equivalents

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total current assets

     —          —          —    
  

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

     —          (995      (995
  

 

 

    

 

 

    

 

 

 

 

67


Note 4: Details of pro forma PHERECYDES adjustments to the Pro forma Consolidated Statement of Financial Position as of December 31, 2022 - Unaudited - LIABILITIES AND SHAREHOLDERS’ EQUITY

 

(in K€)    IAS 19      IFRS 16      Pro forma
adjustments
 

LIABILITIES AND EQUITY

        

Shareholders’ equity

        

Share capital

     —          —          —    

Premiums related to share capital

     —          —          —    

Reserves

     11        11        22  

Translation reserves

     —          —          —    

Net income (loss)

     22        (180      (157
  

 

 

    

 

 

    

 

 

 

Total equity

     33        (169      (136
  

 

 

    

 

 

    

 

 

 

Non-current liabilities

        

Provisions - non-current portion

     (33      —          (33

Financial liabilities - non-current portion

     —          —          —    

Derivative liabilities - non-current portion

     —          —          —    

Lease liabilities - non-current portion

     —          (856      (856

Deferred tax

                   —    
  

 

 

    

 

 

    

 

 

 

Total non-current liabilities

     (33      (856      (889
  

 

 

    

 

 

    

 

 

 

Current liabilities

        

Provisions - current portion

     —          —          —    

Financial liabilities - current portion

     —          —          —    

Derivative liabilities - current portion

     —          —          —    

Lease liabilities - current portion

     —          30        30  

Trade and other payables

     —          —          —    

Current income tax liabilities

     —          —          —    

Other current liabilities

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     —          30        30  
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES AND EQUITY

     (0      (995      (995
  

 

 

    

 

 

    

 

 

 

Adjustment of provisions for retirement benefits (IAS19)

The calculation of provisions for retirement benefits for PHERECYDES employees has been harmonized with the rules applied by Erytech (collective agreement, etc.).

Adjustment of the lease liability and the right of use (IFRS16)

Pro forma IFRS adjustments related to the lease contracts for PHERECYDES’ Nantes and Romainville premises have been recalculated using early surrender assumptions to take into account the planned combination of PHERECYDES’ Lyon teams with ERYTECH’s teams by December 31, 2023. For the Nantes premises, the 6-month notice period will be respected for December 31, 2023. On the other hand, the fixtures and fittings have been depreciated at an accelerated rate to arrive at a net value of

 

68


zero as of December 31, 2023. For the Romainville premises, the contract can only be terminated by September 30, 2024, which is why the debt is maintained until that date and the right of use is amortized until December 31, 2023. The discount rates used are the market rates closest to those of PHERECYDES at the date of the combination. The amortization period of the rights of use has been reduced to December 31, 2023 for both sites. The lease liabilities have been adjusted by € (826K). The right of use has been reduced by €1,024K to take into account the planned release of the premises on December 31, 2023.

The adjustments also include an acceleration of the depreciation charge for the Nantes premises in the amount of €148,000 as of December 31, 2022, due to the announced move.

Note 5: Tax impacts of IFRS and pro forma adjustments

ERYTECH and PHERECYDES are in structurally loss-making tax situations, with no prospect of taxable profits in the coming years, which does not allow for the recognition of deferred tax assets. In addition, no current tax effect has been recognized on the pro forma adjustments and transaction costs.

Note 6: PHERECYDES capital increase

This column presents the effects of the capital increase subscribed by the historical shareholders in February 2023. The main features of this capital increase are presented in the paragraph “Main terms of the merger project” (page 2).

Note 7: Business combination

When the business combination is not cash-settled, the consideration transferred is measured at the fair value of the securities issued as consideration for the contributions at the transaction date of the business combination. The fair value of the consideration transferred is likely to change until the completion date of the transactions since the securities issued as consideration for the contributions will be valued on the basis of the Erytech share price on the transaction date.

Details of the column “Business combination” in the pro forma consolidated statement of financial position as of December 31, 2022 - Unaudited

 

(in K€)    Purchase of
PHERECYDES
shares
(Contribution
in kind)
     Purchase of
additional
PHERECYDES
shares (Merger)
     IFRS 3     Business
combination
 

ASSETS

          

Non-current assets

          

Goodwill

           29,197       29,197  

Equity securities

     2,956        25,327        (28,283     —    
  

 

 

    

 

 

    

 

 

   

 

 

 

Total non-current assets

     2,956        25,327        914       29,197  
  

 

 

    

 

 

    

 

 

   

 

 

 

Current assets

          

Total current assets

          
  

 

 

    

 

 

    

 

 

   

 

 

 

TOTAL ASSETS

     2,956        25,327        914       29,197  
  

 

 

    

 

 

    

 

 

   

 

 

 

 

69


(in K€)    Purchase of
PHERECYDES
shares
(Contribution
in kind)
     Purchase
complementary
titles
PHERECYDES
(Merger)
     IFRS 3      Change in
scope
 

LIABILITIES AND EQUITY

           

Shareholders’ equity

           

Share capital

     310        2,658        (7,939      (4,971

Premiums related to share capital

     2,646        22,669        (9,686      15,629  

Reserves

           9,649        9,649  

Net income

           8,890        8,890  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total shareholders’ equity

     2,956        25,327        914        29,197  
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-current liabilities

           

Total non-current liabilities

              —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Current liabilities

           

Trade and other payables

              —    

Total current liabilities

     —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES AND EQUITY

     2,956        25,327        914        29,197  
  

 

 

    

 

 

    

 

 

    

 

 

 

SHARE PRICE USED TO CALCULATE THE TRANSACTION PRICE

The calculation of the transaction price used for the purposes of preparing the Pro Forma Financial Information was based on the Erytech share price on May 15, 2023 at €0.953. This date is as close as possible to the date of preparation of this document. The final price to be used will only be known after the merger by the end of the second quarter of 2023.

The calculation of the parity of 15 ERYTECH shares for 4 PHERECYDES shares was carried out on the basis of the stock market price on January 19, 2023 (date of the agreement between the two companies), this calculation valued each company at an equivalent amount of €18.9M.

The price of the transaction is extremely sensitive to the evolution of ERYTECH’s share price, which changes often as shown by the examples of share prices shown below.

 

     Dates or Period      Price
ERYTECH

(€)
     Price
PHERECYDES

(€)
     Ratio
Parity
     Number of
titles
ERYTECH
to be

created
     Transaction
price
     Goodwill      Variation
Goodwill
    Variation
in %