Do You Know Why Sesen Bio (SESN) Stock Surged 24% Pre-Hours?

Shares of Sesen Bio Inc. (Nasdaq: SESN) were up 24.33% at $0.6280 at the time of our last check in pre-market trading following a special cash dividend move.

What decision did SESN make?

A modification to the previously disclosed merger agreement between Sesen Bio (SESN) and Carisma Therapeutics Inc. (Carisma), a privately held, clinical-stage biopharma company focused on discovering and developing novel immunotherapies, was made today. The amended agreement, which is dated September 20, 2022, was previously announced.

The one-time special cash dividend anticipated to be paid to Sesen Bio investors would increase to about $70 million, or around $0.34 per share, under the provisions of the modified proposed merger, which has been passed unanimously by the Board members of both companies. The increase is more than the previously announced special cash distribution of up to $25 million, or up to $0.12 per share, and represents the extra cash remaining after SESN reaches the statutory net cash minimum of $75 million. The previously disclosed $30 million funding for Carisma is still committed and is anticipated to finalize concurrently with the merger.

The contingent value right (“CVR”) payable to SESN stockholders has been modified as part of the amended merger agreement to include, in relation to any funds raised from the milestone payment under the Roche Asset Purchase Agreement, any proceeds from the sale of Vicineum and SESN’s other preclinical assets.

How will SESN gain from the strategy?

The completion of the current transaction is still required before the special cash dividend and CVR may be issued. Sesen Bio (SESN) shareholders are anticipated to own 25.2% of the pro forma firm upon the conclusion of the incremental funding from Carisma’s major investors and the merger, in accordance with the exchange ratio calculation outlined in the original merger agreement. According to SESN, its shareholders will be well-positioned to reap the long-term rewards of the impending merger, including a sizeable ownership stake in the merged business, as well as have access to further possible upside through the CVR.

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