I-Mab to divest assets, business operations in China fo $80M

I-Mab announced that as part of its strategy to become a U.S.-based biotech, its Chinese subsidiaries have entered into definitive agreements with I-Mab Biopharma, an unconsolidated affiliate of the company, and a group of China-based investors to divest the company’s assets and business operations in China. Pursuant to the definitive agreements, the company will transfer 100% of the outstanding equity interest in I-Mab Shanghai, a wholly owned subsidiary of the company that operates the company’s business in China, on a cash-free and debt-free basis, to the Hangzhou Company for an aggregate consideration of the RMB equivalent of up to $80M, contingent on the Hangzhou Company group’s achievement of certain future regulatory and sales-based milestone events. The company also retains a right of first negotiation outside of Greater China related to three future investigational new drug candidates. The definitive agreements also provide that the company’s wholly owned subsidiary, I-Mab Biopharma Hong Kong, will transfer the equity interests it holds in the Hangzhou company to certain participating shareholders of the Hangzhou Company in exchange for extinguishment of the existing repurchase obligations owed by I-Mab Hong Kong to those shareholders in the amount of approximately $183M. The total amount of potential repurchase obligations owed by I-Mab Hong Kong and the company to the non-participating shareholders of the Hangzhou Company upon the closing of the transaction is expected to range from $30M to $35M, an amount that includes actual or potential claims in legal proceedings by the non-participating shareholders against I-Mab Hong Kong and the company in connection with the aforementioned transaction. The board, acting upon the unanimous recommendation of the special committee, resolved that the proposed transaction is in the best interest of I-Mab and is fair from a financial point of view to the company and approved the transaction. The transaction is subject to closing conditions and is expected to close by the end of March. Once the transaction is completed, the Hangzhou company will acquire I-Mab drug assets in China, including the Greater China rights for eftansomatropin alfa, felzartamab, uliledlimab, givastomig, and lemzoparlimab; bear all future development costs of these assets; and be responsible for the operations of the research & development center of I-Mab Shanghai and the manufacturing facility of the Hangzhou Company. Concurrent with the entry into definitive agreements and to support the ongoing strategic partnership, the company participated in the Series C fundraising of the Hangzhou Company for an equity interest subscription of $19M in cash. Immediately after the closing of the transaction, the company will directly and through I-Mab Hong Kong own a total of less than 10% of the Hangzhou company’s registered capital. To further its transition to a U.S.-based biotech company, I-Mab announced certain management and personnel changes. Pamela Klein, M.D., has accepted the appointment as the interim chairperson of the company, as Jingwu Zang, steps down from the Board, effective February 10 to lead the Hangzhou Company. Andrew Zhu will step down from the board and resign from his executive position with the company, effective February 10. Furthermore, Joseph Skelton has been appointed by the board to serve as the company’s CFO, effective February 5, succeeding Richard Yeh, who resigned from the board and his executive positions with the company.