Page 6 of 8 – SEC Filing
| Item 4. | Purpose of Transaction. |
RA Capital Management,
LLC (“RA Capital”) delivered a letter to the board of directors (the “Board”) of the Issuer on April 2,
2018, in connection with the Issuer’s proposed merger (the “Proposed Merger”) with Idera Pharmaceuticals, Inc.
(“Idera”) that will be submitted for a vote of the Issuer’s shareholders at a special meeting of shareholders
scheduled to be held on May 9, 2018. In the letter, RA Capital expressed its intention to vote against the Proposed Merger based
on its belief that a lack of strategic alignment and disparate risk profile between the Issuer and Idera would not serve the best
interests of the Issuer’s shareholders.
RA Capital further
stated in the letter its belief that the Board failed to adequately consider all available strategic alternatives prior to negotiating
and finalizing the Proposed Merger and that, if effected, the combination of the Issuer and Idera would result in a dilutive impact
on the Issuer’s stockholders and provide a disproportionate benefit to a single stockholder who also holds a large position
in Idera.
The letter further
noted RA Capital’s desire to invest in the Issuer based on its belief that the Issuer is undervalued and carries far less
associated risk than Idera. In addition, the letter stated RA Capital’s belief that the Issuer’s lead program, BCX-7353,
carries significant potential to serve as a major value inflection point within the next year, when data from its ongoing phase
3 trial are expected to be made available. RA Capital added that Idera has not revealed any comparable product development in its
pipeline.
In addition, RA Capital
expressed its belief that a combination with Idera would not increase the probability of success of the BCX-7353 phase 3 trial
or create long-term value for BioCryst shareholders, noting that Idera’s CEO acknowledged in an investor call that the transaction
was not “contemplated under creating clinical operation synergies” and that the programs at each company would “continue
to operate as is.” The letter further stated that Idera’s financial forecasts indicated the Proposed Merger would not
alleviate future financing requirements for the combined company, with projections that the combined company would require $300
million in additional financing in 2019 and another $300 million in 2020. However, according to the letter, Idera’s management
team had estimated in the same analysis that the companies would require identical aggregate financing amounts as standalone entities.
RA Capital noted in the letter that, as a result of this desire to keep the companies’ respective research and development
work streams separate and the lack of meaningful synergies over the next three years, the Proposed Merger would not maximize value
for shareholders.
In light of the Board’s
inadequate justifications for pursuing the Proposed Merger, RA Capital concluded its letter by requesting that the Board reevaluate
all strategic alternatives that would maximize shareholder value.
The foregoing description
of the letter does not purport to be complete and is qualified in its entirety by reference to the full text of the letter, which
is filed as Exhibit 99.1, and is incorporated herein by reference. The Proposed Merger is subject to the approval of the Issuer’s
and Idera’s shareholders, respectively, including the affirmative vote of the holders of a majority of the outstanding shares
of each of the Issuer’s and Idera’s common stock at special meetings of their shareholders scheduled to be held on
May 9, 2018.
No Reporting Person
has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) – (j) of
Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following,
any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis
and may from time to time in the future express their views to and/or meet with management, the Board, other shareholders or third
parties, including potential acquirers, and/or formulate plans or proposals regarding the Issuer, its assets or its securities.
Such plans or proposals may include one or more plans that relate to or would result in any of the actions set forth in subparagraphs
(a) – (j) of Item 4 of Schedule 13D.
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