UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material under § 240.14a-12

HARPOON THERAPEUTICS, INC.

(Name of Registrant as Specified in its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

☐	No fee required

 

☒	Fee paid previously with preliminary materials

 

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

HARPOON THERAPEUTICS, INC.

611 Gateway Boulevard, Suite 400

South San Francisco, California 94080

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

February 8, 2024

Dear common stockholders of Harpoon Therapeutics, Inc.:

You are cordially invited to attend a special meeting of the common stockholders of Harpoon Therapeutics, Inc., a Delaware corporation (“Harpoon,” the “Company,” “we,” “us” or “our”), to be held virtually on March 8, 2024 at 8:30 a.m. Pacific Time (including any adjournments or postponements thereof, the “Special Meeting”). Common stockholders will be able to attend the Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM and using the 16-digit control number included in your proxy materials. You will not be able to attend the Special Meeting in person. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

We have entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of January 7, 2024, with Merck Sharp & Dohme LLC, a New Jersey limited liability company (“Merck”), and Hawaii Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Merck (“Merger Sub”). Pursuant to and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Harpoon, with Harpoon surviving the merger as a wholly owned subsidiary of Merck (the “Merger”).

At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Merger Agreement (the “Merger Proposal”). The affirmative vote of the holders of a majority of the outstanding shares of Harpoon common stock, par value $0.0001 per share (the “Company Shares”), issued and outstanding as of the close of business on February 6, 2024 (the “Record Date”) is required to approve the Merger Proposal. At the Special Meeting, you also will be asked to consider and vote on a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes in person or by proxy to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”). The affirmative vote of the holders of a majority of the voting power of the Company Shares present in person or represented by proxy at the Special Meeting is required to approve the Adjournment Proposal. Holders of shares of Harpoon’s Series A preferred stock, par value $0.0001 per share (“Preferred Shares”), do not have the right to vote their Preferred Shares on the Merger Proposal or the Adjournment Proposal.

If the Merger is consummated, you will be entitled to receive $23.00 in cash, without interest, for each Company Share that you own (unless you have properly exercised appraisal rights, including by not voting in favor of the Merger Proposal). Such merger consideration represents a premium of approximately 118% over the closing price of the Company Shares of $10.55 on January 5, 2024, the last trading day before the public announcement that Harpoon entered into the Merger Agreement.

The Board of Directors of Harpoon (the “Board”), after considering the factors more fully described in the enclosed proxy statement, has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Harpoon and the holders of Company Shares, (ii) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the General Corporation Law of the State of Delaware, and approved the execution and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger, and (iii) resolved to recommend that holders of Company Shares vote to approve the adoption of the Merger Agreement. The Board unanimously recommends that holders of Company Shares vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement. We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the proxy statement, and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information. You may also obtain more information about Harpoon from documents we file with the Securities and Exchange Commission from time to time.

Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying postage prepaid envelope or grant your proxy electronically over the Internet or by telephone. Only your last-dated proxy will be counted, and any proxy may be revoked prior to its exercise at the Special Meeting. If you attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted.

Your vote is very important, regardless of the number of Company Shares that you own. We cannot consummate the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of at least a majority of the issued and outstanding Company Shares as of the Record Date.

If you have questions or need assistance voting your Company Shares, please contact:

 

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: 212-929-5500

or

Toll-Free (800) 322-2885

On behalf of the Board, I thank you for your support and appreciate your consideration of this matter.

Very truly yours,

/s/ Julie Eastland

Julie Eastland

President, Chief Executive Officer, Secretary and Director

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the Merger, or determined if the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.

PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. This proxy statement is dated February 8, 2024 and, together with the enclosed form of proxy card, is first being mailed to common stockholders on or about February 8, 2024.

HARPOON THERAPEUTICS, INC.

611 Gateway Boulevard, Suite 400

South San Francisco, California 94080

 

 

NOTICE OF SPECIAL MEETING OF COMMON STOCKHOLDERS

TO BE HELD ON MARCH 8, 2024

 

 

NOTICE IS HEREBY GIVEN that a special meeting of the common stockholders of Harpoon Therapeutics, Inc., a Delaware corporation (“Harpoon,” the “Company,” “we,” “us” or “our”), will be held virtually via live webcast at www.virtualshareholdermeeting.com/HARP2024SM on March 8, 2024 at 8:30 a.m. Pacific Time (including any adjournments or postponements thereof, the “Special Meeting”). The Special Meeting is being held for the following purposes:

 

1.

To consider and vote on a proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of January 7, 2024, by and among Merck Sharp & Dohme LLC, a New Jersey limited liability company (“Merck”), Hawaii Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Merck (“Merger Sub”), and Harpoon, pursuant to which Merger Sub will be merged with and into Harpoon, with Harpoon surviving as a wholly owned subsidiary of Merck (the “Merger”); and

 

2.

To consider and vote on a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes in person or by proxy to approve the proposal to adopt the Merger Agreement at the time of the Special Meeting.

Only Harpoon common stockholders of record as of the close of business on February 6, 2024 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. Holders of shares of Harpoon’s Series A preferred stock, par value $0.0001 per share (“Preferred Shares”), do not have the right to vote their Preferred Shares on either of the proposals described above.

The Board unanimously recommends that you vote:

1. “FOR” the proposal to adopt the Merger Agreement (the “Merger Proposal”); and

2. “FOR” the proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

Your vote is very important, regardless of the number of shares of Harpoon common stock, par value $0.0001 per share (“Company Shares”), that you own. Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your Company Shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.

Under Delaware law, common stockholders and beneficial owners who do not vote in favor of the Merger Proposal will have the right to seek appraisal of the fair value of their issued and outstanding Company Shares as determined by the Delaware Court of Chancery if the Merger is consummated, but only if they submit a written demand for such an appraisal to Harpoon before the vote on the Merger Proposal and comply with the other Delaware law procedures explained in the accompanying proxy statement.

By Order of the Board of Directors,

/s/ Julie Eastland

Julie Eastland

President, Chief Executive Officer, Secretary and Director

South San Francisco, California

February 8, 2024

YOUR VOTE IS VERY IMPORTANT!

Whether or not you plan to attend the Special Meeting, please submit your proxy as soon as possible, whether over the Internet, by telephone or by completing, signing and returning the enclosed proxy card by mail in the prepaid reply envelope. You may revoke your proxy or change your vote before it is voted at the Special Meeting.

If your Company Shares are held in the name of a bank, broker or other nominee, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided to you by your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

If your Company Shares are registered directly in your name, voting electronically at the Special Meeting will revoke any proxy that you previously submitted. If you hold your Company Shares through a bank, broker or other nominee and do not have a 16-digit control number, you must obtain a “legal proxy” in order to vote in person at the Special Meeting.

If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or vote by virtual ballot at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting, and if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.

We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the accompanying proxy statement, and its annexes, carefully and in their entirety. If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or require assistance in submitting your proxy or voting your Company Shares, please contact our proxy solicitor by using the contact information provided below:

 

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

 

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			13
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			26
THE COMPANIES			28
THE SPECIAL MEETING			29
Date, Time and Place of the Special Meeting			29
Purpose of the Special Meeting			29
Record Date; Shares Entitled to Vote; Quorum			29
Vote Required; Abstentions and Broker Non-Votes			30
Company Shares Held by Directors and Executive Officers			30
Voting; Proxies			30
Revocability of Proxies			32
Abstentions			32
Adjournments and Postponements			32
Board Recommendation			33
Solicitation of Proxies			33
Anticipated Date of Consummation of the Merger			33
Appraisal Rights			34
Householding of Special Meeting Materials			34
Questions and Additional Information			35
THE MERGER			36
Certain Effects of the Merger on Harpoon			36
Effect on Harpoon if the Merger Is Not Consummated			36
Merger Consideration			36
Background of the Merger			38
Recommendation of the Harpoon Board of Directors and Reasons for the Merger			44
Opinion of Centerview Partners LLC			48
Certain Unaudited Prospective Financial Information			52
Interests of the Directors and Executive Officers of Harpoon in the Merger			56
Financing of the Merger			60
Closing and Effective Time of the Merger			61
Appraisal Rights			61
Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares			65
Regulatory Approvals Required for the Merger			68
Litigation Related to the Merger			69
Delisting and Deregistration of Company Shares			69
THE MERGER AGREEMENT			70
Explanatory Note Regarding the Merger Agreement			70
When the Merger Becomes Effective			70
Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers			71
Effect of the Merger on Company Shares and Series A Preferred Stock			71
Treatment of Company Series A Preferred Stock			72
Treatment of Equity Awards and the ESPP			72
Treatment of Company Warrants			73
Appraisal Shares			73
Payment for Company Shares			73
Representations and Warranties			74
Conduct of Business Pending the Merger			77
Other Covenants and Agreements			80
Conditions to the Merger			90

 

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Termination			91
Termination Fee; Certain Expenses			93
Expenses Generally			94
Specific Performance			94
Amendments; Waiver			94
Governing Law and Jurisdiction			94
THE SUPPORT AGREEMENTS			95
PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL			97
The Merger Proposal			97
Vote Required			97
Board Recommendation			97
PROPOSAL NO. 2: ADJOURNMENT OF THE SPECIAL MEETING			98
The Adjournment Proposal			98
Vote Required			98
Board Recommendation			98
MARKET PRICES AND DIVIDEND DATA			99
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			100
FUTURE STOCKHOLDER PROPOSALS			105
WHERE YOU CAN FIND MORE INFORMATION			106
MISCELLANEOUS			107
ANNEXES
ANNEX A – AGREEMENT AND PLAN OF MERGER			A-1
ANNEX B – FORM OF SUPPORT AGREEMENT			B-1
ANNEX C – OPINION OF CENTERVIEW PARTNERS LLC			C-1
ANNEX D – SECTION 262 OF THE DELAWARE GENERAL CORPORATE LAW			D-1

 

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents to which we refer you in this proxy statement, as well as information included in oral statements or other written statements made or to be made by us or on our behalf, contain “forward-looking statements” that do not directly or exclusively relate to historical facts. Forward-looking statements can usually be identified by the use of terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,” “expect,” “forecast,” “intend,” “looking ahead,” “project,” “may,” “might,” “opinion,” “plan,” “possible,” “potential,” “should,” “will,” “would” and similar words or expressions. Stockholders are cautioned that any such forward-looking statements, such as statements about the consummation of the proposed Merger and the anticipated benefits thereof, are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference into this proxy statement, and the following factors:

 

•

the inability to consummate the Merger within the anticipated time period, or at all, including, but not limited to, as a result of the failure to obtain the required approval of the Company Stockholders or the failure to satisfy the other conditions to the consummation of the Merger;

 

•

the risk that the parties may be unable to obtain the regulatory approval required to complete the Merger, or that the required regulatory approval may delay the consummation of the Merger or result in the imposition of conditions that could cause the parties to abandon the Merger;

 

•

the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, including, but not limited to, the risk that the Merger Agreement may be terminated in circumstances requiring us to pay a termination fee to Merck;

 

•

the risk that our stock price may decline significantly, including below our stock price prior to the public announcement of the execution of the Merger Agreement, if the Merger is not consummated;

 

•

the effect of the announcement, pendency or consummation of the Merger on our business relationships (including, but not limited to, employees, suppliers, vendors, other business partners and governmental entities), operating results, cash flows and business generally;

 

•

risks that the proposed Merger may disrupt our current plans and operations or affect our ability to retain or recruit key employees;

 

•

the response of our competitors to the proposed Merger;

 

•

the amount of the costs, fees, expenses and charges incurred by Harpoon related to the Merger Agreement or the Merger;

 

•

risks related to the diversion of the attention of our management and employees from ongoing business operations;

 

•

the effect of the restrictions placed on our business activities pursuant to the Merger Agreement and the limitations on our ability to pursue certain business opportunities and alternatives to the Merger during the pendency of the Merger;

 

•

the nature, cost and outcome of any litigation and other legal proceedings, including, but not limited to, any such proceedings related to the Merger and instituted against us and others;

 

•

the fact that under the terms of the Merger Agreement, we are unable to solicit other Acquisition Proposals during the pendency of the Merger;

 

•

the fact that receipt of the all-cash Merger Consideration would be taxable to our stockholders that are treated as U.S. Holders for United States federal income tax purposes;

 

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risks related to the implementation of our business model and strategic plans for our business and product candidates;

 

•

risks related to the advancement of product candidates into, and successful completion of, preclinical studies and clinical trials;

 

•

risks and uncertainties related to the regulatory application, review and approval processes and our compliance with applicable legal and regulatory requirements;

 

•

risks related to general industry conditions and competition; and

 

•

risks related to the potential impact of general economic, political and market factors on the parties to the proposed Merger.

Consequently, there can be no assurance that the actual results or developments anticipated by such forward-looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Harpoon or its businesses or operations. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements. The foregoing review of risks and uncertainties that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included in this proxy statement and elsewhere, including the risk factors included in Harpoon’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference in this proxy statement, and other reports filed with the SEC.

Any forward-looking statement made in this proxy statement speaks only as of the date on which it is made. Harpoon can give no assurance that the conditions to the Merger will be satisfied. You should not put undue reliance on any forward-looking statements. Harpoon undertakes no obligation, and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as may be required by law. If Harpoon does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.

 

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THE COMPANIES

Harpoon Therapeutics, Inc.

Harpoon is a Delaware corporation with principal executive offices located at 611 Gateway Boulevard, South San Francisco, California 94080, telephone number (650) 443-7400. Harpoon is a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. Using its proprietary Tri-specific T cell Activating Construct (TriTAC^®) platform, Harpoon is developing a pipeline of novel TriTACs initially focused on the treatment of certain types of solid tumors and hematologic malignancies. Harpoon also has developed a proprietary ProTriTAC^™ platform, which applies a prodrug concept to its TriTAC platform to create a therapeutic T-cell engager that is designed to remain inactive until it reaches the tumor. Harpoon’s third proprietary technology platform, extended release TriTAC-XR, is designed to mitigate cytokine release syndrome. Harpoon’s lead candidate, HPN328, is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small cell lung cancer (SCLC) and neuroendocrine tumors. Additional pipeline candidates include HPN217 targeting B-cell maturation antigen (BCMA), currently in Phase 1 clinical development for the treatment of patients with relapsed/refractory multiple myeloma, and several preclinical stage candidates, including HPN601, a conditionally activated targeting epithelial cell adhesion molecule (EpCAM) for the treatment of certain patients with EpCAM expressing tumors. The Company Shares are listed on Nasdaq under the symbol “HARP.” Additional information about Harpoon is contained in certain of its public filings that are incorporated by reference into this proxy statement. See “Where You Can Find More Information” beginning on page 106 of this proxy statement.

Merck Sharp & Dohme LLC

Merck is a wholly owned subsidiary of Merck & Co., Inc., a New Jersey corporation with principal executive offices located at 126 East Lincoln Avenue, Rahway, New Jersey 07065, telephone number (908) 740-4000. Merck Parent is a global health care company that delivers innovative health solutions through its prescription medicines, including biologic therapies, vaccines and animal health products. The common stock of Merck Parent is listed on the New York Stock Exchange under the symbol “MRK.” 

Hawaii Merger Sub, Inc.

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of Merck, with a registered office located at 1209 Orange Street, Wilmington, Delaware 19801. Merger Sub was formed solely for the purpose of effecting the Merger and the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will cease to exist.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement to Company Stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting or any adjournment or postponement thereof.

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to Company Stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held virtually on March 8, 2024, at 8:30 a.m. Pacific Time. Company Stockholders will be able to virtually attend and vote at the Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM.

Company Shares held directly in your name as a stockholder of record may be voted at the Special Meeting via the Special Meeting website. Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website using the 16-digit control number included in your proxy materials. If you did not receive a 16-digit control and wish to vote at the Special Meeting, you should follow the instructions from your bank, broker or other nominee, including any requirement to obtain a legal proxy.

Purpose of the Special Meeting

At the Special Meeting, we will ask the Company Stockholders as of the Record Date to vote on the Merger Proposal and the Adjournment Proposal. If holders of Company Shares fail to adopt the Merger Agreement by approving the Merger Proposal, the Merger will not occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A and incorporated herein by reference, and the material provisions of the Merger Agreement are described under “The Merger Agreement” beginning on page 70 of this proxy statement.

This proxy statement and the enclosed form of proxy are first being mailed to stockholders on or about February 8, 2024.

Record Date; Shares Entitled to Vote; Quorum

Only Company Stockholders of record as of the close of business on February 6, 2024, the Record Date for the Special Meeting, are entitled to notice of and to vote at the Special Meeting or at any adjournments or postponements thereof. A list of stockholders entitled to vote at the Special Meeting will be available in our offices located at 611 Gateway Boulevard, Suite 400, South San Francisco, CA 94080, during regular business hours for a period of at least 10 days before the Special Meeting.

As of the Record Date, there were 21,397,205 Company Shares issued and outstanding and entitled to be voted at the Special Meeting.

A quorum of Company Stockholders is necessary to transact business at the Special Meeting. Our amended and restated bylaws provide that the presence at the Special Meeting, in person, by remote communication, or by proxy, of the holders of a majority of the voting power of our outstanding Company Shares entitled to vote at the Special Meeting will constitute a quorum for Harpoon to transact business at the Special Meeting. In general, Company Shares that were issued and outstanding as of the Record Date and are represented by a properly signed and returned proxy card will be counted as Company Shares present and entitled to vote at the Special Meeting for purposes of determining a quorum. Company Shares represented by proxies received but marked “ABSTAIN” will be included in the calculation of the number of Company Shares considered to be present at the Special Meeting for purposes of determining a quorum. If a beneficial owner of Company Shares held in street name gives voting instructions to the bank, broker or other nominee with respect to at least one of the proposals, but gives no instruction as to one or more of the other proposals, then those Company Shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal.

 

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In the event that a quorum is not present at the Special Meeting, it is expected that the meeting would be adjourned to a later date to solicit additional proxies, and a quorum will have to be established at such adjourned date.

Vote Required; Abstentions and Broker Non-Votes

Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting.

Approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the Company Shares that are outstanding as of the Record Date. Adoption of the Merger Agreement by Company Stockholders is a condition to the closing of the Merger. A failure to vote your Company Shares or an abstention from voting for the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of voting power of the Company Shares present in person or represented by proxy at the Special Meeting. An abstention from voting for the Adjournment Proposal will have the same effect as a vote “AGAINST” the Adjournment Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Adjournment Proposal will have no effect on the Adjournment Proposal.

Company Shares Held by Directors and Executive Officers

As of the close of business on the Record Date, directors and executive officers of Harpoon and their affiliates beneficially owned and were entitled to vote, in the aggregate, 1,895,937 Company Shares, which represented approximately 8.86% of the Company Shares issued and outstanding on that date. Certain of our directors and executive officers (and certain of their affiliates) have entered into Support Agreements obligating them to vote all of their Company Shares “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

See the section entitled “The Support Agreements” beginning on page 95 of this proxy statement for further information.

Voting; Proxies

Voting at the Special Meeting

You can vote at the virtual Special Meeting, which will be held on March 8, 2024 at 8:30 a.m. Pacific Time, at www.virtualshareholdermeeting.com/HARP2024SM (unless the Special Meeting is adjourned or postponed).

You also may authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card in advance by mail, over the Internet or by telephone. Although Harpoon offers four different voting methods, Harpoon encourages you to vote over the Internet or by phone as Harpoon believes they are the most cost-effective methods. We also recommend that you vote as soon as possible, even if you are planning to attend the Special Meeting, so that the vote count will not be delayed.

Providing Voting Instructions by Proxy

To ensure that your Company Shares are voted at the Special Meeting, we recommend that you submit your proxy or provide voting instructions for your Company Shares held in “street name” to your bank, broker or other nominee promptly, even if you plan to attend the Special Meeting.

 

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Company Shares Held by Record Holders

If you are a stockholder of record and your Company Shares are registered in your name with our transfer agent, Computershare, you may submit your proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting a proxy. You can grant a proxy by telephone by calling the toll-free number 1-800-690-6903 or via the Internet by following the instructions specified on the enclosed proxy card. Votes submitted by telephone or via the Internet for the matters brought before the Special Meeting as described in this proxy statement must be received by 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting. Your Company Shares will be voted as you direct, and in the same manner as if you had completed, signed, dated and returned your proxy card, as described below. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy electronically over the Internet or by telephone.

Submit a Proxy Card. If you complete, sign, date and return the enclosed proxy card by mail so that it is received prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting, your Company Shares will be voted in the manner directed by you on your proxy card.

Voting instructions are included on your proxy card. All Company Shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholder. If you sign, date and return your proxy card without indicating how you wish to vote, such Company Shares represented by your properly signed proxy card will be voted “FOR” each of the Merger Proposal and the Adjournment Proposal. If you fail to return your proxy card and you are a holder of record as of the close of business on the Record Date, unless you attend the Special Meeting, your Company Shares will not be considered present at the Special Meeting for purposes of determining whether a quorum is present, and your failure to vote will have the same effect as a vote “AGAINST” the Merger Proposal and will have no effect on the vote regarding the Adjournment Proposal.

Company Shares Held in “Street Name”

If your Company Shares are held in “street name” through a bank, broker or other nominee, your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your Company Shares. You may cause your Company Shares to be voted through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or other nominee, or by the Internet or telephone through your bank, broker or other nominee by following the instructions provided to you by them if such a service is available, or by attending the Special Meeting and voting using your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number so that you may vote.

Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your Company Shares on “routine” matters if you fail to instruct your bank, broker or other nominee on how to vote your Company Shares with respect to such matters. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of the relevant shares. Harpoon does not expect any broker non-votes at the Special Meeting because the Merger Proposal and the Adjournment Proposal described in this proxy statement are “non-routine” matters, and your bank, broker or other nominee therefore cannot vote on these proposals without your instructions. Accordingly, if you do not return your bank’s, broker’s or other nominee’s voting form, do not provide voting instructions via the Internet or telephone through your bank, broker or other nominee, if applicable, or do not attend the Special Meeting and vote in person with a “legal proxy” from your bank, broker or other nominee, your Company Shares will not be

 

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considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, and your failure to vote will have the same effect as if you voted “AGAINST” the Merger Proposal and will have no effect on the Adjournment Proposal. However, if a beneficial owner of shares of common stock held in street name gives voting instructions to the bank, broker or other nominee with respect to one of the proposals, but gives no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. For Company Shares held in “street name,” only Company Shares affirmatively voted “FOR” the Merger Proposal or the Adjournment Proposal will be counted as a vote in favor of such proposal.

Revocability of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted at the Special Meeting. If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

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delivering a written notice of revocation of your proxy to our Corporate Secretary at Harpoon Therapeutics, Inc., Attention: Corporate Secretary, 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080, prior to the Special Meeting;

 

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signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same Company Shares and returning it to us by mail prior the Special Meeting;

 

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submitting a new proxy by telephone prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting;

 

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submitting a new proxy by Internet prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting; or

 

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attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Harpoon or by sending a written notice of revocation to Harpoon, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by Harpoon before the Special Meeting.

If you hold your Company Shares in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote or submit new voting instructions. You may also vote in person at the Special Meeting with your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number. Any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow Company Stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

Abstentions

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of Company Shares represented at the Special Meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Adjournment Proposal.

Adjournments and Postponements

Although it is not currently expected, subject to certain restrictions in the Merger Agreement, the Special Meeting may be adjourned or postponed, among other reasons, for the purpose of soliciting additional

 

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proxies. If a quorum is not present, then under our amended and restated bylaws, (1) the chairperson of the Special Meeting or (2) the majority of the voting power of the shares present in person or represented by proxy at the Special Meeting, shall have power to adjourn the Special Meeting until a quorum is present or represented, and notice need not be given of the adjourned meeting if the time, place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. However, our amended and restated bylaws provide that if any such adjournment is for more than 30 days, or if after an adjournment a new record date for determining stockholders entitled to vote is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.

If the Special Meeting is adjourned or postponed to solicit additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

In the event that there is present at the Special Meeting, in person or by proxy, sufficient favorable voting power to secure the vote of the Company Stockholders necessary to adopt the Merger Agreement, we do not currently anticipate that we will adjourn or postpone the Special Meeting.

Board Recommendation

The Board, after considering the various factors more fully described under “The Merger—Recommendation of the Harpoon Board of Directors and Reasons for the Merger” beginning on page 44 of this proxy statement, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Harpoon and the Company Stockholders, (2) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approved the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger, and (3) resolved to recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement (the matters described in clauses (1) through (3), the “Board Recommendation”).

The Board unanimously recommends that you vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

Solicitation of Proxies

The Board is soliciting your proxy, and we will bear the cost of the solicitation of proxies.

We have retained MacKenzie Partners, Inc., a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $18,500 plus expenses. We will also indemnify the proxy solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Consummation of the Merger

We currently anticipate that the Merger will be consummated in the first half of 2024, assuming satisfaction or, to the extent permitted by applicable law. waiver of all of the conditions to the Merger. However, the Merger is subject to various conditions, and it is possible, including as a result of factors outside the control of Harpoon and Merck, that the Merger will be consummated at a later time or not at all.

 

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Appraisal Rights

If the Merger is consummated, stockholders who do not wish to accept the applicable merger consideration are entitled to seek appraisal of their Company Shares or shares of Company Series A Preferred Stock under Section 262 of the DGCL and, if all procedures described in Section 262 of the DGCL are strictly complied with, to receive payment in cash for the fair value of their Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of Company Shares or shares of Company Series A Preferred Stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the consideration that such holder of Company Shares or shares of Company Series A Preferred Stock may receive in the Merger. These rights are known as “appraisal rights”. This proxy statement serves as a notice of such appraisal rights pursuant to Section 262 of the DGCL.

Persons who exercise appraisal rights under Section 262 of the DGCL will not receive the consideration that they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their Company Shares or shares of Company Series A Preferred Stock, as applicable, following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their Company Shares or shares of Company Series A Preferred Stock determined under Section 262 of the DGCL could be more than, the same as or less than the consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 of the DGCL is required. Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262 of the DGCL, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A holder of record of Company Shares or shares of Company Series A Preferred Stock and a beneficial owner who (1) continuously holds or beneficially owns, as applicable, such shares through the Effective Time, (2) has not consented to the Merger in writing, voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (3) strictly complies with the procedures under Section 262 of the DGCL, (4) does not thereafter withdraw his, her or its demand for appraisal of such shares and (5) in the case of a beneficial owner, is a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List (as defined in the section entitled “The Merger—Appraisal Rights” beginning on page 61 of this proxy statement), will be entitled to receive the fair value of his, her or its Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value.

A copy of Section 262 of the DGCL is attached to this proxy statement as Annex D. The foregoing summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. For more information, please see the section entitled “The Merger—Appraisal Rights” beginning on page 61 of this proxy statement and Annex D.

Householding of Special Meeting Materials

Unless we have received contrary instructions, we may send a single copy of this proxy statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same

 

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family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as “householding,” reduces the volume of duplicate information received at your household and helps to reduce our expenses.

We will promptly deliver a separate copy of our proxy statement to any stockholder without charge upon a written request or verbal request to Harpoon Therapeutics, Inc., Attention: Corporate Secretary, 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080, telephone number (650) 443-7400. Stockholders sharing an address that are receiving multiple copies of this proxy statement can request delivery of a single copy of the proxy materials by contacting their bank, broker or other intermediary or sending a written request to us at the address above.

Questions and Additional Information

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor:

 

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

If your bank, broker or other nominee holds your Company Shares, you should also call your bank, broker or other nominee for additional information.

 

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THE MERGER

This discussion of the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Certain Effects of the Merger on Harpoon

If the Merger Agreement is adopted by the Company Stockholders and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into Harpoon, with Harpoon continuing as the Surviving Corporation and a wholly owned subsidiary of Merck.

The Company Shares are listed and trade on Nasdaq under the symbol “HARP.” As a result of the Merger, Harpoon will cease to be a publicly traded company and will become a wholly owned subsidiary of Merck. Prior to the Effective Time, we will cooperate with Merck to delist the Company Shares from Nasdaq and deregister the Company Shares under the Exchange Act, provided that such delisting and termination will not be effective until after the Effective Time. Upon such delisting and deregistration, we will no longer be a publicly traded company and will no longer be required to file periodic reports with the SEC, in each case in accordance with applicable law, rules and regulations. If the Merger is consummated, you will not own any shares of the capital stock of the Surviving Corporation or Merck.

Effect on Harpoon if the Merger Is Not Consummated

If the Merger Agreement is not adopted by the holders of a majority of the issued and outstanding Company Shares entitled to vote as of the Record Date or if the Merger is not consummated for any other reason, Company Stockholders will not receive any payment for their Company Shares pursuant to the Merger Agreement. Instead, Harpoon will remain a public company, the Company Shares will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC.

Furthermore, if the Merger is not consummated, depending on the circumstances that caused the Merger not to be consummated, the price of the Company Shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares traded prior to the public announcement of the execution of the Merger Agreement on January 8, 2024 or as of the date of this proxy statement.

Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your Company Shares. If the Merger is not consummated, the Board will continue to evaluate and review our business, operations, assets, operating results, financial condition, prospects and business strategy, among other things, and make such changes as are deemed appropriate and continue to seek to enhance stockholder value. If the Merger Agreement is not adopted by the Company Stockholders or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to Harpoon will be offered or that our business, prospects or results of operations will not be adversely impacted.

In addition, upon termination of the Merger Agreement, under specified circumstances, Harpoon may be required to pay Merck a termination fee, as described under the section titled “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 93 of this proxy statement.

Merger Consideration

At the Effective Time, each Company Share and share of Company Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) will be cancelled and

 

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automatically cease to exist and will be converted into the right to receive (a) in the case of the Company Shares, $23.00 per share in cash, without interest and subject to applicable withholding taxes and (b) in the case of the Company Series A Preferred Stock, an amount in respect of each such share determined in accordance with the terms of the Company Series A Preferred Stock, as amended, altered or modified and in effect as of immediately prior to the Effective Time, subject to applicable withholding taxes. The terms of the Company Series A Preferred Stock provide that, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or the occurrence of any event that is a Deemed Liquidation Event (as defined in the Certificate of Designation for the Company Series A Preferred Stock and which includes the Merger), the holders of shares of Company Series A Preferred Stock then outstanding will be entitled to be paid an amount per share of Company Series A Preferred Stock equal to the greater of: (1) the redemption price per share (which, as defined in the Certificate of Designation, is equal to the product of the stated value of $1,000 and a return factor equal to 3.5, plus accrued and unpaid dividends, whether or not declared) and (2) the amount per share such holder would have been entitled to receive had such holder exchanged the share of Company Series A Preferred Stock for a number of Company Shares equal to $1,000 plus all accrued but unpaid dividends, divided by $7.251. As of the date of this proxy statement and based on accrued dividends on the Company Series A Preferred Stock through March 11, 2024, the amount to be paid to the holders of the Company Series A Preferred Stock in the Merger is approximately $3,577.56 per share of Company Series A Preferred Stock or $89,438,889 in the aggregate.

Each Company Share or share of Company Series A Preferred Stock held in the treasury of Harpoon or owned by Merck or Merger Sub or any direct or indirect wholly owned subsidiary of Merck or Harpoon immediately prior to the Effective Time will automatically be cancelled without any conversion and will cease to exist and no payment or distribution will be made.

Each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to the Effective Time. At the Effective Time, (1) each In the Money Option will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive the Option Consideration and (2) each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

Each Harpoon RSU that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive the RSU Consideration.

Each Harpoon warrant that is outstanding and unexercised immediately prior to the Effective Time will, in accordance with its terms, cease to represent a warrant exercisable for Company Shares and automatically will become a warrant exercisable for the Merger Consideration that such holder would have been entitled to receive if such Harpoon Warrant had been exercised immediately prior to the Effective Time. Following the Effective Time, no holder of any Harpoon warrant will have any right to acquire any Harpoon securities or any securities in the Surviving Corporation, Merck or any of their respective affiliates.

After the Merger is consummated, under the terms of the Merger Agreement, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a Harpoon stockholder as a result of the Merger (except that any holder of Appraisal Shares (as defined in the Merger Agreement) will have those rights granted under Section 262 of the DGCL), nor will you be entitled to receive any shares in Merck or the Surviving Corporation.

Each of the paying agent, the Surviving Corporation, Merger Sub, and Merck will be entitled to deduct and withhold from any amounts payable pursuant to the Merger Agreement such amounts as are required to be deducted and withheld therefrom under applicable tax laws. If the paying agent, the Surviving Corporation, Merger Sub, or Merck, as the case may be, so deducts and withholds amounts and timely and properly remits such amounts to the applicable governmental authority, such amounts will be treated for all purposes under the Merger Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

 

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Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Board, the Transactions Committee or the representatives of Harpoon, Merck and other parties.

Harpoon is a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. Using its proprietary Tri-specific T cell Activating Construct (TriTAC^®) platform, Harpoon is developing a pipeline of novel TriTACs initially focused on the treatment of certain types of solid tumors and hematologic malignancies. Harpoon also has developed a proprietary ProTriTAC^™ platform, which applies a prodrug concept to its TriTAC platform to create a therapeutic T-cell engager that is designed to remain inactive until it reaches the tumor. Harpoon’s third proprietary technology platform, extended release TriTAC-XR, is designed to mitigate cytokine release syndrome. Harpoon’s lead candidate, HPN328, is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small cell lung cancer (SCLC) and neuroendocrine tumors. Additional pipeline candidates include HPN217 targeting B-cell maturation antigen (BCMA), currently in Phase 1 clinical development for the treatment of patients with relapsed/refractory multiple myeloma, and several preclinical stage candidates, including HPN601, a conditionally activated targeting epithelial cell adhesion molecule (EpCAM) for the treatment of certain patients with EpCAM expressing tumors.

Harpoon senior management and the Board regularly review Harpoon’s performance and prospects in light of its business and developments in the biotechnology and pharmaceutical industries. From time to time these reviews have included consideration of potential partnerships, collaborations and other strategic transactions to enhance shareholder value. For instance, in January 2020 and as part of its on-going business development activities, Harpoon entered into a mutual confidentiality agreement with Merck to facilitate discussions regarding a possible business relationship with respect to Harpoon’s pipeline programs and/or TriTAC platform and related technologies. In January 2021, Harpoon and Merck amended the confidentiality agreement to expand the scope of discussions between the parties and extend the term. Harpoon did not enter into any other agreement or arrangement with Merck as a result of these discussions.

On September 15, 2022, the Board formed a transactions committee of the Board (the “Transactions Committee”) to oversee prospective financings and/or the early evaluation of other business development and strategic opportunities. The Transactions Committee consisted of the following independent directors: Jonathan Drachman, M.D.; Scott Myers, the Chair of the Board; Andrew Robbins; and Lauren Silvernail.

Commencing in August 2023, Harpoon senior management contacted 19 large global pharmaceutical companies, including Merck, Party A and Party B, and seven Chinese biopharmaceutical companies regarding interest in a potential partnering relationship with respect to HPN328. Eleven of these parties, including Merck, Party A and Party B, expressed interest in entering into a confidentiality agreement with Harpoon to facilitate further discussions. With respect to Merck, on September 21, 2023, the parties entered into an extension of the existing confidentiality agreement between the parties to facilitate these discussions. None of these confidentiality agreements included a standstill provision. Each of the parties that entered into a confidentiality agreement with Harpoon was given access to due diligence information regarding HPN328, and Harpoon senior management engaged in discussions with, and responded to due diligence requests from, such parties from time to time.

On October 21, 2023, Harpoon announced the presentation of positive interim tolerability and response data for HPN328 in certain patients with SCLC and neuroendocrine tumors at the ESMO Congress 2023. Following the announcement of this data, Harpoon senior management continued discussions with certain parties that had expressed interest with respect to a potential partnership arrangement involving HPN328. However, Harpoon did not receive any proposals relating to such an arrangement, and as of November 8, 2023, all of these parties had

 

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passed or indicated that they were likely to pass on the opportunity except Merck, Party A and Party B. The parties that declined to pursue a transaction with Harpoon cited one or more of the following reasons: (1) lack of fit with such party’s strategic priorities and goals; (2) the early stage of Harpoon’s clinical programs and need to see additional clinical data in order to better assess clinical differentiation and competitive positioning; and/or (3) limited financial capacity for business development.

On October 20, 2023, Julie Eastland, President, Chief Executive Officer and a director of Harpoon, Luke Walker, M.D., Chief Medical Officer, and Haibo Wang, Senior Vice President of Business Development, met with Merck’s Senior Vice President, Clinical Research and other team members of Merck at the ESMO conference to provide a confidential presentation of the HPN328 data being presented at the conference.

On October 23, 2023, representatives of Merck requested focused scientific due diligence materials regarding Harpoon with emphasis on the clinical, safety, regulatory, chemistry, manufacturing and controls (“CMC”), and intellectual property review of HPN328, and the parties engaged in multiple discussions thereafter regarding these matters. During these discussions, representatives of Merck informed Harpoon that Merck would not be in a position to determine whether they wished to proceed with a proposal regarding a potential transaction between the parties until they had completed the review of all of their priority scientific due diligence items, including site visits at the third-party contract development and manufacturing organizations utilized by Harpoon and additional clinical data review materials that Merck had requested with respect to HPN328.

Between November 9, 2023 and November 14, 2023, Ms. Eastland, following consultation with Mr. Myers, engaged in discussions with potential legal and financial advisors to assist Harpoon in the event of a potential strategic transaction. On November 14, 2023, Harpoon entered into a confidentiality agreement with Centerview, which thereafter provided initial guidance and support.

On November 16, 2023, Ms. Eastland provided an update to the Transactions Committee regarding business development activity and identification of potential advisors.

On November 29, 2023, a representative of Centerview, as instructed by Harpoon management and the Transactions Committee, had a conversation with a senior Merck representative, who indicated that Merck was thinking about a broader strategic transaction involving the acquisition of Harpoon, but reiterated that Merck would not be in a position to make a decision in that regard until Merck had completed the review of all of its priority due diligence items.

Also on November 29, 2023, Ms. Eastland provided an update to the Transactions Committee regarding business development activity, and the meeting participants discussed the selection of financial and legal advisors to assist the Board in a review of strategic alternatives, including in the event that Merck were to indicate interest in a potential transaction with Harpoon, based on, among other factors, each advisor’s qualifications, professional reputation and industry expertise.

On December 1, 2023, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin Procter LLP, Harpoon’s outside counsel (“Goodwin”), were present. At this meeting, the representatives of Centerview reported on the recent conversation with Merck’s senior representative regarding Merck’s potential interest in an acquisition of Harpoon. The representatives of Goodwin reviewed the fiduciary duties of the directors in the event that Harpoon were to receive an offer from Merck to acquire the company and the scope of the committee’s authority in light of its original purpose to oversee prospective financings and/or the early evaluation of other business development and strategic opportunities. The Transactions Committee also had a discussion regarding whether any other pharmaceutical and biotechnology companies might have interest in a potential strategic transaction with Harpoon, including weighing the potential benefits of outreach to other potential counterparties against the potential risks, including the risk of leaks inherent in such a process and the potential impact on Harpoon’s business of such leaks. As part of this discussion, the Transactions Committee considered the prior interactions

 

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between Harpoon management and other industry participants, including the results of the recent partnering process. At the conclusion of this discussion, the Transactions Committee determined that outreach should include those parties that would be most likely to have interest in Harpoon, be able to move decisively, and have the ability to consummate a transaction of this size and nature. Accordingly, based on this criteria, the Transactions Committee determined that Party A and Party B should be contacted at the appropriate time with respect to their potential interest in an acquisition of Harpoon. The Transactions Committee then discussed Merck’s request for additional priority due diligence items and authorized management to provide Merck with such items.

On December 6, 2023, members of senior management of Harpoon had a meeting with representatives of Party A to provide a clinical update. During the discussion of potential next steps, Harpoon management informed Party A that there was potential interest from another party and that Centerview was assisting Harpoon in its review of strategic alternatives.

On December 8, 2023, a representative of Party A contacted Harpoon and indicated that Party A was not interested in further discussions with Harpoon regarding a potential transaction given Party A’s recent pipeline priorities.

Also on December 8, 2023, Harpoon and Merck executed an amendment to their existing confidentiality agreement, which included a customary standstill provision that prohibited Merck, for an agreed-upon period from the date of the amendment, from offering to acquire or acquiring Harpoon, and from taking certain other actions, including soliciting proxies, without the prior consent of Harpoon. The amendment provided for the termination of the standstill provision upon Harpoon’s entry into a definitive agreement with a third party providing for a sale of Harpoon, and also allowed Merck to make confidential acquisition proposals to the Board or Harpoon’s Chief Executive Officer at any time. Thereafter, and over the next few weeks, Harpoon provided Merck with access to the priority scientific due diligence items that Merck had requested.

On December 11, 2023, members of senior management of Harpoon had a meeting with representatives of Party B to provide a clinical update.

On December 14, 2023, the Board held a regularly-scheduled meeting at which members of senior management of Harpoon and representatives of Goodwin were present. At this meeting, management provided an overview of the partnering process with respect to HPN328 and feedback received from the various parties contacted, and an update regarding the status of discussions with Merck, Party A and Party B, noting that Party A was not interested in pursuing a transaction with Harpoon. The representatives of Goodwin reviewed the fiduciary duties of the directors in the event that Harpoon were to receive an offer to acquire the company. The representatives of Goodwin also reviewed the terms of the proposed engagement of Centerview as Harpoon’s financial advisor and customary relationship disclosures regarding any relationship between Centerview and each of Merck, Party A and Party B during the preceding two-year period made available by Centerview. Following review of this information, the Board determined that the disclosed information would not impact Centerview’s ability to act effectively as financial advisor to Harpoon. As part of this discussion, the Board, together with the representatives of Goodwin, also discussed the importance of identifying any potential conflicts or the appearance of potential conflicts of interest with respect to the directors of Harpoon. The Board discussed the fact that entities affiliated with director Ronald Hunt held, in addition to Company Shares and warrants to acquire Company Shares, preferred stock in Harpoon which would be treated differently in a transaction than the Company Shares pursuant to the terms of Harpoon’s charter, and also that Mr. Hunt was not a member of the Transactions Committee. The Board discussed expanding the authority of the Transactions Committee and, thereafter, the Board approved resolutions delegating to the Transactions Committee the authority to finalize the engagement terms with Centerview and also expanding the authority of the Transactions Committee to include: (1) considering and evaluating any proposals received by Harpoon in connection with a possible sale, strategic partnership or collaboration, or other business transaction or series of transactions involving a significant portion of Harpoon’s equity or assets; (2) considering and evaluating any alternatives, including, without limitation,

 

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Harpoon continuing to operate as an independent, publicly traded company; (3) monitoring and directing the process and procedures related to the review of any such transaction or other alternatives; (4) participating in and directing the negotiation of the material terms and conditions of any such transaction or other alternative; (5) recommending to the Board the advisability of entering into a definitive agreement (and any ancillary agreements relating thereto) with respect to any such transaction or the advisability of pursuing any other alternative, in each case subject to applicable law; and (6) performing any other activities or responsibilities incidental to the foregoing. In addition, the Board appointed Mr. Myers as Chair of the Transactions Committee. Representatives of Centerview also attended a portion of the meeting and reviewed with the Board their perspectives on the M&A environment and strategic landscape, including Merck. Also at the meeting, management provided business, portfolio, quality/CMC and financial updates to the Board. The meeting participants discussed Harpoon’s prospects and the strategic, financial, operational and competitive challenges facing Harpoon, including the macro-economic, industry and market conditions impacting clinical-stage biotechnology companies such as Harpoon.

On December 17, 2023, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Goodwin were present. At this meeting, management provided an update regarding the status of discussions with Merck, current timelines and potential next steps. The Transactions Committee also discussed the formal engagement of Centerview as Harpoon’s financial advisor in connection with a potential strategic transaction. Representatives of Goodwin reviewed with the Transactions Committee the final terms of Centerview’s engagement. The Transactions Committee, pursuant to their delegated authority from the Board, thereafter authorized Harpoon to formally engage Centerview on the terms presented at the meeting.

On December 19, 2023, Harpoon and Centerview entered into the related engagement letter.

On December 21, 2023, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the Transactions Committee reviewed, discussed and provided feedback with respect to management’s preliminary standalone, long-range plan, including the related methodology for preparation of the plan, the underlying assumptions and related risks, and the preliminary financial projections for 2024 through 2043 that had been prepared based on such long-range plan. The meeting participants also discussed that Harpoon may in the future seek to enter into collaborations, partnering or other similar arrangements and the potential impact that such an arrangement could have on the long-range plan. Centerview also reviewed with the Transactions Committee certain public market perspectives regarding Harpoon. In addition, management updated the Transactions Committee on the status of Merck’s priority due diligence review of Harpoon. Following discussion of timing considerations, the Transactions Committee directed Centerview to contact Party B regarding its potential interest in a strategic transaction involving the acquisition of Harpoon.

Subsequent to the Transactions Committee meeting, a representative of Centerview, at the direction of the Transactions Committee, contacted Party B to inquire as to whether Party B would be interested in a potential strategic transaction involving the acquisition of Harpoon. Representatives of Party B indicated that they were not interested in engaging with Harpoon with respect to either a partnering or acquisition transaction at that time given the early stage of Harpoon’s clinical programs and the need to see additional clinical data before proceeding.

On January 1, 2024, a senior representative of Merck called Ms. Eastland and informed her of Merck’s interest in exploring a potential acquisition of Harpoon and an intent to send a proposal letter to this effect. During this conversation, Merck’s representative indicated that Merck would be offering to acquire all of the outstanding Company Shares, on a fully diluted basis, at a price of $18.50 per Company Share in cash. Merck’s representative also noted that Merck was focused on completing a transaction expeditiously, with a target execution date of January 6, 2024. Ms. Eastland indicated that she would discuss the proposal with the Board.

 

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Following the conversation between Ms. Eastland and Merck’s senior representative, Merck sent a letter to Ms. Eastland containing a non-binding proposal to acquire all of the outstanding Company Shares, on a fully diluted basis, for $18.50 per share in cash, subject to the completion of corporate due diligence and the negotiation of a definitive agreement. The proposal was not subject to a financing condition. The letter also indicated that Merck believed it was imperative that the parties target an execution date of January 6, 2024, if not sooner. The proposal was accompanied by an initial draft of the Merger Agreement.

Later on January 1, 2024, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, Ms. Eastland reported to the Transactions Committee on her recent conversation with Merck’s senior representative and receipt of Merck’s non-binding proposal to acquire Harpoon. Representatives of Goodwin reviewed the fiduciary duties of the directors in this context. Representatives of Centerview reviewed a summary of the proposal. The Transactions Committee also continued its discussion of management’s preliminary long-range plan, including the related methodology, the underlying assumptions and related risks, and the preliminary financial projections for 2024 through 2043 that had been prepared based on such long-range plan, as to which management had made minor revisions based on the feedback provided by the Transactions Committee at the meeting held on December 21, 2023 (see the “Projections” in the section of this proxy statement titled “—Certain Unaudited Prospective Financial Information”). Following discussion of these matters, the Transactions Committee determined to recommend to the Board the approval of the Projections for the reliance and use by Centerview in connection with providing its financial analysis with respect to the Board’s evaluation of a potential transaction and preparing any opinion as requested by the Board. The representatives of Centerview then reviewed certain preliminary financial analyses related to Merck’s proposal. The Transactions Committee then discussed potential responses to Merck regarding its proposal and related process considerations. Following this discussion, the Transactions Committee authorized Centerview to make a counteroffer to Merck of $25.00 per Company Share.

Following the meeting, on January 1, 2024, a representative of Centerview contacted the senior representative of Merck and communicated the counteroffer of $25.00 per Company Share as authorized by the Transactions Committee. Merck’s representative indicated that the counteroffer was not in the range acceptable to Merck and offered instead $21.00 per Company Share.

Shortly thereafter, on January 1, 2024, the Board and the Transactions Committee held a joint meeting (with a majority of directors in attendance), at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the representatives of Centerview updated the directors on Merck’s revised proposal of $21.00 per Company Share. The representatives of Centerview also reviewed a summary of Merck’s revised proposal. The meeting participants discussed potential responses to Merck regarding its revised proposal and related process considerations.

Later in the day, on January 1, 2024, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the Transactions Committee continued their discussion of potential responses to Merck regarding its revised proposal and related process considerations. Following this discussion, the Transactions Committee authorized Centerview to make a counteroffer to Merck of $23.00 per Company Share.

Following the meeting, a representative of Centerview contacted the senior representative of Merck and communicated the counteroffer of $23.00 per Company Share as authorized by the Transactions Committee. Merck’s representative indicated that such counteroffer was acceptable to Merck.

In the evening of January 1, 2024, the Board held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the Board discussed management’s long-range plan as presented earlier in the day to the Transactions Committee, including the related methodology, the underlying assumptions and related risks, and the Projections. Following discussion of

 

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these matters, the Board, taking into account the recommendation of the Transactions Committee, approved the Projections for the reliance and use by Centerview in connection with providing its financial analysis with respect to the Board’s evaluation of a potential transaction and preparing any opinion as requested by the Board. The representatives of Centerview reviewed certain preliminary financial analyses related to Merck’s proposal. Ms. Eastland described the negotiations during the day with Merck and Merck’s request to target execution of the definitive agreement by the end of the week. The Board further discussed Harpoon’s prospects and the strategic, financial, operational and competitive challenges facing Harpoon, as well as the recent discussions conducted by Harpoon with other industry participants, the outcome of those discussions, and the fact that none of these parties, other than Merck, had expressed interest in a transaction with Harpoon. After discussion, the Board agreed that it was in the best interests of Harpoon and the holders of Company Shares to proceed with Merck’s revised proposal to acquire the Company Shares for $23.00 per share in cash, subject to satisfactory negotiation of the Merger Agreement, and directed senior management and Harpoon’s advisors to endeavor to meet Merck’s proposed timetable.

In addition, on January 1, 2024, Covington & Burling LLP, outside counsel to Merck (“Covington”), provided Goodwin with an initial draft of a voting support agreement in support of the Merger Agreement sent earlier that day by Merck, proposed to be executed by Harpoon’s directors, executive officers and certain of their affiliates.

On January 2, 2024, Harpoon provided representatives of Merck and its advisors access to corporate due diligence with respect to Harpoon materials in a virtual data room. Thereafter, Merck sent a further list of requested due diligence items to Harpoon. In addition to its review of the data room, during the remainder of that week, Merck and its advisors participated in multiple conference calls with senior management and representatives of Harpoon as part of its due diligence investigation on topics including intellectual property, human resources, tax, finance and accounting, and legal due diligence. Merck and its advisors continued to perform due diligence through the execution of the Merger Agreement.

On January 3, 2024, Goodwin sent a revised draft of the Merger Agreement to Covington. Thereafter, Goodwin, on behalf of Harpoon, and Covington, on behalf of Merck, conducted a number of conference calls and exchanged drafts of the Merger Agreement. Among other items, the parties negotiated (1) the definition of “Company Material Adverse Effect”, which generally defines the standard for closing risk, (2) Harpoon’s representations, warranties and interim operating covenants, (3) the provisions relating to the rights of the Board to change its recommendation to stockholders with respect to the transaction with Merck and to accept a “Superior Proposal”, (4) the amount and terms of the termination fee payable by Harpoon in the event that Harpoon were to terminate the Merger Agreement to accept a Superior Proposal and in certain other circumstances, (5) the outside date for closing the Merger under the Merger Agreement, and (6) the covenants regarding employee benefit matters applicable to Harpoon employees generally. In addition, Harpoon reached out to Merck regarding initial proposals for transaction bonus and severance programs for Harpoon employees as authorized by the Board, which included a transaction bonus pool and severance guidelines for non-executive employees to be honored by Merck for the remainder of 2024. At the request of Merck, representatives of Harpoon and Merck also discussed a potential post-closing retention program for Harpoon employees.

On the morning of January 7, 2024, representatives of Goodwin and Covington finalized the open items in the Merger Agreement.

Later on January 7, 2024, the Compensation Committee of the Board held a meeting at which representatives of senior management of Harpoon, Goodwin and Holland & Knight LLP, Harpoon’s outside compensation and benefits counsel, were present. The Compensation Committee had held a series of meetings throughout the fall of 2023 as part of its annual compensation planning in the ordinary course, at which the Compensation Committee, with the assistance of its independent compensation consultant, reviewed Harpoon’s compensation programs against benchmarking data. At this meeting, the Compensation Committee approved (1) the payouts for the 2023 annual incentive bonus program based on achievement of the related corporate goals, (2) annual salary and target bonus amounts for 2024, (3) amendments to the severance arrangements for certain officers to align the severance payable upon a change-in-control with the market median, which, with respect to

 

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the executive officers of Harpoon, included an increase in Ms. Eastland’s severance amount related to her annual target bonus from one to 1.5 times and (4) grants of the annual equity awards in the ordinary course. The Compensation Committee also approved a transaction bonus pool for allocation to certain officers of Harpoon as described in the section of this proxy statement titled “—Interests of the Directors and Executive Officers of Harpoon in the Merger.”

On January 7, 2024, the Board and the Transactions Committee held a joint meeting, at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present, to consider approval of the proposed transaction with Merck. At the meeting, representatives of Centerview reviewed with the Board Centerview’s financial analysis of the Merger Consideration and rendered to the Board Centerview’s oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under the caption “—Opinion of Centerview Partners LLC”. Representatives of Goodwin reviewed with the Board the fiduciary duties of the directors in this context and the terms of the final proposed Merger Agreement with Merck. Following additional discussion and consideration of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement (including the factors described in “—Recommendation of the Harpoon Board of Directors and Reasons for the Merger”), the Transactions Committee unanimously adopted resolutions recommending to the Board that the Board: (1) determine that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interests of Harpoon and the Company Stockholders; (2) adopt, approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approve the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger; and (3) recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement. Thereafter, the Board, based upon the recommendation of the Transactions Committee, unanimously adopted resolutions: (1) determining that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interests of Harpoon and the Company Stockholders; (2) adopting, approving and declaring advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approving the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger; and (3) resolving to recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement.

Later on January 7, 2024, Harpoon, Merck and Merger Sub executed the Merger Agreement and the directors and executive officers of Harpoon and certain of their affiliates executed the Support Agreements. See the section of this proxy statement titled “The Support Agreements”.

Before the opening of trading of the stock markets on January 8, 2024, Harpoon and Merck issued a joint press release announcing the execution of the Merger Agreement.

Recommendation of the Harpoon Board of Directors and Reasons for the Merger

At a special meeting held on January 7, 2024, the Board, upon the recommendation of the Transactions Committee, unanimously: (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interests of Harpoon and the Company Stockholders; (2) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL; (3) approved the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger; and (4) resolved to recommend that the Company Stockholders vote to approve the

 

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adoption of the Merger Agreement. Accordingly, the Board recommends that the Company Stockholders vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

In its determinations and in reaching its recommendations, each of the Board and the Transactions Committee, as described in the section titled “—Background of the Merger” of this proxy statement, held a number of meetings, consulted with Harpoon senior management and its outside legal and financial advisors, and considered a number of factors and a substantial amount of information, including, but not limited to, the following (not necessarily presented in order of relative importance) that weighed in favor of the Merger:

Consideration. The Board considered:

 

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the historical market prices, volatility and trading information with respect to the Company Shares;

 

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the recent historical trading prices of the Company Shares on Nasdaq, as compared to the proposed $23.00 per share consideration for the Company Shares, including the fact that the proposed consideration of $23.00 per share represented: (1) a 118% premium to the closing price of $10.55 on January 5, 2024, the last trading day before public announcement of the Merger Agreement; (2) a 121% premium to the trailing volume-weighted average price of $10.40 for the 30-day period ended on January 5, 2024; and (3) a 68% premium to the 52-week high closing price of $13.70 on February 7, 2023; and

 

•

that in the Board’s view it had obtained Merck’s best and final offer, and that, as of the date of the Merger Agreement, the proposed consideration of $23.00 per Company Share represented the highest per share consideration reasonably obtainable.

Harpoon’s Operating and Financial Condition and Prospects. The Board considered Harpoon’s limited operating history, the fact that Harpoon has incurred significant operating losses since its inception and expects to incur significant losses for the foreseeable future, and the risk that Harpoon may not be able to generate sufficient revenue to achieve and maintain profitability. In considering the prospects of Harpoon, the Board reviewed certain financial projections for Harpoon prepared by Harpoon senior management, which reflect an application of various assumptions of management. The Board considered the inherent uncertainty of achieving management’s financial projections, as set forth under the heading titled “ —Certain Unaudited Prospective Financial Information,” and that, as a result, Harpoon’s actual financial results in future periods could differ materially from such financial projections. The Board considered that Harpoon stockholders would continue to be subject to the risks and uncertainties of Harpoon executing on its business plan if it remained independent, including the current and prospective business environment in which Harpoon operates, industry and market conditions negatively impacting valuations of and the outlook for clinical-stage biotechnology companies such as Harpoon with lead programs in clinical trials, the regulatory environment and the significant time before regulatory advancements could be made, competition, and the likely effect of these factors on Harpoon and its prospects as a standalone company.

Potential Strategic Alternatives. The Board reviewed the possible alternatives to the Merger, including the execution of management’s standalone plan. The Board considered the risks inherent in the development of drug products, including (1) the stage of development of Harpoon’s programs, (2) risks related to designing, conducting and compiling data from clinical trials and preclinical studies, (3) challenges with respect to patient enrollment, (4) potential difficulties or delays in the commencement or completion, or termination or suspension, of Harpoon’s ongoing or planned clinical trials, (5) the risks related to seeking approval for marketing from the FDA and other regulatory authorities, (6) competition, and (7) other factors affecting the potential revenues, profitability and cash flows of biotechnology companies generally. The Board also considered the fact that none of Harpoon’s product candidates have been approved yet for marketing by the FDA or any similar non-U.S. regulatory body, as well as the status and prospects for Harpoon’s current portfolio of product candidates and development programs.

 

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Existing Resources. The Board considered the fact that Harpoon will require significant additional capital in order to complete the remaining clinical development for its product candidates and potentially commercialize its product candidates, as well as fund its other ongoing operations, and the challenges that Harpoon has faced in the past in raising necessary capital. The Board also took into consideration that, while Harpoon may seek additional funding through future debt and equity financing, collaborations or strategic partnerships, any such fundraising could be highly dilutive to Harpoon’s existing securityholders, might be available only on unfavorable terms, or might not be available at all at the times or in the amounts necessary or desirable.

Negotiation Process. The Board considered the fact that the terms of the Merger Agreement were the result of arm’s-length negotiations conducted by Harpoon with the knowledge and at the direction of the Board (including through the Transactions Committee) and with the assistance of its financial and legal advisors. The Board also considered the enhancements that Harpoon and its advisors were able to obtain as a result of arm’s-length negotiations with Merck, including the increase in the valuation offered by Merck from the time of its initial offer to the end of the negotiations, a number of changes in the terms and conditions of the Merger Agreement from the version initially proposed by Merck that were favorable to Harpoon, and the inclusion of provisions in the Merger Agreement that the Board believes increase the likelihood of completing the Merger.

Potentially Interested Counterparties. The Board considered the process conducted by Harpoon to identify potential acquirors, taking into account (1) the expected interest of such parties in immunotherapy targeting patients suffering from cancer and other diseases, (2) their financial capability to consummate a transaction of this size, and (3) their ability to move quickly and efficiently in a process. In particular, the Board considered the recent discussions conducted by Harpoon with other industry participants, the outcome of those discussions, and the fact that none of these parties, other than Merck, had expressed interest in a transaction with Harpoon. In addition, the Board noted that the other global pharmaceutical companies that were considered reasonably likely to have potential interest in acquiring Harpoon had declined to engage with Harpoon regarding a potential transaction at the time of the proposed Merger.

Centerview’s Opinion and Analysis. The Board considered the oral opinion of Centerview rendered to the Board on January 7, 2024, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under the caption “—Opinion of Centerview Partners LLC”.

The Merger Agreement; Ability to Consider, Receive and Respond to Unsolicited Proposals. The Board considered the provisions of the Merger Agreement, including (1) the ability of Harpoon under certain circumstances to entertain unsolicited proposals for an acquisition that constitutes or could reasonably be expected to lead to an offer that is superior to the Merger, (2) the ability of the Board under certain circumstances to withdraw or modify its recommendation that Company Stockholders vote to adopt the Merger Agreement and to terminate the Merger Agreement in order to accept a Superior Proposal and enter into a definitive agreement with respect to such Superior Proposal, and (3) the $23,860,000 termination fee payable by Harpoon under certain circumstances, which the Board believed was reasonable relative to termination fees in transactions of a similar size, would not likely preclude competing bids, and would not likely be payable unless Harpoon entered into a definitive agreement for a Superior Proposal.

Conditions to the Consummation of the Merger; Likelihood of Completion. The Board considered the likelihood of completing the Merger, particularly in light of the terms of the Merger Agreement, including (1) the conditions to the Merger being specific and limited, (2) the exceptions contained within the “Company Material Adverse Effect” definition, which generally defines the standard for closing risk, and (3) the likelihood of obtaining the required regulatory approval and the outside date for closing the Merger under the Merger

 

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Agreement, which is anticipated to allow for sufficient time to consummate the Merger. The Board also considered the fact that there is no financing condition to the completion of the Merger, and Harpoon’s ability to obtain specific enforcement of the obligations of Merck and Merger Sub under the Merger Agreement, thereby ensuring that Harpoon has an appropriate remedy in the event Merck and Merger Sub were to decline to comply with their obligations under the Merger Agreement.

Business Reputation of Merck. The Board considered the business reputation and capabilities of Merck and its management and the substantial financial resources of Merck and, by extension, Merger Sub, which the Board believed supported the conclusion that a transaction with Merck and Merger Sub was likely to be completed in a timely and orderly manner.

Certainty of Consideration. The Board considered the all-cash nature of the consideration to be paid in the Merger, which allows Harpoon’s securityholders to realize immediate value, in cash, for their investment in Harpoon, while avoiding Harpoon’s clinical, regulatory, commercialization and other business risks, and while also providing such holders with certainty of value and liquidity for their Harpoon securities.

Appraisal Rights. The Board considered the availability of statutory appraisal rights to the holders of Company Common Stock and Company Series A Preferred Stock who object to the Merger and otherwise comply with all required procedures under the DGCL.

In the course of its deliberations, the Board also considered a variety of material risks and other countervailing factors related to entering into the Merger Agreement, including, but not limited to, the following (which are not necessarily presented in order of relative importance):

 

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the fact that Harpoon’s securityholders will not be entitled to participate in any potential future benefit from the execution of Harpoon management’s standalone business plan;

 

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the effect of the public announcement of the Merger Agreement, including effects on Harpoon’s business relationships and Harpoon’s ability to attract and retain key management and personnel;

 

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the fact that the Merger Agreement precludes Harpoon from actively soliciting alternative acquisition proposals and requires payment by Harpoon of a $23,860,000 termination fee to Merck under certain circumstances, including in the event that the Merger Agreement is terminated by Harpoon to accept a Superior Proposal;

 

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the possibility that the Merger might not be consummated, and the fact that if the Merger is not consummated, Harpoon’s directors, management and other employees will have expended extensive time and effort and will have experienced significant distractions from their work during the pendency of the Merger, and Harpoon’s relationships with its suppliers, vendors, partners, employees and other third parties may be adversely affected;

 

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the restrictions imposed by the Merger Agreement on the conduct of Harpoon’s business prior to completion of the Merger, which could delay or prevent Harpoon from undertaking certain business opportunities that may arise during that time;

 

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the fact that significant transaction and opportunity costs have been and will continue to be incurred in connection with negotiating and entering into the Merger Agreement and completing the Merger;

 

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the risk of transaction-related litigation; and

 

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the treatment of the consideration to be received by the holders of Company Shares in the Merger as taxable to such holders for U.S. federal income tax purposes.

In addition, the Board was aware of and considered the interests of Harpoon’s directors and executive officers that may be different from, or in addition to, the interests of Company Stockholders generally when approving the Merger Agreement and recommending that Company Stockholders vote to adopt the Merger Agreement. For more information, see the section of this proxy statement titled “—Interests of the Directors and Executive Officers of Harpoon in the Merger.”

 

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The foregoing discussion of the information and factors considered by the Board and the Transactions Committee in reaching their respective conclusions and recommendations is intended to be illustrative and not exhaustive. In light of the variety of factors considered in connection with their evaluation of the Merger and the complexity of these matters, the Board and the Transactions Committee did not find it practicable to, and did not, quantify or otherwise attempt to rank or assign relative weights to the various factors considered in reaching their respective determinations. In considering the factors described above and any other factors, individual members of the Board may have viewed factors differently or given different weight, merit or consideration to different factors. In addition, the Board and the Transactions Committee did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board or the Transactions Committee, but rather the Board and the Transactions Committee conducted an overall review of the factors described above, including discussions with Harpoon’s senior management and legal and financial advisors.

The foregoing discussion of the reasoning and consideration of certain factors by the Board and the resulting determinations and recommendation, and certain other information presented in this section, as well as similar information included in this proxy statement, is forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section of this proxy statement titled “Cautionary Note Regarding Forward-Looking Statements.” For the reasons described above, and in light of other factors that the Board believed were appropriate to consider, the Board approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that the Company Stockholders vote in favor of the Merger Proposal and the Adjournment Proposal.

Opinion of Centerview Partners LLC

Harpoon retained Centerview as financial advisor in connection with the Merger. In connection with this engagement, the Board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. On January 7, 2024, Centerview rendered to the Board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated January 7, 2024, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex C and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety by the full text of Centerview’s written opinion attached as Annex C. Centerview’s financial advisory services and opinion were provided for the information and assistance of the members of the Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Merger and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview’s opinion did not address any other term or aspect of the Merger Agreement or the Merger and does not constitute a recommendation to any Harpoon stockholder or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Merger or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

 

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In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

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an execution version of the Merger Agreement dated January 7, 2024;

 

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Annual Reports on Form 10-K of Harpoon for the years ended December 31, 2022, December 31, 2021 and December 31, 2020;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Harpoon;

 

•

certain publicly available research analyst reports for Harpoon;

 

•

certain other communications from Harpoon to its stockholders; and

 

•

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Harpoon, including certain financial forecasts, analyses and projections relating to Harpoon prepared by Harpoon management and furnished to Centerview by Harpoon for purposes of Centerview’s analysis (referred to in this section as the “Projections” and which are summarized in the section below captioned “—Certain Unaudited Prospective Financial Information”) (collectively referred to in this summary of Centerview’s opinion as the “Internal Data”).

Centerview also participated in discussions with members of the senior management and representatives of Harpoon regarding their assessment of the Internal Data, and conducted such financial studies and analyses and took into account such information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with the consent of the Board, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at the Board’s direction, that the Internal Data (including, without limitation, the Projections) were reasonably prepared on bases reflecting the best currently available estimates and judgments of Harpoon management as to the matters covered thereby and Centerview relied, at the direction of the Board, on the Internal Data for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the Internal Data or the assumptions on which it was based. In addition, at the Board’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Harpoon, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Harpoon. Centerview assumed, at the direction of the Board, that the final executed Merger Agreement would not differ in any respect material to Centerview’s analysis or opinion from the execution version reviewed by Centerview. Centerview also assumed, at the direction of the Board, that the Merger will be consummated on the terms set forth in the Merger Agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Merger, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Harpoon, or the ability of Harpoon to pay its obligations when they come due, or as to the impact of the Merger on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, Harpoon’s underlying business decision to proceed with or effect the Merger, or the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available to Harpoon or in which Harpoon might engage.

 

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Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the Merger Agreement or the Merger, including, without limitation, the structure or form of the Merger, or any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with or otherwise contemplated by the Merger, including, without limitation, the fairness of the Merger or any other term or aspect of the Merger to, or any consideration to be received in connection therewith by, or the impact of the Merger on, the holders of any other class of securities, creditors or other constituencies of Harpoon or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Harpoon or any party, or class of such persons in connection with the Merger, whether relative to the Merger Consideration to be paid to the holders of Company Shares pursuant to the Merger Agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion does not constitute a recommendation to any Harpoon stockholder or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Merger or any other matter. Centerview’s financial advisory services and its opinion were provided for the information and assistance of the Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Merger. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Board in connection with Centerview’s opinion, dated January 7, 2024. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of Harpoon. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Harpoon or any other parties to the Merger. None of Harpoon, Merck, Merger Sub or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Harpoon do not purport to be appraisals or reflect the prices at which Harpoon may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before January 5, 2024 (the last trading day before the public announcement of the Merger) and is not necessarily indicative of current market conditions.

Discounted Cash Flow Analysis

Centerview performed a discounted cash flow analysis of Harpoon based on the Projections, which reflect certain assumptions and future financing needs of Harpoon. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset or set of assets by calculating the “present value” of estimated

future cash flows of the asset or set of assets. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

 

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In performing this analysis, Centerview calculated a range of equity values for the Company Shares by (a) discounting to present value as of December 31, 2023 using discount rates ranging from 14.0% to 16.0% (based on Centerview’s analysis of Harpoon’s weighted average cost of capital) and using a mid-year convention: (i) the forecasted risk-adjusted, after-tax unlevered free cash flows of Harpoon over the period beginning on January 1, 2024 and ending on December 31, 2043, as set forth in the Projections, (ii) an implied terminal value of Harpoon, calculated by Centerview by assuming that (as directed by Harpoon management) Harpoon’s unlevered free cash flows would decline in perpetuity after December 31, 2043 at a rate of free cash flow decline of 40% year over year, and (iii) tax savings from usage of Harpoon’s federal net operating losses as of December 31, 2022 and Harpoon’s estimated future losses, as set forth in the Internal Data, (b) adding to the foregoing results, Harpoon’s estimated cash of $110 million and subtracting an estimated $89 million payable to holders of Company Series A Preferred Stock upon redemption thereof, in each case as of December 31, 2023, as set forth in the Internal Data and (c) subtracting from the foregoing results the present value, as of December 31, 2023, of the impact of assumed equity raises in 2024, 2025 and 2026, as set forth in the Internal Data.

Centerview then calculated a range of implied equity values per Company Share by dividing the result of the foregoing calculations by Harpoon’s fully diluted outstanding Company Shares calculated on a treasury stock method basis (taking into account unvested restricted stock units, unvested performance-vesting restricted stock units, outstanding in-the-money stock options and warrants) as of January 5, 2024 and as set forth in the Internal Data. The resulting range of implied equity values per Company Share was $14.35 to $18.15, rounded to the nearest $0.05. Centerview then compared the results of the above analysis to the $23.00 per Company Share value of the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement.

Other Factors

Centerview noted for the Board certain additional factors solely for reference and informational purposes only, including, among other things, the following:

 

•

Historical Stock Trading Price Analysis. Centerview reviewed historical closing trading prices of the Company Shares during the 52-week period ended January 5, 2024 (the last trading day before the public announcement of the Merger), which reflected low and high stock closing prices for Harpoon during such period of approximately $3.29 to $13.70 per Company Share.

 

•

Analyst Price Target Analysis. Centerview reviewed stock price targets for the Company Shares in publicly available Wall Street research analyst reports as of January 5, 2024 (the last trading day before the public announcement of the Merger), which indicated low and high stock price targets for Harpoon ranging from $8.00 to $30.00 per Company Share.

 

•

Precedent Premiums Paid Analysis. Centerview performed an analysis of premiums paid in selected transactions involving publicly traded biopharmaceutical companies with an offer value between $100 million and $1.0 billion for which premium data were available. The premiums in this analysis were calculated by comparing the per share acquisition price in each transaction to the closing price of the target company’s common stock for the date one day prior to the date on which the trading price of the target’s common stock was perceived to be affected by a potential transaction. Based on such analysis and other considerations that Centerview deemed relevant in its professional judgment, Centerview applied a range of 50% to 110% to Harpoon’s closing stock price on January 5, 2024 (the last trading day before the public announcement of the Merger) of $10.55, which resulted in an implied price range of approximately $15.85 to $22.15 per Company Common Share, rounded to the nearest $0.05.

General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the

 

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particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Board in its evaluation of the Merger. Consequently, the analyses described above should not be viewed as determinative of the views of the Board or Harpoon management with respect to the Merger Consideration or as to whether the Board would have been willing to determine that a different consideration was fair. The consideration for the Merger was determined through arm’s-length negotiations between Harpoon and Merck and was approved by the Board. Centerview provided advice to Harpoon during these negotiations. Centerview did not, however, recommend any specific amount of consideration to Harpoon or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, except for its current engagement in connection with the Merger, Centerview had not been engaged to provide financial advisory or other services to Harpoon, and Centerview did not receive any compensation from Harpoon during such period. In the two years prior to the date of its written opinion, Centerview had been engaged to provide financial advisory services unrelated to Harpoon, to Merck Parent, including in connection with Merck Parent’s spin-off of Organon & Co. in 2021 and other strategic matters, and Centerview received between $15 million and $25 million in aggregate compensation from Merck Parent during such period. Centerview may provide financial advisory and other services to or with respect to Harpoon, Merck Parent, Merck, or their respective affiliates in the future, for which Centerview may receive compensation. Certain (i) of Centerview’s and its affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Harpoon, Merck Parent, Merck, or any of their respective affiliates, or any other party that may be involved in the Merger.

Harpoon selected Centerview as its financial advisor in connection with the Merger based on, among other factors, its qualifications, professional reputation and industry expertise. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger.

In connection with Centerview’s services as the financial advisor to Harpoon, Harpoon has agreed to pay Centerview an aggregate fee of approximately $22.5 million, $1 million of which was payable upon the rendering of Centerview’s opinion (regardless of the conclusion reached in the opinion) and the remainder of which will be paid upon, and subject to, consummation of the Merger. In addition, Harpoon has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Certain Unaudited Prospective Financial Information

Harpoon does not, as a matter of course, publicly disclose financial forecasts or projections as to future revenues or other results of its operations due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, in connection with the evaluation of the proposed transaction with Merck and the other strategic alternatives considered by the Board, in December 2023, Harpoon’s senior management prepared certain risk-adjusted financial projections for fiscal years 2024 through 2043 (which we refer to as the “Projections”). The Projections were presented to the Board in connection with its

consideration of the Merger, and were provided to Centerview and, at the instruction and with the approval of the Board, were relied upon and used by Centerview in connection with rendering its opinion to the Board and

 

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performing the related financial analyses as described in the section of this proxy statement captioned “—Opinion of Centerview Partners LLC” and were the only financial projections with respect to Harpoon used by Centerview in performing such financial analyses.

The Projections were prepared based on Harpoon’s continued operation as a standalone company and do not take into account the Merger, including the effect of any business or strategic decision or action that has been or will be taken as a result of the execution of the Merger Agreement.

Harpoon is summarizing the Projections in this proxy statement solely to provide stockholders with access to certain financial projections that were made available to the Board, the Transactions Committee and Centerview for the purposes described above, and are not included in this proxy statement to influence a Harpoon stockholder’s decision whether to vote to adopt the Merger Agreement or for any other purpose. The Projections were not provided to Merck.

Cautionary Note About the Projections

The Projections were prepared by Harpoon senior management based on certain estimates and assumptions with respect to general business, economic, competitive, regulatory, reimbursement and other market and financial conditions and other future events, all of which are difficult to predict and many of which are beyond Harpoon’s control. As a result, there can be no assurance that the Projections accurately reflect future trends or accurately estimate the future market for Harpoon’s product candidates. The Projections, while necessarily presented with numerical specificity, were based on numerous variables and financial, operating and commercial assumptions, developed solely using the information available to Harpoon’s management at the time, that were inherently uncertain. Important factors that may affect actual results and cause the Projections not to be achieved include: (1) the pursuit or success of preclinical studies and/or clinical trials (including the funding for such studies or trials, anticipated patient enrollment, clinical outcomes, timing or associated costs); (2) regulatory approvals and related timelines; (3) the timing of launch of commercial sales of product candidates, if approved; (4) the market acceptance of potential products and product candidates; (5) development of potential products and product candidates for different indications; (6) risks associated with the development of product candidates in combination with other therapies; (7) the impact of competitive products and pricing; (8) the effect of regulatory actions; (9) the availability of licensing arrangements on favorable terms or at all; (10) the ability to establish and maintain intellectual property protection for products or avoid or defend claims of infringement; (11) uncertainties in contractual relationships, including collaborations, partnerships, licensing or other arrangements, and the performance of third-party suppliers and manufacturers; (12) the effect of global economic conditions and conditions in the biotechnology industry; (13) conditions in the financing markets and access to sufficient capital; (14) changes in applicable laws, rules and regulations; (15) accuracy of certain accounting assumptions; and (16) other risk factors described in Harpoon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, subsequent Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as the section titled “Cautionary Note Regarding Forward-Looking Statements” in this proxy statement.

The Projections also reflect assumptions as to certain business decisions that are subject to change. In addition, the Projections do not take into account any circumstances or events occurring after the date that they were prepared, including the announcement of the Merger, and do not give effect to the Merger or any changes to Harpoon’s operations or strategy that may be implemented following the consummation of the Merger or to any costs incurred in connection with the Merger. As a result, there can be no assurance that the Projections will be realized, and actual results may be materially better or worse than those contained in the Projections. The Projections cover multiple years, and such information by its nature becomes less reliable with each successive year.

The inclusion of the Projections in this proxy statement should not be regarded as an indication that Harpoon or any of its affiliates, advisors or representatives considered or consider the Projections to be predictive of actual future events, and the Projections should not be relied upon as such or construed as financial guidance.

 

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The Projections may differ from publicly available analyst estimates. None of Harpoon or any of its affiliates or Centerview assume any responsibility for the accuracy of this information. Harpoon does not intend to make publicly available any update or other revision to the Projections, except as otherwise required by law. Moreover, Harpoon does not intend to update or otherwise revise the projections to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections are no longer appropriate.

Neither Harpoon nor any of its affiliates, advisors, officers, directors or representatives has made or makes any representation or warranty to any holders of Harpoon securities or other person regarding the ultimate performance of Harpoon compared to the information contained in the Projections or that the Projections will be achieved. Harpoon has made no representation to Merck or Merger Sub, in the Merger Agreement or otherwise, concerning the Projections. The Projections are subjective in many respects and are thus subject to interpretation.

The Projections were not prepared with a view toward public disclosure and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or GAAP. In addition, the Projections were not prepared with the assistance of, or reviewed, compiled or examined by, independent accountants. The Projections include non-GAAP financial measures such as EBIT and unlevered free cash flow (each as defined below). Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Harpoon may not be comparable to similarly titled amounts used by other companies. The financial measures included in the Projections are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon or used by the Board or Centerview.

The Projections were based on assumptions about Harpoon’s continued operation as a standalone, publicly-traded company, including with respect to the continued research, development and commercialization of Harpoon’s product candidates, including with respect to HPN328, HPN217 and HPN601, while also accounting for risk and probability adjustments reflecting Harpoon senior management’s assessment as to the probability of success of Harpoon’s pipeline programs as of the time such Projections were prepared. The Projections include assumptions regarding asset-specific probabilities of technical and regulatory success, timing of the clinical development plan, indications to be pursued, timing of commercial launch, sales ramp, market size, market share, peak sales, duration, pricing, relative positioning versus competition, licensing arrangements, market exclusivity, estimated costs and expenses, effective tax rate and utilization of net operating losses, future equity raises conducted by Harpoon, expected cash burn rate, and other relevant factors related to Harpoon’s long-range operating plan. The foregoing is a summary of certain key assumptions and does not purport to be a comprehensive or exhaustive overview of all metrics and assumptions included or reflected in the Projections.

The Projections summarized below reflect the final projections reviewed and approved by the Board. On December 21, 2023, prior to receipt of Merck’s initial proposal, the Transactions Committee reviewed management’s preliminary standalone, long-range plan, including preliminary financial projections for 2024 through 2043, and provided feedback to management. See the section of this proxy statement titled “—Background of the Merger”. Thereafter, based on such feedback, senior management revised certain assumptions underlying the preliminary projections, including extending the duration of therapy with respect to certain indications for HPN328 and increasing the year-over-year decline in sales for all product candidates included in the projections following the estimated loss of exclusivity from 20% to 40% to align more closely with industry benchmarks. Such changes resulted in (a) estimated risk-adjusted revenue related to HPN328 increasing in each of 2026 through 2039 and (b) estimated risk-adjusted revenue decreasing in each of 2040 through 2043 following the estimated loss of exclusivity for HPN328, the net result of which was that estimated risk-adjusted cumulative revenue related to HPN328 over the projection period of 2024 to 2043 increased by 1%. The preliminary projections also were revised to align estimated 2024 operating expenses with the Board approved budget for the first half of the year.

 

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The following tables present a summary of the Projections (USD in millions):

 

		2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E
Net Revenue		$	20			$	15			$	31			$	144			$	310			$	378			$	392			$	417			$	453			$	499
Gross Profit		$	20			$	15			$	24			$	114			$	264			$	321			$	333			$	355			$	385			$	425
Total R&D Expenses		($	65	)		($	90	)		($	94	)		($	33	)		($	22	)		($	26	)		($	23	)		($	15	)		($	15	)		($	15	)
Total S&M Expenses			—			($	13	)		($	55	)		($	83	)		($	86	)		($	90	)		($	115	)		($	127	)		($	133	)		($	139	)
Total G&A Expenses		($	17	)		($	17	)		($	17	)		($	12	)		($	12	)		($	13	)		($	14	)		($	15	)		($	16	)		($	16	)
EBIT (1)		($	62	)		($	105	)		($	142	)		($	13	)		$	143			$	192			$	182			$	198			$	222			$	255
		2034E				2035E				2036E				2037E				2038E				2039E				2040E				2041E				2042E				2043E
Net Revenue		$	556			$	623			$	687			$	709			$	732			$	749			$	532			$	404			$	329			$	197
Gross Profit		$	474			$	531			$	586			$	604			$	624			$	637			$	453			$	344			$	280			$	168
Total R&D Expenses		($	15	)		($	15	)		($	15	)		($	15	)		($	12	)		($	6	)		($	5	)		($	3	)		($	3	)		($	2	)
Total S&M Expenses		($	145	)		($	152	)		($	158	)		($	166	)		($	173	)		($	179	)		($	123	)		($	90	)		($	69	)		($	42	)
Total G&A Expenses		($	18	)		($	19	)		($	20	)		($	22	)		($	23	)		($	24	)		($	17	)		($	9	)		($	6	)		($	4	)
EBIT (1)		$	296			$	345			$	392			$	402			$	416			$	429			$	309			$	242			$	202			$	121

 

(1)	EBIT is a non-GAAP financial measure defined as earnings before interest expenses and taxes.

At the direction of Harpoon’s management and the Board, Centerview calculated, solely based on the Projections, which were approved by the Board for reliance upon and use by Centerview in connection with the rendering of its opinion to the Board and in performing the related financial analyses as described in the section of this proxy statement captioned “—Opinion of Centerview Partners LLC,” and based on information and assumptions provided by Harpoon’s management, unlevered free cash flow as set forth below, which has been reviewed and approved by the Board for reliance upon and use by Centerview in connection with the rendering of its opinion to the Board and in performing the related financial analyses as described in the section of this proxy statement captioned “—Opinion of Centerview Partners LLC.” For purposes of calculating the discounted cash flow, Centerview calculated per Harpoon management the estimated (1) benefit from usage of net operating losses (“NOLs”) based on U.S. federal net operating losses of $208 million as of December 31, 2022 and estimated future losses and (2) impact of the cost of future potential capital raises of $100 million in 2024, $100 million in 2025, and $150 million in 2026. The values in the tables below do not take into account the effect of federal NOL usage and the cost of future capital raises.

The following tables present a summary of the unlevered free cash flows (USD in millions):

 

		2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E
EBIT (1)		($	62	)		($	105	)		($	142	)		($	13	)		$	143			$	192			$	182			$	198			$	222			$	255
Less: Tax Expense (2)			—				—				—				—			($	30	)		($	40	)		($	38	)		($	42	)		($	47	)		($	54	)
Less: Capital Expenditures		($	0	)		($	0	)		($	0	)		($	1	)		($	1	)		($	1	)		($	1	)		($	1	)		($	1	)		($	1	)
Plus: Depreciation & Amortization		$	0			$	0			$	0			$	0			$	1			$	1			$	1			$	1			$	1			$	1
Less: Change in Net Working Capital			—				—			($	3	)		($	11	)		($	15	)		($	7	)		($	1	)		($	2	)		($	3	)		($	4	)
Unlevered Free Cash Flow (3)		($	62	)		($	105	)		($	145	)		($	24	)		$	98			$	145			$	142			$	154			$	172			$	197
		2034E				2035E				2036E				2037E				2038E				2039E				2040E				2041E				2042E				2043E
EBIT (1)		$	296			$	345			$	392			$	402			$	416			$	429			$	309			$	242			$	202			$	121
Less: Tax Expense (2)		($	62	)		($	73	)		($	82	)		($	84	)		($	87	)		($	90	)		($	65	)		($	51	)		($	42	)		($	25	)
Less: Capital Expenditures		($	1	)		($	1	)		($	1	)		($	1	)		($	1	)		($	1	)		($	1	)		($	0	)		($	0	)		($	0	)
Plus: Depreciation & Amortization		$	1			$	1			$	1			$	1			$	1			$	1			$	1			$	1			$	0			$	0
Less: Change in Net Working Capital		($	5	)		($	6	)		($	6	)		($	2	)		($	2	)		($	2	)		$	20			$	12			$	7			$	12
Unlevered Free Cash Flow (3)		$	229			$	267			$	303			$	315			$	326			$	336			$	264			$	203			$	167			$	108

 

(1)	EBIT is a non-GAAP financial measure defined as earnings before interest expenses and taxes.

(2)	Assumes a tax rate of 21%.

 

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(3)	As set forth in these tables, unlevered free cash flow is a non-GAAP financial measure defined as EBIT, less tax expense (if profitable), less capital expenditures, plus depreciation and amortization, and less change in net working capital.

In light of the foregoing factors and the uncertainties inherent in the Projections, stockholders are cautioned not to place undue reliance on the Projections or any other forward-looking information included in this section of the proxy statement.

Interests of the Directors and Executive Officers of Harpoon in the Merger

Certain of Harpoon’s executive officers and directors may have financial interests in the Merger that are different from, or in addition to, the interests of Company Stockholders generally. The Board was aware of these potential interests and considered them, among other matters, in evaluating and negotiating the Merger Agreement and in reaching its decision to approve the Merger Agreement and the Merger, and to recommend that the Company Stockholders approve the Merger Agreement as more fully discussed in “—Recommendation of the Harpoon Board of Directors and Reasons for the Merger.”

Harpoon’s current executive officers and their respective positions are as follows:

 

		Name		Position
		Julie Eastland		Chief Executive Officer
		Luke Walker, M.D.		Chief Medical Officer
		James B. Bucher, J.D.		Chief Legal Officer

Harpoon’s current non-employee directors are as follows:

 

		Name
		Joseph S. Bailes, M.D.
		Mark Chin
		Jonathan Drachman, M.D.
		Ronald Hunt
		Scott Myers
		Andrew Robbins
		Lauren P. Silvernail

The disclosure below does not include Georgia Erbez, former Chief Financial Officer, Natalie Sacks, M.D., former Chief Medical Officer, or Holger Wesche, Ph.D., former Chief Science Officer, each of whom was a named executive officer in Harpoon’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 27, 2023, as they are not entitled to any compensation in connection with the Merger except with respect to any Company Shares or equity awards held by them in the same manner as described below. See the section of this proxy statement titled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 100.

Treatment of Equity and Equity-Based Awards

Harpoon’s directors and executive officers who own Company Shares will receive the Merger Consideration on the same terms and conditions, as the other holders of Company Shares in the Merger. The following table sets forth the number of Company Shares owned, as of January 7, 2024, by each of Harpoon’s executive officers and non-employee members of the Board (which, for this purpose, excludes (1) shares underlying Harpoon stock options, whether or not currently exercisable, (2) shares subject to outstanding and unvested Harpoon RSUs, and (3) shares held by affiliated entities of such persons).

 

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Name		Shares Owned (#)				Value of Shares Owned ($)
Julie Eastland			3,503				80,569
Luke Walker, M.D.			—				—
James B. Bucher, J.D.			—				—
Non-Employee Directors
Joseph S. Bailes, M.D.			—				—
Mark Chin			7,800				179,400
Jonathan Drachman, M.D.			—				—
Ronald Hunt			7,800				179,400
Scott Myers			17,665				406,295
Andrew Robbins			—				—
Lauren P. Silvernail			—				—

Harpoon Stock Options

Each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to the Effective Time. At the Effective Time, (1) each In the Money Option will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive the Option Consideration and (2) each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

The following table sets forth, for each of Harpoon’s executive officers and the non-employee members of the Board, (a) the aggregate number of Company Shares underlying vested Harpoon stock options held by such individual as of January 7, 2024, (b) the aggregate number of Company Shares underlying unvested Harpoon stock options as of January 7, 2024 and (c) the estimated value that the executive officers and non-employee members of the Board will receive in respect of such Harpoon stock options in connection with the Merger.

 

Name		Unvested Stock Options (#)				Value of Unvested Stock Options ($)				Vested Stock Options (#)				Value of Vested Stock Options ($)
Julie Eastland			47,757				436,959				34,404				142,871
Luke Walker, M.D.			28,467				361,547				12,033				151,553
James B. Bucher, J.D.			110,000				1,287,000				—				—
Non-Employee Directors
Joseph S. Bailes, M.D.			2,300				37,589				7,207				12,058
Mark Chin			2,300				37,589				10,462				16,038
Jonathan Drachman, M.D.			2,300				37,589				10,309				32,244
Ronald Hunt			2,300				37,589				10,758				16,038
Scott Myers			4,600				75,178				6,097				5,896
Andrew Robbins			2,300				37,589				4,065				2,946
Lauren P. Silvernail			3,655				46,803				678				4,610

Harpoon Restricted Stock Units

Each Harpoon RSU that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive the RSU Consideration. With respect to the Harpoon RSU granted to Ms. Eastland in April 2022 that vests based upon the achievement of certain performance-related metrics, the performance-related metrics will be deemed to have been achieved at 125% of the target performance level pursuant to the terms of the award agreement governing such Harpoon RSU.

 

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The following table sets forth, for each of Harpoon’s executive officers and the non-employee members of the Board, (1) the aggregate number of Company Shares underlying Harpoon RSUs held as of January 7, 2024, and (2) the estimated value that the executive officers and non-employee members of the Board will receive in respect of such Harpoon RSUs in connection with the Merger.

 

Name		Harpoon RSUs (#)				Value of Harpoon RSUs ($)
Julie Eastland			259,750				5,974,250
Luke Walker, M.D.			135,000				3,105,000
James B. Bucher, J.D.			—				—
Non-Employee Directors
Joseph S. Bailes, M.D.			5,000				115,000
Mark Chin			5,000				115,000
Jonathan Drachman, M.D.			5,000				115,000
Ronald Hunt			5,000				115,000
Scott Myers			5,000				115,000
Andrew Robbins			5,000				115,000
Lauren P. Silvernail			5,000				115,000

Transaction Bonuses

At the time of the execution of the Merger Agreement, the Compensation Committee of the Board approved a transaction bonus pool of $2,000,000 and granted transaction bonuses to Ms. Eastland, in the amount of $1,000,000, and to Dr. Walker, in the amount of $400,000 (the “Transaction Bonuses”). The Transaction Bonuses were approved by the Compensation Committee of the Board to recognize significant contributions to Harpoon and towards the consummation of the Merger. The Transaction Bonuses are contingent and payable only upon the closing of the Merger, provided that the executive remains continuously employed by Harpoon through the Closing Date.

Severance Entitlements

Each of Ms. Eastland, Dr. Walker and Mr. Bucher has entered into an employment agreement with Harpoon (each, an “Employment Agreement”) and, pursuant to the terms of the Merger Agreement, Harpoon was permitted to amend Ms. Eastland’s Employment Agreement to modify the bonus component of the severance payable thereunder from one to 1.5 times her annual target bonus. Each Employment Agreement provides for certain payments and benefits if the executive’s employment with Harpoon is terminated by Harpoon without “cause,” and other than as a result of the executive’s death or disability, or by the executive for “good reason,” in any case, within the period commencing 60 days prior to and ending 24 months following a “change in control” of Harpoon (as such terms are defined in the applicable Employment Agreement) (any such termination, a “CIC Termination”). The Merger will qualify as a “change in control” under the Employment Agreements.

Upon a CIC Termination, each of Ms. Eastland, Dr. Walker and Mr. Bucher is entitled to receive the following payments and benefits:

 

•

cash severance equal to 12 months of the executive’s base salary then in effect plus one times the executive’s target bonus (or, for Ms. Eastland, 18 months of base salary and 1.5 times target bonus), payable in a lump sum on the 60th day following the date of termination of employment;

 

•

in the event that the executive elects continued group medical coverage under COBRA, reimbursement by Harpoon of payments for COBRA coverage (in an amount not to exceed the amount that Harpoon then pays for health insurance coverage for active employees), until the earliest of (1) 12 months following the termination of employment (or 18 months for Ms. Eastland), (2) the expiration of the executive’s eligibility for the continuation coverage under COBRA, or (3) the date the executive enrolls for health insurance coverage in connection with new employment or self-employment; and

 

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•

acceleration of vesting of all outstanding equity awards.

All of the severance payments and benefits described above are subject to, among other things, the executive’s timely execution and non-revocation of a general release of claims. The Employment Agreements also provide that payments and benefits payable to each executive officer will be reduced so that no portion of such payments and benefits are subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), unless the executive officer would be better off on an after-tax basis receiving all such payments and benefits.

The following table sets forth the potential amounts payable to Harpoon’s executive officers upon a CIC Termination under the Employment Agreements, other than the value of accelerated Harpoon stock options and Harpoon RSUs, which are detailed above.

 

Name		Cash Severance ($)				Value of COBRA Benefits ($)
Julie Eastland			1,441,500				40,765
Luke Walker, M.D.			700,000				27,587
James B. Bucher, J.D.			630,000				32,901

Vesting of November 2023 Retention Award

In November 2023, the Compensation Committee of the Board granted cash retention awards (the “November Retention Awards”) to certain key employees of Harpoon in recognition of their services to Harpoon and whose efforts would be needed to build the organization in readiness for late-stage development. November Retention Awards were granted to Ms. Eastland and Dr. Walker in the amounts of $338,250 and $200,000, respectively. The November Retention Awards vest and become payable as to 50% of the award on the six-month anniversary of the date of grant and as to the remaining 50% on the one-year anniversary of the date grant, but accelerate and become payable upon a “change in control” of Harpoon that occurs while such executive remains employed at Harpoon or the executive’s termination of employment without “cause” (but not for death or “disability” (as defined in the executive’s retention award agreement)) or resignation for “good reason” (as such terms are defined in the executive’s Employment Agreement).

New Merck Arrangements

Certain of Harpoon’s executive officers may continue to provide employment or other services to Merck after the Effective Time and may enter into new agreements, arrangements or understandings with Merck to set forth the terms and compensation of such post-Effective Time service. As of the date of this proxy statement, no such agreements, arrangements or understandings with Merck exist, except that Merck intends to implement a post-closing retention program for Harpoon employees but has not specified whether any executive officers will participate.

280G Mitigation Actions

Under the Merger Agreement, Harpoon may, in consultation with Merck, take reasonable actions to mitigate the possible impact of Sections 280G and 4999 of the Code; provided that Harpoon may not make, or agree to make, any related tax gross-up payment.

Continuing Employee Benefits

The Merger Agreement provides that until the end of the calendar year in which the Closing Date occurs, but not beyond the date on which the individual’s employment terminates with Merck, the Surviving Corporation, Harpoon or any of their respective subsidiaries (such period being the “benefits continuation period”), Merck will provide or cause to be provided, to each employee of Harpoon who is retained by Merck

 

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(the “Continuing Employees”), (1) base salary or hourly wages and annual bonus targets that are, in each case, no less favorable than those provided to such Continuing Employee immediately prior to the Closing Date and (2) employee benefits that are substantially comparable in the aggregate to either (in the discretion of Merck) (a) the employee benefits provided to the Continuing Employees immediately prior to the Closing Date or (b) employee benefits provided to similarly situated employees of Merck and its affiliates (in the case of either clause (a) or clause (b), excluding any equity, equity-based, change in control or severance benefits, or defined benefit retirement benefits).

Indemnification

Each of Harpoon’s executive officers and directors is entitled to the indemnification and insurance benefits in favor of Harpoon’s directors and executive officers, as described in more detail in “The Merger Agreement — Indemnification; Directors’ and Officers’ Insurance.”

Section 16 Matters

The Board has taken, or prior to the Effective Time, will take, all actions reasonably necessary to cause the dispositions of shares of the Company’s capital stock (including derivative securities) in connection with the Merger, by each individual who is a director or officer of Harpoon and their affiliated entities, in each case that are subject to the reporting requirements of Section 16(a) of the Exchange Act, to be exempt under Rule 16b-3 under the Exchange Act.

Ownership of Other Securities

In addition to Company Shares, as of January 7, 2024, entities affiliated with New Leaf Venture Partners owned 10,000 shares of the Company Series A Preferred Stock and a warrant to purchase 299,430 Company Shares issued in Harpoon’s March 2023 financing, and warrants to purchase 771,750 shares issued in Harpoon’s October 2023 financing. Ronald Hunt, a non-employee member of the Board, is affiliated with New Leaf Ventures. For further information, see the section of this proxy statement titled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 100. In addition, as of January 7, 2024, Arix Bioscience Holdings Limited owned 3,500 shares of the Company Series A Preferred Stock and warrants to purchase 104,800 Company Shares issued in the Company’s March 2023 financing. Mark Chin, a non-employee member of the Board, was affiliated with Arix Bioscience at the time that such securities were acquired, but was no longer affiliated with Arix Bioscience at the time that the Board approved the Merger Agreement and transactions contemplated thereby.

Financing of the Merger

The Merger Agreement is not conditioned upon receipt of financing by Merck. We anticipate that the total amount of funds necessary to consummate the Merger and the related transactions, not including fees and expenses, will be approximately $680 million, including the estimated funds needed to (1) pay our stockholders the consideration due to them under the Merger Agreement and (2) make payments in respect of outstanding equity awards and warrants of Harpoon in accordance with their terms and pursuant to the Merger Agreement.

We understand that Merck expects to fund amounts needed for the acquisition of Harpoon under the Merger Agreement through the use of cash on hand or existing credit facilities. Merck has represented in the Merger Agreement that it has access to, and will cause Merger Sub to have, at the Effective Time and at the Closing, sufficient funds for the consummation of the Merger and the other transactions contemplated by the Merger Agreement, including payment in cash of the aggregate Merger Consideration on the Closing Date, and to pay all related fees and expenses required to be paid by Merck and Merger Sub pursuant to the terms of the Merger Agreement.

 

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Closing and Effective Time of the Merger

The closing of the Merger will take place remotely by electronic exchange of executed agreements and documents and other deliverables, at 8:00 a.m. Eastern Time on a date to be specified by the parties, which will be no later than the second business day after the date the conditions set forth in the Merger Agreement (other than any such conditions which by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted, waiver of those conditions at the Closing) have been satisfied or, to the extent permitted, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time, or on such other date as Merck and Harpoon may mutually agree in writing.

As soon as practicable on the Closing Date, the parties will cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware the certificate of merger in such form as required by, and executed in accordance with, the relevant provisions of the DGCL and will make all other filings or recordings required under the DGCL to consummate the Merger. The Merger will become effective at such time as the certificate of merger is duly filed with such Secretary of State, or at such later time as Merck and Harpoon agree and specify in the certificate of merger.

Appraisal Rights

If the Merger is consummated, stockholders who do not wish to accept the applicable merger consideration are entitled to seek appraisal of their Company Shares or shares of Company Series A Preferred Stock under Section 262 of the DGCL and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of Company Shares or shares of Company Series A Preferred Stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the consideration that such holder of Company Shares or shares of Company Series A Preferred Stock may receive in the Merger. These rights are known as “appraisal rights.” This proxy statement serves as a notice of such appraisal rights pursuant to Section 262.

Persons who exercise appraisal rights under Section 262 of the DGCL will not receive the consideration that they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their Company Shares or shares of Company Series A Preferred Stock, as applicable, following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their Company Shares or shares of Company Series A Preferred Stock determined under Section 262 could be more than, the same as or less than the consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 is required. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A copy of Section 262 of the DGCL is attached to this proxy statement as Annex D. The following summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 of the DGCL and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 of the DGCL and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. The following summary does not constitute legal or other advice, nor does it constitute a recommendation that persons seek to exercise their appraisal rights under Section 262 of the DGCL. A person who loses his, her or its appraisal rights will be entitled to receive the Merger Consideration under the Merger Agreement.

 

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A holder of record of Company Shares or shares of Company Series A Preferred Stock and a beneficial owner who (1) continuously holds or beneficially owns, as applicable, such shares through the Effective Time, (2) has not consented to the Merger in writing or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (3) strictly complies with the procedures under Section 262 of the DGCL, (4) does not thereafter withdraw his, her or its demand for appraisal of such shares and (5) in the case of a beneficial owner, a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List (as defined below), will be entitled to receive the fair value of his, her or its Company Shares or shares of Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value.

Section 262 of the DGCL requires that where a proposed merger is to be submitted for approval at a meeting of stockholders, the corporation must notify stockholders that appraisal rights will be available not less than 20 days before the meeting to vote on the Merger. Such notice must include either a copy of Section 262 of the DGCL or information directing the stockholders to a publicly available electronic resource at which Section 262 of the DGCL may be accessed without subscription or cost. This proxy statement constitutes Harpoon’s notice to our stockholders that appraisal rights are available in connection with the Merger, in compliance with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 of the DGCL, which is attached to this proxy statement as Annex D. Failure to comply timely and properly with the requirements of Section 262 of the DGCL will result in the loss of your appraisal rights under the DGCL.

If you elect to demand appraisal of your Company Shares or shares of Company Series A Preferred Stock, you must satisfy each of the following conditions: you must deliver to Harpoon a written demand for appraisal of your Company Shares or shares of Company Series A Preferred Stock, as applicable, prior to the Special Meeting, which must (1) reasonably inform us of the identity of the holder of record of such shares who intends to demand appraisal of his, her or its shares (and, for beneficial owners only, such demand is accompanied by documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List), and (2) that you intend to demand the appraisal of your shares. In addition, as described above, you must not vote or submit a proxy in favor of the proposal to adopt the Merger Agreement; you must hold or beneficially own, as applicable, your Company Shares or shares of Company Series A Preferred Stock continuously through the effective date; and you must comply with the other applicable requirements of Section 262 of the DGCL.

A stockholder of Harpoon who elects to exercise appraisal rights must mail or deliver his, her or its written demand for appraisal to the following address:

Harpoon Therapeutics, Inc.

611 Gateway Boulevard

South San Francisco, California 94080

Attention: Corporate Secretary

Within 10 days after the Effective Time, the Surviving Corporation must give written notice that the Merger has become effective to each stockholder of any class or series of stock of Harpoon who is entitled to appraisal rights that the Merger was approved and that appraisal rights are available for any or all shares of such class or series of stock.

Within 120 days after the Effective Time, but not thereafter, the Surviving Corporation and any person who has properly and timely demanded appraisal and otherwise complied with Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on

 

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the Surviving Corporation in the case of a petition filed by a person, demanding a determination of the fair value of the Company Shares or shares of Company Series A Preferred Stock held by all persons that have demanded appraisal. There is no present intent on the part of Harpoon or the Surviving Corporation to file an appraisal petition and persons seeking to exercise appraisal rights should assume that Harpoon and the Surviving Corporation will not file such a petition or initiate any negotiations with respect to the fair value of Company Shares or shares of Company Series A Preferred Stock. Accordingly, persons who desire to have their Company Shares or shares of Company Series A Preferred Stock appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262 of the DGCL. If, within 120 days after the Effective Time, no petition has been filed as provided above, all rights to appraisal will cease and any person that previously demanded appraisal will become entitled only to the Merger Consideration under the Merger Agreement.

At any time within 60 days after the Effective Time, any person who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the demand and accept the Merger Consideration specified by the Merger Agreement for that person’s Company Shares or shares of Company Series A Preferred Stock by delivering to the Surviving Corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the Effective Time will require written approval of the Surviving Corporation. Unless the demand is properly withdrawn by the person within 60 days after the effective date, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any person without the approval of the Delaware Court of Chancery, with such approval conditioned upon such terms as the Delaware Court of Chancery deems just. If the Surviving Corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the person will be entitled to receive only the fair value of such person’s Company Shares or shares of Company Series A Preferred Stock determined by the Delaware Court of Chancery in any such appraisal proceeding, which value could be less than, equal to or more than the Merger Consideration offered pursuant to the Merger Agreement.

In addition, within 120 days after the Effective Time, any person who has theretofore complied with the applicable provisions of Section 262 of the DGCL will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of Company Shares or shares of Company Series A Preferred Stock not consented in writing or otherwise voted in favor of the Merger and with respect to which demands for appraisal were received by the Surviving Corporation and the aggregate number of holders of such shares. Such statement must be given within 10 days after the written request therefor has been received by the Surviving Corporation or within 10 days after the expiration of the period for the delivery of demands as described above, whichever is later.

Upon the filing of a petition by a person, service of a copy of such petition shall be made upon the Surviving Corporation. The Surviving Corporation shall be required to, within 20 days after such service, file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all persons who have demanded appraisal of their Company Shares or shares of Company Series A Preferred Stock and with whom the Surviving Corporation has not reached agreements as to the value of such shares (the “Chancery List”). The Register in Chancery, if so ordered by the Delaware Court of Chancery, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the Surviving Corporation and to all such persons set forth on the Chancery List.

If a petition for an appraisal is timely filed by a person, at the hearing on such petition, the Delaware Court of Chancery will determine which persons have complied with Section 262 of the DGCL and have become entitled to appraisal rights provided thereby. The Delaware Court of Chancery may require the persons who have demanded an appraisal of their Company Shares or shares of Company Series A Preferred Stock and who hold such shares represented by certificates to submit their certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any person fails to comply with such direction, the Delaware Court of Chancery may dismiss the proceedings as to such person.

 

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Upon application by the Surviving Corporation or any person entitled to participate in the appraisal proceedings, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to appraisal. Any person whose name appears on the Chancery List and may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under Section 262 of the DGCL.

Where proceedings are not dismissed, the appraisal proceeding shall be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceedings the Delaware Court of Chancery shall determine the fair value of Company Shares or shares of Company Series A Preferred Stock taking into account all relevant factors, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the Effective Time through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the Surviving Corporation may pay to each person entitled to appraisal an amount in cash, in which case interest shall accrue after such payment only on the sum of (1) the difference, if any, between the amount so paid and the fair value of the Company Shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time.

When the fair value of the Company Shares or shares of Company Series A Preferred Stock is determined, the Delaware Court of Chancery will direct the payment of such value, with interest thereon, if any, to the persons entitled to receive the same.

Although Harpoon believes that the Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and persons should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the Merger Consideration. Moreover, the Surviving Corporation does not anticipate offering more than the Merger Consideration to any person exercising appraisal rights and reserves the right to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair value” of the relevant shares is less than the Merger Consideration.

In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were known or could be ascertained as of the date of the Merger which throw any light on future prospects of the merged corporation. The Delaware Supreme Court has indicated that transaction price is one of the relevant factors the Delaware Court of Chancery may consider in determining “fair value” and that absent deficiencies in the sale process the transaction price should be given “considerable weight.” Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the Merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 of the DGCL to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the Merger and not the product of speculation, may be considered.”

The cost of the appraisal proceeding may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable in the circumstances. However, costs do not

 

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include attorneys’ and expert witness fees. Each person is responsible for his, her or its attorneys’ and expert witness fees, although, upon application of a person whose name appears on the Chancery List who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court of Chancery may order that all or a portion of such expenses, including, without limitation, reasonable attorneys’ and expert witness fees, be charged pro rata against the value of all Company Shares entitled to appraisal not dismissed pursuant to Section 262(k) of the DGCL or subject to such an award pursuant to a reservation of jurisdiction under Section 262(k) of the DGCL. Determinations by the Delaware Court of Chancery are subject to appellate review by the Delaware Supreme Court.

Any person who has duly demanded appraisal in compliance with Section 262 of the DGCL will not be entitled to vote for any purpose any Company Shares or shares of Company Series A Preferred Stock subject to such demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to stockholders of record at a date prior to the Effective Time.

To the extent there are any inconsistencies between the foregoing summary, on the one hand, and Section 262, on the other hand, Section 262 will govern.

Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL will result in the loss of a stockholder’s statutory appraisal rights.

Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares

The following discussion is a summary of certain material U.S. federal income tax consequences of the Merger that may be relevant to holders of Company Shares whose Company Shares are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Code, Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. This discussion is limited to holders that hold their Company Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes). This summary of material U.S. federal income tax consequences is not a complete description of all potential U.S. federal income tax consequences of the Merger. This summary does not describe any of the tax consequences arising under the laws of any state, local or non-U.S. tax jurisdiction and does not consider any aspects of U.S. federal tax law other than income taxation (e.g., state, gift or alternative minimum tax, the Medicare net investment income surtax, or any withholding considerations under the Foreign Account Tax Compliance Act of 2010 (including regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith)). In addition, this summary does not address the U.S. federal income tax consequences to holders of Company Shares that exercise appraisal rights under the DGCL. For purposes of this discussion, a “holder” means either a U.S. Holder or a Non-U.S. Holder or both, as the context may require.

This discussion is for general information only and does not address all of the U.S. federal income tax considerations that may be relevant to holders in light of their particular facts and circumstances, including, but not limited to:

 

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holders that may be subject to special treatment under U.S. federal income tax laws, such as: financial institutions, tax-exempt organizations, governmental organizations, S corporations, partnerships or any other entities or arrangements treated as pass-through entities or partnerships for U.S. federal income tax purposes or any investor therein, banks, insurance companies, mutual funds, brokers or dealers in stocks, securities, commodities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, regulated investment companies, real estate investment trusts, or certain former citizens or long-term residents of the United States;

 

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holders that are corporations that accumulate earnings to avoid U.S. federal income tax;

 

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holders holding their Company Shares as part of a hedging, straddle or other risk reducing transaction or as part of a conversion transaction or other integrated investment;

 

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holders deemed to have sold their Company Shares under the constructive sale provisions of the Code;

 

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holders that received their Company Shares in compensatory transactions;

 

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holders that hold their Company Shares through individual retirement or other tax-deferred accounts;

 

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holders that own an equity interest, actually or constructively, in Merck;

 

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U.S. Holders whose “functional currency” is not the U.S. dollar;

 

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holders that are required to report income no later than when such income is reported in an “applicable financial statement”; or

 

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holders that own or have owned (actually or constructively) 5% or more of the Company Shares.

If a partnership (including an entity or arrangement classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of Company Shares, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding Company Shares and partners therein should consult their tax advisors regarding the particular tax consequences to them of the Merger.

We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary. No assurance can be given that the IRS will agree with the views expressed in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation.

THIS DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE TO ANY HOLDER. A HOLDER SHOULD CONSULT ITS TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR OTHER TAX LAWS.

U.S. Holders

For purposes of this proxy statement, a “U.S. Holder” is a beneficial owner of Company Shares who or that is, or is treated as, for U.S. federal income tax purposes:

 

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An individual who is a citizen or resident of the United States;

 

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A domestic corporation;

 

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An estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

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A trust (i) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

The receipt of cash by a U.S. Holder in exchange for Company Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the Company Shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal

 

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