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

CHEMOCENTRYX, 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

 

 

 

CHEMOCENTRYX, INC.

835 Industrial Road, Suite 600

San Carlos, CA 94070

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

September 14, 2022

Dear Stockholders of ChemoCentryx, Inc.:

You are cordially invited to attend a special meeting of the stockholders of ChemoCentryx, Inc., a Delaware corporation (referred to as “ChemoCentryx,” the “Company,” “we,” “us” or “our”), to be held on October 18, 2022, at 9:00 a.m., local time, at the offices of Latham & Watkins LLP, located at 650 Town Center Drive, 20^th Floor, Costa Mesa, CA 92626 (the special meeting and any adjournments or postponements thereof, referred to as the “Special Meeting”).

We have entered into an Agreement and Plan of Merger (as it may be amended from time to time, referred to as the “Merger Agreement”), dated as of August 3, 2022, with Amgen Inc., a Delaware corporation (referred to as “Amgen”), and Carnation Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Amgen (referred to as “Merger Sub”). Pursuant to and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into ChemoCentryx, with ChemoCentryx surviving the merger as a wholly owned subsidiary of Amgen (referred to as the “Merger”).

At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Merger Agreement (referred to as the “Merger Proposal”). The affirmative vote of the holders of a majority of the shares of ChemoCentryx common stock issued and outstanding and entitled to vote thereon as of the close of business on September 13, 2022 (referred to as the “Record Date”) is required to approve the Merger Proposal. At the Special Meeting, you will also be asked to consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to ChemoCentryx’s named executive officers that is based on or otherwise relates to the Merger (referred to as the “Merger Compensation Proposal”). At the Special Meeting, you will also 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 to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (referred to as the “Adjournment Proposal”).

If the Merger is consummated, you will be entitled to receive $52.00 in cash, without interest, for each share of ChemoCentryx common stock 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 116% over the ChemoCentryx common stock closing price of $24.11 on August 3, 2022, the last trading day before the public announcement that ChemoCentryx entered into the Merger Agreement.

The Board of Directors of ChemoCentryx (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 fair to, and in the best interests of, ChemoCentryx and its stockholders, (ii) approved, adopted, and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) resolved to recommend the adoption of the Merger Agreement and approval of the Merger by ChemoCentryx’s stockholders and

(iv) directed that the adoption of the Merger Agreement be submitted to a vote of ChemoCentryx’s stockholders. The Board unanimously recommends that ChemoCentryx stockholders vote “FOR” the Merger Proposal. In addition, the Board unanimously recommends that ChemoCentryx stockholders vote “FOR” the Merger Compensation 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 and is incorporated herein by reference. The proxy statement also describes the actions and determinations of the Board in connection with its evaluation of the Merger Agreement and the Merger. 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 ChemoCentryx from documents we file with the Securities and Exchange Commission from time to time.

Whether or not you plan to attend the Special Meeting in person, 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. If you attend the Special Meeting and vote in person by ballot, your vote will revoke any proxy that you have previously submitted.

Your vote is very important, regardless of the number of shares that you own. We cannot consummate the Merger unless the proposal to adopt the Merger Agreement is approved by the affirmative vote of the holders of at least a majority of the issued and outstanding shares of ChemoCentryx’s common stock entitled to vote thereon as of the Record Date.

If you have questions or need assistance voting your shares of ChemoCentryx common stock, please contact:

 

1407 Broadway, 27^th 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,

Thomas J. Schall, Ph.D.

President, Chief Executive Officer and Chairman

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 September 14, 2022 and, together with the enclosed form of proxy card, is first being mailed to stockholders on or about September 16, 2022.

CHEMOCENTRYX, INC.

835 Industrial Road, Suite 600

San Carlos, CA 94070

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 18, 2022

 

 

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of ChemoCentryx, Inc., a Delaware corporation (referred to as “ChemoCentryx,” the “Company,” “we,” “us” or “our”), will be held on October 18, 2022, at 9:00 a.m., local time, at the offices of Latham & Watkins LLP, located at 650 Town Center Drive, 20^th Floor, Costa Mesa, CA 92626, 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, referred to as the “Merger Agreement”), dated as of August 3, 2022, among Amgen Inc., a Delaware corporation (referred to as “Amgen”), Carnation Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Amgen (referred to as “Merger Sub”), and ChemoCentryx, pursuant to which Merger Sub will be merged with and into ChemoCentryx, with ChemoCentryx surviving the merger as a wholly owned subsidiary of Amgen (referred to as the “Merger”);

 

2.

To consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to ChemoCentryx’s named executive officers that is based on or otherwise relates to the Merger; and

 

3.

To consider and vote on a proposal to approve the adjournment of the special meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes to approve the proposal to adopt the Merger Agreement at the time of the special meeting (the special meeting and any adjournments or postponements thereof, referred to as the “Special Meeting”).

Only stockholders of record as of the close of business on September 13, 2022 (referred to as 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.

The Board unanimously recommends that you vote:

 

1.

“FOR” the proposal to adopt the Merger Agreement (referred to as the “Merger Proposal”);

2.    “FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid or become payable to ChemoCentryx’s named executive officers that is based on or otherwise relates to the Merger (referred to as the “Merger Compensation Proposal”); and

3.    “FOR” the proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting (referred to as the “Adjournment Proposal”).

Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Special Meeting in person, 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 in person, 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 proposal to adopt the Merger Agreement.

Under Delaware law, stockholders who do not vote in favor of the Merger Proposal will have the right to seek appraisal of the fair value of their shares of ChemoCentryx common stock 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 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,

Thomas J. Schall, Ph.D

President, Chief Executive

Officer and Chairman

San Carlos, California

September 14, 2022

YOUR VOTE IS VERY IMPORTANT!

If your shares are registered directly in your name: If you are a stockholder of record, you may grant a proxy to vote your shares through the Internet, by telephone or by mail as described below. Please help us save time and postage costs by granting a proxy through the Internet or by telephone. Each such method is generally available 24 hours a day and will ensure that your proxy to vote your shares is confirmed and posted immediately. To grant a proxy to vote your shares:

 

1.

BY INTERNET

 

a.

Go to the website at www.proxyvote.com, 24 hours a day, 7 days a week, until 11:59 p.m. Eastern Time on October 17, 2022, the day preceding the Special Meeting.

 

b.

Please have your proxy card available to verify your identity and create an electronic proxy.

 

c.

Follow the simple instructions provided.

 

2.

BY TELEPHONE

 

a.

On a touch-tone telephone, call toll-free 1-800-690-6903, 24 hours a day, 7 days a week, until 11:59 p.m. Eastern Time on October 17, 2022, the day preceding the Special Meeting.

 

b.

Please have your proxy card available to verify your identity.

 

c.

Follow the simple instructions provided.

 

3.

BY MAIL

 

a.

Mark, sign and date your proxy card.

 

b.

Return it prior to 11:59 p.m. Eastern Time on October 17, 2022, the day preceding the Special Meeting, in the postage-paid envelope provided.

If your shares are held in the name of a bank, broker or other nominee: You will receive instructions on how to vote from the bank, broker or other nominee. You must follow the instructions of such bank, broker or other nominee in order for your shares to be voted. Telephone and Internet voting instructions also may be offered to stockholders owning shares through certain banks and brokers. As a beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote the shares in your account. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the Special Meeting, including the Merger Proposal, without your instructions.

If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or vote by ballot in person at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you hold your shares through a bank, broker or other nominee, you must obtain from such nominee a valid “legal proxy” issued in your name in order to vote in person at the Special Meeting.

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 shares of ChemoCentryx common stock, please contact our proxy solicitor or us by using the contact information provided below:

 

1407 Broadway, 27^th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

or

 

ChemoCentryx, Inc.

835 Industrial Road, Suite 600

San Carlos, CA 94070

Attn: Corporate Secretary

Call: (650) 210-2900

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			13
THE COMPANIES			25
THE SPECIAL MEETING			26
Date, Time and Place of the Special Meeting			26
Purpose of the Special Meeting			26
Record Date; Shares Entitled to Vote; Quorum			26
Vote Required; Abstentions and Broker Non-Votes			26
Shares Held by Directors and Executive Officers			27
Voting; Proxies			27
Revocability of Proxies			29
Abstentions			29
Adjournments and Postponements			29
Board Recommendation			30
Solicitation of Proxies			30
Anticipated Date of Consummation of the Merger			30
Appraisal Rights			30
Householding of Special Meeting Materials			31
Questions and Additional Information			32
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			33
THE MERGER			35
Certain Effects of the Merger on ChemoCentryx			35
Effect on ChemoCentryx if the Merger is Not Consummated			35
Merger Consideration			36
Background of the Merger			36
Recommendation of the Board and Reasons for the Merger			48
Opinion of Goldman Sachs & Co. LLC			54
Certain Unaudited Prospective Financial Information			59
Interests of the Directors and Executive Officers of ChemoCentryx in the Merger			62
Financing of the Merger			67
Closing and Effective Time of the Merger			68
Appraisal Rights			68
Material U.S. Federal Income Tax Consequences of the Merger			72
Regulatory Approvals Required for the Merger			75
Litigation Related to the Merger			76
Delisting and Deregistration of ChemoCentryx Common Stock			77
THE MERGER AGREEMENT			78
Explanatory Note Regarding the Merger Agreement			78
When the Merger Becomes Effective			78
Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers			79
Effect of the Merger on ChemoCentryx Common Stock			79
Treatment of Equity Awards and the ESPP			79
Dissenting Shares			80
Payment for ChemoCentryx Common Stock			81
Representations and Warranties			81
Conduct of Business Pending the Merger			85
Other Covenants and Agreements			88
Conditions to the Merger			97
Termination			99
Termination Fee; Certain Expenses			101
Expenses Generally			102

 

i

Specific Performance			102
Amendments; Waiver			102
Governing Law and Jurisdiction			102
PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL			104
The Merger Proposal			104
Vote Required			104
Board Recommendation			104
PROPOSAL NO. 2: ADVISORY VOTE ON THE MERGER COMPENSATION PROPOSAL			105
The Merger Compensation Proposal			105
Vote Required			107
Board Recommendation			108
PROPOSAL NO. 3: ADJOURNMENT OF THE SPECIAL MEETING			109
The Adjournment Proposal			109
Vote Required			109
Board Recommendation			109
MARKET PRICES AND DIVIDEND DATA			110
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			111
WHERE YOU CAN FIND MORE INFORMATION			114
MISCELLANEOUS			116

ANNEXES

 

ANNEX A—AGREEMENT AND PLAN OF MERGER			A-1
ANNEX B—OPINION OF GOLDMAN SACHS & CO. LLC			B-1

 

ii

 

1

 

2

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

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21

 

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THE COMPANIES

ChemoCentryx, Inc.

ChemoCentryx is a Delaware corporation with principal executive offices located at 835 Industrial Road, Suite 600, San Carlos, CA 94070, telephone number (650) 210-2900. ChemoCentryx is a fully integrated United States biopharmaceutical company focused on the development and commercialization of new medications targeting inflammatory disorders, autoimmune diseases and cancer. ChemoCentryx discovered, developed and is now commercializing TAVNEOS (avacopan) in the U.S. as an adjunctive treatment for adult patients with severe active anti-neutrophil cytoplasmic autoantibody-associated vasculitis (ANCA-associated vasculitis), specifically granulomatosis with polyangiitis (GPA) and microscopic polyangiitis (MPA), the two main forms of ANCA-associated vasculitis, in combination with standard therapy including glucocorticoids, and not for the elimination of glucocorticoids use. The common stock of ChemoCentryx is listed on Nasdaq under the symbol “CCXI.” Additional information about ChemoCentryx is contained in certain of its public filings that are incorporated by reference herein. See “Where You Can Find More Information” beginning on page 114 of this proxy statement.

Amgen Inc.

Amgen is a Delaware corporation with principal executive offices located at One Amgen Center Drive, Thousand Oaks, CA 91320, telephone number (805) 447-1000. Amgen is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics. The common stock of Amgen is listed on Nasdaq under the symbol “AMGN.”

Carnation Merger Sub, Inc.

Merger Sub is a Delaware corporation and a wholly owned subsidiary of Amgen, with a registered office located at 251 Little Falls Drive, Wilmington, Delaware 19808. Merger Sub was formed solely for the purpose of effecting the Merger and the transactions contemplated by the Merger Agreement.

 

25

THE SPECIAL MEETING

We are furnishing this proxy statement to ChemoCentryx 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 our stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held on October 18, 2022 at the offices of Latham & Watkins LLP, located at 650 Town Center Drive 20^th Floor, Costa Mesa, CA 92627, at 9:00 a.m., local time, or at any adjournment or postponement thereof.

Purpose of the Special Meeting

At the Special Meeting, we will ask our stockholders of record as of the Record Date to vote on (i) the Merger Proposal, (ii) the Merger Compensation Proposal and (iii) the Adjournment Proposal. If holders of our common stock 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 78 of this proxy statement.

This proxy statement and the enclosed form of proxy are first being mailed to our stockholders on or about September 16, 2022.

Record Date; Shares Entitled to Vote; Quorum

Only stockholders of record as of the close of business on September 13, 2022, the Record Date for the Special Meeting, are entitled to notice 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 835 Industrial Road, Suite 600, San Carlos, CA 94070, during regular business hours for a period of at least 10 days before the Special Meeting and at the place of the Special Meeting during the meeting.

As of the Record Date, there were 71,919,705 shares of our common stock issued and outstanding and entitled to be voted at the Special Meeting.

A quorum of 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 or by proxy, of the holders of a majority of the voting power of our issued and outstanding shares entitled to vote at the meeting will constitute a quorum for ChemoCentryx to transact business at a Special Meeting. In general, shares of our common stock that were outstanding as of the Record Date and are represented by a properly signed and returned proxy card will be counted as shares present and entitled to vote at the Special Meeting for purposes of determining a quorum. Shares represented by proxies received but marked “ABSTAIN” will be included in the calculation of the number of shares considered to be present at the Special Meeting for purposes of determining a quorum. Broker non-votes will not be included in the calculation of the number of shares considered to be present at the Special Meeting for purposes of determining a quorum.

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 share of ChemoCentryx common stock issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting.

 

26

Approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock that are issued and outstanding as of the Record Date and entitled to vote thereon. Adoption of the Merger Agreement by our stockholders is a condition to the closing of the Merger.

Approval of the Merger Compensation Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of ChemoCentryx common stock present in person or by proxy at the Special Meeting and entitled to vote thereon.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority in voting power of the shares of ChemoCentryx common stock present in person or by proxy at the Special Meeting and entitled to vote thereon.

If a ChemoCentryx stockholder fails to vote, it will have the same effect as if the stockholder voted “AGAINST” the Merger Proposal, but it will have no effect on the Merger Compensation Proposal or the Adjournment Proposal.

If a ChemoCentryx stockholder abstains from voting, it will have the same effect as if the stockholder voted “AGAINST” the Merger Proposal, “AGAINST” the Merger Compensation Proposal and “AGAINST” the Adjournment Proposal.

If you hold your shares in “street name” the failure to instruct your bank, broker or other nominee on how to vote your shares will result in a broker non-vote, and each broker non-vote will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Merger Compensation Proposal or the Adjournment Proposal.

Shares Held by Directors and Executive Officers

As of the close of business on the Record Date, directors and executive officers of ChemoCentryx and their affiliates beneficially owned and were entitled to vote, in the aggregate, 3,212,348 shares of our common stock, which represented approximately 4.5% of the shares of our common stock issued and outstanding on that date. Our directors and executive officers have informed us that they currently intend to vote all of their shares of ChemoCentryx common stock (i) “FOR” the Merger Proposal, (ii) “FOR” the Merger Compensation Proposal and (iii) “FOR” the Adjournment Proposal, although none of them is obligated to do so.

Voting; Proxies

Attendance

All holders of shares of ChemoCentryx common stock as of the close of business on the Record Date, including stockholders of record and beneficial owners of common stock registered in the “street name” of a bank, broker or other nominee, are invited to attend the Special Meeting. If you are a stockholder of record, please be prepared to provide proper identification, such as a driver’s license, and proof of ownership of our common stock, such as a bank or brokerage account statement. If you hold your shares in “street name,” you will need to provide proof of ownership, such as a recent account statement or voting instruction form provided by your bank, broker or other nominee or other similar evidence of ownership, along with proper identification and you may not vote your shares in person at the Special Meeting unless you request and obtain a valid “legal proxy” from your bank, broker or other nominee.

Voting in Person

Stockholders of record will be able to vote in person at the Special Meeting. If you plan to attend the Special Meeting and wish to vote in person, you will be given a ballot at the meeting. If you are not a stockholder of record, but instead hold your shares of ChemoCentryx common stock in “street name” through a bank, broker or other nominee, you must provide a “legal proxy” executed in your favor from your bank, broker or other nominee in order to be able to vote in person at the Special Meeting.

 

27

Providing Voting Instructions by Proxy

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

Shares of ChemoCentryx Common Stock Held by Record Holders

If you are a stockholder of record and your shares of ChemoCentryx common stock are registered in your name with our transfer agent, AST, 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 or via the Internet by accessing the Internet address as specified on the enclosed proxy card. Your shares of common stock 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 October 17, 2022, the day preceding the Special Meeting, your shares of ChemoCentryx common stock will be voted in the manner directed by you on your proxy card.

Voting instructions are included on your proxy card. All 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 shares of ChemoCentryx common stock represented by your properly signed proxy will be voted “FOR” each of the Merger Proposal, the Merger Compensation 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 and vote in person, your shares of common stock 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 Merger Compensation Proposal or the Adjournment Proposal.

Shares of ChemoCentryx Common Stock Held in “Street Name”

If your shares of ChemoCentryx common stock 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 shares. You may cause your 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.

Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your shares on “routine” matters if you fail to instruct your bank, broker or other nominee on how to vote your shares with respect to such matters. The Merger Proposal, the Merger Compensation Proposal and the Adjournment Proposal described in this proxy statement are “non-routine” matters, and your bank, broker and 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, such actions will result in a “broker non-vote.” Broker non-votes, if any, will not be considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, will have the same effect as if you voted “AGAINST” the Merger

 

28

Proposal and will have no effect on the Merger Compensation Proposal or the Adjournment Proposal. For shares of common stock held in “street name,” only shares of common stock affirmatively voted “FOR” the Merger Proposal, Merger Compensation 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:

 

•

delivering a written notice of revocation of your proxy to our Corporate Secretary at ChemoCentryx, Inc., Attention: Corporate Secretary, 835 Industrial Road, Suite 600, San Carlos, CA 94070 prior to 11:59 p.m. Eastern Time on October 17, 2022, the day preceding the Special Meeting;

 

•

signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same shares of ChemoCentryx common stock and returning it to us by mail prior to 11:59 pm Eastern Time on October 17, 2022, the day preceding the Special Meeting;

 

•

submitting a new proxy by telephone or Internet prior to 11:59 pm Eastern Time on October 17, 2022, the day preceding the Special Meeting; or

 

•

attending the Special Meeting and voting in person (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 ChemoCentryx or by sending a written notice of revocation to ChemoCentryx, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by ChemoCentryx before the Special Meeting. Please note that to be effective, your new proxy card, Internet or telephonic voting instructions or written notice of revocation must be received by our Corporate Secretary prior to 11:59 p.m. Eastern Time on October 17, 2022, the day preceding the Special Meeting.

If you hold your shares of common stock 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 if you obtain a valid “legal proxy” from your bank, broker or other nominee. Any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow ChemoCentryx 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 shares of ChemoCentryx common stock 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, “AGAINST” the Merger Compensation Proposal and “AGAINST” 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 proxies. If a quorum is not present, then under our amended and restated bylaws, (i) the chairperson of the Special Meeting or (ii) a majority in voting power of the stockholders entitled to vote at the Special Meeting, present in person or represented by proxy,

 

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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, thereof, 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 thirty (30) days, or if after such adjournment a new record date 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.

In addition, the Board could postpone the Special Meeting before it commences. 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 our stockholders necessary to adopt the Merger Agreement by approving the Merger Proposal, 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 Board and Reasons for the Merger” beginning on page 48 of this proxy statement, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, ChemoCentryx and its stockholders, (ii) approved, adopted, and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (iii) resolved to recommend the adoption of the Merger Agreement and approval of the Merger by ChemoCentryx’s stockholders and (iv) directed that the adoption of the Merger Agreement be submitted to a vote of ChemoCentryx’s stockholders.

The Board unanimously recommends that you vote (i) “FOR” the Merger Proposal, (ii) “FOR” the Merger Compensation Proposal and (iii) “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 $25,000 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 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 fourth quarter of 2022, assuming satisfaction or 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 ChemoCentryx and Amgen, that the Merger will be consummated at a later time or not at all.

Appraisal Rights

If the Merger is consummated, persons who do not wish to accept the Merger Consideration are entitled to seek appraisal of their shares of ChemoCentryx common stock under Section 262 and, if all procedures described

 

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in Section 262 are strictly complied with, to receive payment in cash for the fair value of their shares of ChemoCentryx common 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 your shares of ChemoCentryx common stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the Merger Consideration that you are otherwise entitled to receive under the Merger Agreement. 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 will not receive the Merger Consideration 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 shares of ChemoCentryx common stock following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their shares of ChemoCentryx common stock determined under Section 262 could be more than, the same as or less than the Merger 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 holder of record of shares of ChemoCentryx common stock and a beneficial owner who (i) continuously holds such shares through the Effective Time, (ii) has not consented to or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (iii) strictly complies with the procedures under Section 262, (iv) does not thereafter withdraw his, her or its demand for appraisal of such shares and (v) 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 ChemoCentryx and to be set forth on the Chancery List (as defined in the section of this proxy statement entitled “The Merger—Appraisal Rights”), will be entitled to receive the fair value of his, her or its shares of ChemoCentryx common 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 may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. 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 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 of this proxy statement entitled “The Merger—Appraisal Rights”.

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 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 ChemoCentryx, Inc., 835 Industrial Road, Suite 600, San Carlos, CA 94070,

 

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Attention: Corporate Secretary, telephone number 650-210-2900. 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 broker, bank or other intermediary or sending a written request to ChemoCentryx, Inc. 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 or us:

 

1407 Broadway, 27^th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

or

 

835 Industrial Road, Suite 600

San Carlos, CA 94070

Attention: Corporate Secretary

Call: 650-210-2900

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

 

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CAUTIONARY STATEMENT 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,” “opinion,” “plan,” “possible,” “potential,” “project,” “should,” “will” and similar words or expressions. Stockholders are cautioned that any such forward-looking statements 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 in this proxy statement, and the following factors:

 

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the inability to consummate the Merger within the anticipated time period, or at all, due to any reason, including the failure to obtain the ChemoCentryx Stockholder Approval or the failure to satisfy the other conditions to the consummation of the Merger, including the termination or expiration of the waiting period applicable to the Merger under the HSR Act;

 

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the risk that the Merger Agreement may be terminated in circumstances requiring us to pay Amgen a termination fee of $119,314,679;

 

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risks that the proposed Merger disrupts our current plans and operations or affects our ability to retain or recruit key employees;

 

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the effect of the announcement, pendency or consummation of the Merger on our business relationships (including, without limitation, customers, suppliers and other business partners), operating results and business generally;

 

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

 

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

 

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the inability to obtain the ChemoCentryx Stockholder Approval with respect to the Merger;

 

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the risk that our stock price may decline significantly if the Merger is not consummated;

 

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

 

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the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against us and others;

 

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

 

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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; and

 

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the fact that our stockholders would forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent public company.

Consequently, no forward-looking statements may be guaranteed and 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, ChemoCentryx 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

 

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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 herein and elsewhere, including the risk factors included in ChemoCentryx’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 communication speaks only as of the date on which it is made. ChemoCentryx can give no assurance that the conditions to the Merger will be satisfied. You should not put undue reliance on any forward-looking statements. ChemoCentryx 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 ChemoCentryx 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 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 ChemoCentryx

If the Merger Agreement is adopted by ChemoCentryx stockholders and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into ChemoCentryx, with ChemoCentryx continuing as the surviving corporation and a wholly owned subsidiary of Amgen.

At the Effective Time, each share of our common stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares, Excluded Shares and Dissenting Shares) will be converted automatically into the right to receive the Merger Consideration.

The common stock of ChemoCentryx is listed and trades on Nasdaq under the symbol “CCXI.” As a result of the Merger, ChemoCentryx will cease to be a publicly traded company and will become a wholly owned subsidiary of Amgen. Prior to the Effective Time, we will cooperate with Amgen and use reasonable best efforts to delist our common stock from Nasdaq and deregister our common stock under the Exchange Act as promptly as practicable 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 Amgen.

Effect on ChemoCentryx if the Merger is Not Consummated

If the Merger Agreement is not adopted by the holders of a majority of the issued and outstanding shares of ChemoCentryx common stock entitled to vote thereon as of the Record Date or if the Merger is not consummated for any other reason, ChemoCentryx stockholders will not receive any payment for their shares of ChemoCentryx common stock pursuant to the Merger Agreement. Instead, ChemoCentryx will remain a public company, our common stock 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, and depending on the circumstances that caused the Merger not to be consummated, the price of our common stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of our common stock would return to the price at which it trades 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 shares of our common stock. 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 holders of a majority of the issued and outstanding shares of ChemoCentryx common stock entitled to vote thereon as of the Record Date or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to ChemoCentryx will be offered or that our business, prospects or results of operations will not be adversely impacted.

In addition, under specified circumstances, upon termination of the Merger Agreement, ChemoCentryx may be required to pay Amgen a termination fee, as described under “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 101 of this proxy statement.

 

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Merger Consideration

In the Merger, each share of our common stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares, Excluded Shares and Dissenting Shares) will be converted automatically into the right to receive the Merger Consideration, and without any action by the holders of such shares, will cease to be outstanding, be cancelled and cease to exist, and each Certificate or Book-Entry Share will thereafter represent only the right to receive the Merger Consideration.

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 ChemoCentryx stockholder as a result of the Merger (except that any holder of Dissenting Shares will have those rights granted under, and subject to compliance with, Section 262), nor will you be entitled to receive any shares in Amgen or the surviving corporation.

Each of the exchange agent, the surviving corporation and Amgen will be entitled to deduct and withhold from any amounts otherwise payable pursuant to the Merger Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. If the exchange agent, the surviving corporation or Amgen, as the case may be, so deducts and withholds amounts and timely and properly remits such amounts to the applicable governmental authority, such amounts shall be treated for all purposes of the Merger Agreement as having been paid to the person in respect of which such deduction and withholding was made.

Background of the Merger

The Board, together with members of senior management of ChemoCentryx, regularly reviews and assesses the performance, future growth prospects, business plans and overall strategic direction of ChemoCentryx, and considers a variety of strategic alternatives that may be available to ChemoCentryx, including continuing to pursue its strategy as a standalone company or pursuing potential strategic or financing transactions with third parties, in each case with the goal of maximizing stockholder value.

On March 3, 2020, the Board held a regularly-scheduled telephonic meeting at which members of senior management of ChemoCentryx and representatives of Latham & Watkins LLP (referred to as “Latham & Watkins”), counsel to ChemoCentryx, were also present. At the meeting, members of senior management of ChemoCentryx provided a business update to the Board, including, among other matters, an update with respect to ChemoCentryx’s anticipated NDA filing for avacopan for the treatment of ANCA vasculitis and an update with respect to certain of ChemoCentryx’s commercial partnerships and marketing efforts. At an executive session of the meeting, Dr. Thomas Schall, Chief Executive Officer of ChemoCentryx, led a discussion regarding ChemoCentryx’s achievement of corporate goals during the 2019 year, as well as ChemoCentryx’s pipeline and preparation for commercialization. During such executive session, Dr. Schall and members of the Board also discussed whether ChemoCentryx should consider the possibility of a strategic partnership transaction, equity financing or a broader strategic transaction at such time. Following discussion, the Board determined that members of senior management and the Board should continue to evaluate alternatives that may be available to ChemoCentryx, and that it would be appropriate for members of senior management to participate in introductory calls with investment bankers that may assist with ChemoCentryx’s consideration of a potential strategic transaction.

On April 3, 2020, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx, representatives of Latham & Watkins and, for a portion of the meeting, representatives of Goldman Sachs. At the meeting, representatives of Goldman Sachs discussed the biopharmaceutical market generally, including in the context of the COVID-19 pandemic, and trends in biopharmaceutical strategic transactions. Representatives of Goldman Sachs also reviewed certain preliminary illustrative financial analyses of ChemoCentryx on a standalone basis and the assumptions underlying such

 

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preliminary analyses and noted that the same were illustrative analyses, reflected no risk adjustment and were subject to change. Representatives of Goldman Sachs then discussed a potential strategic transaction process, including an illustrative timeline for such a process, and certain biopharmaceutical companies that might have interest in considering a potential strategic transaction with ChemoCentryx. The Board then further discussed, without representatives of Goldman Sachs present, ChemoCentryx’s engagement of Goldman Sachs to serve as ChemoCentryx’s financial advisor with respect to a potential strategic transaction process, and the merits of initiating a strategic transaction process at such time. The Board’s discussion included weighing the potential benefits of outreach to potential counterparties against the potential risks of such a process, as well as discussion of the parties identified by Goldman Sachs as parties that may be interested in considering such a strategic transaction involving ChemoCentryx. Representatives of Latham & Watkins then led a discussion with respect to maintaining confidentiality during a strategic transaction process and the obligations and best practices in conducting such a process. Following discussion, the Board authorized ChemoCentryx’s engagement of Goldman Sachs as ChemoCentryx’s financial advisor and authorized senior management of ChemoCentryx to work with Goldman Sachs to initiate a process to explore a potential strategic transaction involving ChemoCentryx. The closing price per share of ChemoCentryx’s common stock on April 3, 2020 was $38.96.

In accordance with the Board’s direction, during the period between April 3, 2020 and June 1, 2020, representatives of Goldman Sachs contacted 13 potential strategic transaction counterparties, including Amgen, to gauge their interest in a potential strategic transaction with ChemoCentryx. Of those 13 parties contacted, five such parties, including Amgen, entered into a non-disclosure agreement with ChemoCentryx and participated in management presentation meetings with members of senior management of ChemoCentryx and representatives of Goldman Sachs (such parties, other than Amgen, referred to as “Party A,” “Party B,” “Party C” and “Party D”). Any standstill restrictions contained in these non-disclosure agreements expired no later than twelve months following the date of the applicable non-disclosure agreement. Eight of the 13 parties who were contacted by representatives of Goldman Sachs did not engage in discussions with ChemoCentryx or otherwise to pursue a potential strategic transaction with ChemoCentryx. None of the parties contacted ultimately submitted an indication of interest with respect to an acquisition of ChemoCentryx.

On May 7, 2020, the Board held a regularly-scheduled telephonic meeting at which members of senior management of ChemoCentryx, representatives of Latham & Watkins and, for a portion of the meeting, representatives of Goldman Sachs, were also present. At the meeting, members of senior management of ChemoCentryx provided a business update to the Board, including, among other matters, an update with respect to human resources matters and the impact of the COVID-19 pandemic on ChemoCentryx’s business. Representatives of Goldman Sachs then discussed trends in the biopharmaceutical market and provided a summary of the strategic transaction process. Members of senior management of ChemoCentryx then provided the Board with an update of certain interactions and discussions held with parties contacted in connection with ChemoCentryx’s strategic transaction process and discussion ensued with respect to the status of the strategic transaction process and financial alternatives. During an executive session of the meeting, the Board further discussed, among other matters, the status of the strategic transaction process and maximizing the value of ChemoCentryx’s development programs.

On June 1, 2020, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx, representatives of Latham & Watkins and, for a portion of the meeting, representatives of Goldman Sachs. Representatives of Goldman Sachs reviewed the strategic transaction process conducted to date, including the responses received from each party contacted in such process and the fact that none of the parties contacted had indicated interest in pursuing an acquisition of ChemoCentryx at such time. Representatives of Goldman Sachs noted that several of the parties contacted expressed interest in exploring a potential partnership with ChemoCentryx, but that several parties had indicated that an acquisition of ChemoCentryx would be challenging in light of the state of the market and ChemoCentryx’s recent stock price. Without representatives of Goldman Sachs present, the Board then further discussed the strategic transaction process and ChemoCentryx’s financing alternatives, including whether representatives of Goldman Sachs should reach out to additional parties that may be interested in pursuing an acquisition of ChemoCentryx. Following

 

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discussion, the Board approved and directed senior management of ChemoCentryx to pursue a public offering of ChemoCentryx’s common stock, the formation of a pricing committee of the Board with respect to such public offering, and the termination of the strategic transaction process. The closing price per share of ChemoCentryx’s common stock on June 1, 2020 was $60.96.

On June 4, 2020, representatives of Party D contacted representatives of Goldman Sachs by telephone. On that call, representatives of Party D indicated that Party D was working through a potential path forward for an acquisition of ChemoCentryx and the potential structure of such a transaction, which would be subject to approval by Party D’s board of directors.

On the morning of June 8, 2020, representatives of Party D contacted representatives of Goldman Sachs. On that call, representatives of Party D indicated that Party D would not be able to pursue an acquisition of ChemoCentryx at such time.

Later on June 8, 2020, the Board held a telephonic special meeting, which was also attended by representatives of Latham & Watkins. At the meeting, Dr. Schall summarized further discussions between representatives of Goldman Sachs and representatives of Party D, noting that such discussions did not indicate that Party D would be prepared to further pursue an acquisition of ChemoCentryx at that time. Following discussion, the Board authorized and directed senior management of ChemoCentryx to continue its pursuit of a public offering of ChemoCentryx’s common stock.

On June 10, 2020, ChemoCentryx announced its entry into an underwriting agreement with SVB Leerink LLC and Piper Sandler & Co., relating to the issuance and sale of 5,200,000 shares of ChemoCentryx’s common stock and resulting in net proceeds to ChemoCentryx of approximately $282.9 million after deducting underwriting discounts and commissions and estimated offering expenses payable by ChemoCentryx. The closing price per share of ChemoCentryx’s common stock on June 10, 2020 was $60.25.

Thereafter, ChemoCentryx continued to execute on its standalone plan, and on October 8, 2021, obtained FDA approval of TAVNEOS as an adjunctive treatment of adult patients with severe ANCA-associated vasculitis or ANCA vasculitis.

On October 15, 2021, Rachna Khosla, Senior Vice President, Business Development of Amgen, called Dr. Markus Cappel, Chief Business Officer and Treasurer of ChemoCentryx and congratulated him on the approval of TAVNEOS. On November 15, 2021, Ms. Khosla and Dr. Cappel participated in a telephone call, in which Ms. Khosla inquired about ChemoCentryx’s plans for commercialization and suggested that a conversation between Robert Bradway, Chairman, Chief Executive Officer and President of Amgen, and Dr. Schall take place.

On December 7, 2021, Dr. Schall and Mr. Bradway participated in a telephone conversation to discuss a potential partnership or collaboration involving Amgen and ChemoCentryx. On that call, Dr. Schall and Mr. Bradway agreed to schedule an in-person meeting at ChemoCentryx’s headquarters in San Carlos, California, to further discuss a potential business relationship involving ChemoCentryx and Amgen.

On January 7, 2022, ChemoCentryx and Amgen entered into a one-way non-disclosure agreement pursuant to which ChemoCentryx would share confidential information with Amgen.

On January 14, 2022, representatives of ChemoCentryx, including Dr. Schall, Dr. Cappel and Susan Kanaya, Executive Vice President, Chief Financial and Administrative Officer, and Secretary of ChemoCentryx, and representatives of Amgen participated in an in-person meeting at ChemoCentryx’s headquarters in San Carlos, California. During the meeting, representatives of ChemoCentryx reviewed certain aspects of ChemoCentryx’s pipeline and progress with respect to the TAVNEOS launch. During the meeting, representatives of ChemoCentryx expressed to Amgen’s representatives that ChemoCentryx was not interested in

 

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program-by-program business development discussions. At the end of the meeting, representatives of Amgen invited representatives of ChemoCentryx to participate in a follow-up meeting at Amgen’s offices in Thousand Oaks, California.

On February 10, 2022, representatives of ChemoCentryx, including Dr. Schall, Dr. Cappel and Ms. Kanaya, and representatives of Amgen participated in an in-person meeting at Amgen’s headquarters in Thousand Oaks, California. During the meeting, representatives of ChemoCentryx reviewed certain aspects of ChemoCentryx’s pipeline and representatives of Amgen presented on Amgen’s commercial capabilities.

On February 17, 2022, ChemoCentryx and Amgen entered into a one-way non-disclosure agreement pursuant to which Amgen would share confidential information with ChemoCentryx.

On February 25, 2022, Dr. Schall and Mr. Bradway participated in a videoconference meeting. During the meeting, Dr. Schall and Mr. Bradway discussed possible structures of a potential business relationship between ChemoCentryx and Amgen, including the possibility that such a business relationship might take the form of an acquisition of ChemoCentryx by Amgen. Mr. Bradway indicated to Dr. Schall his intent to discuss with Amgen’s board of directors a potential acquisition of ChemoCentryx by Amgen, and requested Dr. Schall’s preliminary feedback with respect to the valuation range that Dr. Schall thought would be acceptable to ChemoCentryx and the Board in such a transaction. Dr. Schall did not express his views with respect to a valuation of ChemoCentryx, but noted that ChemoCentryx would evaluate any proposal for an acquisition of ChemoCentryx by Amgen and that, in addition to TAVNEOS, ChemoCentryx’s pipeline, including its novel, orally-administered PD-L1 checkpoint inhibitor, CCX559, would need to be considered. The closing price per share of ChemoCentryx’s common stock on February 25, 2022 was $30.63.

On February 27, 2022, Mr. Bradway contacted Dr. Schall by telephone and again expressed Amgen’s potential interest in considering an acquisition of ChemoCentryx.

On March 1, 2022, following ChemoCentryx’s Q4 2021 earnings call, Dr. Schall and Mr. Bradway participated in a telephone conversation. During that call, Mr. Bradway reiterated Amgen’s interest in considering an acquisition of ChemoCentryx, noted that Amgen’s goal was to put together a meaningful proposal, and inquired as to Dr. Schall’s feedback with respect to the valuation range that may be acceptable to ChemoCentryx and the Board. Dr. Schall declined to provide his personal view with respect to a valuation of ChemoCentryx. Mr. Bradway indicated that, following further discussion between Amgen’s representatives and Amgen’s financial advisor, PJT Partners LP (referred to as “PJT”), Mr. Bradway expected to deliver to Dr. Schall a preliminary indication of interest for Amgen’s acquisition of ChemoCentryx and reiterated the common interests and common goals of ChemoCentryx and Amgen.

On March 3, 2022, Mr. Bradway telephoned Dr. Schall and indicated that Amgen intended to deliver a preliminary indication of interest to acquire ChemoCentryx at a per share cash purchase price of $42.50. Dr. Schall indicated to Mr. Bradway that he would discuss the proposal with, and could not comment on behalf of, the Board, and that his personal view was that the proposed purchase price would not be sufficient to generate interest from the Board in pursuing a potential transaction.

Later on March 3, 2022, Ms. Khosla, on behalf of Amgen, delivered to Dr. Schall a written non-binding indication of interest in which Amgen proposed to acquire all of the outstanding shares of ChemoCentryx for a per share cash purchase price of $42.50, subject to, among other things, customary due diligence and approval by Amgen’s board of directors. The closing price per share of ChemoCentryx’s common stock on March 3, 2022 was $24.42.

On March 7, 2022, the Board held a telephonic special meeting, which was also attended by representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, members of senior management of ChemoCentryx and representatives of Goldman Sachs led a discussion summarizing the discussions and

 

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meetings between Dr. Schall and Mr. Bradway leading to ChemoCentryx’s receipt of the March 3, 2022 non-binding indication of interest from Amgen. Representatives of Goldman Sachs reviewed with the Board certain financial perspectives regarding the non-binding indication of interest received from Amgen. Representatives of Latham & Watkins then reviewed certain legal aspects involved in the business combination process, as well as specific considerations related to the proposed acquisition of ChemoCentryx by Amgen, including the fiduciary duties of the members of the Board in the context of a sale of ChemoCentryx for cash consideration. Following a discussion of various alternative responses to the non-binding indication of interest received from Amgen, the Board determined that the valuation proposed by the non-binding indication of interest undervalued ChemoCentryx and, as such, that ChemoCentryx should decline Amgen’s offer and should not provide diligence information to, or engage in valuation discussions with, Amgen unless Amgen meaningfully increased the value of its proposal to acquire ChemoCentryx.

Later on March 7, 2022, as directed by the Board, Dr. Schall telephoned Mr. Bradway and declined Amgen’s offer to acquire ChemoCentryx pursuant to the March 3, 2022 non-binding indication of interest.

On March 18, 2022, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx, representatives of Latham & Watkins and, for a portion of the meeting, representatives of Goldman Sachs. At the meeting, members of senior management of ChemoCentryx led a discussion of certain preliminary and illustrative unaudited prospective financial information of ChemoCentryx with respect to market opportunities associated with TAVNEOS for the treatment of ANCA-associated vasculitis (referred to as “AAV”) and ChemoCentryx’s product pipeline, including certain preliminary assumptions with respect to addressable patient population, market penetration, time to peak sales, peak sales, probability of success as a function of clinical development stage, inflationary factors and pricing and exclusivity, as well as cost, royalties and milestones, cash flow, tax and other capitalization considerations. The Board then participated in discussion, without representatives of Goldman Sachs present, of Goldman Sachs’s engagement as ChemoCentryx’s financial advisor. Members of senior management of ChemoCentryx and the Board then discussed a renewal of Goldman Sachs’s engagement. Following discussion, the Board approved the renewed engagement of Goldman Sachs as ChemoCentryx’s financial advisor and directed members of management to execute a renewed engagement letter with Goldman Sachs. Immaterial refinements to the preliminary and illustrative unaudited prospective financial information discussed at the March 18, 2022 meeting were made in advance of the April 28, 2022 meeting of the Board described below.

On April 25, 2022, Ms. Khosla contacted Dr. Cappel via email to request a telephone call.

On April 26, 2022, Ms. Khosla and Dr. Cappel participated in a telephone call on which Ms. Khosla expressed that Amgen appreciated the level of engagement between senior management of ChemoCentryx and senior management of Amgen and that Amgen wished to express its continued interest in ChemoCentryx and TAVNEOS and its belief in the industrial logic of a potential business transaction between Amgen and ChemoCentryx.

On April 28, 2022, the Board held a regularly-scheduled telephonic meeting at which members of senior management of ChemoCentryx, representatives of Latham & Watkins and, for a portion of the meeting, representatives of Goldman Sachs and PricewaterhouseCoopers (referred to as “PwC”), were also present. At the meeting, members of senior management of ChemoCentryx provided a business update to the Board, including, among other matters, certain personnel changes, an update on a commercial advisory project led by PwC, and certain unaudited prospective financial information of ChemoCentryx with respect to market opportunities associated with TAVNEOS for the treatment of AAV and ChemoCentryx’s product pipeline, including certain assumptions with respect to addressable patient population, market penetration, time to peak sales, peak sales, probability of success as a function of clinical development stage, inflationary factors and pricing and exclusivity, as well as cost, royalties and milestones, cash flow, tax and other capitalization considerations. Representatives of Goldman Sachs then reviewed with the Board preliminary financial analyses of ChemoCentryx on a standalone basis.

 

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On May 16, 2022, Mr. Bradway telephoned Dr. Schall and invited him to provide guidance on the valuation that would be sufficient to proceed with negotiation of a potential acquisition of ChemoCentryx by Amgen. Dr. Schall indicated to Mr. Bradway that the Board had extensively discussed Amgen’s proposal and determined that Amgen would need to increase its offer price in order for ChemoCentryx to further consider a potential transaction. Dr. Schall declined to provide his personal view with respect to a valuation of ChemoCentryx.

On May 17, 2022, Mr. Bradway contacted Dr. Schall and indicated that representatives of PJT would contact representatives of Goldman Sachs to further discuss Amgen’s interest in an acquisition of ChemoCentryx and the valuation of ChemoCentryx at which Amgen could propose an acquisition of ChemoCentryx and which may be acceptable for ChemoCentryx’s further consideration of a potential transaction.

On May 18, 2022, a representative of PJT telephoned a representative of Goldman Sachs. On the call, the PJT representative discussed Amgen’s interest in a potential acquisition of ChemoCentryx, including exploring alternative structures. The Goldman Sachs representative indicated that Amgen would have to further increase its proposal to warrant engagement in discussions. The PJT representative asked for valuation guidance, but the Goldman Sachs representative declined to provide any such guidance at such time, indicating that he would first need to discuss with ChemoCentryx.

On May 20, 2022, the PJT representative and the Goldman Sachs representative participated in a follow-up telephone call. On the call, the Goldman Sachs representative, based on discussions with and guidance from ChemoCentryx, conveyed that a proposal by Amgen would likely need to be in the $50s (on a price per share basis) in order for the Board to consider engagement in further discussions by ChemoCentryx with Amgen regarding a potential business combination.

On June 4, 2022, Dr. Schall and Mr. Bradway participated in a telephone call on which they discussed the May 20, 2022 phone call between representatives of PJT and representatives of Goldman Sachs. On the call, Mr. Bradway suggested that Amgen continued to be interested in exploring a potential transaction with ChemoCentryx and was evaluating the valuation guidance provided to representatives of PJT. Mr. Bradway suggested that he and Dr. Schall endeavor to speak again in the coming week.

On June 9, 2022, Dr. Schall and Mr. Bradway participated in a telephone call. During such call, Mr. Bradway indicated to Dr. Schall that Amgen needed assistance in answering a handful of diligence questions before Amgen would be in a position to increase its proposed offer price and submit a revised indication of interest for the acquisition of ChemoCentryx by Amgen. Following the call, representatives of Amgen delivered to members of senior management of ChemoCentryx such diligence questions.

On June 10, 2022, members of senior management of ChemoCentryx delivered to representatives of Amgen ChemoCentryx’s responses to the diligence questions delivered by Amgen on June 9, 2022.

On June 15, 2022, Mr. Bradway telephoned Dr. Schall and indicated that Amgen expected to deliver an updated proposed purchase price for Amgen’s acquisition of ChemoCentryx in the coming week.

On June 16, 2022, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx and representatives of Latham & Watkins. At the meeting, among other matters, members of senior management of ChemoCentryx led a discussion of ChemoCentryx’s commercial progress in ChemoCentryx’s second fiscal quarter and Dr. Schall provided the Board with an update on his recent discussions with Mr. Bradway.

On June 23, 2022, Mr. Bradway telephoned Dr. Schall. On that call, Mr. Bradway reiterated Amgen’s interest in pursuing an acquisition of ChemoCentryx and indicated that Amgen would increase its proposed purchase price to $51.00 per share. Dr. Schall indicated that he would need to discuss Amgen’s revised proposal with, and could not comment on behalf of, the Board. The closing price per share of ChemoCentryx’s common stock on June 22, 2022 was $22.17.

 

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On June 24, 2022, the Board held a telephonic special meeting, which was also attended by representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, Dr. Schall updated the Board with respect to his conversation with Mr. Bradway on June 23, 2022, and the revised per share purchase price of $51.00 relayed by Mr. Bradway. Members of senior management of ChemoCentryx and the Board then discussed the unaudited prospective financial information provided to the Board on April 28, 2022, including certain assumptions reflected therein with respect to addressable patient population and market penetration and potential outcomes for the commercialization of TAVNEOS in indications for AAV and ChemoCentryx’s pipeline products. Representatives of Goldman Sachs then summarized the progression of ChemoCentryx’s discussions with Amgen since the receipt of Amgen’s March 3, 2022 non-binding indication of interest, and reviewed Goldman Sachs’s preliminary financial analysis of ChemoCentryx and of Amgen’s proposal. Representatives of Goldman Sachs also reviewed certain other biopharmaceutical companies who may be interested in an acquisition of ChemoCentryx and who would be the most likely to be capable of consummating such a transaction. Representatives of Latham & Watkins also reviewed with the members of the Board their fiduciary duties in the context of a sale of ChemoCentryx for cash consideration. Following discussion, the Board authorized senior management of ChemoCentryx to continue engaging with Amgen on a limited basis, including by making available to representatives of Amgen certain diligence information relating to ChemoCentryx, and further directed management to convey to representatives of Amgen that access to diligence materials would be provided on the basis that Amgen use its diligence investigation of ChemoCentryx to further improve upon its $51.00 per share proposal before a potential strategic transaction would be further considered.

On June 29, 2022, Dr. Schall and Mr. Bradway participated in a telephone call. On that call, Dr. Schall indicated to Mr. Bradway that ChemoCentryx would provide representatives of Amgen with access to certain diligence information, but that the Board had directed management of ChemoCentryx to engage with Amgen on a limited basis while Amgen completed its diligence investigation and that the Board expected Amgen to use the results of such diligence investigation to further improve upon its $51.00 per share proposal. Mr. Bradway indicated that Amgen’s representatives were prepared to commence diligence and acknowledged the expectation of the Board.

On July 3, 2022, ChemoCentryx granted representatives of Amgen access to an electronic data room containing due diligence information regarding ChemoCentryx.

On July 8, 2022, the Board participated in a telephone call, which also included representatives of Latham & Watkins and, for a portion of the call, representatives of Goldman Sachs. On the call, Dr. Schall updated the Board on his discussions with Mr. Bradway and noted to the Board that representatives of Amgen had been granted access to ChemoCentryx’s data room. The Board also discussed whether any other biopharmaceutical companies might have interest in a potential strategic transaction with ChemoCentryx, including certain potential counterparties identified by Goldman Sachs and previously discussed with the Board. The Board’s discussion included 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 ChemoCentryx’s business of such leaks. As part of this discussion, the Board considered prior interactions between ChemoCentryx management and other industry participants, including ChemoCentryx’s strategic transaction process in 2020. Without members of Goldman Sachs present, representatives of Latham & Watkins then reviewed with the members of the Board their fiduciary duties in the context of a sale of ChemoCentryx for cash consideration and the Board further discussed outreach to other biopharmaceutical companies.

On July 12, 2022, Dr. Schall received an email from the Chief Executive Officer of a biopharmaceutical company (referred to as “Party E”) requesting a telephone call. On July 13, 2022, the Chief Executive Officer of Party E and Dr. Schall participated in a telephone call. On that call, Party E’s Chief Executive Officer indicated that Party E was interested in exploring a potential business combination with ChemoCentryx and that Party E would be delivering to ChemoCentryx a written indication of interest for the acquisition of ChemoCentryx for a per share cash purchase price equal to $36.00, subject to customary due diligence and approval by Party E’s board of directors. Dr. Schall indicated that he would need to discuss Party E’s proposal with, and could not

 

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comment on behalf of, the Board, and that his personal view was that the proposed $36.00 per share purchase price would not be sufficient to generate interest from the Board in pursuing a potential transaction. Later in the day on July 13, 2022, representatives of Party E delivered to Dr. Schall a written non-binding indication of interest for Party E’s acquisition of ChemoCentryx for a cash purchase price of $36.00 per share, which non-binding indication of interest included a financing commitment letter from Party E’s financial advisor. The closing price per share of ChemoCentryx’s common stock on July 13, 2022 was $23.02.

Later on July 13, 2022, the Board held a telephonic special meeting, which was also attended by representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, Dr. Schall updated the Board with respect to his conversation with the Chief Executive Officer of Party E and the non-binding indication of interest received from Party E on July 13, 2022, proposing an acquisition of ChemoCentryx for a per share purchase price of $36.00. Following discussion, the Board determined that, in light of the low valuation ascribed to ChemoCentryx in Party E’s July 13, 2022 indication of interest, management of ChemoCentryx should decline further discussions with Party E with respect to a potential business combination unless and until Party E significantly increased the purchase price of its proposal.

On July 14, 2022, as directed by the Board, Dr. Schall contacted the Chief Executive Officer of Party E and informed him that the Board had determined that the value ascribed to ChemoCentryx in Party E’s July 13, 2022 indication of interest was not at a price that warranted further discussions with respect to a potential business combination unless and until Party E significantly increased the purchase price of its proposal.

On July 19, 2022, representatives of Party E delivered to Dr. Schall a revised non-binding written indication of interest pursuant to which Party E proposed an acquisition of ChemoCentryx at a per share price equal to $40.00. The closing price per share of ChemoCentryx’s common stock on July 19, 2022 was $23.54.

On July 20, 2022, the Board held a telephonic special meeting, which was also attended by representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, Dr. Schall provided the Board an update on recent diligence discussions between representatives of Amgen and representatives of ChemoCentryx. Dr. Schall also provided the Board an update with respect to Party E, including Dr. Schall’s conversation with the Chief Executive Officer of Party E on July 14, 2022 and the revised non-binding indication of interest received from Party E on July 19, 2022. Following discussion, the Board directed members of senior management of ChemoCentryx and representatives of Goldman Sachs to convey to representatives of Party E the need for Party E to increase its offer price prior to ChemoCentryx providing Party E with due diligence information. The Board, representatives of Goldman Sachs and representatives of Latham & Watkins then discussed certain other biopharmaceutical companies who would be considered most likely to have interest in acquiring ChemoCentryx and who would be the most likely to be capable of completing an acquisition of ChemoCentryx. Following such discussion, the Board directed representatives of Goldman Sachs to contact four other global biopharmaceutical companies (including Party A, Party C, Party D, and one other biopharmaceutical company referred to as “Party F”) with respect to their potential interest in an acquisition of ChemoCentryx.

Between July 21, 2022, and July 26, 2022, as directed by the Board, representatives of Goldman Sachs contacted representatives of each of Party A, Party C, Party D and Party F to inquire as to whether such parties would be interested in a potential sale transaction involving ChemoCentryx. Between July 21, 2022, and July 28, 2022, representatives of Party C, Party D and Party F indicated to representatives of Goldman Sachs, without providing a specific reason, that each such party was not interested in engaging with ChemoCentryx at such time with respect to a potential sale transaction. Also during the same period, Representatives of Party A indicated that Party A would need to discuss internally to determine Party A’s level of interest and whether Party A would like to proceed with discussions regarding a potential transaction.

On July 21, 2022, as directed by the Board, Dr. Schall participated in a telephone call with the Chief Executive Officer of Party E. On that call, Dr. Schall informed the Chief Executive Officer of Party E that the Board had determined that the value ascribed to ChemoCentryx in Party E’s July 19, 2022 indication of interest was inadequate to engage in further discussions.

 

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On July 22, 2022, representatives of Party E participated in a telephone call with representatives of Goldman Sachs and indicated that Party E felt that an offer of $40.00 per share was substantial and should warrant engagement. Consistent with the Board’s direction, representatives of Goldman Sachs indicated to the representatives of Party E that ChemoCentryx would consider a potential strategic transaction with Party E, but that the valuation ascribed to ChemoCentryx in Party E’s July 19, 2022 indication of interest would need to be increased first. Based on direction from the Board, representatives of Goldman Sachs suggested that in order to warrant engagement with ChemoCentryx, a proposal to acquire ChemoCentryx should reflect a per share purchase price in the $50s. Representatives of Party E suggested that Party E was unlikely to reach a per share purchase price consistent with that guidance and that Party E may need to move in a different direction.

On July 26, 2022, the Board held a regularly-scheduled meeting, which was also attended by representatives of Latham & Watkins, members of senior management of ChemoCentryx and, for a portion of the meeting, representatives of Goldman Sachs. At the meeting, members of senior management of ChemoCentryx provided a business update to the Board, including, among other matters, certain personnel changes, a commercial update with respect to, among other matters, the TAVNEOS launch, a clinical development update and a legal update. Representatives of Goldman Sachs then provided an update with respect to its outreach to Party A, Party C, Party D and Party F, the July 22, 2022 discussion between representatives of Goldman Sachs and representatives of Party E, and the status of discussions with Amgen.

Also on July 26, 2022, a Goldman Sachs representative inquired with a representative of Party A as to whether Party A might be interested in potentially pursuing a business combination with ChemoCentryx. The Party A representative indicated that Party A would likely be interested.

Also on July 26, 2022, Dr. Schall and Mr. Bradway participated in a telephone call on which Dr. Schall provided an update with respect to matters being discussed by representatives of ChemoCentryx and representatives of Amgen and indicated to Mr. Bradway that significant progress had been made with respect to such matters. Mr. Bradway acknowledged the progress made in Amgen’s diligence investigation of ChemoCentryx.

On the evening of July 26, 2022, representatives of Wachtell, Lipton, Rosen & Katz, counsel to Amgen (referred to as “Wachtell Lipton”), provided an initial draft of the Merger Agreement to representatives of Latham & Watkins. The initial draft of the Merger Agreement, among other things, provided for a one-step merger transaction and a termination fee of 4.0% of the aggregate equity value of the transaction payable in certain circumstances.

On July 27, 2022, Dr. Schall and Mr. Bradway participated in a telephone call on which Mr. Bradway indicated that, subject to continued progress with respect to Amgen’s diligence investigation of ChemoCentryx, and subject to approval by Amgen’s board of directors, Amgen was prepared to increase its per share offer price for an acquisition of ChemoCentryx to $52.00.

Also on July 27, 2022, Dr. Schall and the Chief Executive Officer of Party E participated in a telephonic conversation. The Chief Executive Officer of Party E stated that Party E had significant interest in engaging in a potential transaction with ChemoCentryx and felt that its substantial improvement to its July 13, 2022 indication of interest should warrant engagement and access to diligence. The Chief Executive Officer of Party E also stated that he believed certain stockholders of ChemoCentryx would find an offer of $40.00 per share compelling. The Chief Executive Officer of Party E suggested Party E’s willingness and preference to engage privately with ChemoCentryx but noted that he was prepared to present Party E’s proposal publicly to ChemoCentryx stockholders. Consistent with prior direction from the Board, Dr. Schall reiterated the message that the value ascribed to ChemoCentryx in Party E’s July 19, 2022 indication of interest was not at a price that warranted further discussions with respect to a potential business combination unless and until Party E significantly increased the purchase price of its proposal.

 

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On July 28, 2022, the Board held a telephonic special meeting, which was also attended by representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, Dr. Schall provided the Board an update on recent diligence discussions with Amgen and Dr. Schall’s recent discussion with Party E’s Chief Executive Officer. Representatives of Goldman Sachs also provided an update on discussions with Party A’s representatives. Representatives of Goldman Sachs also provided an update on Party C, Party D, and Party F, noting to the Board that each such party had decided not to engage. Following discussion, the Board directed members of senior management of ChemoCentryx and representatives of Goldman Sachs to continue engaging with Party E on a limited basis, to convey to representatives of Party E the need for Party E to increase its offer price prior to ChemoCentryx providing Party E with due diligence information and to convey to representatives of Party E that for a proposal by Party E to acquire ChemoCentryx to be compelling to the Board such proposal would need to reflect a per share purchase price in the $50s. The Board further directed members of senior management of ChemoCentryx, representatives of Goldman Sachs and representatives of Latham & Watkins to continue engaging with Amgen and its representatives with respect to negotiation of the draft Merger Agreement, and to engage with Party A in parallel including by providing guidance on valuation and timing. The Board, representatives of Goldman Sachs and representatives of Latham & Watkins then discussed certain other biopharmaceutical companies who would be considered most likely to have interest in acquiring ChemoCentryx and who would be most likely to be able to complete an acquisition of ChemoCentryx. Following such discussion, the Board directed representatives of Goldman Sachs to contact one additional biopharmaceutical company (referred to as “Party G”) to gauge its potential interest in an acquisition of ChemoCentryx. Party G was contacted by representatives of Goldman Sachs in May 2020 as part of ChemoCentryx’s 2020 strategic transaction process, but did not enter into a non-disclosure agreement with ChemoCentryx during such time or otherwise indicate interest in a potential acquisition of ChemoCentryx during such process.

Later on July 28, 2022, representatives of Goldman Sachs provided a representative of Party A with guidance that a transaction was likely to happen in the near-term, and that it was important for Party A to provide a proposal quickly. Representatives of Goldman Sachs also indicated that, in order to be competitive, Party A would need to be able to support a proposal in the $50s (on a price per share basis). The Party A representative indicated that Party A was prepared to move in line with the timing guidance and could see a path to a proposal price in line with the price guidance provided. Between July 28, 2022 and July 29, 2022, representatives of Goldman Sachs, representatives of Latham & Watkins, and representatives of counsel for Party A negotiated the terms of a non-disclosure agreement. On July 29, 2022, ChemoCentryx and Party A executed a non-disclosure agreement.

Later on July 28, 2022, representatives of Goldman Sachs and representatives of Party G discussed whether Party G would be interested in a potential transaction involving ChemoCentryx. The representatives of Party G indicated that they would need to discuss internally and would revert. Party G never followed up with representatives of Goldman Sachs.

Also on July 28, 2022, representatives of Party E contacted representatives of Goldman Sachs and indicated that Party E remained interested in a potential strategic transaction with ChemoCentryx. Consistent with the Board’s direction, representatives of Goldman Sachs reiterated their previous guidance that a compelling proposal to acquire ChemoCentryx would reflect a per share purchase price in the $50s. Representatives of Party E indicated that Party E was prepared to submit a revised indication of interest, but that Party E was unlikely to reach a per share purchase price level consistent with that guidance. Representatives of Party E also suggested that, while Party E would like to pursue a potential transaction privately, Party E would be willing to explore other paths, including potentially reaching out to ChemoCentryx stockholders directly.

On July 29, 2022, ChemoCentryx granted representatives of Party A access to an electronic data room containing due diligence information regarding ChemoCentryx.

Also on July 29, 2022, representatives of Party E delivered to Dr. Schall a further revised non-binding written indication of interest pursuant to which Party E proposed an acquisition of ChemoCentryx at a per share price equal to $44.00. The closing price per share of ChemoCentryx’s common stock on July 29, 2022 was $23.62.

 

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On July 30, 2022, representatives of Latham & Watkins sent a revised draft of the Merger Agreement to representatives of Wachtell Lipton. Thereafter, during the period from July 30, 2022 through the early afternoon of August 3, 2022, representatives of ChemoCentryx and Amgen and their respective legal advisors negotiated the terms of the Merger Agreement. Key terms of the Merger Agreement negotiated between the parties included: (1) the terms of the “no-shop” restrictions and the circumstances in which the Board could change its recommendation to ChemoCentryx’s stockholders or in which ChemoCentryx could negotiate or accept an alternative acquisition transaction, including the circumstances in which the Merger Agreement could be terminated by ChemoCentryx; (2) the amount of the termination fee and the circumstances in which it would be payable by ChemoCentryx; (3) the definition of “Material Adverse Effect” with respect to ChemoCentryx; (4) the conditions to each party’s obligation to complete the Merger; (5) the parties’ commitments in connection with obtaining required regulatory approvals and the extent to which the parties would be obligated to agree to remedies in connection with obtaining such regulatory approvals; (6) the interim operating covenants applicable to ChemoCentryx prior to the closing of the Merger and related exceptions; and (7) ChemoCentryx’s other representations, warranties and covenants in the Merger Agreement. The Board was kept apprised of these discussions.

On July 31, 2022, representatives of Latham & Watkins delivered an initial draft merger agreement to representatives of counsel for Party A. On the same date, members of senior management of ChemoCentryx, together with representatives of Goldman Sachs, delivered a management presentation to representatives of Party A via videoconference.

On August 1, 2022, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx, representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, Dr. Schall provided the Board an update on his recent discussions with Mr. Bradway, including his July 27, 2022 phone call on which Mr. Bradway indicated that Amgen would be prepared to increase its per share proposal from $51.00 to $52.00. Dr. Schall also provided the Board an update with respect to Party E, including a summary of the further revised non-binding indication of interest received from Party E on July 29, 2022. Members of senior management of ChemoCentryx, together with representatives of Latham & Watkins, then provided the Board with an update on the negotiation of the Merger Agreement and recent discussions held between representatives of ChemoCentryx and Amgen and their respective legal advisors with respect to certain material terms of the Merger Agreement. Representatives of Latham & Watkins then reviewed with the members of the Board their fiduciary duties in the context of a sale of ChemoCentryx for cash consideration. Representatives of Goldman Sachs then updated the Board on its outreach to Party A, Party C, Party D, Party F and Party G, including that a non-disclosure agreement had been executed by ChemoCentryx and Party A and a draft merger agreement had been provided to Party A, and that each other potential acquirer contacted had either expressly indicated that it was not interested in pursuing a transaction at this time or, in the case of Party G, had not followed up with Goldman Sachs following Goldman Sachs’s initial outreach. Representatives of Goldman Sachs also provided an update on their discussions with representatives of Party E and with respect to the revised non-binding indication of interest received from Party E on July 29, 2022. Following discussion, the Board instructed senior management of ChemoCentryx and representatives of Latham & Watkins to continue negotiation of the Merger Agreement with representatives of Amgen and Wachtell Lipton, and to continue engagement with Party A and Party E. The Board also directed senior management of ChemoCentryx and representatives of Goldman Sachs to continue seeking a definitive proposal on valuation from Party A and to continue expressing to representatives of Amgen the Board’s expectation that Amgen would continue to evaluate the valuation of ChemoCentryx during the course of its diligence investigation and negotiation of the Merger Agreement.

Later on August 1, 2022, representatives of Party E participated in a telephone call with representatives of Goldman Sachs. Representatives of Goldman Sachs stated they were prepared to share a non-disclosure agreement with Party E and willing to share diligence information regarding ChemoCentryx if Party E believed that it could likely put forth a proposal in line with the previous guidance in the $50s (on a price per share basis). Representatives of Goldman Sachs also discussed that timing was of the essence and encouraged Party E to move quickly and execute the non-disclosure agreement in order to receive diligence information.

 

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Subsequently, on August 1, 2022, representatives of Goldman Sachs provided representatives of Party E with a non-disclosure agreement. During the period of August 2, 2022 to August 3, 2022, representatives of Latham & Watkins negotiated the terms of such non-disclosure agreement with representatives of Party E and its legal counsel. As of the evening on August 3, 2022, the final terms of the non-disclosure agreement for Party E were not finalized. The non-disclosure agreement was never executed by Party E.

Also on August 1, 2022, senior management of ChemoCentryx and Party A, together with representatives of Latham & Watkins and counsel for Party A, participated in videoconferences to discuss intellectual property and tax due diligence matters.

On the morning of August 2, 2022, Dr. Schall and Mr. Bradway participated in a telephone call. On that call, Dr. Schall emphasized the significant progress that had been made with respect to ChemoCentryx’s responses to Amgen’s diligence inquiries and negotiation of the Merger Agreement. Dr. Schall also noted that the Board had authorized management’s engagement with Amgen and access to diligence materials on the basis that Amgen would use the same to improve upon its valuation proposal. Dr. Schall noted that, based on discussions with the Board, a per share purchase price of $54.50 would generate interest from the Board in approving a potential transaction. Mr. Bradway indicated that he did not think there would be any additional room above the $52.00 per share proposal previously communicated, but that he would consider the matter further and revert.

Also on the morning on August 2, 2022, representatives of Party A communicated to representatives of Goldman Sachs that, after internal review, Party A would not be interested in consummating a transaction at the valuation being considered by ChemoCentryx.

In the early afternoon on August 2, 2022, Mr. Bradway telephoned Dr. Schall and indicated that Amgen would not raise its per share purchase price above $52.00 per share.

Later in the afternoon on August 2, 2022, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx, representatives of Goldman Sachs and representatives of Latham & Watkins. At the meeting, Dr. Schall updated the Board with respect to his conversation with Mr. Bradway and Amgen’s unwillingness to increase its offer price above the $52.00 per share proposal previously communicated. Dr. Schall also updated the Board with respect to Party A’s inability to consummate a transaction at the valuation being contemplated, as well as Party E’s request for diligence information. Dr. Schall and representatives of Goldman Sachs noted that Party E’s request for diligence information did not include a revised valuation proposal from Party E, and the Board discussed Party E’s previous per share proposal of $44.00 per share and Party E’s ability to finance a transaction at a higher valuation based on publicly available information. Members of senior management of ChemoCentryx, together with representatives of Latham & Watkins, provided an update on the transaction process and an update regarding the negotiation of the Merger Agreement, including a summary of the terms of the draft Merger Agreement that had been negotiated with representatives of Amgen and Wachtell Lipton and material open items as of the time of the meeting. Representatives of Latham & Watkins reviewed with the members of the Board their fiduciary duties in the context of a sale of ChemoCentryx for cash consideration. Representatives of Goldman Sachs then reviewed Goldman Sachs’s preliminary financial analyses with respect to the Merger. The Board also reviewed with members of senior management of ChemoCentryx and representatives of Goldman Sachs the results of ChemoCentryx’s outreach process to solicit interest from alternative potential acquirors; it was the consensus of the Board that re-engagement with the other potential acquirors contacted during the process or outreach to additional potential acquirors was not likely to lead to an acquisition proposal superior to the Merger, could jeopardize the successful entry into an acquisition transaction with Amgen at the per share price of $52.00 and could cause significant disruption and risk to ChemoCentryx. The Board noted the relationship disclosures provided by Goldman Sachs regarding its relationship with Amgen; the Board did not identify any concerns with these disclosures. The Board then directed senior management of ChemoCentryx and representatives of Latham & Watkins to continue the negotiation of the Merger Agreement.

 

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During the evening of August 2, 2022 and continuing through the early afternoon of August 3, 2022, members of senior management of ChemoCentryx and representatives of Latham & Watkins and Wachtell Lipton finalized the negotiation of all of the open issues in the Merger Agreement. As part of this resolution, and among other matters, the parties agreed that the termination fee would be equal to approximately $119.3 million.

On August 3, 2022, after market close, the Board held a telephonic special meeting, which was also attended by members of senior management of ChemoCentryx, representatives of Goldman Sachs and representatives of Latham & Watkins. Members of senior management of ChemoCentryx and representatives of Latham & Watkins updated the Board on the negotiation of the Merger Agreement and disclosure schedules. Representatives of Latham & Watkins reviewed modifications to the terms of the Merger Agreement since the meeting of the Board held the prior day. Representatives of Latham & Watkins reviewed with the members of the Board their fiduciary duties in the context of a sale of ChemoCentryx for cash consideration, as they had previously done. Representatives of Goldman Sachs reviewed Goldman Sachs’s financial analyses with respect to the Merger and rendered its oral opinion, subsequently confirmed by delivery of a written opinion dated August 3, 2022, to the Board that, as of the date of such opinion and based upon and subject to the assumptions, qualifications and other matters and limitations set forth therein, the Merger Consideration to be paid to the holders of shares of ChemoCentryx common stock (other than as specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Upon consideration of the factors more fully described in the section of this proxy statement captioned “The Merger—Recommendation of the Board and Reasons for the Merger”, the Board (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, ChemoCentryx and its stockholders, (2) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, (3) directed the adoption of the Merger Agreement be submitted to a vote at a meeting of ChemoCentryx’s stockholders and (4) resolved to recommend that ChemoCentryx’s stockholders vote to approve the adoption of the Merger Agreement and approval of the Merger. The foregoing approval of the Board was subsequently ratified by unanimous written consent of the Board dated August 3, 2022.

Later on the night of August 3, 2022, following the meeting of the Board, ChemoCentryx, Amgen and Merger Sub executed the Merger Agreement.

Before market open on the morning of August 4, 2022, ChemoCentryx and Amgen publicly announced the execution of the Merger Agreement.

Recommendation of the Board and Reasons for the Merger

Recommendation of the Board

The Board has unanimously: (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to, and in the best interests of, ChemoCentryx and its stockholders; (ii) approved, adopted and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger; (iii) resolved to recommend the adoption of the Merger Agreement and approval of the Merger by ChemoCentryx’s stockholders; and (iv) directed that the adoption of the Merger Agreement be submitted to a vote of ChemoCentryx’s stockholders.

The Board unanimously recommends that ChemoCentryx stockholders vote “FOR” the Merger Proposal, “FOR” the Merger Compensation Proposal and “FOR” the Adjournment Proposal.

Reasons for the Merger

In evaluating the Merger Agreement and the transactions contemplated thereby, the Board consulted with members of ChemoCentryx’s senior management, representatives of ChemoCentryx’s legal advisor, Latham & Watkins, and representatives of ChemoCentryx’s financial advisor, Goldman Sachs. In the course of reaching its

 

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determination and recommendation, the Board reviewed, evaluated and considered a significant amount of information and numerous factors and benefits, including those listed below (which are not listed in any relative order of importance), all of which it viewed as supporting its (i) determination that the Merger Agreement and the transactions contemplated thereby, including the Merger, are fair to and in the best interests of ChemoCentryx and its stockholders; (ii) approval and adoption of, and declaration that it is advisable for ChemoCentryx to enter into, the Merger Agreement; (iii) resolution to recommend that ChemoCentryx’s stockholders vote to approve the adoption of the Merger Agreement and approve the Merger on the terms and subject to the conditions set forth in the Merger Agreement; and (iv) direction that the adoption of the Merger Agreement be submitted to a vote of ChemoCentryx’s stockholders at the Special Meeting:

 

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Premium to Market Price. The Board considered the relationship of the Merger Consideration to the price of our common stock immediately prior to the execution of the Merger Agreement and the recent historical market price and volatility of our common stock, including the fact that the Merger Consideration represents a premium of approximately 123% to the $23.27 closing price per share of our common stock on Nasdaq on August 2, 2022, the last trading day prior to the date on which the Merger Agreement was executed, a premium of approximately 118% to the trailing volume-weighted average price per share of $23.84 for the thirty (30) calendar day period ended August 2, 2022, and a premium of approximately 138% to the trailing volume-weighted average price per share of $21.81 for the ninety (90) calendar day period ended August 2, 2022. The Board believed that the Merger Consideration represents the highest value reasonably available for the shares of our common stock for the foreseeable future, taking into account the Board’s familiarity with the business strategy, assets and prospects of ChemoCentryx and the recent historical market price of our common stock.

 

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Certainty of Value. The Board considered the all-cash nature of the Merger Consideration to be received by ChemoCentryx’s stockholders in the Merger, which would provide liquidity and certainty of value to our stockholders while avoiding exposure to ChemoCentryx’s clinical, regulatory, commercialization and other business risks. Taking into account the business, operations, prospects, strategic and short and long term operating plans, assets, liabilities and financial condition of ChemoCentryx, the Board weighed the certainty of realizing compelling value for shares of our common stock by virtue of the Merger against the uncertain prospect that the trading value of shares of our common stock would approach the Merger Consideration in the foreseeable future and the risks and uncertainties associated with our business generally, including those described below and those discussed in ChemoCentryx’s public filings with the SEC. See “Where You Can Find More Information” beginning on page 114 of this proxy statement.

 

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Possible Strategic Alternatives. The Board considered the process conducted by ChemoCentryx, with the assistance of representatives of Goldman Sachs, to identify whether other potential parties might be interested in pursuing an acquisition of ChemoCentryx, taking into account the expected interest of such parties generally, their financial capability to consummate a transaction of this size, and their ability to move expeditiously and efficiently to enter into a definitive agreement with respect to an acquisition of ChemoCentryx and consummate such transaction. In particular, the Board considered the recent outreach by representatives of Goldman Sachs and members of ChemoCentryx’s senior management with respect to such parties believed to be most likely to have interest in pursuing such an acquisition of ChemoCentryx, and considered the responses received from such contacted parties, including the fact that only Party E (in addition to Amgen) submitted a proposal to acquire ChemoCentryx (which the Board did not consider compelling relative to the terms of the Merger Agreement and the Merger Consideration), that Party A had ultimately declined to submit a proposal to acquire ChemoCentryx, and that parties that were considered reasonably likely to have potential interest in acquiring ChemoCentryx had either declined to engage with ChemoCentryx regarding a potential sale transaction or had not responded to representatives of Goldman Sachs following their initial outreach.

 

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Full and Fair Value. The Board believed that the Merger Consideration of $52.00 per share of our common stock represents full and fair value for our shares of common stock, taking into account the

 

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Board’s familiarity with the business strategy, assets and prospects of ChemoCentryx on a standalone basis and the relative certainty of the cash consideration payable in the Merger as compared to the risks and uncertainties of continuing on a standalone basis as an independent public company.

 

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Highest Value Reasonably Obtainable. The Board believed that the Merger Consideration of $52.00 per share of our common stock represents the highest value reasonably obtainable for our shares of common stock for the foreseeable future, taking into account the business, operations, prospects, business strategy, assets, liabilities and general financial condition of ChemoCentryx. The Board also considered the progress and the outcome of ChemoCentryx’s negotiations with Amgen, including the increase in the consideration offered by Amgen from the time of its initial expression of interest 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 Amgen that were favorable to ChemoCentryx, and the fact that a number of other strategic parties that had been contacted with respect to a potential acquisition of ChemoCentryx had either determined not to engage with ChemoCentryx, had determined that it would not be capable of entering into a strategic transaction with ChemoCentryx at such time, or had otherwise failed to submit a proposal that the Board considered compelling relative to the terms of the Merger and the Merger Consideration of $52.00 per share of our common stock. Further, the Board believed, based on these negotiations, that the Merger Consideration was the highest price per share that Amgen was willing to pay and that the Merger Agreement contained the most favorable terms to ChemoCentryx to which Amgen was willing to agree.

 

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Likelihood of Consummation. The Board considered the anticipated timing of the consummation of the transactions contemplated by the Merger Agreement, including the likelihood of consummation, based upon the scope of the conditions to the consummation of the Merger, the relative likelihood of obtaining required regulatory approvals, the remedies available to ChemoCentryx under the Merger Agreement in the event of various breaches by Amgen, including specific performance, and Amgen’s reputation in the biopharmaceutical industry and its financial capacity to complete an acquisition of this size, which the Board believed supported the conclusion that a transaction with Amgen could be completed relatively expeditiously and in an orderly manner.

 

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Goldman Sachs’ Opinion and Related Analyses. The Board considered the opinion of Goldman Sachs rendered to the Board on August 3, 2022, which was subsequently confirmed by delivery of a written opinion dated such date, that, as of such date and based upon and subject to the assumptions, qualifications and other matters and limitations set forth therein, the Merger Consideration to be paid to the holders of shares of ChemoCentryx common stock (other than those specified in such opinion) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as well as its related analyses, as more fully described under “The Merger—Opinion of Goldman Sachs & Co. LLC” beginning on page 54 of this proxy statement.

 

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Terms of the Merger Agreement. The Board considered the terms and conditions of the Merger Agreement, which was the product of arms’-length negotiations with the assistance of ChemoCentryx’s advisors, including the structure of the transaction, the all-cash form of the Merger Consideration, the limited scope of the conditions to the consummation of the Merger, and the customary nature of the representations, warranties, and the covenants and agreements of the parties. For the reasons noted below, the Board believed that the provisions of the Merger Agreement were advisable and fair to, and in the best interests of, ChemoCentryx and our stockholders. In particular:

 

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No Financing Condition. The Board considered the representation of Amgen that Amgen would have sufficient cash or other liquid financial resources or undrawn financial commitments to consummate the Merger, and that the consummation of the Merger is not subject to a financing condition.

 

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No Solicitation Covenants and Fiduciary Outs. The Board considered the non-solicitation covenants and “fiduciary out” provisions of the Merger Agreement, which, subject to the terms and conditions thereof and limitations set forth therein, permit ChemoCentryx to furnish information to, and to engage in discussions or negotiations with, third parties that make unsolicited Acquisition Proposals

 

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meeting certain criteria, permit the Board to change its recommendation to stockholders regarding the Merger Agreement under certain circumstances and permit ChemoCentryx to terminate the Merger Agreement in order to enter into a definitive agreement relating to a Superior Proposal, subject to, among other things, payment of a termination fee to Amgen. The Board further considered its ability to change its recommendation to stockholders regarding the Merger Agreement in response to an Intervening Event if the failure to do so would reasonably be expected to be inconsistent with the fiduciary duties of the Board under applicable law. The Board further considered the fact that the approximately $119.3 million termination fee payable by ChemoCentryx in the event the Merger Agreement is terminated under certain circumstances, in the opinion of the Board, (i) is reasonable in light of the overall terms of the Merger Agreement and the benefits of the Merger, (ii) is consistent with the amount of such fees payable in comparable transactions on a relative basis and (iii) would not be a substantial impediment or preclude another party from making a competing proposal to acquire ChemoCentryx.

 

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End Date. The Board considered the fact that the End Date under the Merger Agreement, on which either party, subject to certain exceptions, can terminate the Merger Agreement, allows for sufficient time to consummate the transactions contemplated by the Merger Agreement, but also prevents the Merger Agreement from being extended for an unreasonable amount of time.

 

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Enforcement. The Board considered ChemoCentryx’s ability to obtain specific enforcement of the obligations of Amgen and Merger Sub under the Merger Agreement, thereby ensuring that ChemoCentryx has an appropriate remedy in the event Amgen and Merger Sub were to decline to comply with their obligations under the Merger Agreement.

 

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Stockholder Approval; Appraisal Rights. The Board considered that the adoption of the Merger Agreement would be subject to the approval of our stockholders, that stockholders would be free to vote against the adoption of the Merger Agreement, and that stockholders who do not vote to adopt the Merger Agreement and who properly exercise their appraisal rights under Delaware law will be entitled to such appraisal rights in connection with the Merger.

 

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Conditions to Closing; Interim Operations. The Board considered the fact that the terms and conditions of the Merger Agreement minimize, to the extent reasonably practical, the risk that a condition to consummation of the Merger would not be satisfied and also provide reasonable flexibility to operate ChemoCentryx’s business during the pendency of the Merger, including with respect to actions in response to the COVID-19 pandemic.

The Board, in consultation with members of ChemoCentryx’s senior management, also assessed ChemoCentryx’s prospects for substantially increasing stockholder value as a standalone company in excess of the Merger Consideration given the risks and uncertainties in ChemoCentryx’s business, including, but not limited to, the following (which are not listed in any relative order of importance) and those discussed in ChemoCentryx’s public filings with the SEC (see “Where You Can Find More Information” beginning on page 114 of this proxy statement):

 

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the fact that ChemoCentryx has received orphan drug designation and orphan drug exclusivity for TAVNEOS in the United States, Japan and the European Union in the disease for which it is approved, but may not be able to obtain orphan drug designation or orphan drug exclusivity in other jurisdictions or for other indications of TAVNEOS for which ChemoCentryx pursues development or for any drug product candidates, and ChemoCentryx may not be able to maintain orphan drug exclusivity for TAVNEOS, or maintain orphan drug exclusivity for any drug product candidate for which ChemoCentryx may obtain orphan drug exclusivity;

 

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the possible failure or delays of current or future preclinical studies or clinical trials;

 

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ChemoCentryx’s reliance on third parties to conduct preclinical studies and clinical trials and the risks and costs of engaging additional partners or hiring additional personnel as ChemoCentryx’s preclinical, clinical and commercial activities increase;

 

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ChemoCentryx’s reliance on third party contract manufacturing organizations to manufacture and supply TAVNEOS and our drug product candidates;

 

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ChemoCentryx’s reliance on third party partners and sublicensees for the marketing, commercialization and sale of TAVNEOS in certain territories;

 

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the uncertainty of the outcomes of ongoing and planned clinical trials and the potential to not obtain regulatory approval, including the potential identification of safety-related concerns associated with the use of a drug product candidate;

 

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the significant risks and challenges associated with commercializing TAVNEOS, the costs associated with successfully scaling commercial operations and the risk that ChemoCentryx will be unable to generate adequate product revenue or achieve and maintain profitability;

 

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the outcome, timing and costs of expanding the commercialization of TAVNEOS outside of its current markets and indications and risks if ChemoCentryx is unable to maintain an effective sales and marketing and distribution capability to maximize its potential across a range of markets and indications;

 

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the risks inherent in obtaining regulatory approvals from government payors and adequate reimbursement from regulatory authorities and other third party payors to be able to sell TAVNEOS and our drug product candidates;

 

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risks and potential delays relating to the manufacturing and supply of TAVNEOS and ChemoCentryx’s drug product candidates, including due to the failure of third party manufacturers to comply with manufacturing regulations;

 

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risks and uncertainties associated with the COVID-19 pandemic and related variants, and the potential impact of such risks and uncertainties on a standalone strategy-basis and the trading price of our common stock, including the uncertainty related to the spread of the COVID-19 pandemic and the potential consequences of the pandemic on the financial markets and ChemoCentryx’s current and future business and operations, which could include: delays of ChemoCentryx’s ongoing and planned clinical trials; decreases and delays in supplier, vendor and collaboration partner interactions as a result of government and other restrictions; delays in interactions with and responses from governmental authorities; and disruptions in the operations of clinical research organizations and other third parties upon whom ChemoCentryx relies; and

 

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the current state of the U.S. and global economies, including the recent downward trend in the biopharmaceutical financial markets, increased volatility resulting from escalating political and global trade tensions, and the current and potential impact in both the near term and long term on the biopharmaceutical industry and the future commercialization efforts required with respect to ChemoCentryx’s drug products and drug product candidates that are or become approved for sale, including the numerous risks, costs and uncertainties associated with research, development and commercialization of ChemoCentryx’s pipeline programs, all of which risks are enhanced by the COVID-19 pandemic and may remain present following the resolution of the COVID-19 pandemic.

In the course of its deliberations, the Board, in consultation with members of ChemoCentryx’s senior management and representatives of ChemoCentryx’s outside financial and legal advisors, also considered a variety of uncertainties, risks and other potentially negative factors concerning the Merger Agreement and the transactions contemplated by the Merger Agreement, including, but not limited to, the following (which are not listed in any relative order of importance):

 

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No Stockholder Participation in Future Earnings or Growth. The Board considered that the nature of the Merger as a cash transaction means that, if the Merger is consummated, our stockholders will not participate in future earnings or growth of ChemoCentryx and will not benefit from any appreciation in the value of ChemoCentryx’s business or the shares of the surviving corporation.

 

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Risk Associated with Failure to Consummate the Merger. The Board considered the possibility that the transactions contemplated by the Merger Agreement, including the Merger, might not be

 

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consummated, and that consummation of the Merger is subject to the satisfaction of certain conditions that may not be within our control, including receipt of the necessary regulatory clearances and approvals and that no Material Adverse Effect with respect to ChemoCentryx has occurred that is continuing. The Board considered the fact that there can be no assurance that all conditions to the parties’ obligations to consummate the Merger will be satisfied and, as a result, it is possible that the Merger may not be consummated even if the Merger Agreement is adopted by our stockholders. The Board considered the fact that if the Merger is not consummated (i) we will have incurred significant transaction and opportunity costs, including the possibility of disruption to our operations, diversion of management and employee attention, employee attrition and a potentially negative effect on our business and customer relationships, (ii) the trading price of our common stock may be adversely affected, and (iii) the market’s perceptions of our prospects could be adversely affected.

 

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Interim Operating Covenants. The Board considered the restrictions on the conduct of our business during the pendency of the Merger, which may delay or prevent ChemoCentryx from undertaking potential business opportunities that may arise, may have a material adverse effect on our ability to respond to changing market and business conditions in a timely manner (or at all), or may negatively affect our ability to attract, retain and motivate key personnel. The Board also considered that the focus and resources of ChemoCentryx’s management may become diverted from other important business opportunities and operational matters while working to consummate the Merger, which could adversely affect our business.

 

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No Solicitation Covenants and Termination Fee. The Board considered the fact that, subject to certain exceptions, the Merger Agreement precludes ChemoCentryx and its representatives from soliciting, or entering into or participating in discussions or negotiations relating to, alternative acquisition proposals, and requires ChemoCentryx to pay to Amgen a termination fee of approximately $119.3 million if the Merger Agreement is terminated under certain circumstances, including a termination of the Merger Agreement by ChemoCentryx to enter into a definitive agreement for a Superior Proposal, as described in “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 101 of this proxy statement. The Board also considered, but did not consider preclusive, the fact that the right afforded to Amgen under the Merger Agreement to propose amendments or modifications to the terms and conditions of the Merger Agreement in response to a Superior Proposal may discourage other parties that might otherwise have an interest in a business combination with, or an acquisition of, ChemoCentryx. The Board also considered that the amount of the termination fee, as compared to termination fees in transactions of a similar size, in the opinion of the Board, was reasonable, would not likely deter competing bids. The Board also recognized that the provisions in the Merger Agreement relating to non-solicitation and the termination fee were required by Amgen as conditions to entering into the Merger Agreement.

 

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Effect of Transaction Announcement. The Board considered the potential effect of the announcement of the Merger Agreement, including effects on our stock price and operations, including our relationships with suppliers, distributors, vendors, collaborators and employees, and our ability to attract and retain key personnel during the pendency of the transactions contemplated by the Merger Agreement, as well as the possibility of a suit, action or proceeding in respect of the Merger Agreement or the transactions contemplated thereby.

 

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Transaction Costs. The Board considered the fact that we have incurred and will continue to incur significant transaction costs and expenses in connection with the Merger, regardless of whether the Merger is consummated.

 

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Taxable Transaction. The Board considered 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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Interests of Directors and Executive Officers. The Board considered the possibility that ChemoCentryx’s directors and executive officers may have interests in the transactions contemplated by the Merger Agreement that may be different from, or in addition to, those of ChemoCentryx’s stockholders generally. See “The Merger—Interests of the Directors and Executive Officers of ChemoCentryx in the Merger” beginning on page 62 of this proxy statement.

 

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After considering the foregoing potentially negative factors, the Board concluded that the potential benefits of the Merger substantially outweighed the risks or potential negative consequences.

The foregoing discussion of the information and factors considered by the Board is intended to be illustrative and not exhaustive, but includes the material reasons and factors considered by the Board in reaching its conclusions and recommendation in relation to the Merger, the Merger Agreement and the transactions proposed thereby. In light of the variety of reasons and factors considered and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific reasons or factors considered in reaching their determinations and recommendations. The Board based its recommendation on the totality of the information presented, including thorough discussions with, and questioning of, members of our senior management and representatives of our outside financial advisor and legal counsel. Individual directors may have given differing weights to different factors or may have had different reasons for their ultimate determination. In addition, the Board did not reach any specific conclusion with respect to any of the factors or reasons considered. Instead, the Board conducted an overall analysis of the factors and reasons described above and determined in its business judgment that, in the aggregate, the potential benefits of the Merger to the stockholders of ChemoCentryx outweighed the risks or potential negative consequences. It should be noted that this explanation of the reasoning of the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 33 of this proxy statement.

Opinion of Goldman Sachs & Co. LLC

Goldman Sachs rendered its opinion to the Board that, as of August 3, 2022 and based upon and subject to the factors and assumptions set forth therein, the $52.00 in cash per share of ChemoCentryx common stock to be paid to the holders (other than Amgen and its affiliates) of such shares pursuant to the Merger Agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated August 3, 2022, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement. Goldman Sachs provided advisory services and its opinion for the information and assistance of the Board in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of ChemoCentryx’s common stock should vote with respect to the Merger, or any other matter.

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

 

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the Merger Agreement;

 

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annual reports to stockholders and Annual Reports on Form 10-K of ChemoCentryx for the five years ended December 31, 2021;

 

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

 

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certain other communications from ChemoCentryx to its stockholders;

 

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certain publicly available research analyst reports for ChemoCentryx; and

 

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certain internal financial analyses and forecasts for ChemoCentryx, including assumed probabilities associated with certain future events contemplated by such forecasts and certain analyses related to the expected utilization by ChemoCentryx of certain net operating loss carryforwards, each as prepared by the management of ChemoCentryx and approved for Goldman Sachs’ use by ChemoCentryx, as described and summarized under “The Merger—Certain Unaudited Prospective Financial Information” (together, the “Financial Information”).

Goldman Sachs also held discussions with members of the senior management of ChemoCentryx regarding their assessment of the past and current business operations, financial condition and future prospects of

 

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ChemoCentryx; reviewed the reported price and trading activity for ChemoCentryx’s common stock; compared certain financial and stock market information for ChemoCentryx with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the biopharmaceutical industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with ChemoCentryx’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed, with ChemoCentryx’s consent, that the Financial Information was reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of ChemoCentryx. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of ChemoCentryx or any of its subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of ChemoCentryx to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to ChemoCentryx; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, as of the date of the opinion, of the $52.00 in cash per share of ChemoCentryx’s common stock to be paid to the holders (other than Amgen and its affiliates) of such shares pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the fairness of the Merger to, or any consideration received therewith by, the holders of any other class of securities, creditors or other constituencies of ChemoCentryx; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of ChemoCentryx, or class of such persons in connection with the Merger, whether relative to the $52.00 in cash per share of ChemoCentryx’s common stock to be paid to the holders (other than Amgen and its affiliates) of shares of ChemoCentryx’s common stock pursuant to the Merger Agreement or otherwise. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion, and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs does not express any opinion as to the prices at which shares of ChemoCentryx’s common stock will trade at any time, or as to the potential effects of volatility in the credit, financial and stock markets on ChemoCentryx, Amgen or the Merger, or as to the impact of the Merger on the solvency or viability of ChemoCentryx or Amgen or the ability of ChemoCentryx or Amgen to pay their respective obligations when they become due. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses may include information presented in tabular format. Any such tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based

 

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on market data, is based on market data as it existed on or before August 2, 2022, the last trading day before the date of Goldman Sachs’ opinion, and is not necessarily indicative of current market conditions.

Historical Stock Trading Analysis. Goldman Sachs reviewed the historical trading prices and volumes for the shares of ChemoCentryx’s common stock for the one-year period ended August 2, 2022. In addition, Goldman Sachs analyzed the consideration to be paid to holders (other than Amgen and its affiliates) of shares of ChemoCentryx’s common stock pursuant to the Merger Agreement in relation to the (i) the closing price per share of ChemoCentryx’s common stock on August 2, 2022, the last trading day before the date of Goldman Sachs’ opinion, (ii) the high closing price per share of ChemoCentryx’s common stock for the 52-week period ended August 2, 2022, and (iii) the volume weighted average price (the “VWAP”) per share of ChemoCentryx’s common stock for the preceding thirty-, sixty- and ninety-calendar day periods ended August 2, 2022.

This analysis indicated that the price per share of ChemoCentryx’s common stock to be paid to holders (other than Amgen and its affiliates) of shares of ChemoCentryx’s common stock pursuant to the Merger Agreement represented:

 

•

a premium of approximately 123% based on the closing price per share of ChemoCentryx’s common stock of $23.27 on August 2, 2022, the last trading day before the date of Goldman Sachs’ opinion;

 

•

a premium of approximately 28% based on the highest closing price per share of ChemoCentryx’s common stock of $40.50 for the 52-week period ended August 2, 2022;

 

•

a premium of approximately 118% based on the VWAP per share of ChemoCentryx’s common stock of $23.84 for the thirty-calendar day period ended August 2, 2022;

 

•

a premium of approximately 113% based on the VWAP per share of ChemoCentryx’s common stock of $24.47 for the sixty-calendar day period ended August 2, 2022; and

 

•

a premium of approximately 138% based on the VWAP per share of ChemoCentryx’s common stock of $21.81 for the ninety-calendar day period ended August 2, 2022.

Illustrative Discounted Cash Flow Analysis—TAVNEOS AAV Only Cash Flows. Using the Financial Information, Goldman Sachs performed an illustrative discounted cash flow analysis to calculate the estimated present value of ChemoCentryx based on estimates of unlevered free cash flows for the third and fourth quarters of 2022 and years 2023 through 2044 to be derived from the commercialization of TAVNEOS for its indication in ANCA-associated vasculitis, as reflected in the Financial Information (such standalone unlevered free cash flows referred to as the “TAVNEOS AAV Only Cash Flows”). Using a mid-year convention and discount rates ranging from 11.5% to 13.5%, reflecting estimates of ChemoCentryx’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2022 (i) the TAVNEOS AAV Only Cash Flows and (ii) a range of illustrative terminal values for ChemoCentryx based on the TAVNEOS AAV Only Cash Flows, which were calculated by applying perpetuity growth rates ranging from negative 20% to 0% to a terminal year estimate of the TAVNEOS AAV Only Cash Flows, as reflected in the Financial Information. In addition, using discount rates ranging from 11.5% to 13.5%, reflecting estimates of ChemoCentryx’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2022 the estimated benefits of ChemoCentryx’s net operating losses (“NOLs”) for the third and fourth quarters of 2022 and years 2023 through 2044, as reflected in the Financial Information. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including ChemoCentryx’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for ChemoCentryx, as well as certain financial metrics for the United States financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Financial Information and market expectations regarding long-term real growth of gross domestic product, and inflation. Goldman Sachs derived ranges of illustrative enterprise values for ChemoCentryx based on the TAVNEOS AAV Only Cash Flows by adding the ranges of the present values it derived above. Goldman Sachs then added to such ranges of illustrative enterprise values it derived for ChemoCentryx based on the

 

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TAVNEOS AAV Only Cash Flows the net cash balance of $322.0 million as of June 30, 2022 of ChemoCentryx and the net present value of $200.0 million in financing expected at the end of 2022 as reflected in the Financial Information, in each case, as provided by the management of ChemoCentryx, to derive a range of illustrative equity values for ChemoCentryx based on the TAVNEOS AAV Only Cash Flows. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of ChemoCentryx as of August 2, 2022, as provided by the management of ChemoCentryx, using the treasury stock method, to derive a range of illustrative present values per share ranging from $41.01 to $45.91.

Illustrative Discounted Cash Flow Analysis—Aggregate Cash Flows. Using the Financial Information, Goldman Sachs performed an illustrative discounted cash flow analysis to calculate the estimated present value of ChemoCentryx based on (A) the TAVNEOS AAV Only Cash Flows and (B) estimates of the unlevered free cash flows for the third and fourth quarters of 2022 and years 2023 through 2044 to be derived from the commercialization of TAVNEOS for indications other than ANCA-associated vasculitis and the Company’s CCX559 and CCX507 pipeline drug candidates, as reflected in the Financial Information (the cash flows described in clauses (A) and (B) collectively, the “Aggregate Cash Flows”).

Using discount rates ranging from 11.5% to 13.5%, reflecting estimates of ChemoCentryx’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2022 (i) the Aggregate Cash Flows and (ii) a range of illustrative terminal values for ChemoCentryx based on the Aggregate Cash Flows, which were calculated by applying perpetuity growth rates ranging from negative 20% to 0% to a terminal year estimate of the Aggregate Cash Flows, as reflected in the Financial Information. In addition, using a mid-year convention and discount rates ranging from 11.5% to 13.5%, reflecting estimates of ChemoCentryx’s weighted average cost of capital, Goldman Sachs discounted to present value as of June 30, 2022 the estimated benefits of ChemoCentryx’s NOLs for the third and fourth quarters of 2022 and years 2023 through 2044, as reflected in the Financial Information. Goldman Sachs derived such discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including ChemoCentryx’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for ChemoCentryx, as well as certain financial metrics for the United States financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Financial Information and market expectations regarding long-term real growth of gross domestic product, and inflation. Goldman Sachs derived ranges of illustrative enterprise values for ChemoCentryx based on the Aggregate Cash Flows by adding the ranges of present values it derived above. Goldman Sachs then added to the range of illustrative enterprise values it derived for ChemoCentryx based on the Aggregate Cash Flows the net cash balance of $322.0 million as of June 30, 2022 of ChemoCentryx and the net present value of the $200.0 million in financing expected at the end of 2022 as reflected in the Financial Information, in each case, as provided by the management of ChemoCentryx, to derive a range of illustrative equity values for ChemoCentryx based on the Aggregate Cash Flows. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of ChemoCentryx as of August 2, 2022, as provided by the management of ChemoCentryx, using the treasury stock method, to derive a range of illustrative present values per share ranging from $51.80 to $59.60.

Premia Analysis—Undisturbed Closing Stock Price. Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for transactions announced during the time period from January 1, 2015 through August 2, 2022 involving a public company in the biopharmaceutical industry as the target where the disclosed enterprise value for the transaction was between $3.0 billion and $8.0 billion. For the same transactions, using publicly available information, Goldman Sachs calculated the median, 25th percentile and 75th percentile premiums of the price paid in such transactions relative to the applicable target’s last undisturbed closing stock price prior to announcement of the applicable transaction. This analysis indicated a median premium of 62% across such transactions. This analysis also indicated a 25th percentile premium of 47% and 75th percentile premium of 92% across such transactions. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of 47% to 92% to the undisturbed closing price per share of ChemoCentryx’s common stock of $23.27 as of August 2, 2022 and calculated a range of implied equity values per share of ChemoCentryx’s common stock of $34.21 to $44.68.

 

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Premia Analysis—52-Week High Closing Stock Price. Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for transactions announced during the time period from January 1, 2015 through August 2, 2022 involving a public company in the biopharmaceutical industry as the target where the disclosed enterprise value for the transaction was between $3.0 billion and $8.0 billion. For the same transactions, using publicly available information, Goldman Sachs calculated the average, 25th percentile and 75th percentile premia of the price paid in such transactions relative to the applicable target’s last undisturbed 52-week high closing stock prices prior to announcement of the applicable transaction. This analysis indicated a median premium of 21% across such transactions. This analysis also indicated a 25th percentile premium of negative 1% and 75th percentile premium of 31% across such transactions. Using this analysis, Goldman Sachs applied a reference range of illustrative premiums of negative 1% to 31% to the October 11, 2021, $40.50 per share closing price of ChemoCentryx’s common stock, which is the undisturbed 52-week high closing price per share of ChemoCentryx’s common stock for the 52-week period ended August 2, 2022, and calculated a range of implied equity values per share of ChemoCentryx’s common stock of $40.10 to $53.06.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to ChemoCentryx or the Merger.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Board as to the fairness from a financial point of view, as of the date of the opinion, of the $52.00 in cash per share Merger Consideration to be paid to the holders (other than Amgen and its affiliates) of such shares pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of ChemoCentryx, Amgen, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The Merger Consideration was determined through arm’s-length negotiations between ChemoCentryx and Amgen and was approved by the Board. Goldman Sachs provided advice to ChemoCentryx during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to ChemoCentryx or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

As described in the section of this proxy statement captioned “The Merger—Recommendation of the Board and Reasons for the Merger,” Goldman Sachs’ opinion to the Board was one of many factors taken into consideration by the Board in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they

 

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manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of ChemoCentryx, Amgen, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transactions contemplated by the Merger Agreement. Goldman Sachs acted as financial advisor to ChemoCentryx in connection with, and participated in certain negotiations leading to, the Merger and other transactions contemplated by the Merger Agreement. During the two-year period ended August 3, 2022, the Investment Banking Division of Goldman Sachs has not been engaged by ChemoCentryx or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs has provided certain financial advisory and/or underwriting services to Amgen and/or its affiliates from time to time for which our Investment Banking Division has received, and may receive, compensation, including having acted as financial advisor to Amgen in connection with its acquisition of Five Prime Therapeutics in April 2021; as bookrunner in connection with the public offering by Amgen of its 1.650% Senior Notes due 2028 (aggregate principal amount $1,250,000,000), 2.000% Senior Notes due 2032 (aggregate principal amount $1,250,000,000), 2.800% Senior Notes due 2041 (aggregate principal amount $1,150,000,000), and 3.000% Senior Notes due 2052 (aggregate principal amount $1,350,000,000) in August 2021; as financial advisor to Amgen in connection with its acquisition of Teneobio, Inc. in October 2021; and as bookrunner in connection with the public offering by Amgen of its 3.000% Senior Notes due 2029 (aggregate principal amount $750,000,000), 3.350% Senior Notes due 2032 (aggregate principal amount $1,000,000,000), 4.200% Senior Notes due 2052 (aggregate principal amount $1,000,000,000), and 4.400% Senior Notes due 2062 (aggregate principal amount $1,250,000,000) in February 2022. During the two-year period ended August 3, 2022, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Amgen and/or its affiliates of approximately $23.0 million. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to ChemoCentryx, Amgen, and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

The Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated March 28, 2022, ChemoCentryx engaged Goldman Sachs to act as its financial advisor in connection with the Merger. The engagement letter between ChemoCentryx and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of the announcement of ChemoCentryx’s entry into the Merger Agreement, to be approximately $40.0 million, payable upon the consummation of the Merger. In addition, ChemoCentryx has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Certain Unaudited Prospective Financial Information

We do not, as a matter of course, make public projections as to our future financial performance, due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, ChemoCentryx’s management regularly prepares and reviews with the Board estimates regarding the success and timing of the development of, regulatory filings and approvals for and the commercialization of our products and product candidates, as well as various partnership scenarios for the development and commercialization of our product candidates outside of the United States. In connection with our strategic planning process and the Board’s evaluation of the Merger, as described further in the section of this proxy statement captioned “The Merger—Background of the Merger,” ChemoCentryx’s management prepared and reviewed with the Board certain unaudited prospective financial information of ChemoCentryx as an independent company for the third and fourth quarter of fiscal year 2022 and for fiscal years 2023 through 2044, as prepared and used as described below (referred to as the “Unaudited Prospective Financial Information)”.

The Unaudited Prospective Financial Information was prepared for internal use only and not for public disclosure and was provided to the Board for the purposes of considering, analyzing and evaluating the Merger.

 

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The Unaudited Prospective Financial Information was also provided to, and approved by ChemoCentryx for use by, Goldman Sachs, ChemoCentryx’s financial advisor, for the purposes of Goldman Sachs’ financial analyses and fairness opinion in connection with the Merger (as described in more detail in the section of this proxy statement captioned “The Merger—Opinion of Goldman Sachs & Co. LLC”). The Unaudited Prospective Financial Information includes estimates of ChemoCentryx’s financial performance on a probability-adjusted basis. With ChemoCentryx’s consent, Goldman Sachs assumed that the Unaudited Prospective Financial Information was reasonably prepared on bases reflecting the best then available estimates and judgments of our management as to our future financial performance, and relied on ChemoCentryx’s assessments as to the validity of, and risks associated with, our products and product candidates.

The Unaudited Prospective Financial Information was developed based on ChemoCentryx’s management’s knowledge of and assumptions with respect to ChemoCentryx’s business, including with respect to the commercialization of TAVNEOS for the treatment of ANCA-associated vasculitis and in other indications and ChemoCentryx’s CCX559 and CCX507 pipeline drug candidates. The Unaudited Prospective Financial Information was developed without giving effect to the Merger, including any impact of the negotiation or execution of the Merger Agreement or the Merger, the expenses that have already or may be incurred in connection with completing the Merger or any changes to ChemoCentryx’s operations or strategy that may be implemented during the pendency of or following the consummation of the Merger. The Unaudited Prospective Financial Information also does not consider the effect of any failure of the Merger to be completed; it should not be viewed as accurate or continuing in that context.

The Unaudited Prospective Financial Information was not prepared with a view toward public disclosure or complying with accounting principles generally accepted in the United States (which we refer to as “GAAP”). In addition, the Unaudited Prospective Financial Information was not prepared with a view toward complying with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. Neither our independent registered public accounting firm nor any other independent accountants have (1) compiled, reviewed, audited, examined or performed any procedures with respect to the Unaudited Prospective Financial Information, (2) expressed any opinion or any other form of assurance on such information or the achievability of the Unaudited Prospective Financial Information or (3) assumed any responsibility for the Unaudited Prospective Financial Information.

Because the Unaudited Prospective Financial Information reflects estimates and judgments, it is susceptible to sensitivities and assumptions, as well as multiple interpretations based on actual experience and business developments. The Unaudited Prospective Financial Information also covers multiple years, and such information by its nature becomes less predictive with each succeeding year. The Unaudited Prospective Financial Information is not, and should not be considered to be, a guarantee of future operating results. Further, the Unaudited Prospective Financial Information is not fact and should not be relied upon as being necessarily indicative of our future results.

Although the Unaudited Prospective Financial Information is presented with numerical specificity, it reflects numerous assumptions and estimates as to future events. The Unaudited Prospective Financial Information will be affected by, among other factors, our ability to achieve our goals for the development, regulatory approval and commercialization of our products and product candidates, including on the timeline assumed for purposes of the Unaudited Prospective Financial Information. The Unaudited Prospective Financial Information reflects assumptions and uncertainties that are subject to change. Important factors that may affect actual results and cause the Unaudited Prospective Financial Information not to be achieved are described in various risk factors described in the sections of this proxy statement captioned “Cautionary Statement Regarding Forward-Looking Statements,” and in our other filings with the SEC, including those listed under the section captioned “Where You Can Find More Information.” All of these factors are difficult to predict, and many of them are outside of our control. As a result, there can be no assurance that the Unaudited Prospective Financial Information will be realized, and actual results may be materially better or worse than those contained in the Unaudited Prospective Financial Information, whether or not the Merger is consummated. The Unaudited

 

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Prospective Financial Information also reflects assumptions as to certain business decisions that are subject to change. The Unaudited Prospective Financial Information may differ from publicized analyst estimates and forecasts and does not consider any events or circumstances after the date that it was prepared, including the announcement of the entry into the Merger Agreement. The Unaudited Prospective Financial Information has not been updated or revised to reflect information or results after the date it was prepared or as of the date of this proxy statement. Except to the extent required by applicable federal securities laws, we do not intend to update or otherwise revise the Unaudited Prospective Financial Information to reflect circumstances existing after the date that such information was prepared or to reflect the occurrence of future events. ChemoCentryx has or may report results of operations for periods included in the Unaudited Prospective Financial Information that were or will be completed following the preparation of the Unaudited Prospective Financial Information. Stockholders and investors are urged to refer to ChemoCentryx’s periodic filings with the SEC for information on ChemoCentryx’s actual historical results.

Certain of the financial measures included in the Unaudited Prospective Financial Information are “non-GAAP financial measures.” These are financial performance measures that are not calculated in accordance with GAAP. These non-GAAP financial measures should not be viewed as a substitute for GAAP financial measures, and may be different from non-GAAP financial measures used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. In certain circumstances, including those applicable to the Unaudited Prospective Financial Information, financial measures included in forecasts provided to a financial advisor and a board of directors in connection with a business combination transaction are excluded from the definition of “non-GAAP financial measures” under applicable SEC rules and regulations. As a result, the Unaudited Prospective Financial Information is 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 by the Board or Goldman Sachs. Accordingly, no reconciliation of the financial measures included in the Unaudited Prospective Financial Information is provided in this proxy statement.

The Unaudited Prospective Financial Information constitutes forward-looking statements. By including the Unaudited Prospective Financial Information in this proxy statement, neither we nor any of our representatives has made or makes any representation to any person regarding our ultimate performance as compared to the information contained in the Unaudited Prospective Financial Information. The inclusion of the Unaudited Prospective Financial Information should not be regarded as an indication that the Board, ChemoCentryx or any other person considered, or now considers, the Unaudited Prospective Financial Information to be predictive of actual future results. Further, the inclusion of the Unaudited Prospective Financial Information in this proxy statement does not constitute an admission or representation by ChemoCentryx that the information presented is material. The Unaudited Prospective Financial Information is included in this proxy statement solely to give our stockholders access to the information that was provided to the Board and Goldman Sachs. The Unaudited Prospective Financial Information is not included in this proxy statement in order to influence any ChemoCentryx stockholder to make any investment decision with respect to the Merger, including whether or not to seek appraisal rights with respect to their shares.

Unaudited Prospective Financial Information

Various judgments and assumptions were made when preparing the Unaudited Prospective Financial Information, including, among others (1) revenue estimates in the United States based on various assumptions, including with respect to addressable patient population, market penetration, time to peak sales, peak sales, probability of success as a function of clinical development stage, inflationary factors and pricing and exclusivity, and potential outcomes with respect thereto for the commercialization of TAVNEOS (including in indications other than ANCA-associated vasculitis) and ChemoCentryx’s CCX559 and CCX507 pipeline drug candidates, (2) the entry into partnerships for the development and commercialization of certain product candidates outside of the United States with various upfront, milestone and royalty payments assumptions,

 

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(3) assumptions with respect to cost of goods sold and sales and marketing expenses, certain of such assumptions estimated on a product-by-product basis, (4) estimated royalty and milestone expenses payable by and to ChemoCentryx based on the terms of ChemoCentryx’s existing partner relationships, (5) variable research and development expenses estimated based on the phase of each product’s development and launch, (6) estimated benefits of ChemoCentryx’s NOLs and the assumed completion of an equity financing in the fourth quarter of fiscal year 2022 resulting in net proceeds to ChemoCentryx of $200 million, and (7) corporate general and administrative expenses generally estimated to grow until TAVNEOS’s loss of exclusivity.

The following table presents estimates of net revenue and EBIT with respect to the commercialization of TAVNEOS (including in indications other than ANCA-associated vasculitis) and ChemoCentryx’s CCX559 and CCX507 pipeline drug candidates for the third and fourth quarter of fiscal year 2022 and for fiscal years 2023 through 2044, as reflected in the Unaudited Prospective Financial Information, as well as estimates of unlevered free cash flow with respect to the commercialization of TAVNEOS (including in indications other than ANCA-associated vasculitis) and ChemoCentryx’s CCX559 and CCX507 pipeline drug candidates for the same period, as approved by ChemoCentryx.

 

($) in millions		2H 2022E				2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E				2034E				2035E				2036E				2037E				2038E				2039E				2040E				2041E				2042E				2043E				2044E
Total Net Revenue		$	46			$	242			$	462			$	711			$	1,002			$	1,191			$	1,369			$	1,604			$	1,775			$	1,916			$	2,013			$	2,113			$	2,184			$	617			$	618			$	620			$	621			$	503			$	503			$	503			$	503			$	503			$	287
EBIT(1)		$	(112	)		$	(53	)		$	172			$	466			$	767			$	941			$	1,061			$	1,326			$	1,398			$	1,535			$	1,620			$	1,702			$	1,528			$	389			$	390			$	391			$	393			$	282			$	282			$	282			$	282			$	282			$	131
Unlevered Free Cash Flow(2)		$	(144	)		$	(90	)		$	107			$	330			$	556			$	695			$	790			$	991			$	1,050			$	1,158			$	1,226			$	1,289			$	1,159			$	389			$	308			$	305			$	302			$	221			$	215			$	215			$	214			$	214			$	112

 

(1)

“EBIT” refers to ChemoCentryx’s gross profit before interest expenses and taxes less ChemoCentryx’s total operating expenses. EBIT is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity.

(2)

“Unlevered Free Cash Flow” is defined as ChemoCentryx’s EBIT less tax expense, plus depreciation and amortization, less capital expenditures, less changes in net working capital. Unlevered Free Cash Flow is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity. Unlevered Free Cash Flow excludes the impact of ChemoCentryx’s estimated net operating losses and tax credits as of June, 30, 2022 of $744.4 million and excludes an assumed equity raise of $200 million in the fourth quarter of 2022.

The following table presents estimates of net revenue and EBIT with respect to the commercialization of TAVNEOS for ANCA-associated vasculitis for the third and fourth quarter of fiscal year 2022 and for fiscal years 2023 through 2044, as reflected in the Unaudited Prospective Financial Information, as well as estimates of unlevered free cash flow with respect to the commercialization of TAVNEOS for ANCA-associated vasculitis for the same period, as approved by ChemoCentryx.

 

($) in millions		2H 2022E				2023E				2024E				2025E				2026E				2027E				2028E				2029E				2030E				2031E				2032E				2033E				2034E				2035E				2036E				2037E				2038E				2039E				2040E				2041E				2042E				2043E				2044E
Total Net Revenue (AAV Only)		$	46			$	237			$	451			$	670			$	833			$	867			$	902			$	938			$	976			$	1,015			$	1,056			$	1,099			$	1,143			$	147			$	147			$	147			$	147			$	147			$	147			$	147			$	147			$	147			$	147
EBIT (AAV Only)(1)		$	(25	)		$	74			$	309			$	557			$	736			$	783			$	775			$	868			$	856			$	902			$	940			$	978			$	813			$	106			$	106			$	106			$	106			$	106			$	106			$	106			$	106			$	106			$	106
Unlevered Free Cash Flow (AAV Only)(2)		$	(56	)		$	37			$	211			$	401			$	537			$	581			$	578			$	650			$	644			$	681			$	711			$	741			$	617			$	103			$	83			$	82			$	81			$	83			$	81			$	81			$	81			$	81			$	87

 

(1)

“EBIT” refers to ChemoCentryx’s gross profit before interest expenses and taxes less ChemoCentryx’s total operating expenses. EBIT is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity.

(2)

“Unlevered Free Cash Flow” is defined as ChemoCentryx’s EBIT less tax expense, plus depreciation and amortization, less capital expenditures, less changes in net working capital. Unlevered Free Cash Flow is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity. Unlevered Free Cash Flow excludes the impact of ChemoCentryx’s estimated net operating losses and tax credits as of June, 30, 2022 of $744.4 million and excludes an assumed equity raise of $200 million in the fourth quarter of 2022.

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

Members of the Board and ChemoCentryx’s executive officers may have various interests in the Merger that may be in addition to, or different from, the interests of ChemoCentryx stockholders generally. The members of the Board were aware of these potential interests and considered them at the time they approved the Merger Agreement and in making their recommendation that ChemoCentryx stockholders adopt the Merger Agreement. These potential interests are described below.

 

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Treatment of Equity Awards

Each of our directors and executive officers hold outstanding ChemoCentryx equity awards. The ChemoCentryx equity awards held by our directors and executive officers immediately prior to the Effective Time will be treated in the Merger in the same manner as ChemoCentryx equity awards held by employees generally. At the Effective Time, outstanding ChemoCentryx equity awards held by our directors and executive officers will be treated as follows:

 

•

Each ChemoCentryx stock option that is outstanding and unexercised immediately prior to the Effective Time will vest in full and be cancelled and converted into the right to receive an amount in cash equal to the product of (i) the number of shares of ChemoCentryx common stock underlying such stock option, multiplied by (ii) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such ChemoCentryx stock option. Any ChemoCentryx stock options, whether vested or unvested, with a per share exercise price equal to or exceeding the Merger Consideration will be cancelled for no consideration as of immediately prior to the Effective Time;

 

•

Each RSU that was granted prior to August 3, 2022 or to a non-employee member of the Board and that is outstanding immediately prior to the Effective Time will vest in full and be cancelled and converted into the right to receive an amount in cash equal to the product of (i) the number of shares of ChemoCentryx common stock subject to such RSU multiplied by (ii) the Merger Consideration;

 

•

Each RSU that was granted on or after August 3, 2022 (other than to a non-employee member of the Board) and that is outstanding immediately prior to the Effective Time will be converted into an Amgen Cash Award, representing the right to receive an amount in cash equal to the product of (i) the total number of shares of ChemoCentryx common stock subject to such RSU multiplied by (ii) the Merger Consideration, which will vest and become payable at the same time as such RSU would have vested and been payable pursuant to its terms, subject to continued employment. Each Amgen Cash Award will provide for accelerated vesting upon the executive officer’s death, disability or if the executive officer’s employment is terminated under circumstances that would give rise to severance under his or her employment agreement, as described below under “—Change in Control Severance Benefits in Executive Officer Employment Arrangements”, subject to such executive officer’s execution and non-revocation of a release of claims in the form attached to the employment agreement; and

 

•

Each restricted stock award that was granted prior to August 3, 2022 or to a non-employee member of the Board and is outstanding immediately prior to the Effective Time will vest in full and be cancelled and converted into the right to receive, as soon as reasonably practicable after the Effective Time, an amount in cash equal to the Merger Consideration.

 

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The following table sets forth, for each of ChemoCentryx’s directors and executive officers, (i) the number and value of shares of ChemoCentryx common stock subject to vested ChemoCentryx stock options, (ii) the number and value of shares of ChemoCentryx common stock subject to unvested ChemoCentryx stock options, (iii) the number and value of unvested RSUs and restricted stock awards and (iv) the total value of shares of ChemoCentryx common stock subject to ChemoCentryx stock options, unvested RSUs and unvested restricted stock awards, in each case, held by such director or executive officer as of September 13, 2022. As of September 13, 2022, none of our directors or executive officers held any RSUs that would be converted into Amgen Cash Awards at the Effective Time. These amounts do not attempt to forecast any additional equity award grants, issuances or forfeitures that may occur prior to the Effective Time following the date of this proxy statement. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, the actual amounts to be received by ChemoCentryx’s directors and executive officers may materially differ from the amounts set forth below. This table also does not include any outstanding rights to purchase shares under the ESPP held by our executive officers or any outstanding stock options the exercise price of which is in excess of $52.00 per share and which will be cancelled for no consideration at the Effective Time. For additional information regarding the ESPP, see “The Merger Agreement—Treatment of Equity Awards and the ESPP” beginning on page 79 of this proxy statement.

 

Name		Vested Stock Options (#)				Value of Vested Stock Options ($)(1)				Unvested Stock Options (#)				Value of Unvested Stock Options ($)(1)				Unvested RSUs/ Restricted Stock (#)				Value of Unvested RSUs/ Restricted Stock ($)(2)				Total Value of Outstanding Stock Options and Unvested RSUs/ Restricted Stock ($)(3)
Non-Employee Directors
Thomas A. Edwards			30,143				1,206,822				8,342				247,007				15,723				817,596				2,271,424
Joseph M. Feczko, M.D.			42,643				1,682,572				8,342				247,007				15,723				817,596				2,747,174
Jennifer L. Herron			—				—				—				—				17,237				896,324				896,324
Geoffrey M. Parker			42,643				1,682,572				8,342				247,007				15,723				817,596				2,747,174
James L. Tyree			42,643				1,682,572				8,342				247,007				15,723				817,596				2,747,174
David E. Wheadon, M.D.			—				—				—				—				22,274				1,158,248				1,158,248

Name		Vested Stock Options (#)				Value of Vested Stock Options ($)(1)				Unvested Stock Options (#)				Value of Unvested Stock Options ($)(1)				Unvested RSUs (#)				Value of Unvested RSUs ($)(2)				Total Value of Outstanding Stock Options and Unvested RSUs ($)(3)
Executive Officers
Thomas J. Schall, Ph.D.			1,978,499				85,519,709				235,601				5,184,348				239,934				12,476,568				103,180,625
Tausif Butt			21,875				849,406				105,325				3,220,118				41,400				2,152,800				6,222,324
Rita I. Jain, M.D.			16,791				685,293				59,700				1,810,899				11,600				603,200				3,099,392
Markus J. Cappel, Ph.D.			96,547				3,703,870				62,601				1,407,651				61,467				3,196,284				8,307,805
Susan M. Kanaya			364,547				15,764,730				89,001				1,978,993				90,968				4,730,336				22,474,059

 

(1)

For purposes of this table, the value of each stock option is the product obtained by multiplying (A) the number of shares of ChemoCentryx common stock underlying the vested or unvested portion, as applicable, of such stock option by (B) the excess, if any, of (i) $52.00, over (ii) the exercise price of such ChemoCentryx stock option.

(2)	For purposes of this table, the value of each RSU or restricted stock award is $52.00.

(3)	See page 111 of this proxy statement for additional information regarding shares beneficially owned by directors and executive officers of ChemoCentryx and their affiliates.

 

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Change in Control Severance Benefits in Executive Officer Employment Arrangements

Each of ChemoCentryx’s executive officers has entered into an employment agreement with ChemoCentryx, pursuant to which the executive officer is entitled to severance benefits upon a qualifying termination of employment, including after a change in control (which will include the Merger).     

Employment Agreements with Dr. Schall, Ms. Kanaya and Dr. Cappel

ChemoCentryx has entered into employment agreements with each of Dr. Schall, Ms. Kanaya and Dr. Cappel. Under each of the employment agreements, if ChemoCentryx terminates an executive officer’s employment without “cause” or if the executive officer resigns for “good reason”, in each case within 12 months following a change in control, subject to the execution and non-revocation of a release of claims, such executive officer will be entitled to receive: (1) a lump sum cash payment equal to the executive officer’s monthly base salary as in effect immediately prior to the involuntary termination for the 18 month period following the date of termination or resignation, (2) a lump sum cash payment equal to one and one-half times the executive officer’s target bonus for the fiscal year in which the date of termination occurred, (3) until the date that is 18 months following the date of termination (or, if earlier, the date on which the applicable continuation period under COBRA ends), reimbursement of the costs associated with continuation coverage pursuant to COBRA for the executive officer and his or her eligible dependents covered under ChemoCentryx’s health plans as of the date of termination, such that the executive officer’s premiums are the same as for active employees, and (4) accelerated vesting of all of the executive officer’s outstanding stock awards upon the date of effectiveness of the release. The foregoing change-in-control severance benefits will only apply so long as the executive officer is working on a full-time basis.

For purposes of the employment agreements, “cause” means an executive officer (1) has committed an act of fraud, embezzlement or dishonesty in connection with the executive officer’s employment, or has intentionally committed some other illegal act that has, or may be reasonably expected to have, a material adverse impact on the company or any successor or parent or subsidiary thereof; (2) has been convicted of, or entered a plea of “guilty” or “no contest” to, a felony, or to any crime involving moral turpitude, which causes or may reasonably be expected to cause substantial economic injury to or substantial injury to the reputation of ChemoCentryx or any successor or parent or subsidiary thereof; (3) has made any unauthorized use or disclosure of confidential information or trade secrets of ChemoCentryx or any successor or parent or subsidiary thereof that has, or may reasonably be expected to have, a material adverse impact on any such entity; (4) has materially breached a ChemoCentryx policy, materially breached the provisions of the executive officer’s employment agreement, or has committed any other intentional misconduct that has, or may be reasonably expected to have, a material adverse impact on ChemoCentryx or any successor or parent or subsidiary thereof; or (5) has intentionally refused or intentionally failed to act in accordance with any lawful and proper direction or order of the board of directors or the appropriate individual to whom the executive officer reports; provided such direction is not materially inconsistent with the executive officer’s customary duties and responsibilities.

For purposes of the employment agreements, “good reason” means (1) a material diminution in the executive officer’s authority, duties or responsibilities, (2) a material diminution in the authority, duties or responsibilities of the supervisor to whom the named executive officer is required to report, (3) a material diminution in the executive officer’s base compensation unless such a reduction is imposed across-the-board to senior management of the company, (4) a material change in the geographic location at which the executive officer must perform his or her duties, or (5) any other action or inaction that constitutes a material breach by the company or any successor or affiliate of its obligations to the executive officer under the employment agreement.

Employment Agreements with Mr. Butt and Dr. Jain

ChemoCentryx has entered into employment agreements with each of Mr. Butt and Dr. Jain, each of which provides that if ChemoCentryx terminates the executive officer’s employment without “cause” or if the executive

 

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officer resigns for “good reason”, in each case within 12 months following a change in control, subject to the execution and non-revocation of a release of claims, such executive officer will be entitled to receive: (1) a lump sum cash payment equal to 12 months of the executive officer’s current base salary, (2) a lump sum cash payment equal to the executive officer’s target bonus for the fiscal year in which the date of termination occurred, (3) if the executive officer timely elects continued coverage under COBRA, payment of COBRA premiums for health insurance coverage until the earliest of (A) the close of the 12 month period following the termination of the executive officer’s employment, (B) expiration of the executive officer’s eligibility for COBRA continuation coverage, or (C) the date on which the executive officer becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment, and (4) accelerated vesting of the service-based vesting requirements of the executive officer’s outstanding equity awards as of the date of termination (with any performance-based equity awards treated in accordance with their terms).

For purposes of the employment agreements with Mr. Butt and Dr. Jain, “cause” and “good reason” generally have the meanings given to such terms in the employment agreements with the other executive officers described above.

For an estimate of the amounts that would be payable to each of ChemoCentryx’s named executive officers upon a qualifying termination at the Effective Time of the Merger under their employment agreements, see “Proposal No. 2: Advisory Vote on the Merger Compensation Proposal—The Merger Compensation Proposal—Quantification of Potential Payments and Benefits to ChemoCentryx’s Named Executive Officers” beginning on page 105 of this proxy statement.

ChemoCentryx Annual Bonus Plan

If the Closing Date occurs before annual bonuses for fiscal year 2022 are paid, Amgen will, or will cause the surviving corporation to, pay each eligible executive officer the amounts payable to such executive officer under ChemoCentryx’s annual bonus plan (A) if the Closing Date occurs prior to December 31, 2022, based on the target level of performance, or (B) if the Closing Date occurs on or after January 1, 2023, based on the actual level of performance and individual earned bonus amounts as determined by ChemoCentryx no later than immediately prior to the Effective Time. If an executive officer is terminated prior to the payment of his or her fiscal year 2022 bonus under the circumstances that would give rise to severance under such executive officer’s employment agreement, then subject to such executive officer’s execution and non-revocation of a release of claims in the same form to be executed under his or her employment agreement, such executive officer will remain entitled to receive such fiscal year 2022 bonus, prorated for the portion of fiscal year 2022 elapsed prior to the date of termination if such termination occurs prior to December 31, 2022. The payment of any such prorated bonus is in addition to the severance under his or her employment agreement, as described above.

For an estimate of the amounts that would be payable to each of ChemoCentryx’s named executive officers upon a qualifying termination at the effective time of the Merger under ChemoCentryx’s annual bonus plan, see “Proposal No. 2: Advisory Vote on the Merger Compensation Proposal—The Merger Compensation Proposal—Quantification of Potential Payments and Benefits to ChemoCentryx’s Named Executive Officers” beginning on page 105 of this proxy statement.

New Amgen Arrangements

Certain of ChemoCentryx’s executive officers may continue to provide employment or other services to Amgen after the Effective Time and may enter into new agreements, arrangements or understandings with Amgen to set forth the terms and compensation of such post-Closing service. As of the date of this proxy statement, no such agreements, arrangements or understandings with Amgen exist.

 

66

Tax Planning Strategies

Under the Merger Agreement, if the Closing Date is not reasonably expected to occur in 2022, ChemoCentryx may implement tax planning strategies for the purpose of mitigating the impact of Sections 280G and 4999 of the Code on ChemoCentryx’s executive officers and preserve certain compensation-related tax deductions that might otherwise be disallowed. Such tax planning strategies will not include a gross-up of any excise taxes under Section 4999 of the Code, but may include vesting certain equity awards in the second half of December 2022 that are scheduled to vest in early 2023 or paying 2022 bonuses (or a portion thereof) in the second half of December 2022. In addition, ChemoCentryx is permitted to enter into amendments to the employment agreements with each of Dr. Schall, Ms. Kanaya and Dr. Cappel to implement a standard “better-net” cutback with respect to Sections 280G and 4999 of the Code. As of the date of this proxy statement, no such tax planning strategies or amendments have been finalized or implemented.

Indemnification of Directors and Officers; Insurance

Under the Merger Agreement, from and after the Effective Time until the sixth (6^th) anniversary of the date on which the Effective Time occurs, Amgen will cause the surviving corporation, among other things, to indemnify and hold harmless each present and former (as of August 3, 2022) director or officer of ChemoCentryx or any of its subsidiaries in their capacities as such against any losses incurred by such indemnified person in respect of any pending or threatened litigation, action, suit, claim, demand or proceeding based upon or arising out of, in whole or in part, the fact that such indemnified person was a director or officer of ChemoCentryx or any of its subsidiaries at or prior to the Effective Time and pertaining to any and all matters pending, existing or occurring at or prior to the Effective Time, including any such matter arising under any claim with respect to the transactions contemplated by the Merger Agreement, to the fullest extent permitted by the DGCL and any other applicable law, the certificate of incorporation and amended and restated bylaws (or other similar organizational documents) of ChemoCentryx and its subsidiaries in effect on August 3, 2022, and Amgen will cause the surviving corporation to observe the indemnification, exculpation and advancement of expenses provisions in favor of ChemoCentryx’s present and former directors and officers (as of August 3, 2022) as set forth the certificate of incorporation and amended and restated bylaws (or other similar organizational documents) of ChemoCentryx and its subsidiaries in effect on August 3, 2022, and the terms of certain indemnification agreements between ChemoCentryx and its officers and directors.

In addition, prior to the Effective Time Amgen will, or will cause the surviving corporation to, obtain and fully pay the premium (subject to limitations set forth in the Merger Agreement) for the non-cancellable extension of the directors’ and officers’ liability coverage of ChemoCentryx’s existing directors’ and officers’ insurance policies for a claims reporting or discovery period of six (6) years from and after the Effective Time with respect to any claim related to any period of time at or prior to the Effective Time and with terms, conditions, retentions and limits of liability no less favorable than the coverage provided under ChemoCentryx’s directors’ and officers’ and fiduciary liability insurance policies in effect as of August 3, 2022. For a detailed description of these requirements, please see “The Merger Agreement—Other Covenants and Agreements—Indemnification of Directors and Officers; Insurance” beginning on page 95 of this proxy statement.

Financing of the Merger

The Merger Agreement is not conditioned upon receipt of financing by Amgen. 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 $4.0 billion, including the estimated funds needed to (i) pay our stockholders the Merger Consideration due to them under the Merger Agreement and (ii) make payments in respect of outstanding equity awards of ChemoCentryx pursuant to the Merger Agreement.

We understand that Amgen expects to fund amounts needed for the acquisition of ChemoCentryx under the Merger Agreement through the use of cash on hand.

 

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ChemoCentryx has agreed that it will, and will cause its subsidiaries to, and will use its reasonable best efforts to cause its and their respective representatives to, provide all cooperation that is necessary, customary or advisable and reasonably requested by Amgen to assist Amgen in the arrangement of any third-party debt or equity financing for the purpose of financing the aggregate Merger Consideration, any repayment or refinancing of debt contemplated by the Merger Agreement or required or undertaken in connection with the transactions contemplated by the Merger Agreement and any other amounts required to be paid in connection with the consummation of the transactions contemplated by the Merger Agreement (including all amounts payable in respect of equity awards of ChemoCentryx under the Merger Agreement) and all related fees and expenses of Amgen and Merger Sub, upon the terms and subject to the conditions and exceptions set forth in the Merger Agreement and as further described in the section of this proxy statement captioned “The Merger Agreement—Other Covenants and Agreements—Financing Covenants” beginning on page 96.

ChemoCentryx has also agreed that it will, and will cause its subsidiaries to, use their respective reasonable best efforts to deliver all notices, cooperate with Amgen and take all other actions to facilitate the termination at the closing of all commitments in respect of its existing credit agreement (as described in the section of this proxy statement captioned “The Merger Agreement—Other Covenants and Agreements—Financing Covenants”), the repayment in full on the Closing Date of all obligations in respect of the indebtedness under its existing credit agreement, and the release on the Closing Date of any liens securing all such indebtedness and guarantees in connection therewith, subject to Amgen providing all funds required to effect all such repayments at the closing.

Closing and Effective Time of the Merger

Unless another date is agreed by the parties, the closing of the Merger will take place as soon as practicable (but in any event no later than the third business day) after the date the conditions to the Merger set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the closing of the Merger, but subject to the satisfaction or, to the extent permissible, waiver of those conditions at such time) have been satisfied or (to the extent permissible) waived in accordance with the Merger Agreement.

At the closing of the Merger, ChemoCentryx and Merger Sub will cause to be filed a certificate of merger with respect to the Merger with the Secretary of State of the State of Delaware in accordance with the DGCL and will make all other filings or recordings required by the DGCL in connection with the Merger. The Merger will become effective at such time as such certificate of merger has been duly filed with the Secretary of State of the State of Delaware (or at such later date and time as specified in the certificate of merger).

Appraisal Rights

If the Merger is consummated, persons who do not wish to accept the Merger Consideration are entitled to seek appraisal of their shares of ChemoCentryx common stock under Section 262 and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their shares of ChemoCentryx common 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 your shares of ChemoCentryx common stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the Merger Consideration that you are otherwise entitled to receive under the Merger Agreement. 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 will not receive the Merger Consideration 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 shares of ChemoCentryx common stock following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their shares of ChemoCentryx common stock determined under Section 262 could be more than, the same as or less than the Merger Consideration they would otherwise

 

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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 may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. 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 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. 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. A person who loses his, her or its appraisal rights will be entitled to receive the Merger Consideration under the Merger Agreement.

A holder of record of shares of ChemoCentryx common stock and a beneficial owner who (i) continuously holds such shares through the Effective Time, (ii) has not consented to or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (iii) strictly complies with the procedures under Section 262, (iv) does not thereafter withdraw his, her or its demand for appraisal of such shares and (v) 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 ChemoCentryx 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 shares of ChemoCentryx common 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 requires that where a merger agreement is to be submitted for adoption at a meeting of stockholders, the stockholders be notified that appraisal rights will be available not less than twenty (20) days before the meeting to vote on the merger. Such notice must include either a copy of Section 262 or information directing the stockholders to a publicly available electronic resource at which Section 262 may be accessed without subscription or cost. This proxy statement constitutes ChemoCentryx’s notice to our stockholders that appraisal rights are available in connection with the Merger, in compliance with the requirements of Section 262. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262, which may be accessed without subscription or cost at the following publicly available website: https://delcode.delaware.gov/title8/c001/sc09/index.html#262. Failure to comply timely and properly with the requirements of Section 262 will result in the loss of your appraisal rights under the DGCL.

If you elect to demand appraisal of your shares of ChemoCentryx common stock, you must satisfy each of the following conditions: you must deliver to ChemoCentryx a written demand for appraisal of your shares of ChemoCentryx common stock prior to the Special Meeting, which must reasonably inform us of the identity of the holder of record of shares of ChemoCentryx common stock who intends to demand appraisal of his, her or its shares of ChemoCentryx common stock 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 ChemoCentryx and to be set forth on the Chancery List; you must not vote or submit a proxy in favor of the proposal to adopt the Merger Agreement; you must hold your shares of ChemoCentryx common stock continuously through the effective date; and you must comply with the other applicable requirements of Section 262.

 

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

ChemoCentryx, Inc.

835 Industrial Road, Suite 600

San Carlos, CA 94070

Attention: Corporate Secretary

A record holder who holds shares of ChemoCentryx common stock as a nominee for others, such as a broker, fiduciary, depositary or other nominee, may exercise appraisal rights with respect to the shares held for all or less than all beneficial owners of shares as to which such person is the record owner. In such case, the demand must set forth the number of shares of ChemoCentryx common stock covered by such demand. Where the number of shares of ChemoCentryx common stock is not expressly stated, the demand will be presumed to cover all shares of ChemoCentryx common stock outstanding in the name of such record owner.

Within ten (10) days after the Effective Time, the surviving corporation must give written notice that the Merger has become effective to each (a) ChemoCentryx stockholder who has properly filed a written demand for appraisal and who did not vote in favor of the proposal to adopt the Merger Agreement and (b) any beneficial owner who has demanded appraisal under Section 262. At any time within sixty (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 shares of ChemoCentryx common 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 sixty (60) days after the Effective Time will require written approval of the surviving corporation. Unless the demand is properly withdrawn by the person within sixty (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 shares of ChemoCentryx common 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.

Within one hundred twenty (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 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a person, demanding a determination of the fair value of the shares of ChemoCentryx common stock held by all persons that have demanded appraisal. There is no present intent on the part of ChemoCentryx or the surviving corporation to file an appraisal petition and persons seeking to exercise appraisal rights should assume that ChemoCentryx and the surviving corporation will not file such a petition or initiate any negotiations with respect to the fair value of shares of ChemoCentryx common stock. Accordingly, persons who desire to have their shares of ChemoCentryx common 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. If, within one hundred twenty (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.

In addition, within one hundred twenty (120) days after the Effective Time, any person who has theretofore complied with the applicable provisions of Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares of ChemoCentryx common 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

 

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statement must be mailed within ten (10) days after the written request therefor has been received by the surviving corporation or within ten (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 twenty (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 shares of ChemoCentryx common stock and with whom the surviving corporation has not reached agreements as to the value of such shares (referred to as 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 person 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 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 shares of ChemoCentryx common stock and who hold shares represented by certificates to submit their certificates of shares of ChemoCentryx common stock 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.

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.

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 shares of ChemoCentryx common 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 five percent (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 (x) the difference, if any, between the amount so paid and the fair value of the shares of ChemoCentryx common stock as determined by the Delaware Court of Chancery, and (y) interest theretofore accrued, unless paid by the surviving corporation as part of the pre-judgment payment to the person.

When the fair value of the shares of ChemoCentryx common 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 ChemoCentryx 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, the “fair value” of the relevant shares of ChemoCentryx common stock is less than the Merger Consideration.

 

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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. Section 262 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 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.” In addition, the Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenting person’s exclusive remedy.

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 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 shares of ChemoCentryx common stock entitled to appraisal not dismissed pursuant to Section 262(k) of the DGCL or subject to such and 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 will not be entitled to vote for any purpose any shares of ChemoCentryx common stock subject to such demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to ChemoCentryx 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 will result in the loss of a stockholder’s statutory appraisal rights.

Material U.S. Federal Income Tax Consequences of the Merger

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 shares of ChemoCentryx common stock whose shares are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Internal Revenue Code of 1986, as amended (referred to as the “Code”), Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (referred to as 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 shares of ChemoCentryx common stock 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

 

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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 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, 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, “controlled foreign corporations,” “passive foreign investment companies” or certain former citizens or long-term residents of the United States;

 

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holders holding their shares of ChemoCentryx common stock 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 sell their shares of ChemoCentryx common stock under the constructive sale provisions of the Code;

 

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holders that received their shares of ChemoCentryx common stock in compensatory transactions;

 

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holders that hold their shares of ChemoCentryx common stock through individual retirement or other tax-deferred accounts;

 

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holders that own an equity interest, actually or constructively, in Amgen or the surviving corporation;

 

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

 

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holders that own or have owned (directly, indirectly or constructively) 5% or more of ChemoCentryx common stock (by vote or value).

If a partnership (including an entity or arrangement classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of ChemoCentryx common stock, 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 shares of ChemoCentryx common stock 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.

 

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U.S. Holders

For purposes of this proxy statement, a “U.S. Holder” is a beneficial owner of shares of ChemoCentryx common stock who or that is 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 corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

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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 shares of ChemoCentryx common stock 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 shares of ChemoCentryx common stock surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares of ChemoCentryx common stock. Any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the consummation of the Merger. A reduced tax rate on capital gains generally will apply to long-term capital gains of non-corporate U.S. Holders, including individuals. There are limitations on the deductibility of capital losses. If a U.S. Holder acquired different blocks of ChemoCentryx common stock at different times or different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of ChemoCentryx common stock.

Payments made to a U.S. Holder in exchange for shares of ChemoCentryx common stock pursuant to the Merger may be subject to information reporting to the IRS and backup withholding at a rate of 24%. To avoid backup withholding on such payments, U.S. Holders that do not otherwise establish an exemption should complete and return to the exchange agent a properly executed IRS Form W-9 included in the letter of transmittal certifying that such holder is a United States person for U.S. federal income tax purposes, that the taxpayer identification number provided is correct and that such holder is not subject to backup withholding. Certain types of U.S. Holders (including, with respect to certain types of payments, corporations) generally are not subject to backup withholding or information reporting rules.

Backup withholding is not an additional tax. Any amounts withheld from cash payments to a U.S. Holder pursuant to the Merger under the backup withholding rules generally will be allowed as a refund or a credit against such U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.

Non-U.S. Holders

For purposes of this proxy statement, the term “Non-U.S. Holder” means a beneficial owner of shares of ChemoCentryx common stock that is neither a U.S. Holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

Non-U.S. Holders should consult their tax advisors to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their particular circumstances.

 

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Any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

 

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the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case such gain generally will be subject to U.S. federal income tax at rates generally applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to an additional branch profits tax at a rate of 30% (or a lower rate specified under an applicable tax treaty);

 

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such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate specified under an applicable tax treaty), which may be offset by U.S.-source capital losses of such Non-U.S. Holder recognized in the same taxable year (if any); or

 

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shares of ChemoCentryx common stock held by such Non-U.S. Holder constitute a United States real property interest by reason of ChemoCentryx’s status as a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code (a “USRPHC”), at any time during the shorter of the five-year period ending on the date of the Effective Time or the period that the Non-U.S. Holder held the applicable shares of ChemoCentryx common stock. ChemoCentryx believes it has not been, is not and will not be a USRPHC during the five-year period ending on the date of the Effective Time.

Payments made to Non-U.S. Holders in exchange for shares of ChemoCentryx common stock pursuant to the Merger may be subject to information reporting to the IRS and backup withholding at a rate of 24%. Non-U.S. Holders generally can avoid information reporting and backup withholding by providing the exchange agent with the applicable and properly completed and executed IRS Form W-8 certifying the holder’s non-U.S. status or by otherwise establishing an exemption. Copies of information returns that are filed with the IRS may be made available under an applicable tax treaty or information exchange agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.

Regulatory Approvals Required for the Merger

HSR Act and U.S. Antitrust Matters

Under the HSR Act, and the rules promulgated thereunder by the Federal Trade Commission (referred to as the “FTC”), the Merger cannot be consummated until ChemoCentryx and Amgen each file a notification and report form with the FTC and the Antitrust Division of the U.S. Department of Justice (referred to as the “DOJ”) under the HSR Act and the applicable waiting period thereunder has expired or been terminated. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period. ChemoCentryx and Amgen filed their respective HSR Act notifications on August 17, 2022.

At any time before or after consummation of the Merger, notwithstanding the expiration or termination of the waiting period under the HSR Act, the Antitrust Division of the DOJ or the FTC could take such action under applicable antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Merger, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or after the consummation of the Merger, and notwithstanding the expiration or termination of the waiting period under the HSR Act, any state could take such action under its applicable antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the consummation of the Merger or

 

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seeking divestiture of substantial assets of the parties. Private parties may also seek to take legal action under applicable antitrust laws under certain circumstances.

Subject to the terms of the Merger Agreement, ChemoCentryx, Amgen and Merger Sub have agreed to use their reasonable best efforts to promptly take, and to cause their affiliates to take, all actions and steps requested or required by any governmental authority as a condition to granting any consent, permit, authorization, waiver, clearance or approval, and to cause the prompt expiration or termination of any applicable waiting period and to resolve objections, if any, of the FTC or DOJ, or other governmental authorities of any other jurisdiction for which consents, permits, authorizations, waivers, clearances, approvals and expirations or terminations of waiting periods are required with respect to the transactions contemplated by the Merger Agreement, so as to obtain such consents, permits, authorizations, waivers, clearances, approvals or termination of the waiting period under the HSR Act or other antitrust laws, and to avoid the commencement of a lawsuit by the FTC, the DOJ or other governmental authorities under antitrust laws, and to avoid the entry of, or to effect the dissolution of, any order in any action or legal proceeding which would otherwise have the effect of preventing the closing of the Merger or delaying the closing of the Merger beyond the End Date. Pursuant to the Merger Agreement, such reasonable best efforts required by the parties and/or their affiliates will include (1) proffering and consenting and/or agreeing to the sale, divestiture, licensing or other disposition, or the holding separate, of particular assets, categories of assets or portions of any business of ChemoCentryx or any of its subsidiaries, (2) promptly effecting the disposition, licensing or holding separate of particular assets, categories of assets or portions of any business of ChemoCentryx or any of its subsidiaries and (3) agreeing to such limitations on the conduct or actions with respect to any particular assets, categories of assets or portions of any business of ChemoCentryx or any of its subsidiaries, in each case, as may be required in order to enable the consummation of the transactions contemplated by the Merger Agreement to occur as soon as reasonably practicable (and in any event no later than the End Date) (the actions referred to in clauses (1), (2) and (3), referred to as “remedy actions”). Notwithstanding the foregoing, pursuant to the Merger Agreement (i) neither Amgen nor any of its affiliates is required to proffer, consent to or agree to or effect any remedy action with respect to (A) any assets, categories of assets or portions of any business of Amgen or any of its subsidiaries (other than solely ChemoCentryx and its subsidiaries, subject to the following clause (B)) or (B) any assets, categories of assets or portions of any business of ChemoCentryx or any of its subsidiaries if, in the case of this clause (B), any such remedy action would, individually or in the aggregate, reasonably be expected to be material to the business, assets or financial condition of ChemoCentryx and its subsidiaries, taken as a whole and (ii) ChemoCentryx is only permitted to proffer, consent to or agree to or effect any remedy action with the prior written consent of Amgen.

Other than the filings required under the HSR Act as described above, we currently do not expect that any clearance, approval or consent would be required under any other applicable antitrust law in connection with the Merger.

Litigation Related to the Merger

On September 2, 2022, a purported stockholder of ChemoCentryx filed a lawsuit in the United States District Court for the Northern District of California captioned Meinking v. ChemoCentryx, Inc., Case No. 3:22-cv-05019-LB. The complaint names ChemoCentryx and members of the Board as defendants and alleges that the defendants made materially incomplete and misleading statements about the proposed acquisition of ChemoCentryx by Amgen. Specifically, the complaint alleges that all defendants violated Section 14(a) of the Exchange Act and that each Board member violated Section 20(a) of the Exchange Act, and asserts claims challenging the adequacy of disclosures regarding ChemoCentryx’s projections, Goldman’s financial analyses, and the sales process leading up to the proposed transaction in the preliminary proxy statement filed with the SEC on August 31, 2022 (the “Preliminary Proxy”). The complaint seeks, among other relief, (i) injunctive relief preventing the parties from proceeding with the Merger until the alleged disclosure deficiencies have been remedied, (ii) rescission in the event the Merger is consummated or alternatively rescissory damages and (iii) an award of costs, including attorneys’ and experts’ fees. ChemoCentryx believes this lawsuit is without merit.

 

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Additional lawsuits may be filed against ChemoCentryx, members of the Board or ChemoCentryx’s officers in connection with the Merger, which could prevent or delay completion of the Merger and result in substantial costs to ChemoCentryx, including any costs associated with indemnification.

Delisting and Deregistration of ChemoCentryx Common Stock

If the Merger is consummated, following the Effective Time, the common stock of ChemoCentryx will cease trading on Nasdaq and will be deregistered under the Exchange Act. As such, we would no longer file periodic reports with the SEC.

 

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THE MERGER AGREEMENT

The following summary describes certain material provisions of the Merger Agreement. This summary is not 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 into this proxy statement by reference. We encourage you to read the Merger Agreement carefully in its entirety because this summary may not contain all the information about the Merger Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary of its terms have been included to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about ChemoCentryx contained in this proxy statement or in ChemoCentryx’s public reports filed with the SEC may supplement, update or modify the factual disclosures about ChemoCentryx contained in the Merger Agreement and described in this summary. The representations, warranties, covenants, and agreements made in the Merger Agreement by ChemoCentryx and Amgen were qualified and subject to important limitations agreed to by ChemoCentryx and Amgen in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations, warranties, covenants, and agreements contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations, warranties, covenants, and agreements were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right to not close the Merger if the representations and warranties of the other party prove to be untrue (or such covenants and agreements were not complied with), due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations, warranties, covenants, and agreements may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed with the SEC, and in some cases were qualified by disclosures contained in the disclosure schedules delivered by ChemoCentryx to Amgen in connection with the Merger Agreement (referred to as the “Disclosure Schedules”), which disclosures are not reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since August 3, 2022, and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement or in the respective public filings made by each of ChemoCentryx or Amgen with the SEC. For the foregoing reasons, the representations, warranties, covenants, and agreements and any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of ChemoCentryx, Amgen or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this proxy statement or incorporated by reference into this proxy statement.

Additional information about ChemoCentryx may be found elsewhere in this proxy statement and ChemoCentryx’s other public filings. See “Where You Can Find More Information” beginning on page 114 of this proxy statement.

When the Merger Becomes Effective

The closing of the Merger will take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52^nd Street, New York, New York 10019, or remotely by exchange of documents and signatures (or their electronic counterparts) as soon as practicable (but in any event no later than the third business day) after the date the conditions to the Merger set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied at the closing of the Merger, but subject to the satisfaction or waiver, to the extent permissible, of such conditions at such time) have been satisfied or, to the extent permissible, waived, unless another time, date or place is mutually agreed by ChemoCentryx and Amgen.

 

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At the closing of the Merger, ChemoCentryx and Merger Sub will file a certificate of merger with respect to the Merger with the Secretary of State of the State of Delaware in accordance with the DGCL and will make all other filings or recordings required by the DGCL in connection with the Merger. The Merger will become effective upon the filing of such certificate of merger, or at such later date and time as may be specified in such certificate of merger.

Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

Pursuant to the terms and conditions of the Merger Agreement, at the Effective Time, Merger Sub will be merged with and into ChemoCentryx, the separate corporate existence of Merger Sub will cease, and ChemoCentryx will continue as the surviving corporation and a wholly owned subsidiary of Amgen. At the Effective Time, the certificate of incorporation of the surviving corporation will be amended and restated such that the certificate of incorporation of Merger Sub in effect immediately prior to the Effective Time will be the certificate of incorporation of the surviving corporation until thereafter amended (provided that the name of the surviving corporation will be “ChemoCentryx, Inc.”). At the Effective Time, the bylaws of the surviving corporation will be amended and restated such that the bylaws of Merger Sub in effect immediately prior to the Effective Time will be the bylaws of the surviving corporation until thereafter amended (provided that the name of the surviving corporation will be “ChemoCentryx, Inc.”). From and after the Effective Time, the directors of Merger Sub at the Effective Time will be the initial directors of, and the officers of Merger Sub at the Effective Time will be the initial officers of, the surviving corporation and, in each case, will hold office until their respective successors are duly elected or appointed and qualified in accordance with applicable law.

Effect of the Merger on ChemoCentryx Common Stock

At the Effective Time, each share of ChemoCentryx common stock issued and outstanding immediately prior to the Effective Time (other than Cancelled Shares, Excluded Shares and Dissenting Shares) will automatically be cancelled and cease to exist and will be converted into the right to receive the Merger Consideration in cash.

At the Effective Time, any Cancelled Shares will automatically be cancelled and will cease to exist, and no consideration or payment will be made with respect thereto. At the Effective Time, each Excluded Share will be converted into a number of shares of the surviving corporation such that the subsidiary holding such Excluded Share immediately prior to the Effective Time owns the same percentage of the outstanding capital stock of the surviving corporation immediately following the Effective Time as such subsidiary owned in ChemoCentryx immediately prior to the Effective Time.

If, during the period between August 3, 2022 and the Effective Time, the outstanding shares of ChemoCentryx common stock are changed into a different number of shares or a different class (including by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of shares or similar transaction, or any stock dividend with a record date occurring during such period, but excluding any change that results from any exercise of any ChemoCentryx stock option award outstanding as of August 3, 2022), the Merger Consideration and any other amounts payable pursuant to the Merger Agreement will be appropriately adjusted to reflect the effect of such change as set forth in the Merger Agreement in order to provide Amgen and the holders of shares of ChemoCentryx common stock and ChemoCentryx equity awards the same economic effect for the aggregate shares of common stock and equity awards of ChemoCentryx held thereby, as applicable, as contemplated by the Merger Agreement prior to any such event.

Treatment of Equity Awards and the ESPP

Stock Options. At or immediately prior to the Effective Time, each option to purchase shares of ChemoCentryx common stock granted under the ChemoCentryx Amended and Restated 2012 Incentive Award Plan, as amended (referred to as the “ChemoCentryx Stock Plan”), that is outstanding immediately prior to the

 

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Effective Time will vest in full and be cancelled and converted into the right to receive an amount of cash equal to the product of (i) the number of shares of ChemoCentryx common stock that were purchasable upon exercise of such stock option, multiplied by (ii) the excess (if any) of the Merger Consideration over the per share exercise price of such stock option. Any stock option, whether vested or unvested, with a per share exercise price greater than or equal to the Merger Consideration will be cancelled for no consideration as of immediately prior to the Effective Time.

Restricted Stock Units. At or immediately prior to the Effective Time, each RSU granted under the ChemoCentryx Stock Plan that was (i) granted prior to August 3, 2022 or granted after August 3, 2022 and specified in the Disclosure Schedules and/or (ii) granted to a non-employee member of the Board that is outstanding immediately prior to the Effective Time will vest in full and be cancelled and converted into the right to receive an amount of cash equal to the product of (A) the number of shares of ChemoCentryx common stock that were subject to such RSU multiplied by (B) the Merger Consideration. At or immediately prior to the Effective Time, each RSU that was granted on or following August 3, 2022 (subject to certain exceptions specified in the Disclosure Schedules and other than RSUs granted to a non-employee member of the Board) will be converted into the right to receive an amount in cash, without interest, equal to the product of (1) the total number of shares of ChemoCentryx common stock subject to such RSU and (2) the Merger Consideration, which will vest and become payable at the same time as such RSU would have vested and been payable pursuant to its terms, generally subject to continued employment or service.

Restricted Stock Awards. At or immediately prior to the Effective Time, each share of ChemoCentryx common stock subject to vesting, repurchase or other lapse restriction granted under the ChemoCentryx Stock Plan that was (i) granted prior to August 3, 2022 and/or (ii) granted to a non-employee member of the Board that is outstanding immediately prior to the Effective Time will vest in full and be cancelled and converted into the right to receive the Merger Consideration.

ESPP. ChemoCentryx will take such action as may be necessary under the ESPP to ensure, provide for or cause the following to occur: (i) except for the Final Offering Period, no new offering periods under the ESPP will commence during the period from August 3, 2022 through the Effective Time; (ii) there will be no increase in the amount of payroll deductions or payroll contributions permitted to be made by the participants under the ESPP during the current offering period, except those made in accordance with payroll deduction elections that are in effect as of August 3, 2022; and (iii) no individuals will commence participation in the ESPP during the period from August 3, 2022 through the Effective Time. If the Effective Time would occur during the Final Offering Period, (A) the accumulated contributions of the participants in such offering period will be used to purchase shares of ChemoCentryx common stock as of such date as ChemoCentryx determines in its sole discretion (provided that such date will be no later than five business days prior to the Effective Time), (B) the participants’ accumulated contributions under the ESPP will be used to purchase shares of ChemoCentryx common stock in accordance with the terms of the ESPP as of the date determined in accordance with the foregoing clause (A), and (C) purchase rights under such offering will terminate immediately after such purchase. As of no later than the business day immediately prior to the Effective Time, ChemoCentryx will terminate the ESPP. As promptly as practicable following the purchase of shares ChemoCentryx common stock in accordance with the foregoing clause (B), ChemoCentryx will return to each participant the funds, if any, that remain in such participant’s account under the ESPP after such purchase.

Dissenting Shares

The Merger Agreement provides that Dissenting Shares will not be converted into the right to receive the Merger Consideration, but instead at the Effective Time will be entitled to payment for such shares determined in accordance with Section 262. If any ChemoCentryx stockholder fails to perfect, withdraws or otherwise loses the right to appraisal of the fair value of such Dissenting Shares under Section 262, or if a court of competent jurisdiction shall determine that such holder is not entitled to relief provided by Section 262, then such Dissenting Shares will be treated as if they had been converted as of the Effective Time into the right to receive the Merger Consideration.

 

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Payment for ChemoCentryx Common Stock

Prior to the Effective Time, Amgen will deposit, or cause to be deposited, with the exchange agent cash in an amount necessary to pay the aggregate Merger Consideration payable to holders of ChemoCentryx common stock.

Promptly (and in any event not later than the third business day) after the Effective Time, Amgen will send or cause the exchange agent to send to each holder of record of Certificates or Non-DTC Book-Entry Shares that immediately prior to the Effective Time represented outstanding shares of ChemoCentryx common stock (i) in the case of holders of Certificates, a letter of transmittal in reasonable and customary form, which will specify that delivery will be effected, and risk of loss and title will pass, only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof) to the exchange agent, and instructions for use in effecting the surrender of the Certificates (or affidavits of loss in lieu thereof) pursuant to such letter of transmittal and (ii) in the case of Non-DTC Book-Entry Shares, reasonable and customary provisions regarding delivery of an “agent’s message” with respect to such uncertificated shares.

Each holder of a Certificate will be entitled to receive, upon surrender of a Certificate (or an affidavit of loss in lieu thereof) to the exchange agent, together with a properly completed letter of transmittal, the Merger Consideration payable for each share of ChemoCentryx common stock represented by such Certificate.

Each holder of a Non-DTC Book-Entry Share will be entitled to receive, upon receipt of an “agent’s message” by the exchange agent or such other evidence of transfer as may reasonably be requested by the exchange agent, the Merger Consideration payable for each share of ChemoCentryx common stock represented by such Non-DTC Book-Entry Share.

With respect to DTC Book-Entry Shares, ChemoCentryx, Merger Sub and Amgen will cooperate to establish procedures with the exchange agent and DTC with the objective that the exchange agent will transmit to DTC or its nominees on the first business day after the Closing Date, an amount in cash, by wire transfer of immediately available funds, equal to (i) the number of shares of ChemoCentryx common stock that have been converted into the right to receive the Merger Consideration that are held of record by DTC or such nominee immediately prior to the Effective Time, multiplied by (ii) the Merger Consideration.

Each of the exchange agent, the surviving corporation and Amgen will be entitled to deduct and withhold from any amounts otherwise payable pursuant to the Merger Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. If the exchange agent, the surviving corporation or Amgen, as the case may be, so deducts and withholds amounts and timely and properly remits such amounts to the applicable governmental authority, such amounts shall be treated for all purposes of the Merger Agreement as having been paid to the person in respect of which such deduction and withholding was made.

Representations and Warranties

The Merger Agreement contains representations and warranties of each of ChemoCentryx and Amgen (which representations and warranties are subject to certain qualifications or exceptions in the Merger Agreement and the Disclosure Schedules) as to, among other things:

 

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corporate organization, existence, good standing and corporate power and authority to conduct such party’s business as presently conducted;

 

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corporate power and authority to enter into the Merger Agreement, to perform such party’s obligations thereunder and to complete the transactions contemplated thereby;

 

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required regulatory filings or actions and authorizations, consents or approvals of governmental entities and other persons;

 

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the absence of certain violations, defaults or consent requirements under certain contracts, organizational documents and applicable law, in each case arising out of the execution, delivery or performance of, or consummation of the transactions contemplated by, the Merger Agreement;

 

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matters relating to information to be included in required filings with the SEC in connection with the Merger; and

 

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the absence of any fees owed to investment bankers or brokers in connection with the Merger, other than those specified in the Merger Agreement.

The Merger Agreement also contains representations and warranties of ChemoCentryx (which representations and warranties are subject to certain qualifications or exceptions in the Merger Agreement and the Disclosure Schedules) as to, among other things:

 

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the capitalization of ChemoCentryx, including the authorized and outstanding capital stock, outstanding equity awards, shares of ChemoCentryx common stock reserved for issuance under ChemoCentryx’s equity incentive plans and shares of ChemoCentryx common stock reserved for issuance under the ESPP;

 

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all shares of ChemoCentryx common stock having been, or being when issued pursuant to any ChemoCentryx equity award, ChemoCentryx equity incentive plan or other employee benefit plan or the ESPP in accordance with the respective terms thereof, duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights;

 

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the exercise price of each ChemoCentryx stock option as compared to fair market value and the exemption of ChemoCentryx stock options under Section 409A of the Code;

 

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the issuance of shares of ChemoCentryx common stock or other equity interests;

 

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except as otherwise disclosed and except for changes since August 2, 2022 resulting from the exercise, settlement or forfeiture of stock options and RSUs outstanding on such date, the absence of (i) other equity interests of ChemoCentryx or securities convertible into equity interests of ChemoCentryx, (ii) subscriptions, warrants, calls, options or other rights to acquire equity interests from ChemoCentryx or obligations of ChemoCentryx to issue equity interests, or (iii) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar rights;

 

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except for the ChemoCentryx equity incentive plan and the award agreements thereunder governing ChemoCentryx equity awards, the absence of (i) stockholder agreements or voting trusts or other agreements restricting the transfer or affecting the voting rights of ChemoCentryx equity interests, (ii) obligations of ChemoCentryx or any of its subsidiaries to repurchase, redeem or otherwise acquire any of the equity interests of ChemoCentryx, or granting any preemptive rights, (iii) a stockholder rights plan or “poison pill”, or (iv) outstanding bonds, debentures, notes or other similar obligations, the holders of which have the right to vote (or convertible into, or exchangeable or exercisable for, securities having the right to vote);

 

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all outstanding shares, capital stock or other voting securities of, or ownership interests in, each subsidiary of ChemoCentryx having been duly authorized and validly issued, fully paid and non-assessable and free of preemptive rights;

 

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except as otherwise disclosed, the absence of other equity interests of any subsidiary of ChemoCentryx;

 

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the issuance and transfer of any equity interests in any subsidiary of ChemoCentryx in accordance with such subsidiary’s organizational documents and applicable law;

 

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the corporate actions required to be taken, and taken, in connection with the execution, delivery and performance of the Merger Agreement by ChemoCentryx, including with respect to the approval by ChemoCentryx stockholders of the Merger Proposal;

 

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