UPDATE: Pursuant To Merger Agreement, Each Stealth BioTherapeutics ADS Will Be Cancelled In Exchange For Right To Receive $0.375 In Cash

Stealth BioTherapeutics Corp (NASDAQ:MITO), a clinical-stage biotechnology company focused on the discovery, development, and commercialization of novel therapies for diseases involving mitochondrial dysfunction, announced today that it has entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with Stealth Parent Limited, an exempted company with limited liability incorporated under the law of the Cayman Islands ("Parent"), and Stealth Merger Sub Limited, an exempted company with limited liability incorporated under the law of the Cayman Islands and a wholly-owned subsidiary of Parent ("Merger Sub"), to be acquired by a consortium of investors led by Morningside Venture (I) Investments Ltd. for itself and on behalf of its affiliates ("Morningside") and J. Wood Capital Advisors LLC ("J. Wood Capital") (the "Consortium") in an all-cash transaction. Pursuant to the terms of the Merger Agreement, and subject to the terms and conditions thereof, Merger Sub will merge with and into the Company with the Company being the surviving company and becoming a wholly-owned subsidiary of Parent (the "Merger").

Pursuant to the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each ordinary share, par value US$0.0003 per share, of the Company (each, a "Share") issued and outstanding immediately prior to the Effective Time will be cancelled and cease to exist, in exchange for the right to receive US$0.03125 in cash without interest (the "Per Share Merger Consideration"), and each outstanding American Depositary Share of the Company (each an "ADS," representing 12 Shares, and collectively, the "ADSs") will be cancelled in exchange for the right to receive US$0.375 in cash without interest (less any ADS cancellation fees not to exceed $0.05 per ADS) (the "Per ADS Merger Consideration"), except for (a) Shares (including Shares represented by ADSs) beneficially owned by Morningside and its affiliates, (b) Shares (including Shares represented by ADSs) owned by Parent, Merger Sub or the Company (as treasury shares, if any) or by any of their direct or indirect subsidiaries, and (c) Shares that are held by a holder who has validly exercised and not withdrawn or lost its right to dissent from the Merger pursuant to Section 238 of the Companies Act of the Cayman Islands, which will be cancelled and cease to exist and will entitle the former holder thereof to receive payment of the fair value of such dissenting shares in accordance with Section 238 of the Companies Act of the Cayman Islands. 

The Per ADS Merger Consideration represents (before taking into account any ADS cancellation fees) a premium of 34.4% to the closing price of the Company's ADSs on June 24, 2022, the last trading day prior to the Company's announcement of its receipt of the original "going-private" proposal, and a premium of 43.9% to the average closing price of the Company's ADSs during the last 30 trading days prior to its receipt of the original "going-private" proposal.

The Consortium intends to fund the Merger through cash contributions from members of the Consortium.

The Company's Board, acting upon the unanimous recommendation of a committee of independent and disinterested directors established by the Board (the "Special Committee"), approved the Merger Agreement and the Merger. The Special Committee negotiated the terms of the Merger Agreement with the assistance of its independent financial and legal advisors.

The Merger, which is currently expected to close during the second half of 2022, is subject to customary closing conditions including the approval of the Merger Agreement by an affirmative vote of holders of Shares representing at least two-thirds of the voting power of the Shares present and voting in person or by proxy as a single class at a meeting of the Company's shareholders which will be convened to consider the approval of the Merger Agreement and the Merger. Morningside Venture (I) Investments Limited, Season Pioneer Investments Limited and Equal Talent Investments Limited have agreed to vote all of the Shares and ADSs they beneficially own, which represent approximately 65% of the voting rights attached to the total outstanding Shares of the Company as of the date of the Merger Agreement, in favor of the authorization and approval of the Merger Agreement and the Merger. If completed, the Merger will result in the Company becoming a privately-held company and its ADSs will no longer be listed on NASDAQ.

Houlihan Lokey Capital, Inc. is serving as financial advisor to the Special Committee; Wilmer Cutler Pickering Hale and Dorr LLP is serving as U.S. legal counsel to the Special Committee and the Company and Walkers is serving as Cayman Islands legal counsel to the Special Committee and the Company.

Goodwin Procter LLP is serving as U.S. legal counsel to the Consortium and Campbells LLP is serving as Cayman Islands legal counsel to the Consortium.