DEFM14A
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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

ORCHARD THERAPEUTICS PLC

(Name of Registrant as Specified In Its Charter)

(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.

 

 

 


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LOGO

Orchard Therapeutics plc

(Incorporated and registered in England and Wales

with registered number 11494381)

Registered office: 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom

TRANSACTION PROPOSED—YOUR VOTE IS VERY IMPORTANT

November 16, 2023

Dear Fellow Shareholder:

As previously announced, on October 5, 2023, Orchard Therapeutics plc (“Orchard”) entered into a transaction agreement (as it may be amended, the “Transaction Agreement”) with Kyowa Kirin Co., Ltd., a Japanese joint stock company (kabushiki kaisha) (“KKC”), pursuant to which KKC will acquire the entire issued and to be issued share capital of Orchard (the “Transaction”) by means of a court-sanctioned scheme of arrangement (the “Scheme of Arrangement”) under Part 26 of the Companies Act.

We cordially invite all holders of Orchard ordinary shares to attend two meetings of shareholders of Orchard. The first meeting (the “Court Meeting”) will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:00 p.m. (London time). The second meeting (the “General Meeting” and, together with the Court Meeting, the “Shareholder Meetings”) will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:15 p.m. (London time) (or as soon thereafter as the Court Meeting shall have been concluded or adjourned).

At the Court Meeting, Orchard shareholders will be asked to consider and vote on the Scheme of Arrangement. At the General Meeting, Orchard shareholders will be asked to consider and vote on (1) a proposal (i) authorizing the Board of Directors of Orchard (the “Orchard Board”) to take all action necessary or appropriate for carrying the Scheme of Arrangement into effect and (ii) making certain amendments to the articles of association of Orchard in order to facilitate the Transaction and (2) a non-binding advisory proposal to approve certain compensation arrangements for Orchard’s named executive officers.

Transaction Overview

If the Transaction is completed:

 

   

all (i) voting ordinary shares, par value £0.10 per share, of Orchard and (ii) non-voting ordinary shares, par value £0.10 per share, of Orchard (collectively, “Orchard ordinary shares”) will be acquired by KKC;

 

   

holders of Orchard ordinary shares as of the record time for the Scheme of Arrangement will, on the terms set out in the Scheme of Arrangement, have the right to receive for each Orchard ordinary share held by them at such time an amount equal to (a) $1.60 in cash, without interest, per Orchard ordinary share (the “Cash Consideration”), plus (b) one contractual contingent value right (each, a “CVR”) per Orchard ordinary share, which each represent the right to receive a contingent payment of $0.10 in cash, without interest, if a certain milestone is achieved, pursuant to the Contingent Value Rights Agreement (the “CVR Agreement”) to be entered into between KKC and a rights agent mutually agreeable to Orchard and KKC (the “Rights Agent”) in connection with the completion of the transaction; and


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accordingly, holders of American Depositary Shares of Orchard, each representing 10 Orchard ordinary shares (“Orchard ADSs”) as of the time that the Scheme of Arrangement becomes effective will have the right to receive for each Orchard ADS an amount equal to (a) $16.00 in cash (less an amount equal to (i) a $0.05 per Orchard ADS cancellation fee, plus (ii) a $0.05 per Orchard ADS cash distribution fee for the distribution of the per ADS Cash Consideration (as defined below), plus (iii) any other fees and expenses payable by such holders pursuant to the terms of the deposit agreement, dated as of November 2, 2018, as amended (the “Deposit Agreement”), by and among Orchard, Citibank, N.A., as depositary (the “Depositary”), and all holders and beneficial owners of Orchard ADSs issued thereunder (“Orchard ADS Fees”), for which the holder of the Orchard ADS is liable) (the “per ADS Cash Consideration”), plus (b) 10 CVRs per Orchard ADS, which each represent the right to receive a contingent payment of $0.10 in cash, without interest, if a certain milestone is achieved, pursuant to the CVR Agreement (together with the per ADS Cash Consideration, the “ADS deliverables”).

The Cash Consideration and per ADS Cash Consideration is denominated in US dollars.

Voting

It is important that holders of Orchard ordinary shares vote at both of the Shareholder Meetings, and that holders of Orchard ADSs provide voting instructions to the Depositary to vote at both of the Shareholder Meetings on their behalf.

Holders of Orchard ordinary shares are encouraged to submit a form of proxy (by post, online or electronically through CREST) for each of the Court Meeting and the General Meeting as soon as possible. Holders of Orchard ordinary shares who hold their Orchard ordinary shares indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of a holder of Orchard ordinary shares to vote at the Shareholder Meetings. If this applies to you, we encourage you to consult your broker, bank, trust company or other nominee as soon as possible.

If you hold Orchard ADSs, you will not be able to attend the Shareholder Meetings (in person or otherwise) or submit a form of proxy. However, holders of Orchard ADSs who hold their Orchard ADSs directly (i.e. by having Orchard ADSs registered in their names on the Orchard ADS register maintained by the Depositary) on November 16, 2023 at 5:00 pm (New York time) will be sent ADS voting instruction cards and will have the right to instruct the Depositary how to vote the Orchard ordinary shares underlying their Orchard ADSs with respect to the resolutions to be proposed at the Shareholder Meetings, subject to and in accordance with the terms of the Deposit Agreement. Holders of Orchard ADSs are encouraged to timely submit voting instructions to the Depositary for each of the Court Meeting and the General Meeting as soon as possible. Holders of Orchard ADSs who hold their Orchard ADSs indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of an Orchard ADS holder to issue voting instructions to the Depositary. If this applies to you, we encourage you to consult your broker, bank, trust company or other nominee as soon as possible.

For specific instructions on voting Orchard ordinary shares and Orchard ADSs, please refer to the accompanying proxy statement and forms of proxy or ADS voting instruction cards.

Recommendation of the Orchard Board

The Orchard Board considers the terms of the Transaction to be in the best interests of Orchard and its shareholders taken as a whole. Accordingly, the Orchard Board unanimously recommends that Orchard shareholders vote:

• “FOR” the approval of the Scheme of Arrangement at the Court Meeting; and

• “FOR” the approval of both of the resolutions at the General Meeting.


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The Orchard Board made its determination after evaluating the Transaction in consultation with Orchard’s management and legal and financial advisors, and after considering a number of factors.

In considering the recommendation of the Orchard Board, you should be aware that directors and executive officers of Orchard may have certain interests in the Transaction that may be different from, or in addition to, the interests of Orchard shareholders generally. See the sections entitled “The General Meeting—Proposal 2—Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements” and “The Transaction—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction” beginning on pages 45 and 79, respectively, of the accompanying proxy statement for further information regarding these interests.

We urge you to read the accompanying proxy statement, including any documents incorporated by reference therein and the Annexes thereto, carefully and in their entirety. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 26 of the accompanying proxy statement for risks relating to the Transaction and the combined company following the Transaction.

If you have any questions regarding the accompanying proxy statement, including any questions on how to vote:

 

   

if you hold Orchard ordinary shares, please contact Orchard’s registrar, Equiniti Limited, or Orchard’s proxy solicitor, MacKenzie Partners, Inc., or MacKenzie, at the contact information below:

Equiniti Limited

Telephone (call charges apply): +44 (0)371 384 2050 between 8:30 a.m.—5:30 p.m. (London time)

MacKenzie

Email: proxy@mackenziepartners.com

Telephone (toll free): +1 (800) 322-2885, between 9:00 a.m.—5:30 p.m. (London time)

On behalf of the Orchard Board, thank you for your consideration and continued support.

Yours sincerely,

 

/s/ Bobby Gaspar

  

/s/ Frank Thomas

Bobby Gaspar    Frank Thomas
Chief Executive Officer, Orchard Therapeutics plc    President and Chief Operating Officer, Orchard Therapeutics plc

NONE OF THE U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR THE UNITED KINGDOM FINANCIAL CONDUCT AUTHORITY HAS APPROVED OR DISAPPROVED THE TRANSACTION OR OTHER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT OR THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE TRANSACTION, NOR HAVE THEY DETERMINED IF THE ACCOMPANYING PROXY STATEMENT IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

For the avoidance of doubt, the accompanying proxy statement is not intended to be, and is not, a prospectus for the purposes of the Prospectus Rules made under Part 6 of the UK Financial Services and Markets Act 2000 (as set out in the UK Financial Conduct Authority’s Handbook).

The accompanying proxy statement is dated November 16, 2023 and is first being mailed or otherwise delivered to Orchard shareholders on or about November 17, 2023.


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THIS NOTICE APPLIES TO ORDINARY SHAREHOLDERS ONLY.

ADS HOLDERS SHOULD REFER TO THE SEPARATE NOTICE SENT BY

THE DEPOSITARY TO THEM WITH THE PROXY STATEMENT.

 

 

LOGO

Orchard Therapeutics plc

(Incorporated and registered in England and Wales

with registered number 11494381)

NOTICE OF COURT MEETING

TO BE HELD ON DECEMBER 19, 2023

 

IN THE HIGH COURT OF JUSTICE    CR-2023-005790

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMPANIES COURT (ChD)

  

IN THE MATTER OF ORCHARD THERAPEUTICS PLC

- and –

IN THE MATTER OF THE COMPANIES ACT 2006

NOTICE IS HEREBY GIVEN that, by an order dated November 15, 2023 made in the above matters, the High Court of Justice of England and Wales (the “Court”) has given permission for a meeting (the “Court Meeting”) to be convened of the holders of Scheme Shares as at the Voting Record Time (each such term having the meaning given to it in the Scheme, as defined below) for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement proposed to be made pursuant to Part 26 of the Companies Act 2006 (the “Companies Act”) between Orchard Therapeutics plc (“Orchard”) and the holders of the Scheme Shares (the “Scheme” or the “Scheme of Arrangement”) and that the Court Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:00 p.m. (London time).

A copy of the Scheme and a copy of the explanatory statement required to be published pursuant to section 897 of the Companies Act are incorporated in the accompanying proxy statement.

Unless the context requires otherwise, any capitalized term used but not defined in this notice shall have the meaning given to such term in the accompanying proxy statement.

Voting on the resolution to approve the Scheme will be by poll, which shall be conducted as the Chair of the Court Meeting may determine.

Right to Appoint a Proxy, Procedure for Appointment

Scheme Shareholders are strongly encouraged to submit proxy appointments and instructions for the Court Meeting as soon as possible, using any of the methods (by post, online or electronically through CREST) set out in the below Notes to this notice.


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Voting Record Time

Entitlement to attend and vote at the Court Meeting or any adjournment thereof and the number of votes which may be cast at the Court Meeting will be determined by reference to the register of members of Orchard at the “Voting Record Time”, which is 6:30 p.m. (London time) on December 15, 2023 or, if the Court Meeting is adjourned, 6:30 p.m. (London time) on the date which is two business days before the date fixed for the adjourned meeting. Changes to the register of members of Orchard after the relevant time shall be disregarded in determining the rights of any person to attend in person or by proxy and vote at the Court Meeting.

Joint Holders

In the case of joint holders of eligible Scheme Shares, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s). For this purpose, seniority will be determined by the order in which the names stand in the register of members of Orchard in respect of the joint holding.

Corporate Representatives

As an alternative to appointing a proxy, any holder of eligible Scheme Shares which is a corporation may appoint one or more corporate representatives who may exercise on its behalf all its powers as a member, provided that if two or more corporate representatives purport to vote in respect of the same shares, if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way, and in other cases the power is treated as not exercised.

By the said order, the Court has appointed Hubert Baburaj Gaspar or, failing him, any other Orchard Director, each with a business address of 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom to act as Chair of the Court Meeting and has directed the Chair to report the result thereof to the Court.

YOUR VOTE IS IMPORTANT

Your vote at the Court Meeting is very important. You are strongly encouraged to submit proxy appointments and instructions for the Court Meeting as soon as possible.

Dated November 16, 2023

Slaughter and May

One Bunhill Row

London EC1Y 8YY

Solicitors for the Company


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Notes:

The following notes explain your general rights as a Scheme Shareholder and your right to attend and vote at the Court Meeting or to appoint a proxy to vote on your behalf.

1. RIGHT TO APPOINT A PROXY; PROCEDURE FOR APPOINTMENT

Scheme Shareholders are strongly encouraged to submit proxy appointments and instructions for the Court Meeting as soon as possible, using any of the methods (by post, online or electronically through CREST) set out below.

The completion and return of the blue form of proxy by post (or appointment of a proxy online or through CREST) will not prevent you from attending, asking questions and voting at the Court Meeting in person if you are entitled to and wish to do so.

A Scheme Shareholder entitled to attend and vote at the Court Meeting may appoint one or more proxies to exercise all or any of such Scheme Shareholder’s rights to attend, ask questions and, on a poll, to vote, instead of him or her. A proxy need not be a Scheme Shareholder but must attend the meeting for the Scheme Shareholder’s vote to be counted. If a Scheme Shareholder appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by the Scheme Shareholder. If a Scheme Shareholder wishes to appoint more than one proxy, they should contact Equiniti Limited on +44 (0)371 384 2050 for further blue forms of proxy or photocopy the blue form of proxy as required.

Scheme Shareholders who do not appoint a proxy will still be entitled to attend, ask questions and vote at the Court Meeting in person.

(a) Sending blue form of proxy by post

A blue form of proxy, for use at the Court Meeting, has been provided with this notice. Instructions for its use are set out on the form. It is requested that the blue form of proxy (together with any power of attorney or other authority, if any, under which it is signed, or a duly certified copy thereof) be returned in the pre-paid envelope provided to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA so as to be received as soon as possible and not later than 2:00 p.m. on December 15, 2023 (or, in the case of an adjournment of the Court Meeting, 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time appointed for the adjourned meeting).

If the blue form of proxy for the Court Meeting is not lodged by the relevant time, it may be emailed to ProxyVotes@equiniti.com or handed to the Chair, or Equiniti on behalf of the Chair, at any time prior to the commencement of the Court Meeting.

(b) Online appointment of proxies

As an alternative to completing and returning the printed blue form of proxy, proxies may be appointed electronically by logging on to the following website: www.sharevote.co.uk.com using the series of numbers printed under the headings Voting ID, Task ID and Shareholder Reference Number on the form of proxy. Alternatively, shareholders who have already registered with Equiniti’s online portfolio service, Shareview, can appoint their proxy electronically by logging on to their portfolio at www.shareview.co.uk by using their usual user ID and password. Once logged in, simply click ‘view’ on the ‘My Investments’ page, click on the link to vote and then follow the on screen instructions. Full details and instructions on these electronic proxy facilities are given on the respective websites. For an electronic proxy appointment to be valid, the appointment must be received by Equiniti not later than 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time fixed for the Court Meeting or any adjournment thereof. If the electronic proxy appointment is not received by this time, the blue form of proxy may be emailed ProxyVotes@equiniti.com or handed to the Chair, or Equiniti on behalf of the Chair, any time prior to the commencement of the Court Meeting or any adjournment thereof. Full details of the procedure to be followed to appoint a proxy electronically are given on the website.


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(c) Electronic appointment of proxies through CREST

If you hold Orchard Voting Ordinary Shares in uncertificated form through CREST and wish to appoint a proxy or proxies for the Court Meeting (or any adjournment thereof) by using the CREST electronic proxy appointment service, you may do so by using the procedures described in the CREST Manual (available via https://www.euroclear.com/en.html). CREST personal members or other CREST sponsored members, and those CREST members who have appointed any voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear and must contain the information required for such instructions as described in the CREST Manual. The message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instructions given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by Orchard’s Registrar (ID: RA19) not later than 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time fixed for the Court Meeting or any adjournment thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Orchard’s Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. If the CREST proxy appointment or instruction is not received by this time, the blue form of proxy may be emailed to ProxyVotes@equiniti.com or handed to the Chair, or Equiniti on behalf of the Chair, any time prior to the commencement of the Court Meeting or any adjournment thereof.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed any voting service provider(s), to procure that his/her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. For further information on the logistics of submitting messages in CREST, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

Orchard may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the CREST Regulations.

(d) Electronic appointment of proxies through Proxymity

If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be received as soon as possible and not later than 2:00 p.m. on December 15, 2023 (or, in the case of an adjournment of the Court Meeting, 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time appointed for the adjourned meeting).

Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.

2. NOMINATED PERSONS

Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act to enjoy information rights (a “Nominated Person”) does not, in that capacity, have a right to appoint a proxy, such right only being exercisable by eligible shareholders of Orchard. However, Nominated Persons may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Court Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.


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THIS NOTICE APPLIES TO ORDINARY SHAREHOLDERS ONLY.

ADS HOLDERS SHOULD REFER TO THE SEPARATE NOTICE SENT BY THE DEPOSITARY TO

THEM WITH THE PROXY STATEMENT.

 

 

LOGO

Orchard Therapeutics plc

(Incorporated and registered in England and Wales

with registered number 11494381)

NOTICE OF GENERAL MEETING OF ORCHARD THERAPEUTICS PLC

TO BE HELD ON DECEMBER 19, 2023

NOTICE is hereby given that a General Meeting (the “General Meeting”) of Orchard Therapeutics plc, a public limited company incorporated under the laws of England and Wales (“Orchard” or the “Company”), will be held on December 19, 2023, at 2:15 p.m. (London time) (or as soon thereafter as the Court Meeting (as defined in the Scheme of Arrangement that is included in the accompanying proxy statement) is concluded or adjourned), at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom for the purpose of considering and, if thought fit, passing the following resolutions, one of which is a special resolution and one of which is an ordinary resolution.

Unless the context requires otherwise, any capitalized term used but not defined in this notice shall have the meaning given to such term in the accompanying proxy statement.

Special resolution

Amendment of the Articles of Association and General Authorisation to Carry Scheme into Effect

 

1.

THAT, for the purpose of giving effect to the scheme of arrangement dated November 16, 2023 between Orchard and the holders of Scheme Shares (as defined in such scheme of arrangement), a print of which has been produced to this meeting and for the purposes of identification signed by the Chair of this meeting, in its original form or with or subject to any modification, addition, or condition as may be agreed from time to time (including, for the avoidance of doubt, after the date of this resolution) between Orchard and Kyowa Kirin Co., Ltd (“KKC”) which (if required) is approved by the High Court of Justice of England and Wales (the “Court”), or which is otherwise imposed by the Court and is mutually acceptable to Orchard and KKC each acting reasonably and in good faith (the “Scheme”):

 

  A.

the directors of Orchard (or a duly authorized committee of the directors) be and are hereby authorized to take all such action as they may consider necessary or appropriate for carrying the Scheme into effect; and

 

  B.

with effect from the passing of this resolution, the articles of association of Orchard be and are hereby amended by the adoption and inclusion of the following new article 143:

143 Scheme of Arrangement

 

  (1)

In this article, references to the “Scheme” are to the Scheme of Arrangement under Part 26 of the Act between Orchard and the holders of Scheme Shares dated November 16, 2023 in its original form or with or subject to any modification, addition or condition as may be agreed between


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  Orchard and KKC and which (if required) is approved by the Court, or which is otherwise imposed by the Court and is mutually acceptable to Orchard and KKC each acting reasonably and in good faith and, save as defined in this article, expressions defined in the Scheme shall have the same meanings in this article. Capitalised terms used but not otherwise defined in this article shall have the meaning ascribed to such terms in the Scheme.

 

  (2)

Notwithstanding any other provision of these articles or the terms of any resolution, whether ordinary or special, passed by Orchard in General Meeting, if Orchard issues any shares (other than to any member of the KKC Group or a nominee of any such person (each such person, a “KKC Company”)) at or after the Voting Record Time but before the Scheme Record Time, such shares shall be issued subject to the terms of the Scheme (and shall be Scheme Shares for the purposes of the Scheme) and the original or any subsequent holder or holders of such shares shall be bound by the Scheme accordingly.

 

  (3)

Subject to the Scheme becoming effective, and notwithstanding any other provision of these articles, if any shares in Orchard are issued or transferred to any person other than a KKC Company (a “New Member”) after the Scheme Record Time (such shares the “Post-Scheme Shares”), such New Member (or any subsequent holder or any nominee of such New Member or any such subsequent holder) will be obliged, upon the Scheme becoming effective (or, if later, upon the issue or transfer of the Post-Scheme Shares to such New Member), to transfer immediately all of its Post-Scheme Shares free of all encumbrances to KKC (or to such other person as may be nominated by KKC) who shall be obliged to acquire (or procure the acquisition by such other person of) all of the Post-Scheme Shares. In exchange for the transfer of the Post-Scheme Shares, KKC (or such other person as has been nominated by KKC) shall pay or procure the payment to the New Member of the same Cash Consideration and, subject to Article 143(v), deliver such number of CVRs that the New Member would have been entitled to receive pursuant to the Scheme had each Post-Scheme Share been a Scheme Share.

 

  (4)

Notwithstanding the provisions of Article 143(iii) and subject to Article 143(v), if, in respect of any New Member with a registered address in a jurisdiction outside the United Kingdom or the U.S., KKC, any member of the KKC Group or the Rights Agent is advised that the delivery of CVRs pursuant to Article 143(iii) would or might infringe the laws of such jurisdiction or would require KKC, any member of the KKC Group, the Rights Agent or Orchard to observe any governmental or other consent or any registration, filing or other formality with which KKC, any member of the KKC Group, the Rights Agent or Orchard (as the case may be) is unable to comply, or compliance with which by such person is regarded by such person or by KKC (in the case of KKC, acting reasonably) as unduly onerous, each of KKC or the Rights Agent may, in its discretion, determine that such New Member shall not have issued to it the CVRs and, in lieu of the entitlement to CVRs, KKC shall, to the extent permitted by Applicable Law, pay to such New Member an amount per Post-Scheme Share equal to the cash amount (if any), on the same date as such payment is made to the holders of Scheme Shares that hold CVRs in the same manner as the Cash Consideration is payable to such New Member (rounded up or down to the nearest U.S. cent), that such New Member would have been entitled to receive if it had received CVRs pursuant to the Scheme had each Post-Scheme Share been a Scheme Share.

 

  (5)

Where a person becomes a New Member following the occurrence of a CVR Event, KKC (or such other person as has been nominated by KKC) shall not deliver any CVRs to such New Member and shall instead pay such New Member an amount per Post-Scheme Share equal to the cash amount (if any), on the same date and in the same manner as the Cash Consideration is payable to such New Member (rounded up or down to the nearest U.S. cent), that such New Member would have been entitled to receive had it received CVRs pursuant to the Scheme had each Post-Scheme Share been a Scheme Share. For the avoidance of doubt, if no CVR Event has occurred on or prior to 31 December 2024, a person becoming a New Member on or after 1 January 2025 shall be entitled to the Cash Consideration only in respect of any Post-Scheme Shares.

 

  (6)

If, after the Effective Time, Orchard Ordinary Shares shall have been changed to, or exchanged for, a different number or class of shares or securities by reason of any stock dividend, bonus


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  issue, scrip dividend, subdivision, reorganization, merger, consolidation, reclassification, redesignation, recapitalization, share split, reverse share split, combination or exchange of shares, or a stock or scrip dividend shall be declared with a record date falling after the Effective Time, or any similar event shall have occurred, then the amount of any Cash Consideration or CVRs due to a New Member for each Post-Scheme Share pursuant to Article 143(iii) above shall be adjusted by the directors of Orchard in such manner as the auditors of Orchard may determine to be appropriate to provide KKC and the New Members holding any Post-Scheme Share(s) with the same economic effect as contemplated by the Scheme prior to such event. References in this article to shares shall, following such adjustment, be construed accordingly.

 

  (7)

To give effect to any transfer of Post-Scheme Shares required by this article, Orchard may appoint any person as attorney and agent (the “agent”) for the New Member to execute and deliver as transferor a form of transfer or other instrument or instruction of transfer on behalf of the New Member (or any subsequent holder or any nominee of such New Member or any such subsequent holder) in favour of KKC (or such other person as KKC may nominate) and do all such other things and execute and deliver all such documents as may in the opinion of the agent be necessary or desirable to vest the Post-Scheme Shares in KKC (or such other person as KKC may nominate) and pending such vesting to exercise all such rights attaching to the Post-Scheme Shares as KKC may direct. If an agent is so appointed, the New Member shall not thereafter be entitled to exercise any rights attaching to the Post-Scheme Shares unless so agreed in writing by KKC, and Orchard may send to the agent any notice, circular, warrant or other document or communication which may otherwise be required to be sent to the New Member as a member of Orchard.

 

  (8)

Orchard may give good receipt for the Cash Consideration and CVRs due to the New Member pursuant to Article 143(iii) above for the Post-Scheme Shares and may register KKC (or such other person as KKC may nominate) as holder of the Post-Scheme Shares and issue to it certificate(s) for the same. The agent shall be empowered to execute and deliver as transferor a form of transfer or other instrument or instruction of transfer on behalf of the New Member (or any subsequent holder). Orchard shall not be obliged to issue a certificate to the New Member for any Post-Scheme Shares.

 

  (9)

KKC shall settle (or procure the settlement) of the Cash Consideration due to the New Member and delivery of the CVRs due to the New Member pursuant to Article 143(iii) within 14 days of the transfer of the Post-Scheme Shares by the New Member to KKC (or to such other person as KKC may nominate).

 

  (10)

Notwithstanding any other provision of these articles, neither Orchard nor its directors shall register the transfer of any Scheme Shares effected between the Scheme Record Time and the Effective Time (other than to a KKC Company or a nominee of a KKC Company pursuant to the Scheme).

 

  (11)

If the Scheme shall not have become effective by the date referred to in paragraph 10.2 of the Scheme, this article shall be of no effect.”

Ordinary resolution

Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements

THAT, the compensation that may be paid or become payable to Orchard’s named executive officers in connection with the Transaction, as disclosed in the table entitled “Potential Payments to Named Executive Officers” beginning on page 83 of the accompanying proxy statement, including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become payable, are hereby approved.


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YOUR VOTE IS IMPORTANT

Your vote at the General Meeting is very important. You are strongly encouraged to submit proxy appointments and instructions for the General Meeting as soon as possible.

 

By Order of the Board

/s/ Christopher York

Christopher York

Company Secretary

 

Registered Office:

245 Hammersmith Road, 3rd Floor, London, England, W6 8PW

Orchard Therapeutics plc

Registered in England and Wales No. 11494381


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Notes:

The following notes explain your general rights as a shareholder and your right to attend and vote at the General Meeting or to appoint someone else to vote on your behalf. For the avoidance of doubt, references in these notes to “Orchard shareholders” are to holders of Orchard Voting Ordinary Shareholders only, not holders of Orchard ADSs.

1. ENTITLEMENT TO ATTEND AND VOTE

Pursuant to Regulation 41(1) of the Uncertificated Securities Regulations 2001 (as amended), Orchard has specified that only those Orchard Voting Ordinary Shareholders registered on the register of members of Orchard at 6:30 p.m. (London time) on December 15, 2023 (or, if the meeting is adjourned to a time more than 48 hours after such time, at 6:30 p.m. on the day which is two days prior to the date of the adjourned meeting) (the “Voting Record Time”) shall be entitled to attend and vote at the General Meeting in person or by proxy in respect of the number of Orchard Ordinary Voting Shares registered in their name at that time. If the meeting is adjourned to a time not more than 48 hours after the Voting Record Time, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purposes of determining the number of votes they may cast) at the adjourned meeting. Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.

2. RIGHT TO APPOINT A PROXY; PROCEDURE FOR APPOINTMENT

Orchard shareholders are strongly encouraged to submit proxy appointments and instructions for the General Meeting as soon as possible, using any of the methods (by post, online or electronically through CREST) set out below.

The completion and return of the yellow form of proxy by post (or appointment of a proxy online or through CREST) will not prevent you from attending, asking questions and voting in person at the General Meeting, if you are entitled to and wish to do so.

An Orchard Voting Ordinary Shareholder entitled to attend and vote at the General Meeting may appoint one or more proxies to exercise all or any of such Shareholder’s rights to attend, ask questions and, on a poll, to vote, instead of him or her. A proxy need not be a member of Orchard but must attend the meeting for the member’s vote to be counted. If a member appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by the member. If a member wishes to appoint more than one proxy they should contact Equiniti Limited on +44 (0)371 384 2050 for further yellow forms of proxy or photocopy the yellow form of proxy as required.

Orchard Voting Ordinary Shareholders who do not appoint a proxy will still be entitled to attend, ask questions and vote in person at the General Meeting if they would prefer to do so.

(a) Sending yellow form of proxy by post

A yellow form of proxy, for use at the General Meeting, has been provided with this notice. Instructions for its use are set out on the form. It is requested that the yellow form of proxy (together with any power of attorney or other authority, if any, under which it is signed, or a duly certified copy thereof) be returned in the pre-paid envelope provided by Orchard’s Registrars to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, so as to be received as soon as possible and in any event not later than 2:15 p.m. on December 15, 2023 (or, in the case of an adjournment of the General Meeting, 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time appointed for the adjourned meeting).

If the yellow form of proxy for the General Meeting is not received by Equiniti by the relevant time, it will be invalid.


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(b) Online appointment of proxies

As an alternative to completing and returning the printed yellow form of proxy, proxies may be appointed electronically by logging on to the following website: www.sharevote.co.uk using the series of numbers printed under the headings Voting ID, Task ID and Shareholder Reference Number on the form of proxy. Alternatively, shareholders who have already registered with Equiniti’s online portfolio service, Shareview, can appoint their proxy electronically by logging on to their portfolio at www.shareview.co.uk by using their usual user ID and password. Once logged in, simply click ‘view’ on the ‘My Investments’ page, click on the link to vote and then follow the on screen instructions. Full details and instructions on these electronic proxy facilities are given on the respective websites. For an electronic proxy appointment to be valid, the appointment must be received by Equiniti not later than 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time fixed for the General Meeting or any adjournment thereof. Full details of the procedure to be followed to appoint a proxy electronically are given on the website.

(c) Electronic appointment of proxies through CREST

If you hold Orchard Voting Ordinary Shares in uncertificated form through CREST and wish to appoint a proxy or proxies for the General Meeting (or any adjournment thereof) by using the CREST electronic proxy appointment service, you may do so by using the procedures described in the CREST Manual (available at https://www.euroclear.com/en.html). CREST personal members or other CREST sponsored members, and those CREST members who have appointed any voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear and must contain the information required for such instructions as described in the CREST Manual. The message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instructions given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by Orchard’s Registrar (ID: RA19) not later than 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time fixed for the General Meeting or any adjournment thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Orchard’s Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed any voting service provider(s), to procure that his/her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. For further information on the logistics of submitting messages in CREST, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

Orchard may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the CREST Regulations.

(d) Electronic appointment of proxies through Proxymity

If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be received as soon as possible and not later than 2:15 p.m. on December 15, 2023 (or, in the case of an adjournment of the General Meeting, 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time appointed for the adjourned meeting).


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Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.

(e) Nominated persons

Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the member by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the member as to the exercise of voting rights.

The statement of rights of Orchard Voting Ordinary Shareholders in relation to the appointment of proxies described in these notes does not apply to nominated persons. Such rights can only be exercised by Orchard Voting Ordinary Shareholders.

3. APPOINTMENT OF A PROXY BY JOINT HOLDERS

In the case of joint holders, where more than one of the joint holders purports to appoint one or more proxies, only the purported appointment submitted by the most senior holder will be accepted. Seniority shall be determined by the order in which the names of the joint holders stand in Orchard’s register of members in respect of the joint holding.

4. CORPORATE REPRESENTATIVES

Any corporation which is an Orchard Voting Ordinary Shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers, provided that if two or more representatives purport to vote in respect of the same shares: if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; and in other cases, the power is treated as not exercised.

5. VOTES TO BE TAKEN BY A POLL AND RESULTS

At the General Meeting voting on the resolutions will be by poll rather than a show of hands. This is a more transparent method of voting as member votes are to be counted according to the number of Orchard Voting Ordinary Shares held. The results of the polls will be announced by the filing of a current report on Form 8-K with the SEC within four business days of the day the final results are available and published on Orchard’s website as soon as reasonably practicable following the conclusion of the General Meeting.

The ‘WITHHELD’ option on the form of proxy is provided to enable Orchard shareholders to abstain from voting on the resolutions. However, a vote withheld is not a vote in law and will not be counted in the calculation of proportion of votes ‘FOR’ and ‘AGAINST’ the resolutions.

6. WEBSITE PROVIDING INFORMATION REGARDING THE GENERAL MEETING

Information regarding the General Meeting, and a copy of this Notice may be found on Orchard’s website at https://ir.orchard-tx.com/. The information contained on Orchard’s website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC.

7. ISSUED SHARE CAPITAL AND TOTAL VOTING RIGHTS

As at November 13, 2023 (being the latest practicable date prior to the publication of this notice) Orchard’s issued share capital consisted of (i) 227,619,539 Orchard Ordinary Shares in issue (of which (A) none were held in treasury (B) 45,705,326 Orchard Non-Voting Ordinary Shares were outstanding, and (C) 181,914,213 Orchard Voting Ordinary Shares were outstanding), and (ii) there is one Orchard Deferred Share in issue which is held by Orchard in treasury. Therefore, the total voting rights in Orchard as at November 13, 2023 were 181,914,213 votes.


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8. FURTHER QUESTIONS AND COMMUNICATION

As set out in paragraph 1 above, Orchard shareholders will be permitted to ask questions to the Orchard directors during the course of the General Meeting. The Chair of the General Meeting will ensure that relevant matters relating to the formal business of the General Meeting are addressed in the General Meeting.

Orchard shareholders who have any queries about the General Meeting should contact the Shareholder Helpline operated by Equiniti Limited, Orchard’s Registrar, between 8:30 a.m. and 5:30 p.m. (London Time) Monday to Friday (except English and Welsh public holidays) on +44 (0)371 384 2050. Calls are charged at the standard geographic rate and will vary by provider. Please note that calls may be monitored or recorded and Equiniti cannot provide advice on the merits of the Transaction or the Scheme or give any financial, legal or tax advice.

Orchard shareholders may not use any electronic address or fax number provided in this Notice or in any related documents to communicate with Orchard for any purpose other than those expressly stated. Any electronic communications, including the lodgement of any electronic proxy appointment, received by Orchard, or its agents, that is found to contain any virus will not be accepted.


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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement incorporates important business and financial information about Orchard from other documents that Orchard has filed with the SEC, and that are contained in or incorporated by reference into this proxy statement. For a list of documents incorporated by reference into this proxy statement, please see the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement. This information is available through the SEC’s website at www.sec.gov.

You may request copies of this proxy statement and any of the documents incorporated by reference into this proxy statement, without charge, by directing a request to Orchard’s Global Corporate Communications Department by email at investors@orchard-tx.com or by telephone at +1 (760) 795-2200 or:

 

   

if you hold Orchard ordinary shares, by contacting Orchard’s proxy solicitor, MacKenzie, by telephone at +1-800-322-2885 or by email at proxy@mackenziepartners.com or Orchard’s registrar, Equiniti Limited, by telephone at +44 (0)371 384 2050; and

 

   

if you hold Orchard ADSs, by contacting the Depositary, Citibank, N.A., by telephone at +1- 877- 248-4237 (toll free within the U.S.) or +1-781-575-4555 (for international callers) or by email: citibank@shareholders-online.com.

In order for you to receive timely delivery of the documents in advance of the Shareholder Meetings to be held on December 19, 2023, you must request the information no later than five business days prior to the date of the Shareholder Meetings, being December 12, 2023.

ABOUT THIS PROXY STATEMENT

This document constitutes a proxy statement of Orchard under Section 14(a) of the Securities Exchange Act of 1934, as amended. It also constitutes a notice of meeting with respect to the Court Meeting and the General Meeting and contains an explanatory statement in respect of the Scheme of Arrangement (as required by section 897 of the Companies Act).

KKC has supplied all information contained or incorporated by reference into this proxy statement relating to KKC, and Orchard has supplied all such information relating to Orchard.

Orchard and KKC have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this proxy statement, and Orchard and KKC take no responsibility for, and can provide no assurance as to the reliability of, any information others may give you. This proxy statement is dated November 16, 2023 and you should not assume that the information contained in this proxy statement is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this proxy statement is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement to Orchard shareholders nor the delivery of Orchard ordinary shares pursuant to the Scheme of Arrangement will create any implication to the contrary.

This proxy statement is first being mailed or otherwise delivered to Orchard shareholders on or about November 17, 2023.


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CERTAIN DEFINITIONS

Unless otherwise indicated or as the context otherwise requires, all references in this proxy statement to:

 

   

“ADS deliverables” means the per ADS Cash Consideration and the per ADS share deliverable.

 

   

“Cash Consideration” means (i) with respect to an Orchard ordinary share, an amount equal to $1.60 in cash or (ii) with respect to an Orchard ADS, the per ADS Cash Consideration.

 

   

“Cash Memorandum Account” has the meaning given in the CREST Manual.

 

   

“closing” means the closing of the Transaction.

 

   

“closing date” means the date on which the closing actually occurs.

 

   

“Companies Act” means the Companies Act 2006.

 

   

“Compensation Committee” means the Compensation Committee of Orchard.

 

   

“Court” means the High Court of Justice of England and Wales.

 

   

“Court Meeting” means the meeting of the eligible Orchard shareholders convened with the permission of the Court for the purpose of considering and, if thought fit, approving the Scheme Proposal.

 

   

“Court Order” means the order of the Court sanctioning the Scheme of Arrangement under section 899 of the Companies Act.

 

   

“Court Sanction Hearing” means the Court hearing at which the Court will decide whether to sanction the Scheme of Arrangement.

 

   

“CREST Manual” means the CREST Manual published by Euroclear as amended from time to time.

 

   

“CVR” means one (1) contractual contingent value right per Scheme Share which shall represent the right to receive the CVR Payment, upon the terms and subject to the conditions of the CVR Agreement.

 

   

“CVR Agreement” means the contingent value rights agreement, to be entered into prior to or concurrently with the effective time, between KKC and the Rights Agent.

 

   

“CVR Paying Agent” means Wilmington Savings Fund Society, FSB.

 

   

“CVR Payment” means a contingent payment of $0.10 per CVR, without interest, if a certain milestone is achieved.

 

   

“Deposit Agreement” means the deposit agreement dated as of November 2, 2018 by and among Orchard, the Depositary and all holders and beneficial owners of the Orchard ADSs issued thereunder, as amended March 10, 2023 (as such agreement is further amended, modified or supplemented from time to time).

 

   

“Depositary” means Citibank, N.A. as depositary under the Deposit Agreement.

 

   

“DTC” means The Depository Trust Company.

 

   

“effective time” means the time at which the Scheme of Arrangement becomes effective (being the time that the Court Order is delivered to the Registrar of Companies in England and Wales in accordance with section 899(4) of the Companies Act).

 

   

“Equiniti” means Equiniti Limited, incorporated in England and Wales with registered number 06226088, registrar and receiving agent for the Company.

 

   

“Euroclear” means Euroclear UK & Ireland Limited incorporated in England and Wales with registered number 02878738.

 

   

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

   

“General Meeting” means the general meeting of the eligible Orchard shareholders to be held for the purpose of considering and, if thought fit, passing the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.


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“Goldman Sachs” means Goldman Sachs LLC, financial advisor to KKC.

 

   

“Guggenheim Securities” means Guggenheim Securities, LLC, financial advisor to Orchard.

 

   

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

   

“KKC” means Kyowa Kirin Co., Ltd., a Japanese joint stock company (kabushiki kaisha).

 

   

“KKC Board” means the Board of Directors of KKC.

 

   

“KKC Constitution” means the memorandum and articles of association of KKC.

 

   

“Nasdaq” means the Nasdaq Capital Market or the Nasdaq Stock Market LLC, as applicable.

 

   

“Nominee” has the meaning set forth in the Scheme of Arrangement (being a company falling within Section 67(6) and Section 93(3) of the UK Finance Act 1986 as KKC may in its sole discretion appoint in order to act as transferee of the Orchard ordinary shares underlying the Orchard ADSs pursuant to the Scheme of Arrangement).

 

   

“Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements” means the proposal at the General Meeting to approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to Orchard’s named executive officers in connection with the Transaction, as disclosed in the table entitled “Potential Payments to Named Executive Officers” beginning on page 83 of this proxy statement, including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become payable.

 

   

“Orchard” means Orchard Therapeutics plc, a public limited company incorporated in England and Wales.

 

   

“Orchard ADS Fees” means (i) a $0.05 per Orchard ADS cancellation fee, (ii) a $0.05 per Orchard ADS cash distribution fee for the distribution of the per ADS Cash Consideration (as defined below), plus (iii) any other fees and expenses payable by such holders pursuant to the terms of the Deposit Agreement.

 

   

“Orchard ADS Register” means the register of Orchard ADSs and registered holders of Orchard ADSs maintained by the Depositary.

 

   

“Orchard ADSs” means American Depositary Shares representing, as of the date of this proxy statement, a beneficial ownership interest in 10 Orchard ordinary shares on deposit with the Depositary (or a custodian under the Deposit Agreement), subject to the terms and conditions of the Deposit Agreement.

 

   

“Orchard ADS Voting Record Time” means 5:00 pm (New York time) on November 16, 2023.

 

   

“Orchard Articles” means the articles of association of Orchard.

 

   

“Orchard Board” means the Board of Directors of Orchard.

 

   

“Orchard Board recommendation” means the recommendation by the Orchard Board that Orchard shareholders vote in favor of the Scheme Proposal at the Court Meeting and the Scheme Implementation Proposal at the General Meeting.

 

   

“Orchard ordinary shares” means the Orchard Voting Ordinary Shares and Orchard Non-Voting Ordinary Shares.

 

   

“Orchard’s Registrar” means Equiniti Limited.

 

   

“Orchard shareholders” means holders of Orchard ordinary shares and/or holders of Orchard ADSs.

 

   

“Orchard Voting Ordinary Shares” means voting Orchard ordinary shares, nominal value £0.10 each, with full voting rights.

 

   

“Orchard Non-Voting Ordinary Shares” means non-voting Orchard ordinary shares, nominal value £0.10 each, with no voting rights.


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“Orchard Shareholder Resolutions” means (i) the special resolution to amend the organizational documents of Orchard and approve such other matters as may be necessary to facilitate the implementation of the Transaction and/or the Scheme of Arrangement; and (ii) the ordinary resolution to approve the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.

 

   

“per ADS Cash Consideration” means an amount equal to $16.00 in cash (less, in the case of an Orchard ADS holder, an amount equal to any Orchard ADS Fees for which the holder is liable).

 

   

“Proposals” means the Scheme Proposal, the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.

 

   

“required Orchard shareholder approvals” means the Scheme Proposal and the Scheme Implementation Proposal.

 

   

“Scheme Implementation Proposal” means at the General Meeting the proposal to (i) authorize the Orchard Board to take all action necessary or appropriate for carrying the Scheme of Arrangement into effect and (ii) make certain amendments to the Orchard Articles in order to facilitate the Transaction, including provisions to ensure that any Orchard ordinary shares that are issued at or after the Voting Record Time will either be subject to the terms of the Scheme of Arrangement or will be acquired by KKC (and/or, at KKC’s election, the Nominee) on the same terms as under the Scheme of Arrangement.

 

   

“Scheme of Arrangement” or “Scheme” means the court-sanctioned scheme of arrangement to effect the Transaction under Part 26 of the Companies Act, as set out in the section entitled “The Scheme of Arrangement” beginning on page 108 of this proxy statement.

 

   

“scheme deliverables” means (i) the Cash Consideration and (ii) the CVR.

 

   

“Scheme Proposal” means the proposal at the Court Meeting to approve the Scheme of Arrangement.

 

   

“Scheme Record Time” has the meaning set forth in the Scheme of Arrangement.

 

   

“Scheme Shareholders” has the meaning set forth in the Scheme of Arrangement, being the holders of Scheme Shares whose names appear in the register of members of Orchard at the Scheme Record Time.

 

   

“Scheme Shares” has the meaning set forth in the Scheme of Arrangement, being the Orchard ordinary shares:

 

   

in issue at the date of this proxy statement;

 

   

(if any) issued after the date of this proxy statement and prior to the Voting Record Time;

 

   

(if any) issued at or after the Voting Record Time and prior to the Scheme Record Time, either on terms that the original or any subsequent holders thereof shall be bound by the Scheme of Arrangement or in respect of which the holders thereof shall have agreed in writing to be bound by the Scheme of Arrangement;

in each case remaining in issue at the Scheme Record Time, but excluding (i) any Orchard ordinary shares which are registered in the name of or beneficially owned by KKC or by any of their respective nominees and (ii) any Orchard ordinary shares held in treasury by Orchard.

 

   

“SEC” means the U.S. Securities and Exchange Commission.

 

   

“Securities Act” means the Securities Act of 1933, as amended.

 

   

“Shareholder Meetings” means the Court Meeting and the General Meeting.

 

   

“Transaction” means the acquisition by KKC (and/or, at KKC’s election, the Nominee) of the entire issued and to be issued share capital of Orchard pursuant to the Transaction Agreement and the Scheme of Arrangement.

 

   

“Transaction Agreement” means the transaction agreement, dated as of October 5, 2023, by and among Orchard and KKC, as it may be amended from time to time.


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“transaction deliverables” means the Cash Consideration and CVR, when used in relation to holders of Orchard ordinary shares, and the ADS deliverables, when used in relation to holders of Orchard ADSs.

 

   

“VAT” means (i) any tax charged or imposed pursuant to Council Directive 2006/112/EC or any national legislation implementing such Directive; and (ii) to the extent not included in (i), any value added tax imposed by the United Kingdom Value Added Tax Act 1994 and any related secondary legislation.

 

   

“Voting Record Time” means 6:30 p.m. (London time) on December 15, 2023 or, if the Court Meeting and/or General Meeting is adjourned, 6:30 p.m. (London time) on the date which is two business days before the date fixed for the adjourned meeting(s).

 

   

“$”, “US dollars” and “USD” are references to U.S. dollars.

 

   

“£”, “British pounds” and “GBP” are references to the lawful currency of the United Kingdom.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

All dates and times are based on Orchard’s current expectations and are subject to change. If any of the dates or times in this expected timetable change, Orchard will publicly announce the changes.

 

Event

  

Time and/or Date(1)

Publication of this document    November 16, 2023
Orchard ADS Voting Record Time   

5:00 pm (New York time) on November 16, 2023

Latest time for receipt by the Depositary of Orchard ADS voting instructions for Court Meeting and General Meeting    10:00 am (New York time) on December 13, 2023
Latest time for receipt by Orchard’s Registrar of forms of proxy for Court Meeting (BLUE form)    2:00 p.m. (London time) on December 15, 2023 (2)
Latest time for receipt by Orchard’s Registrar of forms of proxy for General Meeting (YELLOW form)    2:15 p.m. (London time) on December 15, 2023 (3)
Voting Record Time    6:30 p.m. (London time) on December 15, 2023 (4)
Court Meeting    2:00 p.m. (London time) on December 19, 2023
General Meeting    2:15 p.m. (London time) on December 19, 2023 (5)


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The following dates and times associated with the Scheme of Arrangement are presented for illustrative purposes only, are subject to change and will depend on, among other things, the date on which the conditions to the Scheme of Arrangement are satisfied or, if capable of waiver, waived and the date on which the Court sanctions the Scheme of Arrangement. Orchard will give adequate notice of all of these dates and times, when known, by public announcement. Further updates and changes to these times will be notified in the same way. See also note (1).
Last day for dealings in ADSs on Nasdaq by investors    D-1 or D
Formal suspension by Nasdaq of dealings in ADSs    D
Court Sanction Hearing    D (“D”)
Scheme Record Time    6:00 p.m. (London time) on D+1
Last day for settlement of trades of Orchard ADSs on Nasdaq    D+1 or D+2
Effective date of the Scheme of Arrangement    D+2 (“E”)
Latest date for dispatch of checks and crediting of CREST accounts for the scheme deliverables    E+14

 

(1)

The dates and times given are indicative only and are based on current expectations and are subject to change (including as a result of changes to the regulatory timetable).

(2)

It is requested that the blue form of proxy for the Court Meeting be received by 2:00 p.m. (London time) on December 15, 2023, or, if the Court Meeting is adjourned, 48 hours prior to the time fixed for the adjourned Court Meeting (excluding any part of such 48-hour period falling on a non-working day). If the blue form of proxy is not lodged by this time, it may be emailed to ProxyVotes@equiniti.com or handed to the Chair, or Equiniti on behalf of the Chair, at any time prior to the commencement of the Court Meeting.

(3)

In order to be valid, the yellow form of proxy for the General Meeting must be received by 2:15 p.m. (London time) on December 15, 2023 or, if the General Meeting is adjourned, 48-hours prior to the time fixed for the adjourned General Meeting (excluding any part of such 48 hour period falling on a non-working day).

(4)

If either the Court Meeting or the General Meeting is adjourned, the Voting Record Time for the relevant adjourned meeting will be 6:30 p.m. (London time) on the day which is two business days prior to the date of the adjourned meeting.

(5)

To commence at 2:15 p.m. (London time) or as soon thereafter as the Court Meeting concludes or is adjourned.


Table of Contents

TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND SHAREHOLDER MEETINGS

     1  

SUMMARY

     15  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     24  

RISK FACTORS

     26  

•  SCHEME PROPOSAL AND THE COURT MEETING AND THE GENERAL MEETING –EXPLANATORY STATEMENT

     30  

THE GENERAL MEETING

     43  

Proposal 1—Scheme Implementation Proposal

     43  

Proposal 2—Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements

     45  

THE PARTIES TO THE TRANSACTION

     46  

THE TRANSACTION

     47  

Overview

     47  

Background of the Transaction

     47  

Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction

     60  

Opinion of Orchard’s Financial Advisor

     65  

Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction

     79  

Orchard ADSs

     84  

Regulatory and Court Approvals Required for the Transaction

     85  

Accounting Treatment

     85  

Delisting and Deregistration of Orchard ADSs

     85  

No Appraisal or Dissenters’ Rights

     85  

THE TRANSACTION AGREEMENT

     86  

Explanatory Note Regarding the Transaction Agreement

     86  

Structure of the Transaction

     86  

Closing and Effective Time

     86  

Scheme Deliverables to Orchard Shareholders

     86  

Treatment of Equity and Equity-Based Awards

     87  

Representations and Warranties

     88  

Covenants Regarding Conduct of Business by Orchard Pending the Effective Time

     91  

Efforts to Complete the Transaction

     94  

Efforts to Implement the Scheme of Arrangement

     95  

No Solicitation; Change in Board Recommendation

     96  

Indemnification

     99  

Employee Benefits Matters

     100  


Table of Contents

TABLE OF CONTENTS

(continued)

 

     Page  

Additional Agreements

     100  

Conditions to Complete the Transaction

     100  

Termination of the Transaction Agreement

     101  

Termination Fees and Expenses

     102  

Withholding Taxes

     103  

Amendments and Waivers

     104  

Governing Law

     104  

Specific Enforcement

     104  

THE CONTINGENT VALUE RIGHTS AGREEMENT

     105  

FORM OF SCHEME OF ARRANGEMENT

     108  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     119  

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION

     122  

MATERIAL UNITED KINGDOM TAX CONSEQUENCES OF THE TRANSACTION

     129  

HOUSEHOLDING OF PROXY MATERIALS

     131  

SHAREHOLDER PROPOSALS

     132  

WHERE YOU CAN FIND MORE INFORMATION

     133  

Annex A - Transaction Agreement

     A-1  

Annex B - Form of Scheme of Arrangement

     B-1  

Annex C - Form of Scheme Implementation Proposal

     C-1  

Annex D - Opinion of Orchard’s Financial Advisor

     D-1  


Table of Contents

QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND SHAREHOLDER MEETINGS

The following questions and answers are intended to briefly address some commonly asked questions regarding the Transaction, the Transaction Agreement and the Shareholder Meetings. These questions and answers may not address all questions that may be important to you as an Orchard shareholder. Please refer to the section entitled “Summary” beginning on page 15 of this proxy statement and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement.

 

Q:

Why am I receiving this proxy statement?

 

A:

On October 5, 2023, Orchard and KKC entered into the Transaction Agreement, pursuant to which KKC (and/or, at KKC’s election, the Nominee) will acquire the entire issued and to be issued share capital of Orchard. The Transaction will be implemented by means of the Scheme of Arrangement, which is a court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

The Transaction is conditional on, among other things, Orchard shareholders approving the Scheme Proposal at the Court Meeting and the Scheme Implementation Proposal at the General Meeting. In order for the Transaction to proceed, it is therefore very important that you vote at both the Court Meeting and the General Meeting. As set out elsewhere in this proxy statement, the Orchard Board unanimously recommends that you vote in favor of the resolutions at the Court Meeting and the General Meeting. Instructions on how to vote are set out beginning on page 37, in the case of Orchard ADS holders, and page 38, in the case of Orchard ordinary shareholders, of this proxy statement.

We have included in this proxy statement important information about the Transaction, the Transaction Agreement (a copy of which is included as Annex A to this proxy statement) and the Shareholder Meetings. You should read this information carefully and in its entirety. The enclosed forms of proxy (for registered holders of Orchard ordinary shares) and voting instruction cards (for registered holders of Orchard ADSs) will allow Orchard shareholders to vote at the Shareholder Meetings without attending in person.

After completion of the Transaction, Orchard will be an indirect wholly owned subsidiary of KKC, the Orchard ADSs will be delisted from Nasdaq and deregistered under the Exchange Act, and Orchard will no longer be required to file periodic reports with the SEC.

 

Q:

What is the Scheme of Arrangement?

 

A:

A “scheme of arrangement” is a court-sanctioned arrangement between an English company (such as Orchard) and its shareholders under Part 26 of the Companies Act, which can be used as a transaction structure to effect an acquisition, takeover or other business combination. A scheme of arrangement enables a buyer to acquire the entire issued share capital of a target company if the scheme of arrangement has been approved by the requisite majorities of the target company’s shareholders and the scheme of arrangement has been sanctioned by the Court.

The Transaction will be completed by means of the Scheme of Arrangement, a copy of which is included in this proxy statement beginning on page 108, which will enable KKC (and/or, at KKC’s election, the Nominee) to acquire the outstanding Orchard ordinary shares. In order to be effected, the Scheme of Arrangement requires the approval of the requisite majorities of Orchard shareholders and the sanction of the Court. The Scheme of Arrangement and the votes required by the Orchard shareholders to approve the Scheme of Arrangement are further described under the section entitled “Scheme Proposal and the Court Meeting and the General Meeting—Explanatory Statement” beginning on page 30 of this proxy statement.

 

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Q:

What will I receive if the Transaction is completed?

 

A:

If the Transaction is completed:

 

   

all Orchard ordinary shares will be acquired by KKC (and/or, at KKC’s election, the Nominee);

 

   

holders of Orchard ordinary shares as of the record time for the Scheme of Arrangement will have the right to receive, for each Orchard ordinary share held by them at such time, the scheme deliverables, consisting of an amount equal to $1.60 in cash plus one contingent value right to receive an amount equal to $0.10 per Orchard ordinary share; and

 

   

accordingly, holders of Orchard ADSs as of the effective time will have the right to receive, for each Orchard ADS, an amount equal to $16.00 in cash (less, an amount equal to any Orchard ADS Fees for which the holder of the Orchard ADS is liable) plus ten contingent value rights, each representing a right to receive an amount equal to $0.10 per Orchard ordinary share.

You will not have any rights with respect to your Orchard ordinary shares and/or Orchard ADSs after the completion of the Transaction other than the right to receive the applicable transaction deliverables.

 

Q:

What will holders of Orchard equity compensation awards receive if the Transaction is completed?

 

A:

At the effective time:

Each vested Orchard Share Option that has a per share exercise price that is less than the Cash Consideration (each, an “In-the-Money Vested Orchard Share Option”) that is outstanding and unexercised immediately prior to the Effective Time shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled and converted into the right to receive, for each Orchard Ordinary Share underlying such In-the-Money Vested Orchard Share Option, without interest and subject to deduction and withholding for employee income tax and employee National Insurance contributions or social security contributions, (i) an amount in cash equal to the excess of the Cash Consideration over the per share exercise price of such In-the-Money Vested Orchard Share Option and (ii) one CVR. KKC shall cause Orchard (or another applicable Subsidiary of KKC) to pay such cash amount through the payroll systems of Orchard (or another applicable Subsidiary of KKC) and deliver such CVR as soon as practicable on or following the Effective Time (but in no event later than the first ordinary payroll of Orchard (or another applicable Subsidiary of KKC) following the Effective Time).

Each unvested Orchard Share Option that has a per share exercise price that is less than the Cash Consideration (each, an “In-the-Money Unvested Orchard Share Option”) that is outstanding immediately prior to the Effective Time, shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or holder thereof, be canceled without payment of any consideration being made in respect thereof.

Each Orchard Share Option, whether vested or unvested, with an exercise price per share equal to or greater than the Cash Consideration shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled at the Effective Time without payment of any consideration being made in respect thereof.

Each vested Orchard RSU that is outstanding immediately prior to the Effective Time shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled and converted into the right to receive, for each Orchard Ordinary Share underlying such Orchard RSU, without interest and subject to deduction and withholding for employee income tax and employee National Insurance contributions or social security contributions, (i) an amount in cash equal to the Cash Consideration and (ii) one CVR. KKC shall cause Orchard (or another applicable Subsidiary of KKC) to pay such cash amount through the payroll systems of Orchard (or another applicable Subsidiary of KKC) and deliver such CVR as soon as practicable on or following the Effective Time (but in no event later than the first ordinary payroll of Orchard (or

 

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another applicable Subsidiary of KKC) following the Effective Time). Each unvested Orchard RSU that is outstanding immediately prior to the Effective Time (each, an “Unvested Orchard RSU”), shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or holder thereof, be canceled without payment of any consideration being made in respect thereof.

Each vested Orchard PSU that is outstanding immediately prior to the Effective Time shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled and converted into the right to receive, for each Orchard Ordinary Share underlying such Orchard PSU, determined based on maximum level of achievement for all performance objectives, without interest and subject to deduction and withholding for employee income tax and employee National Insurance contributions or social security contributions, (i) an amount in cash equal to the Cash Consideration and (ii) one CVR. KKC shall cause Orchard (or another applicable Subsidiary of KKC) to pay such cash amount through the payroll systems of Orchard (or another applicable Subsidiary of KKC) and deliver such CVR as soon as practicable on or following the Effective Time (but in no event later than the first ordinary payroll of Orchard (or another applicable Subsidiary of KKC) following the Effective Time). Each unvested Orchard PSU that is outstanding immediately prior to the Effective Time (each, an “Unvested Orchard PSU”), shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or holder thereof, be canceled without payment of any consideration being made in respect thereof.

KKC also agrees to implement a new transitional cash plan (“Transitional Cash Plan”) and grant (or procure the grant) of cash awards (each, a “Transition Award”) under such Transitional Cash Plan to all holders of In-the-Money Unvested Orchard Share Options, Unvested Orchard RSUs and/or Unvested Orchard PSUs immediately prior to the Effective Time.

 

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Q:

What are Orchard shareholders being asked to consider and approve?

 

A.

Orchard shareholders are being asked to consider and approve the following resolutions at the Shareholder Meetings:

 

Proposal

 

Description

  Orchard Board
Recommendation
  Approval required
to complete the
Transaction

Court Meeting

     
1. Scheme Proposal   To approve the Scheme of Arrangement.   FOR   Yes

General Meeting

     
1. Scheme Implementation Proposal   To (i) authorize the Orchard Board to take all action necessary or appropriate for carrying the Scheme of Arrangement into effect and (ii) make certain amendments to the Orchard Articles in order to facilitate the Transaction, including provisions to ensure that any Orchard ordinary shares that are issued at or after the Voting Record Time will either be subject to the terms of the Scheme of Arrangement or will be acquired by KKC (and/or, at KKC’s election, the Nominee) on the same terms as under the Scheme of Arrangement.   FOR   Yes
2. Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements   To approve, on an advisory, non-binding basis, the compensation that may be paid or become payable to Orchard’s named executive officers in connection with the Transaction, as disclosed in the table entitled “Potential Payments to Named Executive Officers” beginning on page 83 of this proxy statement, including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become payable.   FOR   No

The Transaction cannot be completed unless each of the Scheme Proposal and the Scheme Implementation Proposal is passed. Each copy of this proxy statement mailed to registered holders of Orchard ordinary shares is accompanied by two forms of proxy with instructions for voting.

For registered holders of Orchard ordinary shares, the blue form of proxy corresponds to the Court Meeting and the yellow form of proxy corresponds to the General Meeting. The Depositary will mail to registered holders of Orchard ADSs as of the Orchard ADS Voting Record Time (i) a Depositary Notice of Court Meeting and General Meeting for Orchard Therapeutics plc, (ii) a voting instruction card and (iii) this proxy statement. You are encouraged to submit a proxy (by post, online or electronically through CREST) or voting instructions for each of the Court Meeting and the General Meeting as soon as possible. If you hold Orchard ordinary shares or Orchard ADSs indirectly through a broker, bank, trust company or other nominee you must rely on the procedures of such broker, bank, trust company or other nominee in order to submit your voting instructions for both the Court Meeting and the General Meeting. Providing voting instructions via a broker, bank, trust company or other nominee may require the provision of information by a particular deadline, well in advance of the deadline to submit proxies or voting instructions, and therefore you are encouraged to reach out to such broker, bank, trust company or other nominee as quickly as possible.

If the Scheme of Arrangement becomes effective, it will be binding on all Scheme Shareholders, including Scheme Shareholders who vote against the Scheme Proposal and the Scheme Implementation Proposal.

 

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Q:

How does the Orchard Board recommend that I vote at the Shareholder Meetings?

 

A:

The Orchard Board unanimously recommends that Orchard shareholders vote “FOR” the Scheme Proposal at the Court meeting, “FOR” the Scheme Implementation Proposal at the General Meeting and “FOR” the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements at the General Meeting. See the section entitled “The Transaction—Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction” beginning on page 60 of this proxy statement.

 

Q:

What are the Shareholder Meetings?

 

A:

Orchard is holding two separate Orchard shareholder meetings in connection with the Transaction:

Court Meeting: In order for the Scheme of Arrangement to become effective, the Scheme of Arrangement must be approved by the requisite majorities of Scheme Shareholders. This approval is to be obtained at the Court Meeting, which is convened with the permission of the Court. The purpose of the Court Meeting is to allow the Court to ascertain whether Scheme Shareholders are in favor of the Scheme of Arrangement.

General Meeting: In addition to the approval of the Scheme of Arrangement at the Court Meeting, certain additional resolutions regarding the Transaction are proposed to be approved at the General Meeting.

 

Q:

When and where are the Court Meeting and the General Meeting?

 

A:

The Court Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:00 p.m. (London time). The General Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:15 p.m. (London time) (or as soon thereafter as the Court Meeting shall have been concluded or adjourned).

 

Q:

What if I plan to attend the Shareholder Meetings?

 

A:

Ordinary shareholders can attend the Meeting, but attendance will be limited to ordinary shareholders of record as of 6:30 p.m. London time (11:30 p.m. Eastern time) on December 15, 2023. In order to obtain admittance to the Meeting each ordinary shareholder may be asked to present valid picture identification, such as a driver’s license or passport. If your ordinary shares are held in “street name” through brokerage accounts or by a bank or other nominee you may be able to attend at the discretion of the Chair, and may also be asked to show a recent brokerage statement or account statement reflecting share ownership as of the record date as well as valid picture identification in order to obtain admittance to either the General Meeting or Court Meeting.

If you are a “street name” holder of Orchard ordinary shares, as a matter of English law your name will not be entered in Orchard’s register of members. Accordingly, if you wish to vote directly (i.e., in your own name) at the Court Meeting and/or General Meeting, you must contact your broker/nominee who will arrange for the completion of the required transfer form from their custody into your registered name, prior to the Voting Record Time.

If you are an ADS holder, please note that you will not be able to cast votes at the Meeting. In order to vote your ADSs, you should complete and submit the ADS Proxy Card in accordance with the instructions set forth in this proxy statement. If the arrangements for the Court Meeting or the General Meeting change materially, we will issue a further communication via a Form 8-K filing with the U.S. Securities and Exchange Commission (the “SEC”) and on the Investors & Media section of our website at www.orchard-tx.com.

 

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Q:

What are “Scheme Shares”, “Scheme Shareholders” and the “Scheme Record Time”?

 

A:

Under the Scheme of Arrangement:

“Scheme Shares” are the Orchard ordinary shares:

 

   

in issue at the date of this proxy statement;

 

   

(if any) issued after the date of this proxy statement and prior to the Voting Record Time;

 

   

(if any) issued at or after the Voting Record Time and prior to the Scheme Record Time, either on terms that the original or any subsequent holders thereof shall be bound by the Scheme of Arrangement or in respect of which the holders thereof shall have agreed in writing to be bound by the Scheme of Arrangement;

in each case, remaining in issue at the Scheme Record Time, but excluding (i) any Orchard ordinary shares which are registered in the name of or beneficially owned by KKC or by any of its respective nominees and (ii) any Orchard ordinary shares held in treasury by Orchard.

“Scheme Shareholders” are the holders of Scheme Shares whose names appear in the register of members of Orchard at the Scheme Record Time.

The “Scheme Record Time” is expected to be 6.00 p.m. (London time) on the business day immediately prior to the effective time.

Accordingly, if you are a registered holder of Orchard ordinary shares and do not sell your shares prior to the Scheme Record Time, your Orchard ordinary shares will be Scheme Shares and you will be a Scheme Shareholder.

 

Q:

What is the Voting Record Time? What is the Orchard ADS Voting Record Time?

 

A:

The holders of Orchard ordinary shares that will be entitled to vote at the Shareholder Meetings are those listed in Orchard’s register of members as of the Voting Record Time, which is 6:30 p.m. (London time) on December 15, 2023, or, if either Shareholder Meeting is adjourned, 6:30 p.m. (London time) on the day which is two business days prior to the date of the adjourned meeting.

The holders of Orchard ADSs that will be entitled to provide voting instructions to the Depositary in respect of the Shareholder Meetings are those registered on the Orchard ADS Register as of the Orchard ADS Voting Record Time, which is 5:00 pm (New York time) on November 16, 2023.

 

Q:

Who can attend and vote at the Court Meeting and General Meeting?

 

A:

If you are a “shareholder of record”: Each Orchard shareholder who is entered in Orchard’s register of members at the Voting Record Time will be entitled to attend and vote on all resolutions to be put to the Court Meeting and the General Meeting.

If either meeting is adjourned, only those Orchard shareholders on the register of members at 6:30 p.m. (London time) on the date which is two days (excluding non-working days) before the adjourned meeting will be entitled to attend and vote.

If you hold Orchard ordinary shares in “street name”: Each beneficial owner of Orchard ordinary shares (i.e., holds its Orchard ordinary shares in “street name” through a broker, bank, trust company or other nominee) will be entitled to direct his or her broker, bank, trust or other nominee how to vote such Orchard ordinary shares on all resolutions to be put to the Court Meeting and the General Meeting. If you are a ‘‘street name’’ holder of Orchard ordinary shares and wish to attend the Court Meeting and/or the General Meeting, you will need to bring

 

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evidence of your share ownership in the form of a recent brokerage statement or account statement reflecting share ownership as of the record date as well as valid picture identification. On verification of such evidence, you will be admitted to the Court Meeting and/or the General Meeting, but may not vote at the Court Meeting and/or General Meeting unless you are a shareholder of record or hold a valid proxy from a shareholder of record. As a matter of English law, by virtue of your holding of Orchard ordinary shares in “street name”, your name will not be entered in Orchard’s register of members. You will need to contact your broker, bank, trust company or other nominee in order to submit your voting instructions for both the Court Meeting and the General Meeting. Providing voting instructions via a broker, bank, trust company or other nominee may require the provision of information by a particular deadline, well in advance of the deadline to submit proxies or voting instructions, and therefore you are encouraged to reach out to such broker, bank, trust company or other nominee as quickly as possible.

If you wish to vote directly (whether in person or by proxy) (i.e., in your own name) at the Court Meeting or General Meeting, you must contact your broker/ nominee who will arrange for the completion of a transfer form from their custody into your registered name prior to the Voting Record Time.

If you are an Orchard ADS holder of record: Orchard ADS holders are not entitled to vote directly on the resolutions at the Court Meeting or the General Meeting. Instead, Orchard ADS holders on the Orchard ADS Register at the Orchard ADS Voting Record Time will be eligible to provide the Depositary with voting instructions for the Shareholder Meetings as long as those instructions are received no later than 10:00 am (New York time) on December 13, 2023, or if the Shareholder Meetings are adjourned, such later date as may be notified by the Depositary.

If you hold Orchard ADSs in “street name”: If you hold Orchard ADSs indirectly through a broker, bank, trust company or other nominee you must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of an Orchard ADS holder to issue voting instructions to the Depositary. If this applies to you, we encourage you to consult your broker, bank, trust company or other nominee as soon as possible.

 

Q:

If my Orchard ordinary shares are held in ‘‘street name’’ by my broker, bank, trust or other nominee, will my broker, bank, trust or other nominee vote my Orchard ordinary shares or Orchard ordinary shares for me?

 

A:

If your shares are held in the name of a broker, bank, trust or other nominee as a custodian, you are a “street name” holder. Please follow the voting instructions provided by your broker, bank, trust or other nominee. Please note that you may not vote shares held in street name by returning a proxy card or voting instruction directly to Orchard or by voting in person at the General Meeting or the Court Meeting, unless you provide a “legal proxy” which you must obtain from your broker, bank, trust or other nominee.

Except as described in the preceding paragraph, unless you instruct your broker, bank, trust or other nominee how to vote your Orchard ordinary shares, your shares will NOT be voted on any of the proposals presented at the General Meeting or the Court Meeting.

 

Q:

Can an Orchard ADS holder vote directly at the Court Meeting or General Meeting?

 

A:

If you are an Orchard ADS holder and you wish to vote directly (whether in person or by proxy) at the Court Meeting or the General Meeting, you must elect to become a shareholder of record by surrendering your Orchard ADSs to the Depositary in exchange for the Orchard ordinary shares represented by those Orchard ADSs, in accordance with the terms and conditions of the Deposit Agreement, so as to become a registered holder of Orchard ordinary shares prior to the Voting Record Time. In order to surrender your Orchard ADSs and withdraw the underlying Orchard ordinary shares:

 

   

if you are a registered holder of Orchard ADSs, you should follow the steps described under “Scheme Proposal and the Court Meeting and the General Meeting—Explanatory Statement” beginning on page 30 of this proxy statement; and

 

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if you hold Orchard ADSs indirectly through a broker, bank, trust company or other nominee, you should contact your broker, bank, trust company or nominee to make the necessary arrangements to ensure the necessary processing can be completed in time.

 

Q:

What is the quorum requirement of the General Meeting?

 

A:

The presence at the General Meeting of one or more members present, in person or by proxy or corporate representative, who represent at least one-third of the voting rights of all the members entitled to attend and vote on the business to be transacted at the General Meeting is necessary to constitute a quorum.

 

Q:

What is the required vote for each Proposal?

 

A:

The Scheme Proposal must be approved by a simple majority in number of Orchard ordinary shareholders present and voting (and entitled to vote) in person or by proxy, representing at least 75% in value of the Orchard ordinary shares in respect of which a vote has been cast. This dual majority is intended to provide protection to both majority and minority shareholders of record of Orchard.

If you are an Orchard ADS holder it is the underlying Orchard ordinary shares voted by the Depositary at your direction which will be counted for the purposes of the above tests. While all of the Orchard ordinary shares voted by the Depositary will count towards the 75% in value test, it is important to be aware that, because the Depositary’s nominee is the registered holder of the Orchard ordinary shares underlying your Orchard ADSs, you will not yourself be counted towards the majority in number test. Accordingly, if you wish to be counted towards the majority in number test you must elect to become a shareholder of record by surrendering at least one of your Orchard ADSs to the Depositary in exchange for the Orchard ordinary shares represented by those Orchard ADSs, in accordance with the terms and conditions of the Deposit Agreement, so as to become a registered holder of Orchard ordinary shares prior to the Voting Record Time.

The Scheme Implementation Proposal must be approved by at least 75% of the votes cast by Orchard ordinary shareholders present and voting (and entitled to vote), either in person or by proxy.

The Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements must be approved by a simple majority of the votes cast by Orchard ordinary shareholders present and voting (and entitled to vote), either in person or by proxy.

 

Q:

What happens if I sell my Orchard ordinary shares or Orchard ADSs before completion of the Transaction?

 

A:

If you are a holder of Orchard ordinary shares, in order to receive the scheme deliverables for your Orchard ordinary shares, you must hold your Orchard ordinary shares at the Scheme Record Time. Consequently, if you transfer your Orchard ordinary shares before the Scheme Record Time, you will have transferred your right to receive the scheme deliverables if the Transaction is completed.

The Voting Record Time and Orchard ADS Voting Record Time, which determine the Orchard ordinary shareholders entitled to vote at the Shareholder Meetings and Orchard ADS holders entitled to provide voting instructions to the Depositary in accordance with the terms of the Deposit Agreement, respectively, are earlier than the Scheme Record Time. If you are a holder of Orchard ordinary shares and you transfer your Orchard ordinary shares after the Voting Record Time but prior to the Scheme Record Time, you will retain any rights you hold to vote at the Shareholder Meetings but will not have the right to receive the scheme deliverables.

If you are an Orchard ADS holder, in order to receive the ADS deliverables for your Orchard ADSs, you must not have sold your Orchard ADSs prior to the effective time (including not having sold prior to the effective time in trades that will settle after the effective time). Consequently, if you transfer your Orchard ADSs before

 

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the effective time, you will not be entitled to receive the ADS deliverables. Orchard intends to instruct Nasdaq to halt trading of Orchard ADSs before the open of trading on the date of the Court Sanction Hearing. Accordingly, because Orchard expects that the last day of trading of the Orchard ADSs on Nasdaq will be the trading day prior to the closing date, the persons entitled to the ADS deliverables will not be known until the first trading day following the closing date, which is the date that any trades made on the trading day prior to the closing date will settle. If, however, the last day of trading of the Orchard ADSs on Nasdaq is the closing date, the persons entitled to the ADS deliverables will not be known until the second trading day following the closing date, which is the date that any trades made on the closing date will settle.

 

Q:

Does my vote matter?

 

A:

Yes. It is important that eligible Orchard shareholders vote at both of the Shareholder Meetings and that holders of Orchard ADSs issue voting instructions to the Depositary to vote at both of the Shareholder Meetings on their behalf.

The Transaction cannot be completed unless the Scheme Proposal is approved at the Court Meeting and the Scheme Implementation Proposal is approved at the General Meeting.

 

Q:

What do I need to do now?

 

A:

If you are a “shareholder of record”: If you hold Orchard ordinary shares registered in your own name, you are entitled to attend the Court Meeting and the General Meeting to vote either in person or to appoint another person or persons as your proxy or proxies to attend and vote on your behalf, in accordance with the procedures further outlined in this proxy statement. You are strongly encouraged to submit proxy appointments and instructions for the General Meeting as soon as possible.

If you hold Orchard ordinary shares in “street name”: Holders of Orchard ordinary shares who hold their Orchard ordinary shares indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of a holder of Orchard ordinary shares to vote at the Shareholder Meetings. If this applies to you, we encourage you to consult your broker, bank, trust company or other nominee as soon as possible.

If you are a beneficial holder but not the legal holder of Orchard ordinary shares then, as a matter of English law, your name is not entered in Orchard’s register of members. Accordingly, if you wish to attend and vote directly (i.e., in your own name) at the Court Meeting or General Meeting, you must become a registered holder of Orchard ordinary shares by contacting your Broker/Nominee who will arrange for the completion of the required transfer form from their custody into your registered name, prior to the Voting Record Time.

If either of the Shareholder Meetings is adjourned, only those Orchard ordinary shareholders on the register of members at 6:30 p.m. (London time) on the day which is two business days before the adjourned meeting will be entitled to attend and vote.

If you are an Orchard ADS holder: Orchard ADS holders are not entitled to vote directly at the Court Meeting or the General Meeting. Instead, Orchard ADS holders on the Orchard ADS Register as at the Orchard ADS Voting Record Time will be eligible to provide the Depositary with voting instructions for the Shareholder Meetings and will be sent a Depositary Notice of Court Meeting and General Meeting for Orchard Therapeutics plc as well as an Orchard ADS voting instruction card to be completed and returned in accordance with the instructions printed thereon. The voting instructions must be received by the Depositary no later than 10:00 am (New York time) on December 13, 2023, or, if either the Court Meeting or the General Meeting is adjourned, such later date as may be notified by the Depositary.

Holders of Orchard ADSs who hold their Orchard ADSs indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of an Orchard ADS holder to issue voting instructions to the Depositary. If this applies to you,

 

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we encourage you to consult your broker, bank, trust company or other nominee as soon as possible. Please vote in accordance with the instructions sent to you by your broker, bank, trust company or other nominee as soon as possible.

The Depositary will collate all votes properly timely submitted by holders of Orchard ADSs and submit a vote on behalf of all such holders.

If you are an Orchard ADS holder and you wish to vote directly (whether in person or by proxy) on the Scheme at the Court Meeting or the resolutions at the General Meeting, you must elect to become a shareholder of record by surrendering your Orchard ADSs to the Depositary to withdraw the Orchard ordinary shares represented by those Orchard ADSs, in accordance with the terms and conditions of the Deposit Agreement, so as to become a registered holder of Orchard ordinary shares prior to the Voting Record Time. In order to surrender your Orchard ADSs and withdraw the underlying Orchard ordinary shares if you hold Orchard ADSs indirectly through a broker, bank, trust company or other nominee you should contact your broker, bank, trust company or other nominee to make the necessary arrangements to ensure the necessary processing can be completed in time.

 

Q:

Why did I receive two forms of proxy as a holder of Orchard ordinary shares?

 

A:

Each registered holder of Orchard ordinary shares has been sent a blue form of proxy for use in respect of the Court Meeting and a yellow form of proxy for use in respect of the General Meeting. If you have not received two forms of proxy, please contact Equiniti Limited at +44 (0)371 384 2050.

As an alternative to completing and returning the printed blue and yellow forms of proxy, proxies may be appointed electronically by logging on to the following website: www.sharevote.co.uk and following the instructions therein, as further explained in the Notes to the Notices of the Shareholder Meetings. Shareholders who have already registered with Equiniti’s online portfolio service, Shareview, can appoint their proxy electronically by logging on to their portfolio at www.shareview.co.uk by using their usual user ID and password and following the instructions therein, as further explained in the Notes to the Notices of the Shareholder Meetings. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io.

If you hold Orchard ordinary shares in uncertificated form through CREST and wish to appoint a proxy or proxies for the Shareholder Meetings (or any adjournment thereof) by using the CREST electronic proxy appointment service, you may do so by using the procedures described in the CREST Manual, and as further explained in the Notes to the Notices of the Shareholder Meetings.

Your vote is very important. You are encouraged to submit a proxy card (by post, online or electronically through CREST) for BOTH the Court Meeting and the General Meeting as soon as possible.

 

Q:

What happens if I do not vote or abstain from voting?

 

A:

Holders of Orchard ordinary shares: If you are the registered holder of Orchard ordinary shares and do not vote and do not appoint another person as your proxy to attend and vote on your behalf, your Orchard ordinary shares will not be counted for purposes of determining whether a quorum is present at the General Meeting or for calculating the proportion of votes “FOR” and “AGAINST” the Proposals at the Shareholder Meetings.

If your Orchard ordinary shares are held by a broker, bank, trust company or other nominee, you will need to contact your broker, bank, trust company or other nominee in order to confirm the answer to this question. However, if you do not instruct your broker, bank, trust company or other nominee how to vote your Orchard ordinary shares, we expect that your Orchard ordinary shares will not be voted by your broker, bank, trust company or other nominee on your behalf or counted for purposes of calculating the proportion of votes “FOR” and “AGAINST” the Proposals at the Shareholder Meetings.

 

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There is a “WITHHELD” option to enable you to abstain on the Proposals at the General Meeting (but not the Court Meeting). A vote withheld will count towards the quorum at the General Meeting, however, because a vote withheld is not a vote in law, it will not be counted in the calculation of the proportion of votes “FOR” and “AGAINST” the Proposals at the General Meeting and therefore will have no effect on the outcome of the Proposals at the General Meeting.

Assuming a quorum is present at the General Meeting, failures to vote and withheld votes will have no effect on the outcome of the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.

Holders of Orchard ADSs: Registered holders of Orchard ADSs should instruct the Depositary how to vote the Orchard ordinary shares underlying their Orchard ADSs at the Shareholder Meetings using one of the methods specified in the ADS voting instruction cards, subject to and in accordance with the terms of the Deposit Agreement.

If the Depositary does not receive timely voting instructions from an Orchard ADS holder, under the terms of the Deposit Agreement, such holder will be deemed to have instructed the Depositary to give a discretionary proxy to a person designated by Orchard to vote the Orchard ordinary shares underlying such holder’s Orchard ADSs unless, among other things, Orchard instructs the Depositary that it does not wish for such a proxy to be given. Orchard has instructed the Depositary that it does not wish for such discretionary proxy to be given if the Depositary does not receive timely voting instructions from Orchard ADS holders for the Shareholder Meetings. Accordingly, if the Depositary does not receive timely voting instructions from an Orchard ADS holder on or before 10:00 am (New York time) on December 13, 2023, the Orchard ordinary shares underlying such holder’s Orchard ADSs will not be represented at the Shareholder Meetings and will not be voted at the Shareholder Meetings.

If your Orchard ADSs are held by a broker, bank, trust company or other nominee, you will need to contact your broker, bank, trust company or other nominee in order to confirm the answer to this question. However, if you do not instruct your broker, bank, trust company or other nominee how to vote your Orchard ADSs, we expect that your Orchard ADSs will not be voted by your broker, bank, trust company or other nominee on your behalf or counted for purposes of calculating the proportion of votes “FOR” and “AGAINST” the Proposals at the Shareholder Meetings.

A “broker non-vote” occurs when a broker, bank, trust company or other nominee returns a valid proxy but does not vote on a particular proposal because such broker, bank, trust company or other nominee does not have discretionary authority to vote on the matter and has not received specific voting instructions from the beneficial owner of such shares. Orchard does not expect any broker non-votes at the Shareholder Meetings because the rules applicable to brokers, banks, trust companies and other nominees only provide them with discretionary authority to vote on proposals that are considered routine, whereas the Proposals are considered non-routine.

We encourage you to submit your proxy with instructions and exercise your right to vote as a shareholder.

 

Q:

How will my shares be voted if I do not specify how they should be voted?

 

A:

All shares of Orchard ordinary shares entitled to vote and represented by properly completed proxies received prior to the Court Meeting and General Meeting, and not revoked, will be voted at the Court Meeting and General Meeting as instructed on the proxies. If you properly complete, sign and return a proxy card, but do not indicate how your Orchard ordinary shares should be voted on a matter, the Orchard ordinary shares represented by your proxy will be voted as the Orchard Board recommends and, therefore:

 

   

‘‘FOR’’ the Scheme Proposal;

 

   

‘‘FOR’’ the Scheme Implementation Proposal; and

 

 

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‘‘FOR’’ the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.

 

Q:

Can I change or revoke my proxy or voting instructions or change my vote after I have delivered my proxy or voting instructions?

 

A:

Yes. If you are a shareholder of record of Orchard ordinary shares, you can do this in any of the three following ways:

1. by sending an email to ProxyVotes@equiniti.com, at any time before the Court Meeting (in respect of the blue form of proxy) or at least 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the General Meeting (in respect of the yellow form of proxy), stating that you would like to revoke your proxy;

2. by completing, signing and dating another proxy card and returning it by mail in time to be received at least 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the Court Meeting and/or General Meeting, as applicable, or by submitting a later dated proxy online or electronically via CREST to be transmitted so as to be received by Orchard’s Registrar not later than 48 hours (excluding any part of such 48-hour period falling on a non- working day) before the relevant Shareholder Meeting, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or

3. by attending and voting your shares at the Court Meeting and/or General Meeting.

Please note, however, that only your last validly delivered or received proxy will count (regardless of its date or of the date of its execution).

If your Orchard ordinary shares are held in an account by a broker, bank, trust company or other nominee and you desire to change your vote, you should contact your broker, bank, trust company or other nominee for instructions on how to do so.

If you are a registered holder of Orchard ADSs, you can revoke or change your previous voting instruction by delivering a revocation or modified voting instruction to the Depositary (in the manner specified by the Depositary in the applicable Depositary directions on how to vote Orchard ADSs) that is received by the Depositary by 10:00 am (New York time) on December 13, 2023, or, if either the Court Meeting or the General Meeting is adjourned, such later date as may be notified by the Depositary. If your Orchard ADSs are held in an account by a broker, bank, trust company or other nominee and you desire to change your vote, you should contact your broker, bank, trust company or other nominee for instructions on how to do so.

 

Q:

What are the conditions to completion of the Transaction?

 

A:

In addition to the approval of the Scheme Proposal and the Scheme Implementation Proposal by Orchard shareholders as described above, completion of the Transaction is subject to the sanction of the Scheme of Arrangement by the Court and the satisfaction (or, to the extent permitted by applicable law, waiver) of a number of other conditions, including the receipt of required antitrust clearances, the accuracy of Orchard’s and KKC’s respective representations and warranties under the Transaction Agreement (subject to certain materiality exceptions) and Orchard’s and KKC’s performance of their respective obligations under the Transaction Agreement in all material respects. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Transaction, see the section entitled “The Transaction Agreement—Conditions to Complete the Transaction” beginning on page 100 of this proxy statement.

 

Q:

When do you expect the Transaction to be completed?

 

A:

Subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the closing conditions described under the section entitled “The Transaction Agreement—Conditions to Complete the Transaction” beginning on page 100 of this proxy statement, including the approval by Orchard shareholders of the

 

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  Scheme Proposal and the Scheme Implementation Proposal and the sanction of the Scheme of Arrangement by the Court, Orchard and KKC expect that the Transaction will be completed in the first quarter of 2024. However, it is possible that factors outside the control of both companies could result in the Transaction being completed at a different time or not at all.

 

Q:

What is the Court Sanction Hearing?

 

A:

Under the Companies Act, the Scheme of Arrangement requires the sanction of the Court before it can become effective. The Court Sanction Hearing is currently expected to be held in the first quarter of 2024. Scheme Shareholders are entitled to attend the Court Sanction Hearing, should they wish to do so, in person or through counsel. Instructions for attending the Court Sanction Hearing will be publicized in due course.

Following sanction of the Scheme of Arrangement by the Court, the Scheme of Arrangement will become effective in accordance with its terms upon a copy of the Court Order being delivered to the Registrar of Companies in England and Wales.

 

Q:

What happens if the Transaction is not completed?

 

A:

If the Scheme Proposal or Scheme Implementation Proposal are not approved by Orchard shareholders, or if the Transaction is not completed for any other reason, Orchard shareholders will not receive any payment for their Orchard ordinary shares (and Orchard ADS holders will accordingly not receive any payment in respect of their Orchard ADSs) in connection with the Transaction. Instead, Orchard will remain an independent public company and Orchard shareholders and Orchard ADS holders will continue to own their Orchard ordinary shares and Orchard ADSs. The Orchard ADSs will continue to be registered under the Exchange Act and listed on Nasdaq. In addition, any Orchard Share Options, Orchard RSUs and/or Orchard PSUs will continue to be governed by the rules of the relevant Orchard Stock Plan. Under certain circumstances, if the Transaction is not completed, Orchard may be obligated to pay KKC (or its designee) a $3.86 million termination fee (and to bear any related amount in respect of VAT) or a $3 million termination fee (and bear any related amount in respect of VAT). Please see the section entitled “The Transaction Agreement—Termination Fees and Expenses” beginning on page 101 of this proxy statement.

 

Q:

Should I send in my share certificates or other evidence of ownership now?

 

A:

No, do not send your share certificates now.

There is no requirement for registered Orchard shareholders to take any action with regard to their share certificates. Share certificates in respect of Orchard ordinary shares will cease to be valid upon the Scheme of Arrangement becoming effective.

If you are an Orchard ADS holder who holds your Orchard ADSs in certificated form you will, after the effective time, receive a letter of transmittal with an explanation on how to surrender the ADS certificates to the Depositary. Such Orchard ADS holders must sign and return the letter of transmittal, together with their Orchard ADS certificates, to receive any ADS deliverables to which they are entitled.

If you are an Orchard ADS holder who holds your Orchard ADSs in uncertificated form, you will automatically receive any ADS deliverables to which you are entitled and do not need to take any further action.

If your Orchard ordinary shares or Orchard ADSs are held on your behalf by a broker, bank, trust company or other nominee, you may receive instructions from your broker, bank, trust company or other nominee as to what action, if any, you need to take to effect the surrender of your Orchard ordinary shares or Orchard ADSs in exchange for the scheme deliverables and the ADS deliverables, respectively.

 

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Q:

What is Equiniti’s role?

 

A:

Equiniti Limited is our registrar. All communications concerning ordinary shareholder of record accounts, including address changes, name changes, ordinary certificated share transfer requirements and similar issues can be handled by contacting Equiniti by telephone: +44 (0)371 384 2050 or by writing to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, England.

 

Q:

What is Citibank’s role?

 

A:

Citibank N.A. serves as our ADS depositary bank. Communications concerning ADS holder of record accounts can be handled by contacting Citibank, N.A.—ADR Shareholder Services by telephone: +1-877- 248-4237 (toll free within the U.S.) or +1-781-575-4555 (for international callers) or by email: citibank@shareholders-online.com or at Citibank, N.A.—Shareholder Services, P.O. Box 505050, Louisville, KY 40233-9724.

 

Q:

How can I find out the results of the voting at the Shareholder Meetings?

 

A:

Voting results will be announced by the filing of a current report on Form 8-K with the SEC within four business days after the General Meeting. If final voting results are unavailable at that time, we will file an amended current report on Form 8-K within four business days of the day the final results are available.

The results of any polls taken on the resolutions at the Shareholder Meetings and any other information required by the Companies Act will be made available on our website (www.orchard-tx.com) as soon as reasonably practicable following the Meeting and for the required period thereafter.

 

Q:

Who can help answer any other questions I have?

 

A:

If you have additional questions about the Transaction, need assistance in submitting your proxy or voting your Orchard ordinary shares or Orchard ADSs or need additional copies of this proxy statement or the enclosed proxy cards:

 

   

if you hold Orchard ordinary shares, please contact Orchard’s Registrar, Equiniti Limited, by telephone at +44 (0)371 384 2050 or Orchard’s proxy solicitor, MacKenzie by email at proxy@mackenziepartners.com or by telephone at +1-800-322-2885; or

 

   

if you hold Orchard ADSs, please contact Orchard’s ADS depositary bank, Citibank, N.A., by email at citibank@shareholders-online.com or by telephone at +1-877- 248-4237 (toll free within the U.S.) or +1-781-575-4555 (for international callers).

 

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SUMMARY

The following summary highlights selected information in this proxy statement and may not contain all the information that may be important to you as an Orchard shareholder. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to in this proxy statement. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference into this proxy statement without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement.

The Parties to the Transaction (page 46)

Orchard Therapeutics plc

Orchard, a public limited company incorporated in England and Wales, is a global leader in discovering, developing and commercializing new treatments that tap into the curative potential of hematopoietic stem cell (HSC) gene therapy. Orchard ADSs are listed on Nasdaq under the symbol “ORTX”.

Orchard’s registered offices are located at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom and its telephone number is +44 (0) 203 808-8286.

Kyowa Kirin Co., Ltd.

KKC, a Japanese joint stock company (kabushiki kaisha), is a Global Specialty Pharmaceutical Company with a heritage of 70+ years, applies cutting-edge science including an expertise in antibody research and engineering, to address the needs of patients and society across multiple therapeutic areas including Nephrology, Oncology, Immunology/Allergy and Neurology.

KKC’s executive offices are located at Otemachi Financial City Grand Cube, 1-9-2 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan and its telephone number is +81 3-5205-7200.

The Transaction (page 47) and the Transaction Agreement (page 86)

On October 5, 2023, Orchard entered into the Transaction Agreement with KKC, pursuant to which KKC (and/or, at KKC’s election, the Nominee) will, subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to the completion of the Transaction, acquire the entire issued and to be issued share capital of Orchard. The Transaction is to be implemented by means of the Scheme of Arrangement.

The terms and conditions of the Transaction are contained in the Transaction Agreement, a copy of which is attached as Annex A to this proxy statement. We encourage you to read the Transaction Agreement carefully and in its entirety, as it is the legal document that, along with the Scheme of Arrangement, governs the Transaction.

After completion of the Transaction, Orchard will be an indirect wholly owned subsidiary of KKC, the Orchard ADSs will be delisted from Nasdaq and deregistered under the Exchange Act, and Orchard will no longer be required to file periodic reports with the SEC.

Scheme Deliverables to Orchard Shareholders (page 86)

If the Transaction is completed:

 

   

all Orchard ordinary shares will be acquired by KKC (and/or, at KKC’s election, the Nominee);

 

   

holders of Orchard ordinary shares as of the record time for the Scheme of Arrangement will have the right to receive for each Orchard ordinary share held by them at such time an amount equal to (a) $1.60 in cash,

 

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without interest, per Orchard ordinary share (the “Cash Consideration”), plus (b) one contractual contingent value right (each, a “CVR”) per Orchard ordinary share, which each represents the right to receive a contingent payment of $0.10 in cash, without interest, if a certain milestone is achieved;

 

   

accordingly, holders of Orchard ADSs (each representing 10 Orchard ordinary shares) as of the effective time will have the right to receive, for each Orchard ADS, an amount equal to (a) $16.00 in cash, without interest, (less an amount equal to any Orchard ADS Fees for which the holder is liable) per Orchard ordinary share (the “per ADS Cash Consideration”), plus (b) 10 CVRs, which each represent the right to receive a contingent payment of $1.00 in cash, without interest, if a certain milestone is achieved.

The Cash Consideration and per ADS Cash Consideration is denominated in US dollars.

Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction (page 60)

At a meeting held on October 4, 2023, the Orchard Board unanimously resolved (i) that the Transaction Agreement, the Scheme of Arrangement and the transactions contemplated thereby (including the Transaction) were fair to Orchard and the Orchard shareholders and likely to promote the success of Orchard for the benefit of the Orchard shareholders as a whole, (ii) that the Transaction Agreement, the Scheme of Arrangement and the transactions contemplated thereby (including the Transaction) were approved and (iii) to unanimously recommend to the Orchard shareholders the approval of the Scheme of Arrangement at the Court Meeting and the passing of the Orchard Shareholder Resolutions at the General Meeting.

Opinion of Orchard’s Financial Advisor (page 65)

Opinion of Guggenheim Securities, LLC

The Orchard Board retained Guggenheim Securities, LLC (“Guggenheim Securities”) as its financial advisor, including in connection with Orchard’s possible Transaction with KKC. In connection with the Transaction, Guggenheim Securities rendered an opinion to the Orchard Board to the effect that, as of October 4, 2023 and based on and subject to the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken, the scheme deliverables in connection with the Transaction was fair, from a financial point of view, to the Scheme Shareholders. The full text of Guggenheim Securities’ written opinion, which is attached as Annex D to this proxy statement and which you should read carefully and in its entirety, is subject to the assumptions, limitations, qualifications and other conditions contained in such opinion and is necessarily based on economic, business, capital markets and other conditions, and the information made available to Guggenheim Securities, as of the date of such opinion.

Guggenheim Securities’ opinion was provided to the Orchard Board (in its capacity as such) for its information and assistance in connection with its evaluation of the scheme deliverables. Guggenheim Securities’ opinion and any materials provided in connection therewith did not constitute a recommendation to the Orchard Board with respect to the Transaction, nor does Guggenheim Securities’ opinion or the summary of its underlying financial analyses elsewhere in this proxy statement constitute advice or a recommendation to any Orchard Shareholder or Scheme Shareholder as to how to vote or act in connection with the Transaction or otherwise. Guggenheim Securities’ opinion addresses only the fairness, from a financial point of view and as of the date of such opinion, of the scheme deliverables to the Scheme Shareholders to the extent expressly specified in such opinion and does not address any other term, aspect or implication of the Transaction (including, without limitation, the form or structure of the Transaction), the Transaction Agreement, the CVR Agreement or the Scheme of Arrangement or any other agreement, transaction document or instrument contemplated by the Transaction Agreement or to be entered into or amended in connection with the Transaction, including the CVR Agreement and the Scheme of Arrangement or other transactions related thereto.

For more information, please see the section of this proxy statement captioned “—Opinion of Orchard’s Financial Advisor.”

 

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The Court Meeting (page 30) and the General Meeting (page 30)

The Court Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:00 p.m. (London time) and the General Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom on December 19, 2023 at 2:15 p.m. (London time) (or as soon thereafter as the Court Meeting shall have been concluded or adjourned).

At the Court Meeting, Orchard shareholders are being asked to consider and vote on:

1. Scheme Proposal: To approve and give effect to the Scheme of Arrangement (see the section entitled “Scheme Proposal and the Court Meeting and the General Meeting—Explanatory Statement” beginning on page 33 of this proxy statement).

At the General Meeting, Orchard shareholders are being asked to consider and vote on:

1. Scheme Implementation Proposal: To (i) authorize the Orchard Board to take all action necessary or appropriate for carrying the Scheme of Arrangement into effect and (ii) make certain amendments to the Orchard Articles in order to facilitate the Transaction (see the section entitled “The General Meeting—Proposal 1—Scheme Implementation Proposal” beginning on page 43 of this proxy statement).

2. Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements: To approve, in accordance with Section 14A of the Exchange Act, on an advisory, non-binding basis, the compensation that may be paid or become payable to Orchard’s named executive officers in connection with the Transaction, as disclosed in the table entitled “Potential Payments to Named Executive Officers” beginning on page 83 of this proxy statement, including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become payable (see the section entitled “The General Meeting—Proposal 2—Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements” beginning on page 30 of this proxy statement).

The Orchard Board unanimously recommends that Orchard shareholders vote “FOR” the Scheme Proposal, “FOR” the Scheme Implementation Proposal and “FOR” the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements. For a more complete description of the recommendation of the Orchard Board with respect to the Proposals, see the section entitled “The Transaction—Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction” beginning on page 60 of this proxy statement.

Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction (page 79)

In considering the recommendation of the Orchard Board, you should be aware that directors and executive officers of Orchard may have certain interests in the Transaction that may be different from, or in addition to, the interests of Orchard’s shareholders generally. The members of the Orchard Board were aware of and considered these interests in reaching the determination to approve the Transaction Agreement and recommend to the Orchard shareholders that they vote to approve the Proposals. These interests include:

 

   

Each executive officer of Orchard that holds Unvested Orchard PSUs, Unvested Orchard RSUs and In-the-Money Unvested Orchard Share Options (as defined below) as of immediately prior to the Effective Time will receive a cash award (a “Transition Award”) from KKC which will vest and be paid on the same terms as the original equity award, subject to such executive officer’s continued service with KKC and its subsidiaries through each applicable vesting date; provided, however, that any portion of the Transition Award that, per the terms of the original unvested equity award, remains outstanding and unvested as of December 31, 2024, shall vest on December 31, 2024 (subject to the relevant executive officer’s continued service with KKC and its subsidiaries through such date);

 

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Each executive officer of Orchard will be entitled to the accelerated payment of his/her unvested Transition Award upon a qualifying termination of employment.

 

   

Each unvested Orchard Share Option held by a non-employee director of Orchard will accelerate and become fully vested and exercisable immediately prior to the Effective Time.

 

   

Each of Orchard’s executive officers previously entered into an employment agreement with Orchard, which provide severance and other benefits in the case of a qualifying termination of employment in connection with or following a change of control of Orchard, which will include the completion of the Transaction;

 

   

Certain executive officers of Orchard will be eligible to receive transaction bonuses in connection with the Transaction;

 

   

Each non-employee director will be eligible to receive transaction fees in connection with the Transaction.

 

   

Each executive officer will be eligible to receive an incentive bonus from KKC that will vest over the two year period following the closing of the Transaction; and

 

   

Orchard’s directors and officers are entitled to continued indemnification and insurance coverage under the Transaction Agreement.

See the section entitled “The Transaction—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction” beginning on page 79 of this proxy statement for further information regarding these interests.

Treatment of Equity and Equity-Based Awards (page 87)

Prior to the Effective Time, each holder of a vested option to acquire Orchard ordinary shares (each, a “Orchard Share Option”) that has a per share exercise price that is less than the Cash Consideration (each, an “In-the-Money Vested Orchard Option”) will be provided the opportunity to exercise such holder’s In-the-Money Vested Orchard Option for such period determined by the Board that ends on or prior to the tenth Business Day (as defined within the Transaction Agreement) prior to the Effective Time.

By virtue of the Transaction, at the Effective Time:

 

   

each (i) In-the-Money Vested Orchard Option, , (ii) vested and outstanding restricted share units relating to Orchard ordinary shares (each, a “Orchard RSU”), and (iii) vested and outstanding restricted share unit relating to the Orchard ordinary shares and subject to performance-based vesting (each, a “Orchard PSU”) (in the case of (ii) and (iii), to the extent not yet settled prior to the Effective Time) will automatically and without any action on the part of KKC, Orchard or the holder thereof be cancelled and automatically converted into the right to receive for each underlying Orchard ordinary share (in the case of Orchard PSUs, determined based on maximum level of achievement for all performance objectives) (y) an amount in cash from KKC equal to the excess of the Cash Consideration over the per share exercise price, if any, of such award and (z) one CVR.

 

   

each (i) unvested Orchard Share Option that has a per share exercise price that is less than the Cash Consideration (each, an “Unvested In-the-Money Orchard Option”), (ii) Orchard Share Option, whether vested or unvested, with an exercise price per share equal to or greater than the Cash Consideration, (iii) unvested Orchard RSU that is outstanding immediately prior to the Effective Time (each, an “Unvested Orchard RSU”) and (iv) unvested Orchard PSU that is outstanding immediately prior to the Effective Time (each, an “Unvested Orchard PSU”) will automatically and without any action on the part of KKC, Orchard or the holder thereof, be cancelled at the Effective Time without payment of any consideration being made in respect thereof.

 

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KKC will, conditional on the closing of the Transaction, implement a new transitional cash plan (“Transitional Cash Plan”) and grant (or procure the grant of) cash awards (each, a “Transition Award”) under such Transitional Cash Plan to all holders of Unvested In-the-Money Orchard Options, Unvested Orchard RSUs and Unvested Orchard PSUs (the “Unvested Awards”). The Transitional Award will be equal to the aggregate of the value of (i) the excess, if any, of the Cash Consideration over the per share exercise price, if any, for each Orchard ordinary share underlying such Unvested Awards (in the case of Unvested Orchard PSUs, determined based on maximum level of achievement for all performance objectives) (the “Unvested Cash Consideration”), and (ii) one CVR for each Orchard ordinary share underlying such Unvested Award (in the case of Unvested Orchard PSUs, determined based on maximum level of achievement for all performance objectives) (the “Unvested CVR Consideration”), less any required deductions and withholdings for income tax and employee National Insurance contributions or social security contributions. The Unvested Cash Consideration and the Unvested CVR Consideration shall vest and be paid pursuant to the vesting terms of the original Unvested Awards, subject to the holder’s continued service with KKC and its subsidiaries through each applicable vesting date; provided, however, that any portion of the Transition Award that, per the terms of the original Unvested Award, remains outstanding and unvested as of December 31, 2024, shall vest on December 31, 2024 (subject to the holder’s continued service with KKC and its subsidiaries through such date).

Regulatory and Court Approvals Required for the Transaction (page 85)

Completion of the Transaction is conditional on, among other things, (i) required antitrust clearances and (ii) the sanction of the Scheme of Arrangement by the Court.

Conditions to Complete the Transaction (page 100)

The respective obligations of Orchard and KKC to complete the Transaction are subject to the satisfaction (or to the extent permitted by law, waiver) of the following conditions:

i. the receipt of the required Orchard shareholder approvals;

ii. the sanction of the Scheme of Arrangement by the Court;

iii. the absence of any order issued by any court or other governmental authority of competent jurisdiction that remains in effect and enjoins, prevents or prohibits the completion of the Transaction;

iv. the absence of any applicable law enacted, entered, promulgated or enforced by any governmental authority that remains in effect and prohibits or makes illegal completion of the Transaction; and

v. the consent of, expiration or termination of all required waiting periods (as applicable) under specified regulatory laws.

The obligation of Orchard to complete the Transaction is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following additional conditions:

i. KKC have performed, in all material respects, all of its obligations required to be performed by KKC at or prior to the closing of the Transaction;

ii. the representations and warranties of KKC being true and correct to the extent specified in the Transaction Agreement;

iii. the receipt of a certificate from an executive officer of KKC confirming, on behalf of KKC, the satisfaction of the conditions set forth in the immediately preceding two clauses; and

 

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iv. the CVR Agreement having been executed by KKC and the Rights Agent and it being in full force and effect.

The obligation of KKC to complete the Transaction is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following additional conditions:

i. Orchard having performed, in all material respects, all of its obligations required to be performed by it at or prior to the closing;

ii. the representations and warranties of Orchard being true and correct to the extent specified in the Transaction Agreement, including that no Material Adverse Effect with respect to Orchard has occurred (see the section entitled “The Transaction Agreement—Representations and Warranties” beginning on page 88 of this proxy statement for more information on “Material Adverse Effect”); and

iii. the receipt of a certificate from an executive officer of Orchard confirming the satisfaction of the conditions set forth in the immediately preceding two clauses.

No Solicitation; Change in Board Recommendation (page 96)

Under the Transaction Agreement, Orchard is subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, to provide information to third parties, to enter into or continue discussions with third parties regarding alternative acquisition proposals, to enter into any commitment with respect to any alternative acquisition proposal, to recommend or approve any alternative acquisition proposal or to change the recommendation of the Orchard Board in favor of the Transaction, subject to customary exceptions. In addition, Orchard may be required to pay KKC (or its designee) a termination fee of $3.86 million or $3 million (and in each case to bear any related amount in respect of VAT) in certain circumstances, including certain circumstances where the Transaction Agreement is terminated following Orchard’s receipt of an alternative acquisition proposal.

Termination of the Transaction Agreement (page 101)

The Transaction Agreement may be terminated and the Transaction may be abandoned at any time prior to the effective time (notwithstanding the receipt of the required Orchard shareholder approvals):

 

   

by mutual written agreement of Orchard and KKC;

 

   

by either Orchard or KKC if:

 

   

the Transaction has not been completed on or before 11:59 p.m. Eastern Time on the initial end date of April 30, 2024 (the “End Date”), subject to certain limited extensions;

 

   

a court or other governmental authority of competent jurisdiction has issued an order that permanently enjoins, prevents or prohibits the consummation of the Transaction and such order has become final and non-appealable, except that this right to terminate the Transaction Agreement will not be available to any party whose breach of any provision of the Transaction Agreement was the proximate cause of such order;

 

   

the Court Meeting or General Meeting (including, in each case, any postponements or adjournments thereof) has been completed and the required Orchard shareholder approval voted on at the meeting has not been obtained; or

 

   

the Court declines or refuses to sanction the Scheme of Arrangement, except, that if an appeal has been submitted by either KKC or Orchard in respect of any such decline or refusal, this right to terminate the Transaction Agreement may not be exercised until such appeal has been denied in a final determination;

 

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by KKC if:

 

   

an Orchard adverse recommendation change has occurred (a “Recommendation Change Termination”);

 

   

following the commencement of a tender or exchange offer relating to Orchard ordinary shares or Orchard ADSs by a third party, the Orchard Board states that it recommends such takeover, tender or exchange offer or expresses no opinion or is unable to take a position (other than a “stop, look and listen” communication pursuant to Rule 14d-9(f) promulgated under the Exchange Act) with respect to such takeover, tender or exchange offer, or fails to publicly affirm the Orchard Board recommendation and recommend that the holders of Orchard ordinary shares and Orchard ADSs reject such takeover, tender or exchange offer within 10 business days after the commencement of such takeover, tender offer or exchange offer pursuant to Rule 14d-9 promulgated under the Exchange Act (or, if earlier, five business days prior to the Court Meeting or the General Meeting) (a “Takeover Offer Termination”);

 

   

any acquisition proposal (other than an acquisition proposal in the circumstances described in the prior clause above) has been made public and the Orchard Board fails to (i) publicly affirm the Orchard Board Recommendation and (ii) recommend that the holders of Orchard ordinary shares and Orchard ADSs reject such proposal, in each case within five business days upon receipt of a written request from KKC to do so or, if earlier, prior to the Scheme Meeting or the Orchard general meeting (an “Acquisition Offer Termination”); or

 

   

a willful breach by Orchard of the provisions of the Transaction Agreement relating to (a) the non-solicitation covenant or (b) the Scheme of Arrangement and the Shareholder Meetings, this proxy statement or the implementation of the Scheme of Arrangement (in the case of clause (b), solely if such willful breach would reasonably be expected to prevent, materially impair or materially delay the consummation of the Transaction) has occurred (a “Willful Breach Termination”); or

 

   

a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Orchard has occurred that would cause certain conditions to the obligations of KKC to complete the Transaction not to be satisfied, and such breach or failure to perform (a) is incapable of being cured by the End Date or (b) has not been cured by Orchard within the earlier of (i) 30 days following written notice to Orchard from KKC and (ii) the End Date (a “Material Breach Termination”);

 

   

by Orchard:

 

   

if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of KKC set forth in the Transaction Agreement shall have occurred that would cause certain closing conditions not to be satisfied, and such breach or failure to perform (A) is incapable of being cured by the End Date or (B) has not been cured by KKC within the earlier of (x) 30 days following written notice to KKC from Orchard of such breach or failure to perform and (y) the End Date; or

 

   

prior to the receipt of the required Orchard shareholder approvals, if (a) the Orchard Board has authorized the termination of the Transaction Agreement in accordance with the terms of the non-solicitation covenant in order to enter into a definitive agreement providing for a superior proposal and (b) substantially concurrently with such termination, Orchard enters into such definitive agreement, so long as, at or prior to, and as a condition to the effectiveness of, such termination, Orchard pays KKC (or its designee) the termination fee of $3.86 million (and bears any related amount in respect of VAT) (a “Superior Proposal Termination”).

Termination Fee and Expenses (page 102)

Orchard is required to pay KKC (or its designee) the termination fee of $3.86 million (and to bear any related amount in respect of VAT) if:

 

   

the Transaction Agreement is terminated by KKC pursuant to:

 

   

a Recommendation Change Termination;

 

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a Takeover Offer Termination;

 

   

an Acquisition Offer Termination; or

 

   

a Willful Breach Termination;

 

   

the Transaction Agreement is terminated by Orchard pursuant to a Superior Proposal Termination; or

 

   

the Transaction Agreement is terminated by (i) Orchard or KKC because the Transaction has not been consummated by the End Date or (ii) by KKC pursuant to a Material Breach Termination, so long as (a) an acquisition proposal was made to the Orchard Board or Orchard’s management or publicly announced or made publicly known after October 5, 2023 and was not publicly withdrawn without qualification at least four business days prior to such termination and (b) within 12 months of the date on which the Transaction Agreement is so terminated, Orchard enters into a definitive agreement providing for an acquisition proposal or an acquisition proposal is completed (with references to 20% in the definition of acquisition proposal being deemed to be references to 50% for this purpose).

Orchard is required to pay KKC (or its designee) the termination fee of $3 million (and to bear any related amount in respect of VAT) if:

 

   

the Transaction Agreement is terminated by either Orchard or KKC as a result of (i) the Court declining or refusing to sanction the Scheme of Arrangement or (ii) the Court Meeting or General Meeting (including, in each case, any postponements or adjournments thereof) having been completed and the required Orchard shareholder approval voted on at the meeting has not been obtained.

No Appraisal or Dissenters’ Rights (page 85)

No appraisal or dissenters’ rights are available to holders of Orchard ordinary shares and Orchard ADSs under the laws of England and Wales in connection with the Transaction.

Material United States Federal Income Tax Consequences of the Transaction (page 122)

The receipt of cash and CVRs pursuant to the Transaction will be a taxable transaction for U.S. federal income tax purposes. Subject to the PFIC rules discussed below under “—PFIC Considerations,” generally, for U.S. federal income tax purposes, if you are a holder of Orchard ordinary shares or Orchard ADSs who is a U.S. holder (as defined below in the section of this proxy statement entitled “Material United States Federal Income Tax Consequences of the Transaction” beginning on page 122 of this proxy statement), you will generally recognize capital gain or loss equal to the difference, if any, between (i) the amount of cash received in the Transaction and (ii) your adjusted tax basis in the Orchard ordinary shares or Orchard ADSs surrendered in exchange therefor, as applicable. However, as discussed more fully under “Material United States Federal Income Tax Consequences of the Transaction,” the amount of gain or loss a U.S. holder recognizes, and the timing and potential character of a portion of such gain or loss, depends in part on the U.S. federal income tax treatment of the CVRs, which is subject to significant uncertainty. Because individual circumstances may differ, we recommend that you consult your tax advisor to determine the particular tax effects to you. If you are a holder of Orchard ordinary shares or Orchard ADSs who is a non-U.S. holder (as defined below in the section of this proxy statement entitled “Material United States Federal Income Tax Consequences of the Transaction” beginning on page 122 of this proxy statement), the Transaction will generally not be taxable to you under U.S. federal income tax laws unless you have certain connections to the U.S. and certain other conditions are met.

Material United Kingdom Tax Consequences of the Transaction (page 129)

UK Shareholders (as defined below in the section entitled “Material United Kingdom Tax Consequences of the Transaction” beginning on page 129 of this proxy statement), whose Orchard ordinary shares are transferred

 

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pursuant to the Transaction will be disposing of them for the purposes of UK capital gains tax or corporation tax on chargeable gains (as applicable). A disposal of Orchard ordinary shares by a UK Shareholder may, depending on the UK Shareholder’s circumstances and subject to any available exemptions and reliefs, give rise to a chargeable gain or an allowable loss for the purposes of UK taxation of chargeable gains. Non-UK Shareholders should not generally be liable to UK capital gains tax or corporation tax on chargeable gains (as applicable) realized on the disposal of their Orchard ordinary shares pursuant to the Scheme, unless they have certain connections to the United Kingdom. Because individual circumstances may differ, we recommend that you consult your own tax advisor to determine the particular tax effects to you.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement and the documents incorporated into it by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Orchard including, but not limited to, statements related to the proposed acquisition of Orchard and the anticipated timing, results and benefits thereof; projections of Orchard’s future results of operations or financial condition; statements regarding the expectations and beliefs of the Orchard Board and Orchard management and other statements that are not historical facts. You can generally identify forward-looking statements by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “explore,” “evaluate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” or “will,” or the negative thereof or other variations thereon or comparable terminology. These forward-looking statements are based on each of the companies’ current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties, many of which are beyond Orchard’s control.

Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with Orchard’s ability to complete the Transaction on the proposed terms or on the anticipated timeline, or at all, including:

 

   

risks and uncertainties related to securing the necessary regulatory and shareholder approvals, the sanction of the Court and satisfaction of other closing conditions to consummate the Transaction;

 

   

the occurrence of any event, change or other circumstance that could give rise to the termination of the Transaction Agreement;

 

   

risks related to diverting the attention of Orchard management from ongoing business operations;

 

   

failure to realize the expected benefits of the Transaction;

 

   

significant transaction costs and/or unknown or inestimable liabilities;

 

   

the risk of shareholder litigation in connection with the Transaction, including resulting expense or delay;

 

   

the regulatory approval process, including the risks that Orchard may be unable to obtain regulatory approvals of Libmeldy, in a timely manner or at all;

 

   

the risks related to non-achievement of the CVR milestone and that holders of the CVRs will not receive payments in respect of the CVRs;

 

   

disruption from the Transaction, making it more difficult to conduct business as usual or maintain relationships with customers, employees, distributors, suppliers or other third parties;

 

   

effects relating to the announcement of the Transaction or any further announcements or the consummation of the Transaction on the market price of Orchard ADSs;

 

   

regulatory initiatives and changes in tax laws;

 

   

market volatility; and

 

   

other risks and uncertainties affecting Orchard.

Consequently, all of the forward-looking statements Orchard makes in this proxy statement are qualified by the information contained or incorporated by reference into this proxy statement, including, but not limited to (i) the information contained under this heading and under the section entitled “Risk Factors” beginning on page 26 of this proxy statement and (ii) the information discussed under the sections entitled “Risk Factors” in (A) Orchard’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and (B) Orchard’s

 

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Quarterly Reports on Form 10-Q for the quarters ended March, 31, 2023, June 30, 2023 and September 30, 2023. See the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement.

Other risks and uncertainties of which Orchard is not currently aware may also affect its forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated. Readers of this proxy statement are cautioned that forward-looking statements are not guarantees of future performance.

The forward-looking statements made in this proxy statement are made only as of the date hereof or as of the dates indicated in the forward-looking statements and reflect the views stated therein with respect to future events as at such dates, even if they are subsequently made available by Orchard on its website or otherwise. Except as otherwise required by law, Orchard does not undertake any obligation, and expressly disclaims any obligation, to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.

 

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RISK FACTORS

In addition to the other information contained or incorporated by reference into this proxy statement, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 24 of this proxy statement, Orchard shareholders should carefully consider the following risk factors in determining whether to vote to approve the Proposals. These risk factors may be found under Part I, Item 1A, “Risk Factors” in (A) Orchard’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed on March 14, 2023 and (B) Orchard’s Quarterly Reports on Form 10-Q for the quarters ended March, 31, 2023, June 30, 2023 and September 30, 2023 which are on file with the SEC and each of which are incorporated by reference into this proxy statement.

Risks Relating to the Transaction

There are material uncertainties and risks associated with the Transaction Agreement and the Transaction.

There are material uncertainties and risks associated with the Transaction Agreement and the Transaction. If any of these uncertainties and risks develop into actual events, then Orchard’s business, financial condition, results and ongoing operations, share price or prospects could be materially adversely affected. These uncertainties and risks include the following:

 

   

the announcement or pendency of the Transaction may impede Orchard’s ability to retain and hire key personnel and its ability to maintain relationships with its customers, distributors, suppliers or other third parties or its operating results and business generally;

 

   

matters relating to the Transaction, including integration planning, may require substantial commitments of time and resources by Orchard’s management and employees and may otherwise divert the attention of management and employees, which may affect Orchard’s business operations;

 

   

the Transaction Agreement restricts Orchard from engaging in certain actions without the approval of KKC, which could prevent Orchard from pursuing certain business opportunities that arise prior to the closing of the Transaction or making appropriate changes to Orchard’s business outside the ordinary course of business (see the sections entitled “The Transaction Agreement—Covenants Regarding Conduct of Business by Orchard Pending the Effective Time” beginning on page 91 of this proxy statement for a description of the restrictive covenants applicable to Orchard);

 

   

Orchard’s directors and executive officers have financial interests in the Transaction that may be different from, or in addition to, the interests of Orchard shareholders generally, which could have influenced their decisions to support or approve the Transaction; and

 

   

potential shareholder litigation in connection with the Transaction may result in significant costs of defense, indemnification and liability.

The Transaction may not be completed in a timely manner or at all.

Completion of the Transaction is subject to certain closing conditions, including the following:

 

   

approval by Orchard shareholders of the Scheme of Arrangement and the passing of the special resolution to amend Orchard’s organizational documents and other related matters;

 

   

sanction of the Scheme of Arrangement by the Court;

 

   

certain regulatory approvals, including expiration or early termination of the waiting period under the HSR Act;

 

   

the absence of any law or order prohibiting consummation of the Transaction;

 

   

compliance in all material respects with the obligations of Orchard and KKC under the Transaction Agreement;

 

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accuracy of the representations and warranties of Orchard and KKC, subject to certain materiality standards set forth in the Transaction Agreement; and

 

   

the absence of any “Material Adverse Effect” with respect to Orchard (see the section entitled “The Transaction Agreement—Representations and Warranties” beginning on page 88 of this proxy statement for more information on “Material Adverse Effect”).

Orchard cannot be certain when or if the conditions for the Transaction will be satisfied or (if permissible under applicable law) waived or when or if the Transaction will be completed. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Transaction, see the section entitled “The Transaction Agreement—Conditions to Complete the Transaction” beginning on page 100 of this proxy statement and the section entitled “The Transaction—Regulatory and Court Approvals Required for the Transaction” beginning on page 85 of this proxy statement.

In connection with obtaining antitrust clearance for the Transaction, KKC is not required to make divestitures of or take other actions with respect to any assets or businesses of KKC or its subsidiaries. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the Transaction. There can be no assurance that all required approvals and clearances will be obtained or will be obtained on a timely basis. See the section entitled “The Transaction Agreement—Efforts to Complete Transaction” beginning on page 94 of this proxy statement.

Each of Orchard and KKC has the right to terminate the Transaction Agreement under certain circumstances (see the section entitled “The Transaction Agreement—Termination of the Transaction Agreement” beginning on page 101 of this proxy statement).

Lawsuits may be filed against Orchard or KKC relating to the Transaction and an adverse ruling in any such lawsuit may prevent the Transaction from being completed in the time frame expected or at all.

In the event that the Transaction is not completed for any reason, Orchard shareholders will not receive any payment for their Orchard ADSs or Orchard ordinary shares in connection with the Transaction. Instead, Orchard will remain an independent public company and Orchard shareholders will continue to own their Orchard ADSs and Orchard ordinary shares.

Failure to complete the Transaction could negatively impact Orchard’s business, financial results and the market price of Orchard ADSs.

If the Transaction is delayed or not completed, Orchard’s ongoing businesses may be adversely affected and will be subject to several risks and consequences, including the following:

 

   

decline in Orchard ADSs price to the extent that the price of Orchard ADSs reflects an assumption that the Transaction will be completed;

 

   

negative publicity and a negative impression of Orchard in the investment community;

 

   

negative reactions from employees, customers, distributors, suppliers or other third parties, including the loss of business opportunities and the ability to effectively respond to competitive pressures;

 

   

management’s focus would have been diverted from pursuing other opportunities that could have been beneficial to Orchard;

 

   

Orchard may be required, under certain circumstances, to pay KKC (or its designee) termination fees of up to $3,860,000 million or $3,000,000 in certain circumstances (and in each case to bear any related amount in respect of VAT); and

 

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Orchard could be subject to litigation related to any failure to consummate the Transaction or related to any enforcement proceeding commenced against Orchard to perform its obligations under the Transaction Agreement.

Orchard’s directors and executive officers may have interests in the Transaction that may be different from the interests of Orchard shareholders.

When considering the recommendation of the Orchard Board that Orchard shareholders approve the Proposals, Orchard shareholders should be aware that directors and executive officers of Orchard may have certain interests in the Transaction that may be different from or in addition to the interests of Orchard shareholders generally. These interests include the treatment in the Transaction of Orchard equity compensation awards and certain transition bonuses and the indemnification of Orchard directors and officers by KKC. See the sections entitled “The General Meeting—Proposal 2—Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements”, “The Transaction—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction” and “The Transaction Agreement—Indemnification” beginning on pages 45, 79 and 99, respectively, of this proxy statement for further information regarding these interests. The Orchard Board was aware of these interests and considered them, among other things, in evaluating and approving the Transaction Agreement and the Transaction and in recommending that the Orchard shareholders approve the Proposals.

The Transaction Agreement contains provisions that could discourage a potential competing acquirer of Orchard.

Orchard is subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, to provide information to third parties, to enter into or continue discussions with third parties regarding alternative acquisition proposals, to enter into any commitment with respect to any alternative acquisition proposal, to recommend or approve any alternative acquisition proposal or to change the recommendation of the Orchard Board in favor of the Transaction, subject to customary exceptions. In addition, Orchard may be required to pay KKC (or its designee) a termination fee of $3.86 million or $3 million (and to bear any related amount in respect of VAT) in certain circumstances, including if the Transaction Agreement is terminated in certain circumstances following Orchard’s receipt of an alternative acquisition proposal.

These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of Orchard from considering or proposing the acquisition, even if it was prepared to pay consideration with a higher per Orchard ADS value than the value proposed to be received or realized in the Transaction, or might otherwise result in a potential third-party acquirer proposing to pay a lower price to Orchard shareholders than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances. For more information see the section entitled “The Transaction Agreement—No Solicitation; Change in Board Recommendation” beginning on page 96 of this proxy statement and the section entitled “The Transaction Agreement—Termination Fees and Expenses” beginning on page 102 of this proxy statement.

Orchard has incurred, and will incur, substantial direct and indirect costs as a result of the Transaction.

Orchard has incurred, and will continue to incur, significant costs, expenses and fees for professional advisors, printing and other transaction costs in connection with the Transaction, and a significant portion of these fees and costs are payable by Orchard regardless of whether the Transaction is consummated.

 

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The financial projections in this proxy statement may not prove to be reflective of actual future results.

This proxy statement contains projections and forecasts prepared by Orchard. None of the projections and forecasts included in this proxy statement have been prepared with a view toward public disclosure other than to certain parties involved in the Transaction or toward complying with SEC guidelines or GAAP. Accordingly, such projections and forecasts should not be viewed as public guidance. The projections and forecasts were prepared based on numerous variables and assumptions which are inherently uncertain and may be beyond the control of Orchard and exclude, among other things, transaction-related expenses. Important factors that may affect actual results and results of Orchard’s operations following the Transaction, or could lead to such projections and forecasts not being achieved include, but are not limited to: (i) the Company’s ability to implement its business model and strategic plans for its product, product candidates and pipeline, and challenges inherent in developing, commercializing, manufacturing, launching, marketing and selling existing and new products; (ii) the risk that disruptions from the Transaction will harm the Company’s business, including current plans, operations and collaborations, and including as a result of diverting the attention of the Orchard’s and KKC’s management from ongoing business operations; (iii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Transaction; (iv) legislative, regulatory and economic developments affecting Orchard’s business; (v) general economic and market developments and conditions; and (vi) the evolving legal, regulatory and tax regimes under which the Company operates. While Orchard assumes responsibility for the accuracy and completeness of the projections and forecasts to the extent included in this proxy statement, investors are cautioned not to place undue reliance on the projections, as the projections may be materially different than actual results.

 

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SCHEME PROPOSAL AND THE COURT MEETING AND THE GENERAL MEETING –EXPLANATORY STATEMENT

(In compliance with section 897 of the Companies Act 2006)

November 16, 2023

To the holders of Orchard ordinary shares and, for information only, to holders of Orchard ADSs and the options or awards under any Orchard employee benefit plan providing for equity or equity-based compensation (“Orchard Employee Plan”).

RECOMMENDED ACQUISITION OF ORCHARD THERAPEUTICS PLC BY KYOWA KIRIN CO., LTD. (“KKC”)

v. Introduction

The following section of this proxy statement explains, among other things, the effect of the Scheme of Arrangement and, together with the further information contained elsewhere in this proxy statement, constitutes the explanatory statement in respect of the Scheme of Arrangement as required by section 897 of the Companies Act. Accordingly, in addition to the information contained in the following section of this proxy statement, your attention is drawn to the further information contained elsewhere in this proxy statement and you are advised to read this proxy statement in full.

On October 5, 2023 it was announced that KKC and Orchard had entered into a definitive agreement for KKC (and/or, at KKC’s election, its Nominee(s)), to acquire the entire issued and to be issued share capital of Orchard, in exchange for the aggregate transaction deliverables by way of a court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

Your attention is drawn to the section entitled “The Transaction” beginning on page 47 of this proxy statement, which contains, among other things, (i) information on the reasons for and benefits of the Transaction and (ii) the unanimous recommendation by the Orchard Board to Orchard shareholders to vote in favor of the resolutions to be proposed at the Court Meeting and the General Meeting. The Scheme of Arrangement is set out in full in the section entitled “The Scheme of Arrangement” beginning on page 108 of this proxy statement. For overseas holders of Orchard ordinary shares, your attention is drawn to section 10 of this Explanatory Statement.

2. The Transaction

The Transaction is to be effected by means of the Scheme of Arrangement, a court-sanctioned scheme of arrangement between Orchard and the Scheme Shareholders, under Part 26 of the Companies Act. Implementation of the Transaction requires the approval of the Scheme of Arrangement by the Orchard shareholders at the Court Meeting and the approval of the Scheme Implementation Proposal by the Orchard shareholders at the General Meeting. The Scheme of Arrangement also requires the sanction of the Court. The Scheme of Arrangement is set out in full in the section entitled “The Scheme of Arrangement” beginning on page 108 of this proxy statement.

The purpose of the Scheme of Arrangement is to enable KKC (and/or, at KKC’s election, its Nominee(s)) to acquire the entire issued and to be issued share capital of Orchard. This is to be achieved by KKC (and/or, at KKC’s election, its Nominee(s)) acquiring the Scheme Shares held by the Scheme Shareholders as at the Scheme Record Time, in return for which the Scheme Shareholders will receive the Cash Consideration and contingent value right for their Scheme Shares on the basis set out in the Scheme of Arrangement.

If the Transaction is completed:

 

   

all Orchard ordinary shares will be acquired by KKC (and/or, at KKC’s election, its Nominee(s));

 

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holders of Orchard ordinary shares as of the record time for the Scheme of Arrangement will, on the terms set out in the Scheme of Arrangement, have the right to receive for each Orchard ordinary share held by them at such time the scheme deliverables, consisting of an amount equal to $1.60 in cash without interest plus one contractual contingent value right upon the terms and subject to the conditions of the CVR Agreement (the “CVR”) without interest; and

 

   

accordingly, holders of Orchard ADSs as of the effective time will have the right to receive for each Orchard ADS an amount equal to $16.00 in cash without interest (less, an amount equal to any Orchard ADS Fees for which the holder of the Orchard ADS is liable) plus ten (10) CVRs.

The CVRs represent a contingent value right to receive an additional payment of $0.10 in cash per CVR if the CVR Milestone is achieved prior to the deadline time, being on or before 11:59 p.m. U.S. Eastern Time on December 31, 2024. The CVR Milestone is the granting of regulatory approval by the U.S. Food and Drug Administration (FDA) for the commercial marketing and sale of OTL-200 in the United States of America for the treatment or prevention of metachromatic leukodystrophy (MLD), which includes as an intended patient population (for clarity, in addition to any other patient cohorts, if any) both (i) children (or pediatric patients) with late infantile forms of MLD, and (ii) children (or pediatric patients) with early juvenile forms of MLD, in each case that are pre-symptomatic or without clinical manifestations of the disease (and for the avoidance of doubt, this regulatory approval will be determined without regard to any post-approval requirements, including without limitation any post-approval confirmatory study requirements or implementation of any risk evaluation and mitigation strategy (REMs) requirement). If the CVR Milestone is achieved prior to the CVR Deadline Time, KKC shall within 40 calendar days deliver a notice to the Rights Agent indicating that the holders are entitled to receive the CVR Payment, following which the Rights Agent shall promptly and in any event within ten business days of receipt of funds from KKC make the relevant payment to each eligible holder on the terms and subject to the conditions set out in the CVR Agreement. For the avoidance of doubt, if the CVR Milestone is not achieved prior to the CVR Deadline Time, no further payments shall be made in respect of the CVRs.

The Cash Consideration is expected to be funded through cash on hand.

3. Conditions to the Transaction

The respective obligations of Orchard and KKC to complete the Transaction are subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following conditions:

i. the receipt of the required Orchard shareholder approvals;

ii. the sanction of the Scheme of Arrangement by the Court;

iii. the absence of any order issued by any court or other governmental authority of competent jurisdiction that remains in effect and enjoins, prevents or prohibits the completion of the Transaction;

iv. the absence of any applicable law enacted, entered, promulgated or enforced by any governmental authority that remains in effect and prohibits or makes illegal completion of the Transaction; and

v. the consent of, expiration or termination of all required waiting periods (as applicable) under specified regulatory laws.

The obligation of Orchard to complete the Transaction is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following additional conditions:

i. KKC having performed, in all material respects, all of its obligations required to be performed by it at or prior to the closing of the Transaction;

 

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ii. the representations and warranties of KKC being true and correct to the extent specified in the Transaction Agreement;

iii. the receipt of a certificate from an executive officer of KKC confirming the satisfaction of the conditions set forth in the immediately preceding two clauses; and

iv. the CVR Agreement having been executed by KKC and the Rights Agent and it being in full force and effect.

The obligation of KKC to complete the Transaction is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the following additional conditions:

i. Orchard having performed, in all material respects, all of its obligations required to be performed by it at or prior to the closing;

ii. the representations and warranties of Orchard being true and correct to the extent specified in the Transaction Agreement, including that no Material Adverse Effect with respect to Orchard has occurred (see the section entitled “The Transaction Agreement—Representations and Warranties” beginning on page 88 of this proxy statement for more information on “Material Adverse Effect”); and

iii. the receipt of a certificate from an executive officer of Orchard confirming the satisfaction of the conditions set forth in the immediately preceding two clauses.

The Scheme of Arrangement can only become effective if all conditions to the Transaction, including the required Orchard shareholder approvals and the sanction of the Court, have been satisfied or (to the extent permitted by law) waived. The Scheme of Arrangement will become effective upon a copy of the Court Order being delivered to the Registrar of Companies in England and Wales for registration. Subject to the satisfaction or waiver of the conditions to the Transaction, including the sanction of the Scheme of Arrangement by the Court, the effective time is expected to occur in the first quarter of 2024.

4. Shareholder Meetings

Before the Court’s sanction can be sought, the Scheme of Arrangement requires, among other things, approval of the Scheme Proposal by Scheme Shareholders at the Court Meeting. The Scheme Proposal must be approved by a simple majority in number of the Orchard ordinary shareholders present and voting (and entitled to vote), either in person or by proxy, representing at least 75% in value of the Orchard ordinary shares in respect of which a vote has been cast. Approval of the Scheme Proposal is required to consummate the Transaction. Orchard shareholders are also being asked to consider and approve the Scheme Implementation Proposal at the General Meeting. The Scheme Implementation Proposal, if approved, will (i) authorize the Orchard Board to take all action necessary or appropriate for carrying the Scheme of Arrangement into effect and (ii) make certain amendments to the Orchard Articles in order to facilitate the Transaction. The Scheme Implementation Proposal will be proposed as a special resolution at the General Meeting, which means that the Scheme Implementation Proposal must be approved by at least 75% of the votes cast by Orchard ordinary shareholders present and voting (and entitled to vote), either in person or by proxy at the General Meeting. Approval of the Scheme Implementation Proposal is required to consummate the Transaction.

Notices of both the Court Meeting and the General Meeting are set out at the beginning of this proxy statement. Entitlement to attend and vote at these meetings and the number of votes which may be cast will be determined by reference to the register of members of Orchard at the Voting Record Time. Entitlement to submit ADS voting instruction cards and the number of votes which an ADS holder may instruct the Depositary to cast on its behalf will be determined by reference to the register of the Orchard ADSs maintained by the Depositary at the Orchard ADS Voting Record Time.

 

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If the Scheme of Arrangement becomes effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting.

Date, Time, Place and Purpose of the Court Meeting

The Court Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW at 2:00 p.m. (London time) on December 19, 2023 for eligible Scheme Shareholders on the register of members as at the Voting Record Time to consider and, if thought fit, approve the Scheme of Arrangement.

At the Court Meeting, voting will be by poll and each eligible Scheme Shareholder present in person or by proxy will be entitled to one vote for each Orchard Voting Ordinary Share held as at the Voting Record Time. The approval required at the Court Meeting is a simple majority in number of the Orchard Voting Ordinary Shareholders present and voting (and entitled to vote) in person or by proxy, representing at least 75% in value of the Orchard Voting Ordinary Shares in respect of which a vote has been cast.

You are strongly urged to sign and return your blue form of proxy for the Court Meeting as soon as possible. The completion and return of the forms of proxy will not prevent you from attending, asking questions and voting at either the Court Meeting or the General Meeting, or any adjournment thereof, if you are entitled to and wish to do so.

Date, Time, Place and Purpose of the General Meeting

The General Meeting will be held at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW at 2:15 p.m. (London time) on December 19, 2023 for eligible Orchard shareholders on the register of members as at the Voting Record Time to consider and, if thought fit, approve the Scheme Implementation Proposal as a special resolution and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements as an ordinary resolution.

At the General Meeting, voting on the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements will be by poll and each eligible Orchard shareholder present in person or by proxy will be entitled to one vote for each Orchard Voting Ordinary Share held as at the Voting Record Time. The approval required for the Scheme Implementation Proposal to be passed is at least 75% of the votes validly cast on such resolution in person or by proxy. The approval required for the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements to be passed is a simple majority of the votes cast on such resolution in person or by proxy.

You are strongly urged to sign and return your yellow form of proxy for the General Meeting as soon as possible. The completion and return of the forms of proxy will not prevent you from attending, submitting questions and voting at either the Court Meeting or the General Meeting, or any adjournment thereof, if you are entitled to and wish to do so.

Amendment to the Articles of Association of Orchard

Orchard ordinary shares issued after the Scheme Record Time will not be subject to the Scheme of Arrangement. In order to ensure that KKC (and/or, at KKC’s election, its Nominee(s)) acquires the entire issued and to be issued share capital of Orchard, it is therefore proposed that, pursuant to the Scheme Implementation Proposal, the Orchard Articles be amended so that Orchard ordinary shares issued after the Scheme Record Time (if any), other than to KKC or its nominees, will be automatically acquired by KKC (and/or, at KKC’s election, its Nominee(s)) on the same terms as under the Scheme of Arrangement.

It is also proposed that, pursuant to the Scheme Implementation Proposal, the Orchard Articles be amended to ensure that any Orchard ordinary shares issued at or after the Voting Record Time but prior to the Scheme Record Time will be subject to the Scheme of Arrangement.

 

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Recommendation of the Orchard Board

The Orchard Board has unanimously approved the Transaction Agreement and the actions required and contemplated therein, including the Transaction, and determined that such actions are advisable and in the best interests of Orchard and its shareholders. The Orchard Board unanimously recommends that Orchard shareholders vote “FOR” the Scheme Proposal at the Court Meeting and “FOR” the Scheme Implementation Proposal at the General Meeting and “FOR” the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements at the General Meeting. See “The Transaction—Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction” beginning on page 60 of this proxy statement for a more detailed discussion of the Orchard Board’s recommendation with respect to the Scheme Proposal and the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.

Entitlement to Vote at the Shareholder Meetings

If you hold Orchard Voting Ordinary Shares registered in your own name as of the Voting Record Time, you are entitled to attend the Court Meeting and the General Meeting to vote or to appoint another person or persons as your proxy or proxies to attend and vote on your behalf, in accordance with the procedures further outlined in this proxy statement.

Holders of Orchard Voting Ordinary Shares who hold their Orchard Voting Ordinary Shares indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of a holder of Orchard Voting Ordinary Shares to vote at the Shareholder Meetings. If this applies to you, we encourage you to consult your broker, bank, trust company or other nominee as soon as possible.

If you are a beneficial holder but not the legal holder of Orchard Voting Ordinary Shares then, as a matter of English law, your name is not entered in Orchard’s register of members. Accordingly, if you wish to attend and vote directly (i.e., in your own name) at the Court Meeting or General Meeting, you must become a registered holder of Orchard ordinary shares by contacting your Broker/Nominee who will arrange for the completion of the required transfer form from their custody into your registered name, prior to the Voting Record Time.

If either Shareholder Meeting is adjourned, only those eligible Orchard shareholders on the register of members at 6:30 p.m. (London time) on the date which is two business days before the adjourned meeting will be entitled to attend and vote.

Orchard ADS holders are not entitled to vote directly at the Court Meeting or the General Meeting. Instead, Orchard ADS holders on the Orchard ADS Register as at the Orchard ADS Voting Record Time will be eligible to provide the Depositary with voting instructions for the Shareholder Meetings and will be sent a Depositary Notice of Court Meeting and General Meeting for Orchard Therapeutics plc and an Orchard ADS voting instruction card with the voting instructions printed thereon. The voting instructions must be received by the Depositary no later than 10:00 am (New York time) on December 13, 2023, or, if either the Court Meeting or the General Meeting is adjourned, such later date as may be notified by the Depositary.

Holders of Orchard ADSs who hold their Orchard ADSs indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of an Orchard ADS holder to issue voting instructions to the Depositary. If this applies to you, we encourage you to consult your broker, bank, trust company or other nominee as soon as possible. Please vote in accordance with the instructions sent to you by your broker, bank, trust company or nominee as soon as possible.

The Depositary will collate all votes properly submitted by holders of Orchard ADSs and submit a vote on behalf of all such holders.

 

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If you are an Orchard ADS holder and you wish to vote directly (whether in person or by proxy) on the Scheme at the Court Meeting or the resolutions at the General Meeting, you must elect to become a shareholder of record by surrendering your Orchard ADSs to the Depositary to withdraw the Orchard Voting Ordinary Shares represented by those Orchard ADSs, in accordance with the terms and conditions of the Deposit Agreement, so as to become a registered holder of Orchard Voting Ordinary Shares prior to the Voting Record Time. In order to surrender your Orchard ADSs and withdraw the underlying Orchard Voting Ordinary Shares if you hold Orchard ADSs indirectly through a broker, bank, trust company or other nominee you should contact your broker, bank, trust company or other nominee to make the necessary arrangements to ensure the necessary processing can be completed in time.

Quorum

The presence at the General Meeting of one or more members present in person or by proxy, who represent at least one-third of the voting rights of all the members entitled to attend and vote on the business to be transacted at the General Meeting, is necessary to constitute a quorum.

5. The Orchard Directors and the Effect of the Scheme of Arrangement on their Interests

Details of the interests of Orchard directors in the share capital of Orchard and awards in respect of such share capital, are set out in the section entitled “The Transaction—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction” beginning on page 79 of this proxy statement. Scheme Shares held by the Orchard directors at the Scheme Record Time will be subject to the Scheme of Arrangement.

In common with the other participants who hold Share Options, the Orchard directors who hold Share Options will be able to receive Orchard ordinary shares to the extent that such awards vest and are exercised prior to the effective time.

KKC has received irrevocable undertakings from each of the Orchard Directors to vote (or procure voting) in favour of the Scheme and associated resolutions at the Court Meeting and the General Meeting in respect of their beneficial holdings of Orchard ordinary shares.

It is proposed that, as an ordinary resolution to be proposed at the General Meeting, the Orchard shareholders vote on the approval (on a non-binding, advisory basis) of the compensation that may be paid or become payable to its named executive officers in connection with the Transaction and the agreements and understandings pursuant to which such compensation may be paid or become payable as disclosed in the table entitled “Potential Payments to Named Executive Officers” beginning on page 83 of this proxy statement, including the associated narrative discussion.

Except as set out in the section entitled “The Transaction—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction” beginning on page 79 of this proxy statement and the provisions of the Transaction Agreement applicable to directors as described under “The Transaction Agreement” beginning on page 86 of this proxy statement, the effect of the Scheme of Arrangement on the interests of Orchard directors does not differ from its effect on the interests of any other Orchard shareholder.

6. Sanction of the Scheme of Arrangement by the Court

Under the Companies Act, the Scheme of Arrangement also requires the sanction of the Court. The Court Sanction Hearing is currently expected to be held in the first quarter of 2024. Scheme Shareholders are entitled to attend the Court Sanction Hearing, should they wish to do so, in person or through counsel.

Following sanction of the Scheme of Arrangement by the Court, the Scheme of Arrangement will become effective in accordance with its terms upon a copy of the Court Order being delivered to the Registrar of Companies in England and Wales.

 

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Upon the Scheme of Arrangement becoming effective, it will be binding on all Scheme Shareholders holding Scheme Shares at the Scheme Record Time (including the Depositary), irrespective of whether or not they attended or voted in favor of, or against, the Scheme of Arrangement at the Court Meeting or in favor of, or against, or withheld their vote on the Scheme Implementation Proposal at the General Meeting.

If the Scheme of Arrangement does not become effective by the end date (as defined and further described in the section entitled “The Transaction Agreement—Termination of the Transaction Agreement” beginning on page 101 of this proxy statement), the Transaction Agreement may be terminated by either KKC or Orchard, and the Scheme of Arrangement may not become effective.

7. Solicitation of Proxies

Orchard will bear its own costs and expenses incurred in connection with the filing, printing and mailing of this proxy statement to Orchard shareholders and the retention of any information agent or other service provider in connection with the Transaction. This proxy solicitation is being made by Orchard on behalf of the Orchard Board. Orchard has hired MacKenzie Partners to assist in the solicitation of proxies at a total cost to Orchard of approximately $15,000, plus reimbursement of reasonable additional costs and out-of-pocket expenses. In addition to this mailing, proxies may be solicited by directors, officers or employees of Orchard or its affiliates in person or by telephone or electronic transmission. None of the directors, officers or employees will be directly compensated for such services.

8. Listings, Dealings, Delisting and Settlement

Delisting of Orchard ADSs

On the closing date, entitlements to Scheme Shares held within CREST will be cancelled, and share certificates in respect of Scheme Shares held in certificated form will cease to be valid documents of title and should be destroyed or, at the request of KKC, delivered up to KKC, or to any person appointed by KKC to receive the same.

As a result of the consummation of the Transaction, Orchard will become an indirect subsidiary of KKC and it is intended that Orchard will be re-registered as a private company under the applicable provisions of the Companies Act as soon as reasonably practicable after the closing date.

It is intended that the last day for dealings in Orchard ADSs on Nasdaq will be the last business day before the effective time or the day of the effective time. It is intended that, following the effective time, the Orchard ADS program be terminated and that applications be made to delist the Orchard ADSs from Nasdaq and terminate the registration of the Orchard ADSs under the Exchange Act promptly following such time.

Settlement

Subject to the Scheme of Arrangement becoming effective (and subject to certain exceptions in relation to overseas Orchard shareholders), settlement of the scheme deliverables to which any Orchard shareholder is entitled under the Scheme of Arrangement will be effected within 14 days following the date of the effective time in the following manner:

Orchard ordinary shares in uncertificated form (i.e., CREST)

If, at the Scheme Record Time, a Scheme Shareholder holds Orchard ordinary shares in uncertificated form, the Cash Consideration to which such Scheme Shareholder is entitled will be transferred to such Scheme Shareholder via CREST by KKC procuring the creation of an assured payment obligation in favor of the appropriate CREST account through which the Scheme Shareholder holds such uncertificated Orchard ordinary shares in respect of the Cash Consideration due to such Scheme Shareholder.

 

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With effect from the effective time, each holding of Scheme Shares credited to any stock account in CREST will be disabled and all Scheme Shares will be removed from CREST in due course.

Orchard ordinary shares in certificated form

If, at the Scheme Record Time, a Scheme Shareholder holds Orchard ordinary shares in certificated form, the Cash Consideration to which such Scheme Shareholder is entitled will be paid in U.S. dollars by cheque drawn on a branch of a clearing bank. In the event that the Cash Consideration exceeds $1,000,000 and, subject to the prior written agreement between the Company and Equiniti, the Cash Consideration will be paid by bank transfer to such bank account as nominated by the relevant Scheme Shareholder to the Company.

CVR

The CVR to which each Scheme Shareholder is entitled shall be issued to the Scheme Shareholder upon the terms and subject to the conditions of the CVR Agreement, without interest. The CVRs will not represent any equity or ownership interest in KKC, and accordingly will not confer on the CVR Holders any right to attend, speak at or vote at any meeting of the shareholders of KKC or right to any dividends or right to any return of capital by KKC. Pursuant to the terms of the CVR Agreement, eligible Scheme Shareholders will receive one CVR for each Scheme Share that they hold. The CVRs will be non-transferable other than to certain permitted transferees and no application will be made for the CVRs to be listed on or dealt in any stock exchange. The CVRs will constitute direct unsecured obligations of KKC and shall rank pari passu with one another and with all other unsecured obligations of KKC. The CVRs shall not be evidenced by a certificate or other document of title.

Orchard ADSs

Please see section 9 of this Explanatory Statement if you are an Orchard ADS holder.

General

All documents and remittances sent to, from or on behalf of Orchard shareholders will be sent entirely at their own risk.

9. Orchard ADS Holders

Orchard ADS holders will not be entitled to attend the Court Meeting or the General Meeting or vote directly on the Transaction. Instead, Orchard ADS holders as of the Orchard ADS Voting Record Time will have the right to instruct the Depositary how to vote the Orchard Voting Ordinary Shares underlying the Orchard ADSs with respect to the Transaction, subject to and in accordance with the terms of the Deposit Agreement. Holders of Orchard ADSs who hold their Orchard ADSs indirectly through a broker, bank, trust company or other nominee must rely on the procedures of such broker, bank, trust company or other nominee in order to assert the rights of an Orchard ADS holder to issue voting instructions to the Depositary.

Voting instructions

Registered Orchard ADS holders as of the Orchard ADS Voting Record Time will be sent a Depositary Notice of Court Meeting and General Meeting for Orchard Therapeutics plc and an Orchard ADS voting instruction card. Orchard ADS holders as of the Orchard ADS Voting Record Time can direct the voting of the Orchard Voting Ordinary Shares represented by their Orchard ADSs, subject to the terms of the Deposit Agreement, a copy of which is available free of charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement.

 

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Orchard ADS holders as at the Orchard ADS Voting Record Time should, if they wish to direct the voting of the Orchard Voting Ordinary Shares represented by their Orchard ADSs held by the Depositary at the Court Meeting and the General Meeting, provide Orchard ADS voting instructions to the Depositary in accordance with the instructions printed thereon. The Orchard ADS voting instructions must be received by the Depositary no later than 10:00 am (New York time) on December 13, 2023 or, if either the Court Meeting or the General Meeting is adjourned, such later date as may be notified by the Depositary.

Orchard ADS holders who hold their Orchard ADSs indirectly through a broker, bank, trust company or other nominee must follow the instructions from such broker, bank, trust company or other nominee if they wish to give voting instructions to the Depositary. Providing voting instructions via a broker, bank, trust company or other nominee may require the provision of information by a particular deadline, well in advance of the deadline to give the Depositary voting instructions, and therefore you are encouraged to reach out to such broker, bank, trust company or other nominee as quickly as possible.

Following timely receipt of valid voting instructions from an Orchard ADS holder, the Depositary will endeavor, insofar as practicable and permitted under the provisions of, or governing, the Orchard Voting Ordinary Shares represented by Orchard ADSs, to vote or cause its nominee to vote (by means of the appointment of a proxy or otherwise) such Orchard Voting Ordinary Shares represented by the Orchard ADSs in respect of which instructions have been received in accordance with those instructions.

If the Depositary does not receive timely voting instructions from an Orchard ADS holder, under the terms of the Deposit Agreement, such holder will be deemed to have instructed the Depositary to give a discretionary proxy to a person designated by Orchard to vote the Orchard Voting Ordinary Shares underlying such holder’s Orchard ADSs unless, among other things, Orchard instructs the Depositary it does not wish for such a proxy to be given. Orchard has instructed the Depositary that it does not wish for such discretionary proxy to be given if the Depositary does not receive timely voting instructions from an Orchard ADS holder for the Shareholder Meetings. Accordingly, if the Depositary does not receive timely voting instructions from an Orchard ADS holder on or before 10:00 am (New York time) on December 13, 2023 the Orchard Voting Ordinary Shares underlying such holder’s Orchard ADSs will not be represented at the Shareholder Meetings and will not be voted at the Shareholder Meetings.

Cancellation of Orchard ADSs so as to become an Orchard ordinary shareholder

Only registered holders of Orchard Voting Ordinary Shares will be entitled to attend and vote at the Court Meeting and the General Meeting.

Accordingly, if Orchard ADS holders themselves wish to attend and vote at the Shareholder Meetings (rather than instructing the Depositary how to vote the underlying Orchard Voting Ordinary Shares on their behalf), they must take steps to exchange their Orchard ADSs for Orchard Voting Ordinary Shares, so that they become registered shareholders of Orchard. In order to do this, Orchard ADS holders must present their Orchard ADSs (and, to the extent that such Orchard ADSs are certificated, the certificates evidencing such Orchard ADSs) to the Depositary for cancellation before 5:00 pm (New York time) on November 16, 2023 (subject to the relevant Orchard ADS holder’s compliance with the terms of the Deposit Agreement and payment of the Depositary’s fees), together with:

 

(A)

delivery instructions for the Orchard Voting Ordinary Shares represented by such Orchard ADSs (including, if applicable, the name and address of the person who will be the registered holder of such Orchard Voting Ordinary Shares); and

 

(B)

if the Orchard ADS cancellation is to take place after the Orchard ADS Voting Record Time and before the Voting Record Time, a certification that the Orchard ADS holder:

 

  i.

(x) beneficially owned the relevant Orchard ADSs as at the Orchard ADS Voting Record Time and has not given, and will not give, voting instructions to the Depositary in respect of such Orchard ADSs in

 

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  relation to the Shareholder Meetings (or has cancelled all voting instructions previously given); or (y) beneficially owned the relevant Orchard ADSs as at the Orchard ADS Voting Record Time and has given voting instructions to the Depositary in respect of such Orchard ADSs in relation to the Shareholder Meetings, but undertakes not to vote the Orchard ordinary shares represented by such Orchard ADSs at the Shareholder Meetings; or

 

  ii.

did not beneficially own the relevant Orchard ADSs as at the Orchard ADS Voting Record Time, and undertakes not to vote the Orchard Voting Ordinary Shares represented by such Orchard ADSs at the Shareholder Meetings.

Orchard ADS holders who hold their Orchard ADSs through a broker, bank, trust company or other nominee should promptly contact their broker, bank, trust company or other nominee to find out what actions are required to cancel the Orchard ADSs so as to become an Orchard ordinary shareholder.

Orchard ADS holders who present their Orchard ADSs to the Depositary for cancellation in order to take delivery of Orchard Voting Ordinary Shares will be responsible for the payment of the Depositary’s fees associated with such cancellation ($0.05 per Orchard ADS presented for cancellation).

Orchard ADS holders will not be permitted to cancel their Orchard ADSs from 5:00 pm (New York time) on November 16, 2023 until 5:00 pm (New York time) on December 15, 2023. Orchard ADS holders who take steps (as described in the paragraphs above) to cancel their Orchard ADSs before 5:00 pm (New York time) on November 16, 2023 and become Scheme Shareholders before the Voting Record Time will have the right to attend the both Shareholder Meetings and be represented by counsel to support or oppose the sanctioning of the Scheme of Arrangement (subject to the limitations and qualifications above).

Settlement of ADS transaction deliverables

Prior to the closing, Orchard and KKC will establish procedures to ensure (i) that the Depositary and CVR Paying Agent will, after the closing, promptly deliver the ADS deliverables to each holder of an Orchard ADS entitled thereto and (ii) if reasonably practicable, unless other arrangements are reasonably acceptable to Orchard and KKC, that Orchard ADSs will be treated by the Depositary and CVR Paying Agent, as closely as reasonably possible, in the same manner as Orchard ordinary shares are treated by the Rights Agent with respect to other relevant matters specified in the Transaction Agreement. Orchard intends to instruct Nasdaq to halt trading of Orchard ADSs before the open of trading on the date of the Court Sanction Hearing. Accordingly, because Orchard expects that the last day of trading of the Orchard ADSs on Nasdaq will be the trading day prior to the closing date, the persons entitled to the ADS deliverables will not be known until the first trading day following the closing date, which is the date that any trades made on the trading day prior to the closing date will settle. If, however, the last day of trading of the Orchard ADSs on Nasdaq is the closing date, the persons entitled to the ADS deliverables will not be known until the second trading day following the closing date, which is the date that any trades made on the closing date will settle. If the parties reasonably deem necessary in furtherance of the establishment of such procedures, Orchard will enter into one or more amendments to the Deposit Agreement that are reasonably acceptable to the Depositary, Orchard and KKC, and Orchard and KKC will deliver any certificates and opinions of counsel reasonably requested by the Depositary in connection therewith. The Orchard ADS holders will bear all fees, charges and expenses that they are required to bear under the Deposit Agreement in connection with the Transaction, the cancellation of Orchard ADSs and the receipt of the ADS deliverables. No interest will be paid or accrued on any amount payable in respect of Orchard ADSs.

Each Orchard ADS holder entitled thereto will receive (upon surrender of their Orchard ADSs to the Depositary, if their Orchard ADSs are in certificated form) their pro rata portion of the per ADS Cash Consideration in U.S. dollars. Orchard ADS holders who hold their Orchard ADSs in certificated form will, on or after the closing date, receive letters of transmittal with an explanation on how to surrender the Orchard ADSs to the Depositary. Those holders must sign and return the letter of transmittal, together with their Orchard ADS

 

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certificates, to receive any ADS deliverables to which they are entitled. Orchard ADS holders who hold their Orchard ADSs in uncertificated form will automatically receive the per ADS Cash Consideration and the CVRs to which they are entitled and do not need to take any further action. Payments to Orchard ADS holders will be made by checks mailed by the Depositary to the address the Depositary has in its records for such Orchard ADS holder. The CVRs will be non-transferable other than to certain permitted transferees and no application will be made for the CVRs to be listed or dealt in on any stock exchange. The CVRs will constitute direct unsecured obligations of KKC and shall rank pari passu with one another and with all other unsecured obligations of KKC. The CVRs shall not be evidenced by a certificate or other document of title.

Any Orchard ADS holders who hold their Orchard ADSs indirectly through a broker, bank, trust company or other nominee within DTC, will receive credit of the funds to their account from their broker, bank, trust company or other nominee. The Depositary will remit the applicable funds to DTC, and DTC will, in turn, credit the Orchard ADS holder’s broker, bank, trust company or other nominee.

The settlement of the ADS deliverables is governed by the terms of the Transaction Agreement and the Deposit Agreement and is a matter that is external to the Scheme of Arrangement. As set out in the Scheme of Arrangement, neither KKC nor any member of the KKC Group nor the Rights Agent nor Orchard shall have any responsibility or liability under the Scheme of Arrangement for the onwards distribution or transmission to the holders of Orchard ADSs, or to any other person, of the scheme deliverables due to the Depositary (or any nominee or custodian of the Depositary which is the relevant Scheme Shareholder), albeit that the foregoing does not affect Orchard’s obligations under the Deposit Agreement or any party’s obligations under the Transaction Agreement.

10. Overseas Orchard Shareholders

The availability of the Scheme of Arrangement and the transaction deliverables to overseas Orchard shareholders may be affected by the laws of the relevant jurisdictions. Overseas Orchard shareholders should inform themselves about, and should observe, any applicable legal requirements. It is the responsibility of all overseas Orchard shareholders to satisfy themselves as to their full compliance with the laws of the relevant jurisdiction, including obtaining any governmental, exchange control or other consents which may be required and their compliance with any other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction. If you are in any doubt regarding such matters, you should consult an independent professional adviser in the relevant jurisdiction without delay.

Overseas Orchard shareholders should consult their own legal and tax advisers with respect to the legal and tax consequences of the Transaction in their particular circumstances.

Without prejudice to the generality of the foregoing, if, in respect of any Scheme Shareholder with a registered address in a jurisdiction outside the United Kingdom or the U.S., KKC, any member of the KKC Group or the Rights Agent is advised that the delivery of CVRs would or might infringe the laws of such jurisdiction or would require KKC, any member of the KKC Group, the Rights Agent or Orchard to observe any governmental or other consent or any registration, filing or other formality with which KKC, any member of the KKC Group, the Rights Agent or Orchard (as the case may be) is unable to comply, or compliance with which by such person is regarded by such person or by KKC (in the case of KKC, acting reasonably) as unduly onerous, each of KKC or the Rights Agent may, in its discretion, determine that such Scheme Shareholder shall not have issued to it the CVRs and, in lieu of the entitlement to CVRs, KKC shall, to the extent permitted by Applicable Law, upon the occurrence of a CVR Event, pay to such Scheme Shareholder an amount per Scheme Share equal to the cash amount (if any), on the same date as such payment is made to Scheme Shareholders that hold CVRs in the same manner as the Cash Consideration is payable to such Scheme Shareholders pursuant to the Scheme of Arrangement (rounded up or down to the nearest U.S. cent), that such Scheme Shareholder would have been entitled to receive if it had received CVRs pursuant to the Scheme of Arrangement.

 

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11. Action to be taken

The approval required for the Scheme Proposal at the Court Meeting is a simple majority in number of the Orchard Voting Ordinary Shareholders present and voting (and entitled to vote) in person or by proxy, representing at least 75% in value of the Orchard Voting Ordinary Shares in respect of which a vote has been cast.

The approval required for the Scheme Implementation Proposal at the General Meeting is approval by at least 75% of the votes cast by Orchard Voting Ordinary Shareholders present and voting (and entitled to vote), either in person or by proxy.

The approval required for the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements at the General Meeting is approval by simple majority of the votes cast by Orchard Voting Ordinary Shareholders present and voting (and entitled to vote), either in person or by proxy.

If the Scheme of Arrangement becomes effective it will be binding on all holders of Scheme Shares irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting.

Forms of proxy

Each copy of this proxy statement mailed to eligible holders of Orchard Voting Ordinary Shares is accompanied by two forms of proxy with instructions for voting. The blue form of proxy corresponds to the Court Meeting and the yellow form of proxy corresponds to the General Meeting. If you hold Orchard Voting Ordinary Shares in your name as a shareholder of record, you should complete and return both proxy cards accompanying this proxy statement to ensure that your vote is counted at both of the Shareholder Meetings, or at any adjournment or postponement of the Shareholder Meetings, regardless of whether you plan to attend the Shareholder Meetings, so as to arrive as soon as possible but in any event at least 48 hours before the relevant meeting (excluding any part of such 48 hour period falling on a weekend or public holiday in the UK). You may also authorize a proxy to vote your shares online or electronically as set out in full on the proxy cards.

If the blue form of proxy relating to the Court Meeting is not lodged by the relevant time, it may be emailed to ProxyVotes@equiniti.com or handed to the Chair, or Equiniti on behalf of the Chair at any time up to the Court Meeting. However, in the case of the General Meeting, if the yellow form of proxy is not lodged so as to be received by the time mentioned above, it will be invalid. The completion and return of either form of proxy will not preclude you from attending the Court Meeting or the General Meeting and voting in person if you so wish.

If you hold your Orchard Voting Ordinary Shares in “street name” through a broker, bank, trust company or other nominee, you must direct your broker, bank, trust company or other nominee to vote in accordance with the instructions you have received from your broker, bank, trust company or other nominee.

The Orchard Board is not currently aware of any business to be acted upon at the Shareholder Meetings other than the matters described in this proxy statement. If, however, other matters are properly brought before the Shareholder Meetings, the persons appointed as proxies will have discretion to vote or act on those matters as in their judgment is in the best interest of Orchard and its shareholders, except that Orchard will comply with any limitations on the exercise of such discretion under applicable law and stock exchange listing rules.

If you hold Orchard Voting Ordinary Shares in uncertificated form through CREST and wish to appoint a proxy or proxies for the Court Meeting (or any adjournment thereof) by using the CREST electronic proxy appointment service, you may do so by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed any voting service provider(s), should refer to their CREST sponsor or voting service providers), who will be able to take the appropriate action on their behalf.

 

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In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear and must contain the information required for such instructions as described in the CREST Manual. The message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instructions given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by Orchard’s Registrar (ID: RA19) not later than 48 hours (excluding any part of such 48-hour period falling on a non-working day) before the time fixed for the Court Meeting or any adjournment thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Orchard’s Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. If the CREST proxy appointment or instruction is not received by this time, the blue form of proxy may be emailed to ProxyVotes@equiniti.com or handed to the Chair, or Equiniti on behalf of the Chair any time prior to the commencement of the Court Meeting or any adjournment thereof.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed any voting service provider(s), to procure that his/her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. For further information on the logistics of submitting messages in CREST, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

Orchard may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the CREST Regulations.

Orchard ADS holders should refer to section 9 of this Explanatory Statement for information relevant to such holders.

If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be received as soon as possible and not later than 2:15 p.m. on December 15, 2023 (or, in the case of an adjournment of the General Meeting, 48 hours (excluding any part of such 48 hour period falling on a non-working day) before the time appointed for the adjourned meeting).

Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.

12. Further information

The terms of the Scheme of Arrangement are set out in full in the section entitled “The Scheme of Arrangement” beginning on page 108 of this proxy statement. A summary of material tax consequences are set out in the sections entitled “Material United States Federal Income Tax Consequences of the Transaction”, and “Material United Kingdom Tax Consequences of the Transaction” beginning on pages 122, 129 and 130, respectively, of this proxy statement. Further information regarding Orchard and KKC are set out in the section entitled “The Parties to the Transaction” beginning on page 46 of this proxy statement.

 

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THE GENERAL MEETING

Proposal 1—Scheme Implementation Proposal

For the reasons described above, Orchard is requesting that the Orchard shareholders adopt the following resolution at the General Meeting, which is a special resolution:

THAT, for the purpose of giving effect to the scheme of arrangement dated November 16, 2023 between Orchard and the holders of Scheme Shares (as defined in such scheme of arrangement), a print of which has been produced to this meeting and for the purposes of identification signed by the Chair of this meeting, in its original form or with or subject to any modification, addition, or condition as may be agreed from time to time (including, for the avoidance of doubt, after the date of this resolution) between Orchard and Kyowa Kirin Co., Ltd (“KKC”) which (if required) is approved by the High Court of Justice of England and Wales (the “Court”), or which is otherwise imposed by the Court and is mutually acceptable to Orchard and KKC each acting reasonably and in good faith (the “Scheme”):

 

  A.

the directors of Orchard (or a duly authorized committee of the directors) be and are hereby authorized to take all such action as they may consider necessary or appropriate for carrying the Scheme into effect; and

 

  B.

with effect from the passing of this resolution, the articles of association of Orchard be and are hereby amended by the adoption and inclusion of the following new article 143:

143 Scheme of Arrangement

 

  (i)

In this article, references to the “Scheme” are to the Scheme of Arrangement under Part 26 of the Act between Orchard and the holders of Scheme Shares dated November 16, 2023 in its original form or with or subject to any modification, addition or condition as may be agreed between Orchard and KKC and which (if required) is approved by the Court, or which is otherwise imposed by the Court and is mutually acceptable to Orchard and KKC each acting reasonably and in good faith and, save as defined in this article, expressions defined in the Scheme shall have the same meanings in this article. Capitalised terms used but not otherwise defined in this article shall have the meaning ascribed to such terms in the Scheme.

 

  (ii)

Notwithstanding any other provision of these articles or the terms of any resolution, whether ordinary or special, passed by Orchard in General Meeting, if Orchard issues any shares (other than to any member of the KKC Group or a nominee of any such person (each such person, a “KKC Company”)) at or after the Voting Record Time but before the Scheme Record Time, such shares shall be issued subject to the terms of the Scheme (and shall be Scheme Shares for the purposes of the Scheme) and the original or any subsequent holder or holders of such shares shall be bound by the Scheme accordingly.

 

  (iii)

Subject to the Scheme becoming effective, and notwithstanding any other provision of these articles, if any shares in Orchard are issued or transferred to any person other than a KKC Company (a “New Member”) after the Scheme Record Time (such shares the “Post-Scheme Shares”), such New Member (or any subsequent holder or any nominee of such New Member or any such subsequent holder) will be obliged, upon the Scheme becoming effective (or, if later, upon the issue or transfer of the Post-Scheme Shares to such New Member), to transfer immediately all of its Post-Scheme Shares free of all encumbrances to KKC (or to such other person as may be nominated by KKC) who shall be obliged to acquire (or procure the acquisition by such other person of) all of the Post-Scheme Shares. In exchange for the transfer of the Post-Scheme Shares, KKC (or such other person as has been nominated by KKC) shall pay or procure the payment to the New Member of the same Cash Consideration and, subject to Article 143(v), deliver such number of CVRs that the New Member would have been entitled to receive pursuant to the Scheme had each Post-Scheme Share been a Scheme Share.

 

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  (iv)

Notwithstanding the provisions of Article 143(iii) and subject to Article 143(v), if, in respect of any New Member with a registered address in a jurisdiction outside the United Kingdom or the U.S., KKC, any member of the KKC Group or the Rights Agent is advised that the delivery of CVRs pursuant to Article 143(iii) would or might infringe the laws of such jurisdiction or would require KKC, any member of the KKC Group, the Rights Agent or Orchard to observe any governmental or other consent or any registration, filing or other formality with which KKC, any member of the KKC Group, the Rights Agent or Orchard (as the case may be) is unable to comply, or compliance with which by such person is regarded by such person or by KKC (in the case of KKC, acting reasonably) as unduly onerous, each of KKC or the Rights Agent may, in its discretion, determine that such New Member shall not have issued to it the CVRs and, in lieu of the entitlement to CVRs, KKC shall, to the extent permitted by Applicable Law, pay to such New Member an amount per Post-Scheme Share equal to the cash amount (if any), on the same date as such payment is made to the holders of Scheme Shares that hold CVRs in the same manner as the Cash Consideration is payable to such New Member (rounded up or down to the nearest U.S. cent), that such New Member would have been entitled to receive if it had received CVRs pursuant to the Scheme had each Post-Scheme Share been a Scheme Share.

 

  (v)

Where a person becomes a New Member following the occurrence of a CVR Event, KKC (or such other person as has been nominated by KKC) shall not deliver any CVRs to such New Member and shall instead pay such New Member an amount per Post-Scheme Share equal to the cash amount (if any), on the same date and in the same manner as the Cash Consideration is payable to such New Member (rounded up or down to the nearest U.S. cent), that such New Member would have been entitled to receive had it received CVRs pursuant to the Scheme had each Post-Scheme Share been a Scheme Share. For the avoidance of doubt, if no CVR Event has occurred on or prior to 31 December 2024, a person becoming a New Member on or after 1 January 2025 shall be entitled to the Cash Consideration only in respect of any Post-Scheme Shares.

 

  (vi)

If, after the Effective Time, Orchard Ordinary Shares shall have been changed to, or exchanged for, a different number or class of shares or securities by reason of any stock dividend, bonus issue, scrip dividend, subdivision, reorganization, merger, consolidation, reclassification, redesignation, recapitalization, share split, reverse share split, combination or exchange of shares, or a stock or scrip dividend shall be declared with a record date falling after the Effective Time, or any similar event shall have occurred, then the amount of any Cash Consideration or CVRs due to a New Member for each Post-Scheme Share pursuant to Article 143(iii) above shall be adjusted by the directors of Orchard in such manner as the auditors of Orchard may determine to be appropriate to provide KKC and the New Members holding any Post-Scheme Share(s) with the same economic effect as contemplated by the Scheme prior to such event. References in this article to shares shall, following such adjustment, be construed accordingly.

 

  (vii)

To give effect to any transfer of Post-Scheme Shares required by this article, Orchard may appoint any person as attorney and agent (the “agent”) for the New Member to execute and deliver as transferor a form of transfer or other instrument or instruction of transfer on behalf of the New Member (or any subsequent holder or any nominee of such New Member or any such subsequent holder) in favour of KKC (or such other person as KKC may nominate) and do all such other things and execute and deliver all such documents as may in the opinion of the agent be necessary or desirable to vest the Post-Scheme Shares in KKC (or such other person as KKC may nominate) and pending such vesting to exercise all such rights attaching to the Post-Scheme Shares as KKC may direct. If an agent is so appointed, the New Member shall not thereafter be entitled to exercise any rights attaching to the Post-Scheme Shares unless so agreed in writing by KKC, and Orchard may send to the agent any notice, circular, warrant or other document or communication which may otherwise be required to be sent to the New Member as a member of Orchard.

 

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  (viii)

Orchard may give good receipt for the Cash Consideration and CVRs due to the New Member pursuant to Article 143(iii) above for the Post-Scheme Shares and may register KKC (or such other person as KKC may nominate) as holder of the Post-Scheme Shares and issue to it certificate(s) for the same. The agent shall be empowered to execute and deliver as transferor a form of transfer or other instrument or instruction of transfer on behalf of the New Member (or any subsequent holder). Orchard shall not be obliged to issue a certificate to the New Member for any Post-Scheme Shares.

 

  (ix)

KKC shall settle (or procure the settlement) of the Cash Consideration due to the New Member and delivery of the CVRs due to the New Member pursuant to Article 143(iii) within 14 days of the transfer of the Post-Scheme Shares by the New Member to KKC (or to such other person as KKC may nominate).

 

  (x)

Notwithstanding any other provision of these articles, neither Orchard nor its directors shall register the transfer of any Scheme Shares effected between the Scheme Record Time and the Effective Time (other than to a KKC Company or a nominee of a KKC Company pursuant to the Scheme).

 

  (xi)

If the Scheme shall not have become effective by the date referred to in paragraph 10.2 of the Scheme, this article shall be of no effect.”

Vote Required and Orchard Board Recommendation

Assuming a quorum is present, the Scheme Implementation Proposal will be passed if at least 75% of the votes cast at the General Meeting in person or by proxy are cast in favor of this proposal.

Completion of the Transaction is conditioned upon Orchard shareholder approval of the Scheme Implementation Proposal.

The Orchard Board unanimously recommends that you vote “FOR” the Scheme Implementation Proposal.

Proposal 2—Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements

In accordance with Section 14A of the Exchange Act, Orchard is providing Orchard shareholders with the opportunity to cast a non-binding advisory vote on the compensation that may be paid or become payable to the Orchard’s named executive officers in connection with the Transaction. As required by those rules, Orchard is asking Orchard shareholders to vote on the approval of the following resolution, which is an ordinary resolution:

THAT, the compensation that may be paid or become payable to Orchard’s named executive officers in connection with the Transaction, as disclosed in the table entitled “Potential Payments to Named Executive Officers” beginning on page 83 of this proxy statement, including the associated narrative discussion, and the agreements or understandings pursuant to which such compensation may be paid or become payable, are hereby approved.”

The vote on this proposal is a vote separate and apart from the Scheme Implementation Proposal. Accordingly, you may vote in favor of the Scheme Implementation Proposal and vote not to approve this proposal and vice versa. Because this proposal is only advisory in nature, it will not be binding on Orchard or the Orchard Board. Accordingly, because Orchard is contractually obligated to pay the compensation, such compensation will be paid or become payable, subject only to the conditions applicable thereto, if the Transaction is consummated and regardless of the outcome of the advisory proposal.

Assuming a quorum is present, the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements will be passed if a simple majority of the votes cast at the General Meeting are cast in favor of this proposal.

The Orchard Board unanimously recommends that you vote “FOR” the approval of the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements.

 

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THE PARTIES TO THE TRANSACTION

Orchard Therapeutics plc

Orchard, a public limited company incorporated in England and Wales, is a global leader in discovering, developing and commercializing new treatments that tap into the curative potential of hematopoietic stem cell (HSC) gene therapy. Orchard ADSs are listed on Nasdaq under the symbol “ORTX”.

Orchard’s registered offices are located at 245 Hammersmith Road, 3rd Floor, London, England W6 8PW, United Kingdom and its telephone number is +44 (0) 203 808-8286.

For more information about Orchard, please visit Orchard’s Internet website at www.orchard-tx.com. Orchard’s Internet website address is provided as an inactive textual reference only. The information contained on Orchard’s Internet website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. Additional information about Orchard is included in the documents incorporated by reference into this proxy statement. See the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement.

Kyowa Kirin Co., Ltd.

KKC, a Japanese joint stock company (kabushiki kaisha), is a Global Specialty Pharmaceutical Company with a heritage of 70+ years, applies cutting-edge science including an expertise in antibody research and engineering, to address the needs of patients and society across multiple therapeutic areas including Nephrology, Oncology, Immunology/Allergy and Neurology.

KKC’s executive offices are located at Otemachi Financial City Grand Cube, 1-9-2 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan and its telephone number is +81 3-5205-7200.

For more information about KKC, please visit KKC’s Internet website at www.kyowakirin.com. KKC’s Internet website address is provided as an inactive textual reference only. The information contained on KKC’s Internet website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. Additional information about KKC is included in the documents incorporated by reference into this proxy statement. See the section entitled “Where You Can Find More Information” beginning on page 133 of this proxy statement.

 

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THE TRANSACTION

Overview

On October 5, 2023, Orchard entered into the Transaction Agreement with KKC. Under the terms of the Transaction Agreement, subject to the satisfaction or waiver of the conditions set forth therein, KKC (and/or, at KKC’s election, the Nominee) will, subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to the completion of the Transaction, acquire the entire issued and to be issued share capital of Orchard pursuant to the Scheme of Arrangement, which is a court-sanctioned scheme of arrangement under the Companies Act.

Background of the Transaction

The following chronology summarizes the key meetings and events that led to the signing of the Transaction Agreement. The following chronology does not purport to catalogue every conversation among the Orchard Board or committees thereof or the representatives of Orchard and other parties.

Orchard is a global gene therapy company dedicated to ending the devastation caused by genetic and other severe diseases. Orchard’s ex vivo autologous hematopoietic stem cell (HSC) gene therapy approach harnesses the power of genetically modified blood stem cells and seeks to correct the underlying cause of disease in a single administration. Orchard seeks to achieve this outcome by utilizing a lentiviral vector to introduce a functional copy of a missing or faulty gene into the patient’s own, or autologous, HSCs through an ex vivo process, resulting in a gene-modified cellular drug product that can then be administered to the patient at the bedside. Orchard’s portfolio includes a commercial-stage product and research and development-stage product candidates. Orchard’s lead program is OTL-200, which was approved in the European Union, the United Kingdom, Iceland, Liechtenstein and Norway under the brand name Libmeldy for eligible patients with early-onset metachromatic leukodystrophy, or MLD. Orchard has also filed for marketing approval for OTL-200 in Switzerland and in the U.S. and expects regulatory decisions on those filings in the first half of 2024.

Orchard management and the Orchard Board regularly review Orchard’s performance and prospects in light of its own business activities and external developments in the biotechnology and biopharmaceutical industries. From time to time, these reviews have included consideration of potential partnerships, collaborations and other strategic transactions such as acquisitions or divestitures of programs or technology to enhance shareholder value. Orchard management provided periodic updates on its activities, including those described below, to the Orchard Board.

In August 2021, representatives of KKC’s business development team contacted Orchard’s Chief Executive Officer, Bobby Gaspar, M.D., Ph.D., to arrange an introductory meeting to enquire how Orchard’s scientific platform could be used in a specific research setting. Shortly thereafter, in September 2021, representatives of KKC and members of Orchard management met to discuss Orchard’s business and potential collaboration opportunities. The discussions were high level in nature and the parties did not discuss a potential acquisition or other transaction.

From November 2021 through April 2023, representatives of KKC and members of Orchard management engaged in preliminary discussions regarding KKC’s interest in Orchard’s research and development-stage programs and potential collaboration opportunities. KKC and Orchard did not discuss a potential acquisition. In order to facilitate these discussions, Orchard and KKC entered into a mutual confidentiality agreement, effective as of November 18, 2021, which was subsequently amended to extend the term of the agreement. This mutual confidentiality agreement did not contain a standstill obligation.

During the fourth quarter of 2021 and the first quarter of 2022, the Orchard Board discussed the strategic, financial and operational challenges of operating Orchard’s business in the then-current environment, including the macro-economic, industry and market conditions negatively impacting gene therapy companies such as

 

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Orchard. The Orchard Board discussed the need for significant capital investment to complete Orchard’s clinical trials of OTL-200, to support the filing of a biologics license application, or BLA, for OTL-200, to continue the commercialization of Libmeldy in Europe, to fund its innovative research and development efforts, to hire the appropriate personnel necessary to execute on those priorities, to incentivize critical talent, and to operate generally as a public company, as well as the risks and uncertainties associated with conducting clinical trials and pre-clinical studies for Orchard’s programs and product candidates, pursuing related regulatory approvals and, if successful, launching and commercializing such products. The Orchard Board discussed the risks and uncertainties associated with identifying patients for commercial treatment and for clinical trials for OTL-200 and Orchard’s other programs, the investment required in diagnostics and newborn screening, the complexities of manufacturing and administering gene therapy, the need to treat a sufficient number of patients to demonstrate a consistently durable response rate and survival benefit, the adequacy, scalability and commercial viability of Orchard’s manufacturing capacity, and the pricing and reimbursement of Libmeldy and other Orchard product candidates. The Orchard Board also discussed the risks and uncertainties associated with Orchard’s cash requirements, which, among other macro- , industry- and company-specific headwinds, had severely negatively impacted Orchard’s stock price and its ability to raise sufficient capital through equity financings. The Orchard Board further discussed Orchard’s current cash position, its near-term priorities and related cash requirements, and the lack of attractive financing alternatives given the then-current market conditions.

During the fourth quarter of 2021, the Orchard Board discussed with representatives of Guggenheim Securities, LLC (“Guggenheim Securities”) Orchard’s business and prospects and the possibility of Guggenheim Securities acting as its financial advisor in evaluating strategic alternatives that might be available to Orchard in light of the risks and challenges facing Orchard, as described above. The Orchard Board considered Guggenheim Securities as a potential financial advisor to assist and advise Orchard given, among other things, Guggenheim Securities’ qualifications, experience, and reputation; its knowledge of and involvement in transactions in the biopharmaceutical industry; and its familiarity with gene therapy companies such as Orchard, including through its prior involvement in assisting Orchard in connection with prior Orchard equity offerings. In view of these considerations, Orchard engaged Guggenheim Securities pursuant to an engagement letter dated December 10, 2021, to assist the Orchard Board in exploring and evaluating a broad range of strategic and financial alternatives to enhance stockholder value, including a possible merger or sale of Orchard.

From the fourth quarter of 2021 through the first quarter of 2022, Orchard management, with the assistance of Guggenheim Securities, conducted a broad outreach to potential partners to explore potential collaborations and strategic partnerships. During this time, Orchard management and representatives of Guggenheim Securities discussed potential collaboration opportunities with over two dozen companies, including Party C, Party D, Party E and Party F (as referred to below). These discussions did not result in any collaborations or other transactions.

In December 2021, representatives of KKC and members of Orchard management engaged in a preliminary discussion regarding potential opportunities for a collaboration between the companies, but no specific proposals were made. KKC and Orchard did not discuss a potential acquisition.

In January and February 2022, representatives of KKC and members of Orchard management discussed a potential collaboration focused on the delivery of vectorized antibodies and regulatory T cells, or Tregs, using HSCs. These discussions were preliminary in nature and no proposals were made during these discussions. KKC and Orchard did not discuss a potential acquisition.

In January 2022, in response to an unsolicited inbound inquiry, members of Orchard management had business development discussions with representatives of a global pharmaceutical company (referred to as “Party A,”) regarding its interest in exploring potential partnerships, collaborations and other strategic transactions involving Orchard’s portfolio. To facilitate these discussions, in March 2022, Orchard and Party A entered into a mutual confidentiality agreement. This mutual confidentiality agreement did not contain a standstill obligation. From January 2022 through January 2023, members of Orchard management continued to engage in intermittent discussions with Party A regarding its interest in Orchard’s research and development-

 

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stage product candidates. In December 2022, Party A presented a high-level, preliminary, non-binding term sheet for a worldwide co-development partnership regarding OTL-203 for the treatment of Mucopolysaccharidosis Type I, or MPS-I. Ultimately, however, the parties were not able to come to an agreement on certain key economic terms and discussions ended in January 2023.

On January 31, 2022, February 18, 2022 and March 23, 2022, the Orchard Board held meetings at which members of Orchard management and representatives of Goodwin Procter LLP (“Goodwin”), Orchard’s outside legal counsel, were present. Representatives of Guggenheim Securities were also present for a portion of the meetings. At these meetings, Orchard management provided business updates to the Orchard Board, including discussions regarding potential strategic business combinations and other corporate development opportunities. The Orchard Board discussed the risks and challenges facing Orchard described above and considered the capital requirements necessary for successfully commercializing Libmeldy in Europe and continuing to seek regulatory approval for OTL-200 in the U.S. Orchard management provided an update on Orchard’s cash forecast and financial outlook. The Orchard Board and Orchard management discussed Orchard’s cash burn and cash position and possible strategies to extend its cash runway at least to the then-anticipated timing for BLA approval of OTL-200. The meeting participants discussed the low likelihood that third parties would be interested in providing sufficient equity financing to Orchard at attractive valuations in the then-current economic environment that would not be significantly dilutive to existing Orchard shareholders. Following discussion, the Orchard Board determined that it would be in the best interests of Orchard and Orchard shareholders for Orchard to narrow its pipeline priorities to concentrate resources on severe neurometabolic rare diseases and early research programs with larger patient populations. This included continued investment in OTL-200 for MLD to help build commercial momentum in Europe, as well as to support regulatory and future commercial activities for a potential U.S. approval and launch. The Orchard Board authorized Orchard management to proceed with implementing various actions to refocus Orchard’s business on these pipeline priorities and on preserving cash available by seeking potential partnership opportunities involving Orchard’s research and development-stage product candidates with one or more third parties among other strategic opportunities, along with a reduction in workforce aligned with such changes, on such timeline as Orchard management deemed to be in Orchard’s best interest.

The Orchard Board also considered the prolonged pressure on the stock prices of biopharmaceutical companies and the likelihood that, if the current economic environment were to continue, consolidation would occur in the biopharmaceutical industry, particularly in the capital-intensive gene therapy sector in which Orchard operates. Following discussion, the Orchard Board determined that it would be in the best interests of Orchard and its shareholders for Orchard to proactively review other potential strategic transactions available to it, including a merger of equals transaction, in order to be a first mover in such consolidation among gene therapy companies, as well as partnership opportunities involving Orchard’s research and development-stage product candidates.

At the Orchard Board meeting held on February 18, 2022, in accordance with the Orchard Articles, the Orchard Board established a Transaction Committee of the Orchard Board (the “Transaction Committee”), for convenience (and not because of any actual or perceived conflicts of interests), in order to assist the Orchard Board, as needed, in reviewing and negotiating any proposals that might be received by Orchard regarding a potential strategic transaction. The initial members of the Transaction Committee were the following independent directors: Jim Geraghty (Chair), Charles Rowland, Jr. and Alicia Secor. During the remainder of 2022, the Transaction Committee, assisted by Guggenheim Securities, considered certain potential strategic transactions.

Beginning in February 2022, as authorized by the Orchard Board, Orchard management had preliminary discussions with several gene therapy focused companies, other than KKC, to ascertain interest in a potential strategic transaction, including a merger of equals transaction, with Orchard. The Orchard Board and the Transaction Committee were periodically updated on these discussions, which included mutual management presentations and consideration of the parties’ respective program portfolios as well as various financial matters relevant to a combined enterprise. While discussions with a number of these parties continued for several

 

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months, ultimately, the Transaction Committee concluded that none of these potential strategic transactions were on terms attractive enough to be in the strategic interest of Orchard to pursue at that time.

As part of these discussions, from February 2022 to June 2022, Orchard management engaged in discussions with a gene therapy company (referred to as “Party B”) regarding a potential business combination transaction. In order to facilitate these discussions, Orchard and Party B entered into a mutual confidentiality agreement, effective as of February 3, 2022. This mutual confidentiality agreement did not contain a standstill obligation. Ultimately, however, the Transaction Committee concluded that a potential business combination transaction with Party B was not on terms attractive enough to be in the strategic interest of Orchard to pursue at that time.

On March 30, 2022, Orchard publicly announced its intention to focus its HSC gene therapy platform on severe neurometabolic rare diseases, including Libmeldy for MLD, and to discontinue its investment in and seek alternatives for its programs in rare primary immune deficiencies, including through potential commercial partnerships. As part of the strategic reprioritization, Orchard publicly announced a plan for Orchard to reduce its workforce by approximately 30%.

On May 16, 2022, representatives of KKC presented a high-level outline of a potential framework for a research collaboration pursuant to which Orchard and KKC would research, develop, manufacture and commercialize two programs using Orchard’s HSC platform technology with initial indications to treat glioblastoma, a form of brain cancer, and multiple sclerosis. The collaboration proposed would have included an initial research period after which KKC would have had an exclusive option to the programs. From that date through December 2022, Orchard and KKC continued intermittent discussions regarding a framework for a potential partnership agreement, financial considerations and each party’s role in such collaboration. The Orchard Board and the Transaction Committee were periodically updated on these discussions as they progressed.

On November 29, 2022, as part of ongoing discussions, members of Orchard management visited KKC’s headquarters in Tokyo, Japan to provide a broad overview of Orchard’s technology and platform.

On December 23, 2022, following negotiations between the parties, KKC, subject to KKC executive committee approval which was received on January 12, 2023, and Orchard agreed to a preliminary, non-binding term sheet for a potential exclusive worldwide partnership regarding two programs using Orchard’s HSC platform technology with initial indications to treat glioblastoma, a form of brain cancer, and multiple sclerosis.

From January through April 2023, KKC and Orchard exchanged several drafts of a research collaboration agreement based on the December 23, 2022 preliminary, non-binding term sheet and engaged in negotiations related thereto. On March 14 and 15, 2023, as part of ongoing discussions, representatives of KKC visited Orchard’s headquarters in London, England. Ultimately, however, the parties did not reach agreement on certain key terms and therefore did not execute a research collaboration agreement.

On March 6, 2023, Orchard announced that it entered into a securities purchase agreement for the sale of units comprised of ten Orchard ordinary shares plus a warrant to purchase 11 Orchard ordinary shares in a private placement with an initial closing of $34 million of units at a purchase price of $6.00 (or $0.60 per Orchard ordinary share plus a portion of a warrant), with the potential to raise an additional $34 million through the sale of units at a purchase price of $8.00 per unit (or $0.80 per Orchard ordinary share plus a portion of a warrant) subject to Orchard’s public announcement of its intention to submit a BLA with the U.S. Food and Drug Administration (FDA) (following receipt of minutes from Orchard’s pre-BLA meeting with the FDA) and shareholder approval for authority under section 551 of the Companies Act to allot the shares issuable upon exercise of the warrants and up to an additional $120 million through the exercise of warrants having an exercise price of $11.00 per ten Orchard ordinary shares, which would become exercisable for a 30 day period subject to and following Orchard’s announcement of FDA approval of OTL-200 in the U.S.

 

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On April 24, 2023, Orchard and Guggenheim Securities entered into an agreement that recognized and acknowledged that the December 10, 2021 engagement letter between Orchard and Guggenheim Securities was terminated, effective as of March 1, 2023.

On May 24, 2023, representatives of KKC contacted members of Orchard management and presented a verbal, non-binding indication of interest to acquire Orchard for $9.00 per Orchard ADS in cash (the “May 24 Proposal”). The members of Orchard management indicated that they would inform the Orchard Board of the May 24 Proposal.

On May 24, 2023, members of Orchard management preliminarily discussed with representatives of Guggenheim Securities, Orchard’s business and prospects and the possibility of acting as its financial advisor in evaluating KKC’s May 24 Proposal and any additional proposals that might be received from KKC or any other parties. Orchard considered Guggenheim Securities as a potential financial advisor to assist and advise Orchard given, among other things, that Guggenheim Securities has had a long-standing investment banking relationship with Orchard and had been formally engaged between December 10, 2021 and March 1, 2023 as Orchard’s financial advisor as described above.

On May 25, 2023, the Transaction Committee held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. At the meeting, members of Orchard management reported to the Transaction Committee their recent conversations with representatives of KKC and receipt of the May 24 Proposal. Representatives of Goodwin reviewed with the members of the Transaction Committee their fiduciary duties in the context of an offer to acquire Orchard. The meeting participants then discussed the May 24 Proposal from KKC and related process considerations in the event that the Transaction Committee decided to engage with KKC regarding the May 24 Proposal.

The Transaction Committee then discussed the May 24 Proposal and potential responses to KKC, including whether to engage with KKC with respect to a potential acquisition of Orchard. Representatives of Guggenheim Securities then discussed certain publicly available market data regarding Orchard. The Transaction Committee directed Orchard management to update its long-term plan and projections for consideration by the Orchard Board. Following this discussion, the Transaction Committee directed Orchard management to inform KKC that Orchard was not contemplating a sale of the company and that the May 24 Proposal was inadequate and undervalued Orchard’s business, but that Orchard remained interested in completing the research collaboration agreement with KKC and at the same time would be willing to discuss a broader transaction with KKC.

On May 26, 2023, members of Orchard management had a discussion with representatives of KKC and conveyed the Transaction Committee’s feedback that Orchard was not contemplating a sale of the company and that the May 24 Proposal was inadequate to change that position but that Orchard remained interested in completing the collaboration agreement being discussed with KKC and at the same time would be willing to broaden the scope of the collaboration if it was of interest to KKC.

On May 30, 2023, in order to facilitate continuing discussions between the parties relating to a potential broader strategic transaction, Orchard provided a new form of confidentiality agreement to KKC that included a standstill provision.

On May 31, 2023, following negotiation between the parties, Orchard and KKC entered into a new confidentiality agreement, which included customary non-disclosure provisions and a standstill provision that prohibited KKC from taking certain unsolicited actions without the prior written consent of Orchard, subject to certain customary fall-away provisions to the standstill in the event of the entry, commencement or public announcement of certain change of control transactions involving Orchard and any third party.

On June 2, 2023, certain members of both management teams of Orchard and KKC met in-person in London, England to continue discussions on the research collaboration agreement that had been negotiated and

 

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ways to enhance that collaboration more broadly in the future, through inclusion of additional programs or an equity investment in Orchard by KKC while Orchard remained a standalone company. At the meeting, KKC management indicated that KKC was still interested in an all cash acquisition of Orchard and would present a revised proposal to acquire Orchard.

On June 9, 2023, a member of management of Party B contacted Orchard management seeking a meeting. On June 12, 2023, members of both management teams of Orchard and Party B met via video conference. The discussion was preliminary in nature and did not lead to any proposals being made or nonpublic information being shared between the parties.

On June 14, 2023, the Orchard Board held a regularly-scheduled meeting at which members of Orchard management and representatives of Goodwin were present. Representatives of Guggenheim Securities were present for a portion of the meeting. At the meeting, Orchard management provided a business update to the Orchard Board. Orchard management then provided an update on recent discussions with KKC and its perceived level of interest, noting that KKC indicated a revised proposal was forthcoming and that the discussions had focused on high-level diligence matters. Following discussion, the Orchard Board authorized Orchard management and its advisors to continue discussions with KKC regarding its interest in a transaction involving Orchard and due diligence. The participants then discussed Orchard management’s long-range plan, including the related methodology, the underlying assumptions and related risks, and the preparation of financial projections based on such long-range plan. See the heading titled “—Certain Financial Projections” for further information regarding the “Forecasts.” The Orchard Board also discussed Orchard’s prospects as a standalone company generally and its OTL-200 program and the remaining pipeline. After discussion of these matters, the Orchard Board approved the Forecasts for use by Guggenheim Securities in its financial analyses.

The Orchard Board also discussed whether to contact other pharmaceutical companies, in addition to KKC, that might have interest in an acquisition of Orchard. The meeting participants considered that KKC had not yet presented a proposal that the Orchard Board considered actionable, and also noted that outreach could cause significant disruption to Orchard, including the distraction of employees. Orchard management provided an update on the discussions with Party B. The meeting participants considered that the discussions with Party B were preliminary and concluded that a potential strategic transaction with Party B was not likely to be a viable alternative because, among other things, the parties had divergent views on the strategic rationale for a potential transaction, the equity split for Orchard shareholders of the post-closing combined company and the complexity of rationalizing the companies’ respective programs. Following discussion, the Orchard Board instructed Orchard management to send certain high level diligence questions to Party B to facilitate discussion and consideration, but agreed that no specific proposals should be made at this time given that a transaction with Party B was not likely to be viable. The Orchard Board further decided not to contact additional parties at that time given the risk that a leak could be disruptive to Orchard’s employees and third party relationships and could adversely impact KKC’s interest in continuing to pursue a strategic transaction, but to revisit the possibility of doing so in the future.

On June 18, 2023, members of Orchard management sent a list of high-level diligence questions to Party B. To facilitate the sharing of information, Orchard and Party B entered into an extension of their mutual confidentiality agreement, dated June 19, 2023.

On June 19, 2023, representatives of KKC informed members of Orchard management that KKC was focused on a broader strategic transaction with Orchard and that a research collaboration agreement was no longer under consideration for KKC. Representatives of KKC reconfirmed that KKC would present a revised acquisition proposal to Orchard during the week of July 3, 2023.

On June 21, 2023, members of Orchard management had a discussion with representatives of Party B. This discussion was preliminary in nature and did not lead to any proposals being made. No further discussions regarding a strategic transaction between Orchard and Party B occurred after this time.

 

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On July 5, 2023, representatives of KKC contacted members of Orchard management and presented a verbal, non-binding proposal to acquire Orchard for $15.00 per Orchard ADS in cash (the “July 5 Proposal”). The members of Orchard management indicated that they would inform the Orchard Board of the July 5 Proposal.

On July 6, 2023, KKC provided Orchard written confirmation of the July 5 Proposal, and confirmed that it was subject to the completion of diligence, which KKC expected to complete within four to six weeks. The written confirmation also identified certain priority diligence matters that KKC wanted to review.

Also on July 6, 2023, the Orchard Board held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. At the meeting, Orchard management reported on the recent conversations with representatives of KKC and receipt of the July 5 Proposal. Representatives of Goodwin reviewed with the members of the Orchard Board their fiduciary duties in the context of an offer to acquire Orchard. Representatives of Guggenheim Securities then reviewed certain preliminary financial analyses related to the July 5 Proposal. The meeting participants then discussed the July 5 Proposal and related process considerations in the event that the Orchard Board decided to engage with KKC regarding the July 5 Proposal. The Orchard Board then discussed potential responses to KKC, including whether to engage with KKC with respect to a potential acquisition. Following this discussion, the Orchard Board directed Orchard management to inform KKC that the July 5 Proposal was inadequate, but that Orchard would provide additional targeted due diligence information to KKC to assist KKC in reevaluating its position on value and its proposal.

The Orchard Board also discussed whether any other pharmaceutical and biotechnology companies might have interest in a potential acquisition of Orchard, including weighing the potential benefits of outreach to other potential counterparties against the potential risks, including the risk of leaks inherent in such a process and the potential impact on Orchard’s business of such leaks. The Orchard Board authorized the Transaction Committee to determine whether to contact any other pharmaceutical and biotechnology companies regarding interest in a potential acquisition of Orchard as part of their consideration of a potential acquisition of Orchard by KKC.

Also at the meeting, the Orchard Board expanded the duties and responsibilities of the Transaction Committee, for convenience (and not because of any actual or perceived conflicts of interest) in order to assist the Orchard Board, as needed, in reviewing and negotiating any proposals that might be received by Orchard regarding a potential strategic transaction, including a potential acquisition transaction with KKC, and to supervise and direct the process for outreach to any other parties regarding a strategic transaction with Orchard or an acquisition of Orchard. At this meeting, Steven Altschuler, M.D., an independent director, was appointed as an additional member of the Transaction Committee. The Transaction Committee was charged with making recommendations to the full Orchard Board regarding any potential transaction, but the full Orchard Board retained authority to approve any transaction. Throughout the Transaction Committee’s evaluation of a potential strategic transaction, the Transaction Committee conducted formal meetings, but its members were also in regular informal discussions with Orchard’s management and legal and financial advisors and with each other. The Transaction Committee also met in executive session without Orchard management present.

On July 10 and 11, 2023, Orchard management held discussions with representatives of KKC and conveyed the Orchard Board’s view that the July 5 Proposal did not adequately reflect Orchard’s value and was insufficient to proceed with further discussions regarding a potential acquisition of Orchard. Orchard management also conveyed Orchard’s willingness to provide answers to highly targeted diligence questions to enable KKC to improve its position on value and its proposal.

On July 11, 2023, the Transaction Committee held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. Orchard management provided an update on the recent discussions with KKC and its perceived level of interest and diligence efforts. The Transaction Committee also discussed whether to contact additional pharmaceutical companies regarding

 

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potential interest in a potential acquisition of Orchard. The Transaction Committee reviewed the considerations previously discussed by the Orchard Board and considered prior discussions between Orchard and other potential counterparties and the outcome of such discussions. The Transaction Committee also considered the limited number of companies with interest in the gene therapy sector generally that had the financial capability to consummate a transaction of this size and the ability to move quickly and efficiently in a process. After discussion, the Transaction Committee determined that outreach should include those parties other than KKC that most likely would have interest in Orchard, be able to move decisively, and have the ability to consummate a transaction of this size and nature, which the Transaction Committee, with input from the representatives of Guggenheim Securities, identified to be Party A and three other global pharmaceutical companies (referred to as “Party C,” “Party D,” and “Party E”). After discussion of various factors, including that Orchard’s operating losses and lack of projected cash flows for a long period of time would make it difficult for a traditional financial buyer to be competitive against strategic buyers in a sale process, the Transaction Committee determined that it was advisable not to conduct outreach to financial sponsors.

On July 12, 2023, at the direction of the Transaction Committee, representatives of Guggenheim Securities contacted Party D and Party E to ascertain interest in a potential acquisition of Orchard.

Also on July 12, 2023, KKC provided Orchard with a due diligence request list. Following receipt of this list, Orchard provided KKC with access to selected due diligence materials to facilitate a potential revised proposal.

On July 13 and 14, 2023, representatives of Guggenheim Securities had further discussions with Party D.

On July 14, 2023, at the direction of the Transaction Committee, Dr. Gaspar spoke with a representative of Party C who indicated that Party C would have interest in exploring a potential acquisition of Orchard and entering into a confidentiality agreement with Orchard to facilitate discussions.

On July 17, 2023, at the direction of the Transaction Committee, Dr. Gaspar spoke with a representative of Party A who indicated that due to its existing financial constraints, it was not interested in engaging with Orchard with respect to a potential acquisition transaction.

On July 18, 2023, Orchard made certain additional information responsive to targeted high-level diligence questions available to representatives of KKC in a virtual data room to assist KKC in evaluating its position on value.

On July 24 and 25, 2023, Orchard management facilitated in-person and virtual management meetings with representatives of KKC in London, England. During these meetings, representatives of KKC indicated that KKC expected to provide a revised proposal following its internal meetings on August 7, 2023.

On July 25, 2023, following negotiation between the parties, Orchard and Party C entered into a mutual confidentiality agreement. This mutual confidentiality agreement did not contain a standstill obligation.

Also on July 25, 2023, following discussion with and authorization by members of the Transaction Committee, Dr. Gaspar contacted a fifth global pharmaceutical company (referred to as “Party F”) to ascertain its interest in a potential acquisition of Orchard.

On July 26, 2023, members of Orchard management conducted a management presentation for representatives of Party C.

Also on July 26, 2023, Party D informed Guggenheim Securities that given its outstanding broader strategic priorities, it was not interested in engaging with Orchard with respect to a potential acquisition transaction.

 

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On July 28, 2023, representatives of Guggenheim Securities and representatives of Goldman Sachs, KKC’s financial advisor, had an initial introductory discussion regarding the potential transaction between Orchard and KKC.

Also on July 28, 2023, the Transaction Committee held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. Orchard management reported on its discussions with KKC since the last Transaction Committee meeting and reported on KKC’s due diligence efforts to date and perceived level of interest. Representatives of Guggenheim Securities reported on their recent discussions with representatives of Goldman Sachs. Orchard management and representatives of Guggenheim Securities reported on the status of engagement with other pharmaceutical companies regarding interest in a potential acquisition of Orchard, noting that Party A and Party D had declined to engage in discussions. The meeting participants then discussed potential responses to KKC and related process and timing considerations. Following discussion, the Transaction Committee authorized Orchard management and its advisors to continue discussions with KKC, Party C, Party E and Party F.

Also on July 28, 2023, Party F informed Dr. Gaspar that it was interested in scheduling discussion to learn more about the potential acquisition opportunity.

On July 31, 2023, Dr. Gaspar had a discussion with a representative of Party F who indicated that given certain internal factors, it was unlikely that Party F could move quickly enough to participate in an acquisition of Orchard, however, they would review internally and inform Orchard of its interest.

Also on July 31, 2023, Party E informed Guggenheim Securities without providing a specific reason that it was not interested in engaging with Orchard with respect to a potential acquisition transaction.

On August 1, 2023, a representative of Party C informed Dr. Gaspar that Party C was interested in continuing to explore a potential acquisition transaction.

Also on August 1, 2023, the Orchard Board held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. Orchard management provided an update on the expected timing for the submission of the BLA for OTL-200, to seek U.S. marketing approval as well as other portfolio and program updates. Orchard management reported on its discussions with KKC since the last Orchard Board meeting and reported on KKC’s due diligence efforts to date and perceived level of interest. Representatives of Guggenheim Securities reported on their recent discussions with representatives of Goldman Sachs. The Orchard Board received an update on the recent meeting of the Transaction Committee. Orchard management and representatives of Guggenheim Securities reported on the status of engagement with the five other global pharmaceutical companies regarding interest in a potential acquisition of Orchard (excluding KKC), noting that Party A, Party D and Party E had declined to engage in discussions. Following discussion, the Orchard Board authorized Orchard management and its advisors to continue discussions with KKC, Party C and Party F. At the meeting, representatives of Goodwin reminded the meeting participants that directors and management should not have any discussions with KKC regarding potential future roles, compensation or incentive arrangements for Orchard employees in connection with the proposed transaction until negotiation of all material terms of a transaction were complete.

Also at the meeting, during executive session, the Orchard Board discussed the approval of the formal engagement of Guggenheim Securities as Orchard’s financial advisor. Orchard management reviewed with the Orchard Board the final terms of the proposed engagement letter with Guggenheim Securities. The Orchard Board reviewed a customary relationship disclosure letter made available by Guggenheim Securities prior to the meeting, indicating that Guggenheim Securities had not been engaged by KKC during the two-year period prior to such disclosure. Following review of this information, the Orchard Board determined that the disclosed information would not impact Guggenheim Securities’ ability to act independently and effectively as financial advisor to Orchard. At the meeting, the Orchard Board authorized Orchard to execute and deliver the engagement

 

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letter with Guggenheim Securities on the terms presented at the meeting and the engagement letter was executed by the parties shortly thereafter, effective as of August 1, 2023. See the heading titled “—Opinion of Orchard’s Financial Advisor” for further information regarding Guggenheim Securities’ engagement letter.

On August 3, 2023, Orchard announced that it completed submission of its BLA for OTL-200 for MLD to the FDA.

On August 7, 2023, representatives of KKC informed Orchard management that KKC would be presenting a written revised non-binding proposal to acquire Orchard for $16.00 per Orchard ADS in cash (the “August 7 Proposal”), which KKC verbally indicated was its “best and final offer.” Subsequently, KKC sent Orchard management the August 7 Proposal.

Also on August 7, 2023, Dr. Gaspar had a discussion with a representative of Party C regarding scientific diligence questions. Also that day, representatives of Guggenheim Securities had a discussion with Party C and Party C indicated that it would reach a decision within the next two days on whether to proceed in engaging with Orchard with respect to a potential acquisition transaction.

Also on August 7, 2023, Party F informed Dr. Gaspar without providing a specific reason that it was not interested in engaging with Orchard with respect to a potential acquisition transaction.

On August 9, 2023, Party C informed representatives of Guggenheim Securities without providing a specific reason that following further internal discussions, it was not interested in engaging with Orchard with respect to a potential acquisition transaction.

On August 11, 2023, the Orchard Board held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. At this meeting, Orchard management provided a business update. Orchard management also provided an update on their recent conversations with representatives of KKC, the status of the due diligence process and receipt of the August 7 Proposal. Representatives of Guggenheim Securities then reviewed certain preliminary financial analyses related to the August 7 Proposal. Representatives of Guggenheim Securities also reported on the lack of interest of each of Party A, Party C, Party D, Party E and Party F in submitting a proposal for a potential acquisition of Orchard.

The meeting participants discussed that KKC verbally indicated that the August 7 Proposal was its “best and final offer”. The Orchard Board discussed strategy with respect to further negotiations with KKC that would be most likely to maximize value for Orchard and Orchard shareholders, including seeking additional transaction consideration through a contingent value right (“CVR”) payable upon the approval of OTL-200 for the treatment of MLD in the U.S., which, according to the Forecasts, was achievable and estimated to occur in the first quarter of 2024. See the heading titled “—Certain Financial Projections” for further information regarding the “Forecasts.” Following discussion, and in consideration of the preliminary financial analyses reviewed by Guggenheim Securities at the meeting, the Transaction Committee authorized Orchard management and Guggenheim Securities to continue to negotiate with representatives of KKC and seek an additional CVR of $2.00 per Orchard ADS payable in cash upon the approval of OTL-200 for the treatment of MLD in the U.S.

On August 12, 2023, representatives of Guggenheim Securities had a discussion with representatives of Goldman Sachs and conveyed the counterproposal authorized by the Orchard Board of $16.00 per Orchard ADS in cash plus an additional CVR of $2.00 per Orchard ADS payable in cash upon the approval of OTL-200 for the treatment of MLD in the U.S. The representatives of Goldman Sachs indicated that they would discuss the counterproposal with KKC.

On August 15, 2023, members of Orchard management had a discussion with representatives of KKC regarding the Orchard counterproposal and the proposed CVR. Representatives of KKC confirmed that they would discuss Orchard’s counterproposal with the KKC Board and revert the following week.

 

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On August 24, 2023, representatives of KKC contacted members of Orchard management and presented a verbal, revised, non-binding proposal to acquire Orchard for $16.00 per Orchard ADS in cash plus an additional CVR of $1.00 per Orchard ADS payable in cash upon the approval of OTL-200 for the treatment of MLD in the U.S. prior to December 31, 2024 (the “August 24 Proposal”). Representatives of KKC verbally stated that this was KKC’s “best and final” proposal and that KKC was willing to include the $1.00 CVR to reach agreement with Orchard on valuation. KKC further stated that it would not make another proposal. The members of Orchard management indicated that they would inform the Orchard Board of the August 24 Proposal. Later on August 24, 2023, representatives of Goldman Sachs communicated the same message to representatives of Guggenheim Securities.

On August 25, 2023, the Orchard Board held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. Orchard management reported on their recent conversations with KKC and receipt of KKC’s August 24 Proposal. Representatives of Guggenheim Securities reported on their recent discussions with Goldman Sachs. The Orchard Board discussed that KKC indicated that the August 24 Proposal was “best and final”, the risk that KKC could terminate discussions with Orchard if Orchard rejected the August 24 Proposal and the fact that the five other global pharmaceutical companies that the Orchard Board considered reasonably likely to have a potential interest in acquiring Orchard at the value initially proposed by KKC (i.e., Party A, Party C, Party D, Party E and Party F) had declined to engage with Orchard regarding a potential sale transaction. After discussion, the Orchard Board determined that Orchard had obtained KKC’s last, best and final offer, and determined that it was in the best interests of Orchard and its shareholders to proceed with KKC’s August 24 Proposal. The Orchard Board then authorized Orchard management and Guggenheim Securities to inform KKC of the Orchard Board’s decision to proceed towards a potential transaction on the basis of the August 24 Proposal.

The Orchard Board then discussed whether, given the legal and administrative burden of the CVR, KKC might agree to increase the upfront cash per Orchard ADS value to $17.00 in lieu of including the CVR in the Transaction. After discussion, including discussions regarding the financial review by Guggenheim Securities based on the Forecasts during the Orchard Board meeting held on June 24, 2023, the Orchard Board directed representatives of Guggenheim Securities to discuss with representatives of Goldman Sachs increasing the upfront cash per Orchard ADS price to $17.00, in lieu of including a CVR in the Transaction. The Orchard Board, however, authorized Orchard management and its advisors to proceed towards a potential transaction on the basis of the August 24 Proposal without modification if KKC was unwilling to increase the upfront cash per Orchard ADS value to $17.00 in lieu of including the CVR in the Transaction. The participants at the meeting also discussed expected process and timing considerations to attempt to execute definitive documents with KKC based on the August 24 Proposal as expeditiously as possible.

Also on August 25, 2023, as directed by the Orchard Board, representatives of Guggenheim Securities had a discussion with representatives of Goldman Sachs and discussed whether $1.00 CVR was worth the legal and administrative burden and the Orchard Board’s preference to increase the upfront cash per Orchard ADS price to $17.00, in lieu of including a CVR in the Transaction. The representatives of Goldman Sachs agreed to take the proposal back to KKC for consideration.

On August 28, 2023, representatives of KKC presented a supplemental due diligence request list to Orchard management. In response, Orchard provided KKC access to an expanded virtual data room in order to enable KKC and its advisors to perform a confirmatory due diligence review of Orchard.

On August 29, 2023, representatives of KKC informed Orchard management that KKC was unwilling to increase the upfront cash per Orchard ADS value to $17.00 in lieu of including the CVR in the Transaction. In response, as authorized by the Orchard Board, Orchard management confirmed the Orchard Board’s decision to proceed towards a potential transaction on the basis of the August 24 Proposal without modification.

On August 30, 2023, Orchard provided KKC with an initial draft of language to be included in the proposed CVR Agreement.

 

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On September 1, 2023, representatives of Guggenheim Securities and Goldman Sachs had a discussion regarding KKC’s confirmatory due diligence process, and the expected timeline for execution of definitive transaction documents. During this discussion, representatives of Goldman Sachs confirmed that a KKC Board meeting was scheduled for October 5, 2023 to provide final approval of the Transaction. Representatives of Guggenheim Securities inquired whether KKC’s timing for final approval could be expedited. Representatives of Goldman Sachs responded that they would discuss the matter with KKC.

On September 4 and 5, 2023, members of Orchard management and representatives of KKC had discussions regarding outstanding due diligence items.

On September 7, 2023, members of Orchard management and representatives of KKC had discussions regarding certain potential transaction terms, including CVR Agreement terms. During these discussions, representatives of KKC confirmed that KKC would not expedite its timing for KKC Board approval, which was expected on October 5, 2023.

On September 8, 2023, Morrison Foerster LLP (“MoFo”), legal counsel to KKC, provided Goodwin with an initial draft of the Transaction Agreement.

On September 12 and 13, 2023, members of Orchard management and representatives of KKC met in-person in London, England, as part of ongoing diligence and diligence planning. Representatives of Guggenheim Securities and Goldman Sachs were also in attendance.

On September 16, 2023, MoFo provided Goodwin with an initial draft of the CVR Agreement.

On September 18, 2023, Orchard announced the acceptance of its BLA for OTL-200 in MLD and receipt of priority review. Orchard also announced that the FDA set a PDUFA goal date of March 18, 2024.

Also on September 18, 2023, the Orchard Board held a regularly-scheduled meeting at which members of Orchard management and representatives of Goodwin were present. Representatives of Guggenheim Securities were present for a portion of the meeting. At the meeting, Orchard management provided a business update to the Orchard Board. Orchard management also provided an update on the continuing discussions with KKC, the status of KKC’s due diligence review, and timing considerations. Representatives of Goodwin reviewed key items in the draft transaction documents. The Orchard Board provided feedback and direction to Orchard management and Orchard’s advisors on these matters. Also at this meeting, the directors discussed employee incentive issues that the proposed transaction might create and authorized Orchard management to discuss such matters with KKC.

Also on September 18, 2023, Goodwin sent revised drafts of the Transaction Agreement and CVR Agreement to MoFo.

From September 20 through October 5, 2023, representatives of Goodwin and Slaughter and May, Orchard’s UK legal counsel, with input from the Orchard Board (including through the Transaction Committee and the Compensation Committee) and Orchard management, and KKC’s representatives and representatives of MoFo exchanged drafts and participated in discussions regarding the terms of the Transaction Agreement, Scheme of Arrangement, shareholder resolutions, irrevocable undertakings, the CVR Agreement and related documents. The items negotiated with respect to the these documents included, among other things, (i) the representations and warranties to be made by the parties, (ii) the provisions relating to regulatory approval matters, (iii) the restrictions on the conduct of Orchard’s business until completion of the Transaction, (iv) exclusions of certain events and conditions from the definition of “Material Adverse Effect,” (v) the ability of Orchard under certain circumstances to evaluate unsolicited proposals for an acquisition that constitutes or would reasonably be expected to lead to an offer that was superior to the Transaction, (vi) the conditions to completion of the Transaction, (vii) certain matters regarding Orchard employees discussed below, (viii) the

 

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remedies available to each party under the Transaction Agreement, including termination fees payable to KKC, (ix) the amount of such termination fees, which the parties ultimately agreed in the Transaction Agreement to be $3,860,000 (representing approximately 1% of the equity value of the Transaction) in certain specified circumstances, and $3,000,000 in certain other specified circumstances, in each case to be paid by Orchard (with any related amount in respect of VAT to also be borne by Orchard), (x) the request for certain shareholders of Orchard to execute irrevocable undertakings and (xi) the terms of the CVR Agreement.

On September 21, 2023, members of Orchard management, at the direction of the Orchard Board, had their first discussion with members of KKC management regarding a cash incentive program that would be administered by KKC following the closing, and a transaction bonus pool of $1,750,000 for Orchard directors and certain employees in connection with the proposed transaction to, among other reasons, recognize significant contributions with respect to the consummation of the proposed transaction.

On September 27, 2023, the Transaction Committee held a meeting at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. Orchard management and representatives of Goodwin provided updates on the negotiation of the Transaction Agreement and the CVR Agreement. The participants also discussed the status of the discussions with KKC and the discussion with members of KKC management regarding the proposals for a cash incentive program to be administered by KKC following the closing and a transaction bonus pool for Orchard directors and certain employees in connection with the proposed transaction. The Transaction Committee provided feedback and direction to Orchard management and Orchard’s advisors on these matters.

On October 3 and October 4, 2023, the Transaction Committee held meetings at which members of Orchard management and representatives of Guggenheim Securities and Goodwin were present. Orchard management and representatives of Goodwin provided updates on the negotiation of the Transaction Agreement and the CVR Agreement. The Transaction Committee provided feedback and direction to Orchard management and Orchard’s advisors on these matters.

On the evening of October 4, 2023, the Orchard Board held a meeting at which members of management and representatives of Guggenheim Securities and Goodwin were present, to consider approval of the proposed transaction with KKC. Representatives of Goodwin reviewed the fiduciary duties of the Orchard Board in this context and the terms of the final proposed transaction documentation with KKC, including the Transaction Agreement, the CVR Agreement and the other related definitive documents. Representatives of Goodwin also discussed the agreement with KKC regarding a broad cash incentive program for Orchard employees administered by KKC following the closing and a transaction bonus pool of $1,750,000 for Orchard directors and certain employees and in connection with the proposed transaction, including the potential for arrangements for executive officers described in the section under the heading titled “—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction.” The meeting participants noted that these matters were discussed and agreed upon with KKC only after negotiation of all material economic terms of the transaction were completed, and with the oversight of the Compensation Committee. After discussion, the members of the Compensation Committee approved these matters.

Also at the meeting, representatives of Guggenheim Securities reviewed with the Orchard Board Guggenheim Securities’ financial analyses of the Cash Consideration, and rendered to the Orchard Board an oral opinion, which was subsequently confirmed by delivery of a written opinion dated October 4, 2023, that, as of such date and based upon and subject to the various factors and assumptions set forth therein, the Cash Consideration to be delivered to the Scheme Shareholders pursuant to the Transaction Agreement was fair, from a financial point of view, to such holders. For a detailed discussion of Guggenheim Securities’ opinion, please see heading titled “—Opinion of Orchard’s Financial Advisor.”

After discussion, the Transaction Committee unanimously recommended that the Orchard Board approve Orchard’s entry into the Transaction Agreement for the transaction with KKC on the terms presented at this

 

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meeting. Following additional discussion and consideration of the Transaction Agreement, the CVR Agreement and the other transactions contemplated by the Transaction Agreement (including the factors described in “—Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction”), the Orchard Board unanimously resolved (i) that the Transaction Agreement, the Scheme of Arrangement and the transactions contemplated thereby (including the Transaction) were fair to Orchard and the Orchard shareholders and likely to promote the success of Orchard for the benefit of the Orchard shareholders as a whole, (ii) that the Transaction Agreement, the Scheme of Arrangement and the transactions contemplated thereby (including the Transaction) were approved and (iii) to unanimously recommend to the Orchard shareholders the approval of the Scheme of Arrangement at the Court Meeting and the passing of the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements at the General Meeting.

Early in the morning of October 5, 2023, Orchard and KKC executed the Transaction Agreement, and all signatories to the irrevocable undertakings executed the irrevocable undertakings.

On October 5, 2023, prior to the opening of trading on Nasdaq, Orchard and KKC issued a joint press release announcing the Transaction.

Recommendation of the Orchard Board; Orchard’s Reasons for the Transaction

In evaluating the Transaction Agreement and the Transaction, the Orchard Board considered their fiduciary duties and, in particular, their general duty under section 172(1) of the Companies Act to act in a manner which would be most likely to promote the success of Orchard for the benefit of its members as a whole, and consulted with Orchard’s management and legal and financial advisors. In the course of reaching its determination that the terms of the Transaction are advisable and in the best interests of Orchard and its shareholders and to recommend that Orchard shareholders approve the Scheme of Arrangement at the Court Meeting and the passing of the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements at the General Meeting, the Orchard Board reviewed, evaluated, and considered a significant amount of information and numerous reasons and benefits of the Transaction, each of which the Orchard Board believed supported its unanimous determination and recommendation. As a result, for the reasons set forth below, the Orchard Board recommends that Orchard shareholders approve the Scheme of Arrangement at the Court Meeting and the passing of the Scheme Implementation Proposal and the Non-Binding Advisory Proposal to Approve Certain Compensation Arrangements at the General Meeting:

Offer Price. The Orchard Board considered:

 

   

the historical market prices, volatility and trading information with respect to the Orchard ADSs;

 

   

the recent historical trading prices of the Orchard ADSs, as compared to the upfront Offer Price, including the fact that the upfront Offer Price of $16.00 per Share represents:

 

   

a 97% premium to the closing price of $8.14 on October 4, 2023;

 

   

a 144% premium to the trading volume-weighted average price of $6.55 for the 30-calendar day period ended on October 4, 2023; and

 

   

a 95% premium to the 52-week high closing price of $8.21 on September 27, 2023; and

 

   

that in its view it had obtained KKC’s best and final offer, and that, as of the date of the Transaction Agreement, the Cash Consideration represented the highest per-Orchard ADS consideration reasonably obtainable.

Orchards Operating and Financial Condition and Prospects. The Orchard Board considered Orchard’s operating and financial performance and its prospects, including certain prospective forecasts for Orchard prepared by Orchard management, which reflect an application of various assumptions of Orchard management. The Orchard Board considered the inherent uncertainty of achieving Orchard management’s prospective

 

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forecasts, as set forth under the heading titled “—Certain Financial Projections,” and that, as a result, Orchard’s actual financial results in future periods could differ materially from Orchard management’s forecasts. The Orchard Board considered, among other factors, that the holders of the Orchard ADSs would continue to be subject to the risks and uncertainties of Orchard executing on its long-range plan if it remained independent. These risks and uncertainties included risks relating to the macro-economic, industry and market conditions negatively impacting valuations of gene therapy companies such as Orchard, the need for meaningful capital investment to fund Orchard’s continued operations and the commercialization of OTL-200, the uncertainty in obtaining marketing approval for OTL-200 in the U.S., the need to successfully commercialize and gain market acceptance of Libmeldy in Europe and OTL-200 in the U.S., if approved, the need to build a sales and marketing infrastructure, the development by other companies of competitive products, the need to make significant investment in diagnosis and newborn screening of MLD around the world, the dependence on the success of a single lead product, the dependence on key personnel and compliance with government regulations. The Orchard Board also considered the risks and challenges facing Orchard as a result of its current cash position and that, as a standalone company, Orchard would need to seek substantial additional funding through future equity, royalty and/or debt financings or additional collaborations or strategic partnerships, and any such fundraising could have a highly dilutive effect on Orchard’s existing shareholders, could require Orchard to enter into restrictive covenants, might only be available on unfavorable terms or might not be available at all. The Orchard Board weighed the certainty of realizing a substantial value for Orchard ADSs in the Transaction compared to the uncertainty that trading values would approach the Offer Price in the foreseeable future and the substantial risk and uncertainty associated with Orchard and its business as a gene therapy company (including the risk factors set forth in Orchard’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and subsequent quarterly reports on Form 10-Q).

Potential Strategic Alternatives. The Orchard Board reviewed the possible alternatives to the Transaction, including the execution of Orchard management’s stand-alone plan. The Orchard Board considered the risks inherent in the development of drug products, the risks related to designing, conducting and compiling data from clinical trials, the risks related to seeking approval for marketing from the FDA and other regulatory authorities, risks related to pricing and reimbursement for OTL-200 and Orchard’s other products, if approved, competition, and other factors affecting the revenues and profitability of gene therapy companies generally. The Orchard Board also considered the fact that OTL-200 had not yet been approved for marketing by the FDA, as well as the status and prospects for Orchard’s current product candidates and development programs.

Product Commercialization and Development Risks; Existing Resources. The Orchard Board considered the status and prospects for Orchard’s current product and pipeline, including the fact that Orchard is heavily dependent on the success of Libmeldy in Europe and OTL-200’s regulatory approval in the U.S. The Orchard Board considered the risk that Libmeldy revenue may be lower than expected or may be uneven between quarters, which could affect Orchard’s ability to raise additional capital. The Orchard Board also considered the risks that OTL-200 may not be approved in the U.S. or that the label could be for a smaller subset of the population than Orchard is seeking or, if approved, the risk that OTL-200 may not be successfully commercialized or that Orchard will not receive reimbursement at an acceptable price. The Orchard Board considered the fact that Orchard will require significant additional capital in order to continue to develop its product pipeline, commercialize its products and fund its other ongoing operations. The Orchard Board considered the fact that gene therapy products and product candidates and the process for administering such products and product candidates may cause serious or undesirable effects or adverse events. The Orchard Board also considered the fact that gene therapies are novel, complex and difficult to manufacture and the fact that managing an autologous ex vivo gene therapy supply chain is highly complex. In addition, the Orchard Board considered the significant challenges and costs associated with successfully scaling commercial operations globally, including the ability to obtain and maintain intellectual property protection for Libmeldy and its product candidates, and the expected increase in competition over time.

Negotiation Process. The Orchard Board considered the fact that the terms of the Transaction were the result of robust arm’s-length negotiations conducted by Orchard with the knowledge and at the direction of the

 

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Orchard Board and with the assistance of its financial and legal advisors. The Orchard Board also considered the enhancements that Orchard and its advisors were able to obtain as a result of robust arm’s-length negotiations with KKC, including the increase in the valuation offered by KKC from the time of its initial expression of interest to the end of the negotiations and the inclusion of provisions in the Transaction Agreement that increase the likelihood of completing the Transaction.

Potentially Interested Counterparties. The Orchard Board considered the process conducted by Orchard, with the assistance of representatives of Guggenheim Securities, to identify potential buyers taking into account the expected interest of parties in Libmeldy generally, their financial capability to consummate a transaction of this size, and their ability to move quickly and efficiently in a process, the outcome of those discussions, and the fact that none of these parties, other than KKC, had expressed interest in a strategic transaction such as the Transaction.

Opinion of Financial Advisor. The Orchard Board considered the oral opinion of Guggenheim Securities rendered to the Orchard Board on October 4, 2023, which was subsequently confirmed by delivery of a written opinion dated October 4, 2023, that, as of such date and based upon and subject to the various factors and assumptions set forth therein, the Cash Consideration to be delivered to the Scheme Shareholders pursuant to the Transaction Agreement was fair, from a financial point of view, to such holders. For a detailed discussion of Guggenheim Securities’ opinion, please see heading titled “—Opinion of Orchard’s Financial Advisor.”

The Transaction Agreement; Ability to Consider, Receive and Respond to Unsolicited Proposals. The Orchard Board considered the provisions of the Transaction Agreement, including (1) the agreed exclusions of certain events and conditions from the definition of “Material Adverse Effect,” (2) the ability of Orchard under certain circumstances to evaluate unsolicited proposals for an acquisition that is or would reasonably be expected to lead to an offer that is superior to the Transaction, (3) the ability of the Orchard Board under certain circumstances to withdraw or modify its recommendation that the holders of Orchard ADSs approve the Transaction, including in connection with a superior proposal, (4) Orchard’s right to terminate the Transaction Agreement under certain circumstances in order to accept a superior proposal and enter into an agreement with respect to such superior proposal, (5) the respective termination rights of Orchard and KKC, and (6) the $3,860,000 termination fee payable by Orchard under certain circumstances (with any related amount in respect of VAT to also be borne by Orchard), which the Orchard Board believed was reasonable relative to termination fees in transactions of a similar size, would not likely preclude competing bids and would not likely be payable unless the Orchard Board entered into an agreement for a superior proposal.

Other Termination Fee Payable by Orchard. The Orchard Board considered that, in its view, the fact that Orchard will be required to pay $3,000,000 to KKC (and to bear any related amount in respect of VAT) if the Transaction Agreement is terminated because (1) Orchard shareholders do not approve the Transaction at the applicable Shareholder Meetings or (2) the Court declines or refuses to sanction the Scheme of Arrangement, would likely not deter alternative acquisition proposals.

Conditions to the Consummation of the Transaction; Likelihood of Completion. The Orchard Board considered the likelihood of completing the Transaction, particularly in light of the terms of the Transaction Agreement, including (1) the conditions to the Transaction being specific and limited, (2) the exceptions contained within the definition of “Material Adverse Effect”, which generally defines the standard for closing risk, and (3) the likelihood of obtaining required regulatory approvals, including the commitments made by KKC to obtain the required regulatory approvals in the Transaction Agreement. The Orchard Board also considered the fact that there is no financing condition to the consummation of the Transaction.

Transaction Structure; Timing of Completion. The Orchard Board considered the anticipated timing of the consummation of the Transaction, and the structure of the Transaction as a Scheme of Arrangement. The Orchard Board considered the impact of the Transaction on its employees, including the treatment of its employees’ vested and unvested equity awards under the Orchard Stock Plans. The Orchard Board also considered that the

 

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potential for closing in a relatively short timeframe could reduce the amount of time in which Orchard’s business would be subject to the potential uncertainty of closing and related disruption.

End Date. The Orchard Board considered the termination date under the Transaction Agreement on which either KKC or Orchard, subject to certain exceptions, can terminate the Transaction Agreement, which is anticipated to allow for sufficient time to consummate the Transaction while minimizing the length of time during which Orchard would be required to operate subject to the restrictions on interim operations set forth in the Transaction Agreement. The Orchard Board also considered that either KKC or Orchard can unilaterally extend the termination date by two months in certain circumstances involving the non-satisfaction of conditions relating to regulatory matters.

Business Reputation of KKC. The Orchard Board considered the business reputation and capabilities of KKC and its management and the substantial financial resources of KKC, which the Orchard Board believed supported the conclusion that a transaction with KKC could be completed relatively quickly and in an orderly manner.

Certainty of Consideration. The Orchard Board considered the all-cash nature of the consideration to be paid in the Transaction, which allows holders of Orchard ADSs to realize immediate value, in cash, for their investment in Orchard, while avoiding Orchard’s regulatory, commercialization and other business risks, and while also providing such holders of Orchard ADSs with certainty of value and liquidity for their Orchard ADSs. In addition, the Orchard Board considered that in addition to the upfront cash amount, the holders of Orchard ADSs will receive one CVR per Orchard ADS, which provides the holders of Orchard ADSs with opportunities to realize additional value through additional cash payments to the extent that the Milestone is achieved within the time period described therein, which, according to the Forecasts, is achievable, in particular, given the Orchard Board’s negotiation regarding the scope and timeframe for achieving the Milestone and the Orchard Board’s belief that the Milestone is reasonably achievable, taking into account the fact that while KKC has the right, in its sole and absolute discretion, to direct and control the research, development, commercialization and other exploitation of OTL-200 in all respects, KKC must use “Commercially Reasonable Efforts” (as described in the CVR Agreement) to achieve the Milestone and the extensive experience and resources of KKC in biopharmaceutical product development and commercialization, particularly as such commercial experience and resources relate to the potential achievement of the Milestone.

Terms of the CVR Agreement. The Orchard Board considered the terms of the CVR Agreement, taken as a whole, including the terms and scope of the Milestone, the right of KKC, in its sole and absolute discretion, to direct and control the research, development, commercialization and other exploitation of OTL-200 in all respects, subject to the requirement that KKC use “Commercially Reasonable Efforts” in the achievement of the Milestone and the various other protections of Orchard shareholders therein.

Treatment of Orchard Workforce. The Orchard Board considered the fact that KKC had demonstrated it valued the Orchard workforce, including KKC’s commitment to maintain, for a period of 12 months from consummation of the Transaction the (i) base salary or wages or target annual bonus opportunity and (ii) certain benefits of Orchard’s employees, in each case, that are no less favorable than those provided to such employees immediately prior to consummation of the Transaction.

In the course of its deliberations, the Orchard Board also considered a variety of material risks and other countervailing factors related to entering into the Transaction Agreement, including, but not limited to, the following:

 

   

the fact that Orchard’s shareholders will not be entitled to participate in any potential future benefit from Orchard’s execution of Orchard management’s stand-alone strategic business plan, except to the extent the CVR Milestone payment is made pursuant to the CVR Agreement;

 

   

the fact that, despite the Forecasts that the Milestone is achievable in the timeframe negotiated with KKC, the Milestone may nevertheless not be achieved at all or during the period required by the CVR

 

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Agreement for the holders of Orchard ADSs to receive the payment due with respect to the Milestone pursuant to the CVRs;

 

   

the effect of the public announcement of the Transaction Agreement, including effects on Orchard’s pre-commercialization activities, Orchard’s relationship with its partners and other business relationships, and Orchard’s ability to attract and incentivize key management and personnel;

 

   

the fact that the Transaction Agreement precludes Orchard from actively soliciting alternative takeover proposals and requires payment by Orchard of a $3,860,000 termination fee (and to bear any related amount in respect of VAT) under certain circumstances, including in the event that the Transaction Agreement is terminated by Orchard to accept a superior proposal;

 

   

the fact that Orchard will be required to pay $3,000,000 to KKC (and to bear any related amount in respect of VAT) if the Transaction Agreement is terminated because (1) Orchard shareholders do not approve the Transaction at the applicable Shareholder Meetings or (2) the Court declines or refuses to sanction the Scheme of Arrangement;

 

   

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

 

   

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

 

   

the risk of litigation;

 

   

the fact that significant costs have been and will continue to be incurred in connection with negotiating and entering into the Transaction Agreement and completing the Transaction, and substantial time and effort of Orchard management will be required, potentially resulting in disruptions to the operation of Orchard’s business;

 

   

the interests that certain directors and executive officers of Orchard may have with respect to the Transaction that may be different from, or in addition to, their interests as shareholders of Orchard or the interests of Orchard’s other shareholders generally, as described in “—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction”; and

 

   

the treatment of the consideration to be received by the holders of Orchard ADSs in the Transaction as taxable to the holders of Orchard ADSs for U.S. federal income tax purposes.

The foregoing discussion of the information and factors considered by the Orchard Board in reaching its conclusions and recommendations is intended to be illustrative and not exhaustive, but includes the material reasons and factors considered by the Orchard Board. In view of the wide variety of reasons and factors considered, the Orchard Board did not find it practicable to, and did not, quantify, rank or otherwise assign any relative or specific weights to the various specific factors considered in reaching its determination and making its recommendation. In addition, the Orchard Board did not reach any specific conclusion with respect to any of the factors or reasons considered. Instead, the Orchard Board conducted an overall review of the factors and reasons described above and determined that, in the aggregate, the potential benefits considered outweighed the potential risks or possible negative consequences of the Transaction and would be most likely to promote the success of Orchard for the benefit of its members as a whole.

The foregoing discussion of the reasoning of the Orchard Board and certain information presented in this section is forward-looking in nature and, therefore, the information should be read in light of the factors discussed in “CAUTIONARY STATEMENT REGARDING FORWARD- LOOKING STATEMENTS.” For the

 

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reasons described above, and in light of other factors that the Orchard Board believed were appropriate to consider, the Orchard Board approved the Transaction Agreement and the transactions contemplated thereby, including the Transaction, and unanimously recommends that Orchard’s shareholders tender their Orchard ADSs to KKC pursuant to the Transaction.

ACCORDINGLY, THE ORCHARD BOARD UNANIMOUSLY RECOMMENDS THAT ORCHARD SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE SCHEME PROPOSAL, “FOR” THE APPROVAL OF THE SCHEME IMPLEMENTATION PROPOSAL AND “FOR” THE NON-BINDING ADVISORY PROPOSAL TO APPROVE CERTAIN COMPENSATION ARRANGEMENTS.

Opinion of Orchard’s Financial Advisor

Opinion of Guggenheim Securities, LLC

Overview

The Orchard Board retained Guggenheim Securities as its financial advisor, including in connection with Orchard’s possible Transaction with KKC. Guggenheim Securities has had a long-standing investment banking relationship with Orchard and has been formally engaged in connection with the Transaction since August 1, 2023 as Orchard’s financial advisor. In selecting Guggenheim Securities as its financial advisor, the Orchard Board considered that, among other things, Guggenheim Securities is an internationally recognized investment banking, financial advisory and securities firm whose senior professionals have substantial experience advising companies in, among other industries, the biopharmaceutical sector. Guggenheim Securities, as part of its investment banking, financial advisory and capital markets businesses, is regularly engaged in the valuation and financial assessment of businesses and securities in connection with mergers and acquisitions, recapitalizations, spin-offs/split-offs, restructurings, securities offerings in both the private and public capital markets and valuations for corporate and other purposes.

At the October 4, 2023 meeting of the Orchard Board, Guggenheim Securities rendered an oral opinion, which was confirmed by delivery of a written opinion, dated October 4, 2023, to the Orchard Board to the effect that, as of October 4, 2023 and based on and subject to the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken, the scheme deliverables to be received by the Scheme Shareholders in connection with the Transaction was fair, from a financial point of view, to the Scheme Shareholders.

This description of Guggenheim Securities’ opinion is qualified in its entirety by the full text of the written opinion, which is attached as Annex D to this proxy statement and which you should read carefully and in its entirety. Guggenheim Securities’ written opinion sets forth the matters considered, the procedures followed, the assumptions made and various limitations of and qualifications to the review undertaken by Guggenheim Securities. Guggenheim Securities’ written opinion, which was authorized for issuance by the Fairness Opinion and Valuation Committee of Guggenheim Securities, is necessarily based on economic, business, capital markets and other conditions, and the information made available to Guggenheim Securities, as of the date of such opinion. Guggenheim Securities has no responsibility for updating or revising its opinion based on facts, circumstances or events occurring after the date of the rendering of the opinion.

In reading the discussion of Guggenheim Securities’ opinion set forth below, you should be aware that such opinion (and, as applicable, any materials provided in connection therewith or the summary of Guggenheim Securities’ underlying financial analyses elsewhere in this proxy statement):

 

   

was provided to the Orchard Board (in its capacity as such) for its information and assistance in connection with its evaluation of the scheme deliverables;

 

   

did not constitute a recommendation to the Orchard Board with respect to the Transaction;

 

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does not constitute advice or a recommendation to any Orchard Shareholder or Scheme Shareholder as to how to vote or act in connection with the Transaction or otherwise;

 

   

did not address Orchard’s underlying business or financial decision to pursue or effect the Transaction, the relative merits of the Transaction as compared to any alternative business or financial strategies that might exist for Orchard, any financing of the Transaction or the effects of any other transaction in which Orchard might engage;

 

   

addressed only the fairness, from a financial point of view and as of the date of such opinion, of the scheme deliverables to the Scheme Shareholders to the extent expressly specified in such opinion;

 

   

expressed no view or opinion as to (i) any other term, aspect or implication of (a) the Transaction (including, without limitation, the form or structure of the Transaction), the Transaction Agreement, the CVR Agreement or the Scheme of Arrangement or (b) any other agreement, transaction document or instrument contemplated by the Transaction Agreement or to be entered into or amended in connection with the Transaction, including the CVR Agreement and the Scheme of Arrangement, (ii) the likelihood or probability of the achievement or satisfaction of the CVR Milestone necessary for the CVR Consideration to be paid in accordance with the CVR Agreement or (iii) the fairness, financial or otherwise, of the Transaction to, or of any consideration to be paid to or received by, the holders of any class of securities (other than as expressly specified in its opinion), creditors, employees or other constituencies of Orchard; and

 

   

expressed no view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of Orchard’s directors, officers or employees, or any class of such persons, in connection with the Transaction relative to the scheme deliverables or otherwise.

In connection with rendering its opinion, Guggenheim Securities:

 

   

reviewed a draft of the Transaction Agreement, dated as of October 5, 2023 (Tokyo time), including the form of the CVR Agreement and the form of the Scheme of Arrangement, each attached as an annex thereto;

 

   

reviewed certain publicly available business and financial information regarding Orchard;

 

   

reviewed certain non-public business and financial information regarding Orchard’s business and future prospects (including certain probability-adjusted financial projections for Orchard on a stand-alone basis (See the heading titled “—Certain Financial Projections” for further information regarding the “Forecasts”) and certain other estimates and other forward-looking information), all as prepared by, discussed with and approved for Guggenheim Securities’ use by Orchard’s senior management (collectively, the “Orchard-Provided Information”);

 

   

discussed with Orchard’s senior management their strategic and financial rationale for the Transaction as well as their views of Orchard’s business, operations, historical and projected financial results, liquidity, funding needs, access to capital and future prospects (including, without limitation, their assumptions as to the expected amounts, timing and pricing of future issuances of equity in Orchard) and the commercial, competitive and regulatory dynamics in the biopharmaceutical sector (including assumptions regarding the probability and timing of achievement of the CVR Milestone);

 

   

performed financing-adjusted and probability-adjusted discounted cash flow analyses based on the Orchard-Provided Information;

 

   

reviewed the valuation and financial metrics and acquisition premia associated with certain mergers and acquisitions that Guggenheim Securities deemed relevant in evaluating the Transaction;

 

   

reviewed the historical prices, trading multiples and trading activity of the Orchard ADSs;

 

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compared the financial performance of Orchard and the trading multiples and trading activity of the Orchard ADSs with corresponding data for certain other publicly traded companies that Guggenheim Securities deemed relevant in evaluating Orchard; and

 

   

conducted such other studies, analyses, inquiries and investigations and considered such other factors and information as Guggenheim Securities deemed appropriate.

With respect to the information used in arriving at its opinion, Guggenheim Securities noted that:

 

   

Guggenheim Securities relied upon and assumed the accuracy, completeness and reasonableness of all industry, business, financial, legal, regulatory, tax, accounting, actuarial and other information provided by or discussed with Orchard (including, without limitation, the Orchard-Provided Information) or obtained from public sources, data suppliers and other third parties.

 

   

Guggenheim Securities (i) did not assume any responsibility, obligation or liability for the accuracy, completeness, reasonableness, achievability or independent verification of, and Guggenheim Securities did not independently verify, any such information (including, without limitation, the Orchard-Provided Information), (ii) expressed no view or opinion regarding the (a) reasonableness or achievability of the Forecasts, any other estimates or any other forward-looking information provided by Orchard or the assumptions upon which any of the foregoing are based or (b) reasonableness of the probability adjustments reflected in the Forecasts and (iii) relied upon the assurances of Orchard’s senior management that they were unaware of any facts or circumstances that would make the Orchard-Provided Information incomplete, inaccurate or misleading.

 

   

Specifically, with respect to (i) the Projections utilized in Guggenheim Securities’ analyses, (a) Guggenheim Securities was advised by Orchard’s senior management, and Guggenheim Securities assumed, that the Forecasts (including the probability adjustments reflected therein and the expected development and commercialization of Orchard’s products and product candidates) had been reasonably prepared on bases reflecting the then-best currently available estimates and judgments of Orchard’s senior management as to the expected future performance of Orchard on a stand-alone basis and (b) Guggenheim Securities assumed that the Forecasts had been reviewed by the Orchard Board with the understanding that such information would be used and relied upon by Guggenheim Securities in connection with rendering its opinion and (ii) any financial projections / forecasts, any other estimates and/or any other forward-looking information obtained by Guggenheim Securities from public sources, data suppliers and other third parties, Guggenheim Securities assumed that such information was reasonable and reliable.

Guggenheim Securities also noted certain other considerations with respect to its engagement and the rendering of its opinion:

 

   

During the course of its engagement, Guggenheim Securities was asked by the Orchard Board to solicit indications of interest from various potential strategic acquirors regarding a potential extraordinary corporate transaction with or involving Orchard, and Guggenheim Securities considered the results of such solicitation process in rendering its opinion.

 

   

Guggenheim Securities did not perform or obtain any independent appraisal of the assets or liabilities (including any contingent, derivative or off-balance sheet assets and liabilities) of Orchard or any other entity or the solvency or fair value of Orchard or any other entity, nor was Guggenheim Securities furnished with any such appraisals.

 

   

Guggenheim Securities’ professionals are not legal, regulatory, tax, consulting, accounting, appraisal or actuarial experts and nothing in Guggenheim Securities’ opinion should be construed as constituting advice with respect to such matters; accordingly, Guggenheim Securities relied on the assessments of Orchard’s senior management and Orchard’s other professional advisors with respect to such matters. Guggenheim Securities did not express any view or render any opinion regarding the tax consequences of the Transaction to Orchard or its securityholders.

 

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Guggenheim Securities further assumed that, in all respects meaningful to its analyses:

 

   

(i) the final executed form of the Transaction Agreement did not, and the CVR Agreement and the Scheme of Arrangement will not, differ from the drafts that Guggenheim Securities reviewed, (ii) Orchard and KKC will comply with all terms and provisions of the Transaction Agreement, the CVR Agreement and the Scheme of Arrangement and (iii) the representations and warranties of Orchard and KKC contained in the Transaction Agreement were true and correct and all conditions to the obligations of each party to the Transaction Agreement, the CVR Agreement and the Scheme of Arrangement to consummate the Transaction would be satisfied without any waiver, amendment or modification thereof;

 

   

the Transaction will be consummated in a timely manner in accordance with the terms of the Transaction Agreement (including the CVR Agreement and the Scheme of Arrangement, as applicable) and in compliance with all applicable legal and other requirements, without any delays, limitations, restrictions, conditions, waivers, amendments or modifications (regulatory, tax-related or otherwise) that would have an effect on Orchard or the Transaction in any way meaningful to Guggenheim Securities’ analyses or opinion; and

 

   

the conditions for the payment of the CVR Consideration will occur and the CVR Consideration will be paid to each Scheme Shareholder, in each case, as provided in the Transaction Agreement, the CVR Agreement and the Scheme of Arrangement.

Guggenheim Securities did not express any view or opinion as to (i) the price or range of prices at which the Orchard ADSs or other securities or financial instruments of or relating to Orchard may trade or otherwise be transferable at any time, including subsequent to the announcement or consummation of the Transaction, (ii) the potential effects of volatility in the credit, financial or equity markets on Orchard, any such securities or other financial instruments, the Transaction or the financing thereof or (iii) the impact of the Transaction on the solvency or viability of Orchard or KKC to pay their respective obligations when they come due.

Summary of Financial Analyses

Overview of Financial Analyses

This “Summary of Financial Analyses” presents a summary of the principal financial analyses performed by Guggenheim Securities and presented to the Orchard Board in connection with Guggenheim Securities’ rendering of its opinion. Such presentation to the Orchard Board was supplemented by Guggenheim Securities’ oral discussion with the Orchard Board, the nature and substance of which may not be fully described herein.

Some of the financial analyses summarized below include summary data and information presented in tabular format. In order to understand fully such financial analyses, the summary data and tables must be read together with the full text of the summary. Considering the summary data and tables alone could create a misleading or incomplete view of Guggenheim Securities’ financial analyses.

The preparation of a fairness opinion is a complex process and involves various judgments and determinations as to the most appropriate and relevant financial analyses and the application of those methods to the particular circumstances involved. A fairness opinion therefore is not readily susceptible to partial analysis or summary description, and taking portions of the financial analyses set forth below, without considering such analyses as a whole, would in Guggenheim Securities’ view create an incomplete and misleading picture of the processes underlying the financial analyses considered in rendering Guggenheim Securities’ opinion.

In arriving at its opinion, Guggenheim Securities:

 

   

based its financial analyses on various assumptions, including assumptions concerning general economic, business and capital markets conditions and industry-specific and company-specific factors, all of which are beyond the control of Orchard, KKC and Guggenheim Securities;

 

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did not form a view or opinion as to whether any individual analysis or factor, whether positive or negative, considered in isolation, supported or failed to support its opinion;

 

   

considered the results of all of its financial analyses and did not attribute any particular weight to any one analysis or factor; and

 

   

ultimately arrived at its opinion based on the results of all of its financial analyses assessed as a whole and believes that the totality of the factors considered and the various financial analyses performed by Guggenheim Securities in connection with its opinion operated collectively to support its determination as to the fairness, from a financial point of view and as of the date of such opinion, of the scheme deliverables, to be received by the Scheme Shareholders pursuant to the Transaction Agreement, the CVR Agreement and the Scheme of Arrangement to the extent expressly specified in such opinion.

With respect to the financial analyses performed by Guggenheim Securities in connection with rendering its opinion:

 

   

Such financial analyses, particularly those based on estimates and projections, are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by these analyses.

 

   

None of the selected precedent merger and acquisition transactions used in the selected precedent merger and acquisition transactions analysis described below is identical or directly comparable to the Transaction, and none of the selected publicly traded companies used in the selected publicly traded companies analysis described below is identical or directly comparable to Orchard. However, such transactions and companies were selected by Guggenheim Securities, among other reasons, because they involved target companies or represented publicly traded companies which may be considered broadly similar, for purposes of Guggenheim Securities’ financial analyses, to the Transaction and Orchard based on Guggenheim Securities’ professional judgment and experience with the biopharmaceutical sector.

 

   

In any event, selected precedent merger and acquisition transactions analysis and selected publicly traded comparable companies analysis are not purely mathematical; rather, such analyses involve complex considerations and judgments concerning the differences in business, operating, financial and capital markets-related characteristics and other factors regarding the selected precedent merger and acquisition transactions to which the Transaction was compared and the selected publicly traded companies to which Orchard was compared.

 

   

Such financial analyses do not purport to be appraisals or to reflect the prices at which any securities may trade at the present time or at any time in the future.

Certain Definitions

Throughout this section entitled “Summary of Financial Analyses,” the following defined terms are used in connection with Guggenheim Securities’ various financial analyses:

 

   

“ADS” means American depository shares.

 

   

“Enterprise value” or “EV” represents the relevant company’s equity value plus (i) the principal or face amount of total debt and certain other debt-like items less (ii) cash, cash equivalents, short- and long-term marketable investments and certain other cash-like items.

 

   

“Equity value” represents for each relevant company (i) the product of (a) the number of outstanding common shares plus shares issuable upon the conversion or exercise of all in the money convertible securities, restricted share units, stock options and/or stock warrants and (b) the relevant company’s stock price less (ii) the cash proceeds from the assumed exercise of all in-the-money stock options, restricted share units and stock warrants.

 

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“NPV” means net present value.

 

   

“Orchard ADS” means American depositary shares of Orchard, with each such American depositary share representing ten (10) Orchard Ordinary Shares.

 

   

“T+5 Revenue” means:

 

   

for purposes of the Orchard Selected Precedent Merger and Acquisition Transactions Analysis, the probability-adjusted revenue forecast for the 12-month period ending five (5) years following the date of announcement of the relevant transaction, using time-weighted average of revenues from the fourth and fifth calendar years following announcement; and

 

   

for purposes of the Selected Publicly Traded Companies Analysis, the probability-adjusted revenue forecast for the 12-month period ending five (5) years after October 5, 2023, using time-weighted average of revenues from the fourth and fifth calendar years following announcement.

 

   

“EV / T+5 Revenue multiple” means the relevant enterprise value divided by the relevant T+5 Revenue.

Recap of Orchard Financial Analyses

In evaluating Orchard in connection with rendering its opinion, Guggenheim Securities performed various financial analyses, which are summarized in the table below and described in more detail elsewhere herein, including a financing-adjusted and probability-adjusted discounted cash flow analysis. Solely for informational reference purposes, Guggenheim Securities also reviewed selected precedent merger and acquisition transactions, selected publicly traded companies, premia paid in selected merger and acquisition transactions, 52-week trading range of Orchard ADSs and certain Wall Street equity research analysts’ trading price targets for Orchard ADSs.

Recap of Orchard Financial Analyses

 

October 4, 2023 Closing Orchard ADS Price

   $ 8.14  

Per ADS Consideration

   $ 16.00  

Per ADS Consideration (incl. NPV of CVR)(1)

   $ 16.84  

 

     Reference Range
for Orchard
Valuation per ADS
 
     Low      High  

Financial Analyses

     

Discounted Cash Flow Analysis (Financing- and Probability-Adjusted)

   $ 13.88      $ 17.56  

For Informational Reference Purposes(2)

     

Selected Precedent M&A Transactions Analysis (25-75th Percentile)

   $ 13.54      $ 19.16  

Selected Publicly Traded Companies Analysis (25-75th Percentile)

   $ 8.63      $ 12.86  

Precedent Premia Analysis (25-75th Percentile)

   $ 11.26      $ 13.46  

Orchard ADS Price Range During 52-Week Trading Range

   $ 3.65      $ 8.21  

Wall Street Equity Research Price Targets

   $ 14.00      $ 34.00  

 

(1) 

Represents the sum of (i) $16.00, the per ADS consideration, plus (ii) NPV on October 4, 2023 of $0.84, the additional CVR consideration (which reflects adjustment for the probability of approval of OTL-200 and a discount rate in accordance with the Orchard-Provided Information).

(2) 

Reference metrics include the probability-adjusted dilutive impact of Orchard’s outstanding warrants.

 

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Orchard Financial Analysis

Orchard Discounted Cash Flow Analysis. Guggenheim Securities performed a stand-alone financing-adjusted and probability-adjusted discounted cash flow analysis of Orchard based on projected, probability-adjusted, after-tax unlevered free cash flows for Orchard and an estimate of its terminal / continuing value at the end of the projection period utilized in the Projections.

In performing its discounted cash flow analyses with respect to Orchard:

 

   

Guggenheim Securities based its financing-adjusted and probability-adjusted discounted cash flow analysis of Orchard on the Orchard-Provided Information.

 

   

Guggenheim Securities used a discount rate range of 15.00% – 17.00% based on its estimate of Orchard’s weighted average cost of capital and mid-year discounting convention to discount the Forecasts to a valuation date of June 30, 2023.

 

   

In estimating Orchard’s terminal / continuing value, Guggenheim Securities used a perpetual growth rate of negative 10% applied to Orchard’s terminal year normalized after-tax free cash flow and added net cash of $123 million (as provided and approved for Guggenheim Securities’ use by Orchard’s senior management as of June 30, 2023).

 

   

Guggenheim Securities took into account (i) the probability-adjusted dilutive impact of outstanding warrants, (ii) the estimated present value of the estimated net cost of equity financings in 2025 and 2026 as set forth in the Projections and (iii) the estimated present value of actual and potential tax savings from utilization of Orchard’s net operating losses as set forth in the Projections.

 

   

As instructed by Orchard, Guggenheim Securities divided the result of the foregoing calculations by the number of fully-diluted outstanding shares (determined using the treasury stock method and taking into account outstanding in-the-money stock options and restricted share units) as of October 3, 2023, as set forth in the Orchard-Provided Information, taking into account the dilution associated with assumed equity raises and the probability-adjusted dilutive impact of outstanding warrants.

Guggenheim Securities’ financing-adjusted and probability-adjusted discounted cash flow analysis resulted in an overall reference range of $13.88 – $17.56 per ADS for purposes of evaluating the equity value per ADS on a stand-alone intrinsic-value basis.

Other Financial Reviews for Reference Information Purposes

In order to provide certain context for the financial analyses of Orchard in connection with its opinion as described above, Guggenheim Securities undertook various additional financial reviews and analyses as summarized below solely for informational reference purposes. As a general matter, Guggenheim Securities did not consider such additional financial reviews and analyses to be determinative methodologies for purposes of its opinion.

Orchard Selected Precedent Merger and Acquisition Transactions Analysis. Guggenheim Securities reviewed and analyzed certain financial metrics associated with selected precedent merger and acquisition transactions involving companies in the biopharmaceutical sector that Guggenheim Securities deemed relevant in its professional judgment for purposes of this analysis. Guggenheim Securities calculated, among other things and to the extent publicly available, certain implied change-of-control transaction multiples for the selected

 

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precedent merger and acquisition transactions (based on each company’s most recent publicly available financial filings and certain other publicly available information), which are summarized in the table below:

Selected Precedent Merger and Acquisition Transactions Analysis

 

Date Announced

   Acquiror    Target    EV(1) / T+5  Revenue(2)
Multiple

05/22/2023

   Ironwood    VectivBio    5.1x

01/09/2023

   Ipsen    Albireo    1.8x

01/08/2023

   Chiesi    Amryt    1.8x

04/13/2022

   GSK    Sierra    3.2x

01/19/2022

   UCB    Zogenix    2.0x

09/30/2019

   Sobi    Dova    3.4x

03/04/2019

   Biogen    Nightstar    1.4x

Statistical Summary

        

75th Percentile

         3.3x

Mean

         2.7x

Median

         2.0x

25th Percentile

         1.8x

Orchard / KKC Acquisition

         2.1x(3)

 

(1)

EV excludes fair value of the CVR, where applicable.

(2)

T+5 Revenues are based on Schedule 14D-9 or merger proxy projections disclosure.

(3)

EV excludes fair value of the warrants.

In performing its selected precedent merger and acquisition transactions analysis with respect to Orchard, Guggenheim Securities selected a reference range of enterprise value / T+5 Revenue multiples of 1.8x to 3.3x (based on the 25th and 75th percentile range) for purposes of evaluating Orchard on a change-of-control basis.

Guggenheim Securities’ selected precedent merger and acquisition analysis resulted in an overall reference range of $13.54 – $19.16 per ADS for purposes of evaluating ADS on a change-of-control basis.

Selected Publicly Traded Companies Analysis. Guggenheim Securities reviewed and analyzed Orchard’s historical ADS price performance, trading metrics and historical and projected / forecasted financial performance compared to corresponding data for selected publicly traded companies in order to provide context for a reference range of generally comparable public trading multiples. Guggenheim Securities calculated, among other things, various public market trading multiples for Orchard and the selected publicly traded companies (in the case of the selected publicly traded companies, based on public filings and publicly available Wall Street

 

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research analysts’ estimates published by FactSet as of October 4, 2023), which are summarized in the table below:

Selected Publicly Traded Companies Analysis

 

Company   

EV/

T+5 Revenue
Multiple

 

Mirum

     1.6x  

Catalyst

     2.4x  

BioCryst

     1.4x  

Rhythm

     1.1x  

Pharming

     1.7x  

Calliditas

     0.6x  

Agios

     0.8x  

Marinus

     0.8x  

Travere

     0.5x  

bluebird

     0.2x  

Statistical Summary

 

75th Percentile

     1.6x  

Mean

     1.1x  

Median

     1.0x  

25th Percentile

     0.6x  

Orchard

     0.5x  

In performing its selected publicly traded companies analysis with respect to Orchard, Guggenheim Securities selected a reference range of enterprise value / T+5 Revenue multiples of 0.6x – 1.6x (based on the 25th and 75th percentile range) for purposes of evaluating Orchard on a stand-alone public market trading basis. Guggenheim Securities’ selected publicly traded companies analysis resulted in an overall reference range of $8.63 – $12.86 per ADS for purposes of evaluating Orchard on a stand-alone public market trading basis.

Premia Paid in Selected Precedent Merger and Acquisition Transactions. Guggenheim Securities reviewed, based on publicly available information, the implied premia paid or proposed to be paid in connection with selected precedent merger and acquisition transactions for the past five (5) years involving companies in the biopharmaceutical sector that Guggenheim Securities deemed relevant in its professional judgment for purposes of this analysis. Guggenheim Securities noted that such precedent merger and acquisition transaction-related upfront premia (excluding value attributed to CVRs where applicable) ranged from 38% to 65% (based on the 25th to 75th percentile range), based on the target company’s one (1)-day unaffected spot closing stock price. Guggenheim Securities further noted that, in connection with the Transaction, the Transaction-implied premium (based on the scheme deliverables) was 97% versus Orchard’s spot closing stock price of $8.14 on October 4, 2023 (the last trading day prior to the announcement of the Transaction).

Orchard ADS Price Trading History. Guggenheim Securities reviewed the Orchard ADS closing price trading history for the 52 weeks ending October 4, 2023, the last trading day prior to the announcement of the Transaction. Guggenheim Securities noted that the lowest closing price was $3.65 on December 28, 2022, and the highest closing price was $8.21 on September 27, 2023.

Orchard Wall Street Equity Research Analyst Price Targets. Guggenheim Securities reviewed four (4) selected Wall Street equity research analyst price targets for Orchard ADS as published prior to October 4, 2023. Guggenheim Securities noted that such Wall Street equity research analyst price targets for Orchard ADS were $14.00 to $34.00 per ADS.

 

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Other Considerations

Except as described in the summary above, Orchard did not provide specific instructions to, or place any limitations on, Guggenheim Securities with respect to the procedures to be followed or factors to be considered in performing its financial analyses or providing its opinion. The type and amount of consideration payable in the Transaction were determined through negotiations between Orchard and KKC and were approved by the Orchard Board. The decision to enter into the Transaction Agreement was solely that of the Orchard Board. Guggenheim Securities’ opinion was just one of the many factors taken into consideration by the Orchard Board. Consequently, Guggenheim Securities’ financial analyses should not be viewed as determinative of the view of the Orchard Board with respect to the fairness, from a financial point of view, and as of the date of Guggenheim Securities’ opinion, of the scheme deliverables to be received by the Scheme Shareholders.

Pursuant to the terms of Guggenheim Securities’ engagement letter, Orchard has agreed to pay Guggenheim Securities a cash transaction fee (based on a percentage of the aggregate value associated with the Transaction as determined by the agreed upon fee schedule) upon consummation of the Transaction, which cash transaction fee is currently estimated to be approximately $10.5 million. Orchard has previously paid Guggenheim Securities a cash opinion fee of $1 million that became payable upon the rendering of Guggenheim Securities’ opinion with respect to the Transaction, which will be credited against the foregoing cash transaction fee. In addition, Orchard has agreed to reimburse Guggenheim Securities for certain expenses and indemnify Guggenheim Securities against certain liabilities arising out of its engagement.

In the two (2) years prior to the date of its written opinion, Guggenheim Securities has been engaged by Orchard in connection with various matters unrelated to the Transaction, including its engagement as Orchard’s sole placement agent in connection with its private placement of ordinary shares and warrants in March 2023 (for which Guggenheim Securities received $2.0 million in fees and is entitled to receive an additional incentive fee of $1.2 million in connection with the exercise of the outstanding warrants). Guggenheim Securities has not been previously engaged during the past two (2) years prior to the date of its written opinion by KKC, to provide any financial advisory or investment banking services for which Guggenheim Securities received fees.

Guggenheim Securities and its affiliates and related entities engage in a wide range of financial services activities for its and their own accounts and the accounts of customers, including, but not limited to: asset, investment and wealth management; insurance services; investment banking, corporate finance, mergers and acquisitions and restructuring; merchant banking; fixed income and equity sales, trading and research; and derivatives, foreign exchange and futures. In the ordinary course of these activities, Guggenheim Securities and its affiliates and related entities may (i) provide such financial services to Orchard, KKC, any other participants in the Transaction and their respective affiliates, for which services Guggenheim Securities and its affiliates and related entities may have received, and may in the future receive, compensation and (ii) directly and indirectly hold long and short positions, trade and otherwise conduct such activities in or with respect to loans, debt and equity securities and derivative products of or relating to Orchard, KKC, any other participants in the Transaction and their respective affiliates. Furthermore, Guggenheim Securities and its affiliates and related entities and its or their respective directors, officers, employees, consultants and agents may have investments in Orchard, KKC, any other participants in the Transaction and their respective affiliates.

Consistent with applicable legal and regulatory guidelines, Guggenheim Securities has adopted certain policies and procedures to establish and maintain the independence of its research departments and personnel. As a result, Guggenheim Securities’ research analysts may hold views, make statements or investment recommendations and publish research reports with respect to Orchard, KKC, any other participants in the Transaction and their respective affiliates and the Transaction that differ from the views of Guggenheim Securities’ investment banking personnel.

 

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Certain Financial Projections

Orchard does not, as a matter of course, publicly disclose forecasts or projections as to future performance, earnings or other results due to the inherent unpredictability of the underlying assumptions, estimates and projections. However, as described in “—Background of the Transaction,” in connection with its strategic planning process and at the direction of the Transaction Committee in connection with its evaluation of the proposed transaction with KKC and based on its view of the prospects for Orchard on a stand-alone basis with respect to Orchard’s programs, Orchard management prepared long-range projections of revenue and costs for fiscal years 2023 through 2042 (the “Non Probability-Adjusted Forecasts”), which were impacted by the probabilities of success (“PoS”), as provided by Orchard management, for each forecasted program to reflect Orchard’s probability-adjusted outlook (the “Probability-Adjusted Forecasts,” and together with the Non Probability-Adjusted Forecasts, the “Forecasts”). These Forecasts were based on certain internal assumptions about the probability of technical success and regulatory approval, timing of commercial launch, sales ramp, overall expenditures on Orchard’s programs, market size, disease epidemiology, market share, pricing, competition, partnering and licensing arrangements, market exclusivity, manufacturing costs and innovations, estimated costs and expenses, qualifying tax credits, effective tax rate and utilization of net operating losses, ability to raise future capital at certain assumed share prices, and other relevant factors relating to Orchard and its products and programs. The Forecasts were developed solely using the information available to Orchard management at the time they were created.

The Forecasts were provided to and considered by the Transaction Committee and the Orchard Board in connection with their respective evaluations of the Transaction in comparison to Orchard’s other strategic alternatives. The Forecasts also were provided to Guggenheim Securities, and the Orchard Board directed Guggenheim Securities to use the Forecasts in its financial analyses and opinion (as summarized above under “— Opinion of Orchard’s Financial Advisor”). The Forecasts were the only financial projections with respect to Orchard used and relied upon by Guggenheim Securities in rendering its opinion. The Forecasts were not provided to KKC.

The summaries of the Forecasts are not being included in this proxy statement to influence any shareholder’s decision whether to vote for the Scheme Implementation Proposal or for any other related purpose. The summaries of the Forecasts are being included in this proxy statement because the Forecasts were provided to the Orchard Board to evaluate strategic transactions considered by the Orchard Board, including the transactions contemplated by the Transaction Agreement, and to Guggenheim Securities for Guggenheim Securities’ financial analyses and opinion. The summaries of the Non Probability-Adjusted Forecasts are being included in this proxy statement for informational purposes only and neither the Orchard Board nor Guggenheim Securities relied on the Non Probability-Adjusted Forecasts. The Forecasts may differ from publicized analyst estimates and forecasts and, in each instance, do not take into account any events or circumstances after the date they were prepared, including the announcement of the Transaction.

Each of the Probability-Adjusted Forecasts and the Non Probability-Adjusted Forecasts, although presented with numerical specificity, are necessarily based on numerous variables, estimates and assumptions that are inherently uncertain, and many of which are beyond Orchard’s control. Because the Forecasts span multiple years, by their nature they will become subject to greater uncertainty with each successive year and are unlikely to anticipate each circumstance that will have an effect on Orchard’s business and its results of operations. Each of the Forecasts was prepared by Orchard management based on certain estimates and assumptions with respect to general business, economic, competitive, regulatory, reimbursement and other market and financial conditions and other future events, all of which are difficult to predict and many of which are beyond Orchard’s control. As a result, there can be no assurance that any of the Forecasts accurately reflect future trends or accurately estimate the future market for Orchard’s products or product candidates. Each of the Forecasts was developed solely using the information available to Orchard management at the time they were created and reflect assumptions as to certain business decisions that are subject to change. Important factors that may affect actual results or that may result in any of the Forecasts not being achieved include, but are not limited to: (1) Orchard’s ability to identify patients for commercial treatment; (2) Orchard’s ability to manufacture its products and product candidates as

 

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required; (3) the success of clinical trials (including the funding therefor, anticipated patient enrollment, clinical outcomes, timing or associated costs); (4) regulatory approvals and related timelines; (5) the market acceptance of Orchard’s products and potential products; (6) Orchard’s research, pre-clinical and clinical development of potential products and product candidates for different indications; (7) the availability of third-party reimbursement and the pricing of Orchard’s products and potential products; (8) the impact of competitive products and pricing; (9) the effect of regulatory actions; (10) the effect of global economic conditions; (11) conditions in the financing markets and access to sufficient capital; (12) changes in applicable laws, rules and regulations; (13) accuracy of certain accounting assumptions; (14) changes in actual or projected cash flows; and (15) other risk factors described in Orchard’s annual report on Form 10-K for the fiscal year ended December 31, 2022, subsequent quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as the section titled “Cautionary Note Regarding Forward-Looking Statements” in this proxy statement. In addition, the Forecasts may be affected by Orchard’s ability to achieve strategic goals, objectives and targets over the applicable period. Accordingly, there can be no assurance that any of the Forecasts will be realized, and actual results may vary materially from those shown.

Modeling and forecasting the future development and commercialization of drug candidates by an emerging biotechnology company is a highly speculative endeavor. In addition to the various limitations described above, there can be no assurance of the approval, or timing of approval, of Orchard’s product candidates, and it is possible that other therapies will be preferable. There also can be no assurance that Orchard will obtain the regulatory approvals necessary for the commercialization of its products or product candidates, or that Orchard’s competitors will not commercialize products that are safer, more effective, or more successfully marketed and sold than any product that Orchard may market or commercialize. Since the Forecasts cover a long period of time, the Forecasts by their nature are unlikely to anticipate each circumstance that will have an effect on Orchard’s products and product candidates. The Forecasts were not prepared with a view toward complying with U.S. generally accepted accounting principles (“GAAP”), the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial information included in this document has been prepared by, and is the responsibility of, the Company’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying financial projections and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in this document relates to the Company’s previously issued financial statements. It does not extend to the financial projections and should not be read to do so. None of Orchard, KKC or any of their respective affiliates, advisors, officers, directors or representatives has made or makes any representation or warranty to any Orchard or KKC stockholders regarding the ultimate performance of Orchard compared to the information contained in any of the Forecasts, the likelihood that the Forecasts will be achieved consistent with any of the Forecasts or at all, the results of Orchard’s clinical trials, the potential timing and approval of commercial launch of any of Orchard’s future products, the effectiveness or marketability of Orchard’s product candidates, or the overall future performance of Orchard.

The Forecasts were reasonably prepared by Orchard management on bases reflecting the best currently available estimates and judgments of Orchard management as to the matters covered thereby. The Forecasts were prepared assuming Orchard’s continued operation as a stand-alone, publicly traded company, and therefore do not give effect to the Transaction or any changes to Orchard’s operations or strategy that may be implemented following the consummation of the Transaction or to any costs incurred in connection with the Transaction, including the potential synergies that may be achieved by the combined company as a result of the Transaction or the effect of any business or strategic decision or action that has been or will be taken as a result of the execution of the Transaction Agreement. Orchard management believed the assumptions used in the preparation of these Forecasts to be reasonable at the time they were made, including, but not limited to, assumptions relating to the probability of achieving sales for OTL-200 (Libmeldy), the success of Orchard’s research and development-stage programs, clinical and pre-clinical pipeline, market size, disease epidemiology, market share, the effect of regulatory actions, the decisions of third-party partners, the ability to out-license products, the likelihood of

 

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receiving royalties from out-licensed assets, manufacturing costs and innovations, success of clinical testing, the effect of global economic conditions, availability of third-party reimbursement, increases in regulatory oversight, competition, pricing, reimbursement, research and development expenses, qualifying tax credits, general and administrative expenses, effective tax rate and utilization of net operating losses and other relevant factors related to Orchard’s long-range operating plan. The foregoing is a summary of certain key assumptions and does not purport to be a comprehensive overview of all assumptions reflected in each of the Forecasts.

Certain of the measures included in the Forecasts, including unlevered free cash flow, are financial measures that are not calculated in accordance with GAAP. Such 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. Accordingly, non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP. Unlevered free cash flow should not be considered as an alternative to operating income or net income as a measure of operating performance or cash flow or as a measure of liquidity.

Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and, therefore, are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not relied upon by Guggenheim Securities for purposes of its financial analysis as described above in the section titled “— Opinion of Orchard’s Financial Advisor” or by the Transaction Committee or the Orchard Board in connection with its consideration of the Transaction. Accordingly, we have not provided a reconciliation of any financial measures included in any of the Forecasts.

Orchard undertakes no obligation to update or otherwise revise or reconcile any of the Forecasts to reflect circumstances existing after the date such Forecasts were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying such Forecasts are shown to be in error. None of Orchard, or, to the knowledge of Orchard, KKC, intends to make publicly available any update or other revisions to any of the Forecasts, except as otherwise required by law.

Non Probability-Adjusted Forecasts

Set forth below is a summary of the Non Probability-Adjusted Forecasts, which are select projected financial information for Orchard for fiscal years 2023 through 2042 based on information as prepared by Orchard management in connection with Orchard’s evaluation of the Transaction. The Non Probability-Adjusted Forecasts were not probability-adjusted and included the following key assumptions as to which there can be no assurance: (A) for OTL-200 (Libmeldy), (i) a launch year of 2021 in the EU and (ii) a launch year of 2024 in the U.S.; (B) for OTL-203, (i) a launch year of 2030 in the EU and (ii) a launch year of 2029 in the U.S.; (C) for OTL-201, (i) a launch year of 2033 in the EU and (ii) a launch year of 2032 in the U.S.; (D) for OTL-206, (i) a launch year of 2035 in the EU and (ii) a launch year of 2033 in the U.S.; (E) for OTL-204, (i) a launch year of 2039 in the EU and (ii) a launch year of 2038 in the U.S.; and (F) for OTL-104, (i) a launch year of 2037 in the EU and (ii) a launch year of 2036 in the U.S. The Non Probability-Adjusted Forecasts for the applicable fiscal years are summarized below (in millions):

 

     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032  

Total Revenue

     $45       $59       $85       $105       $127       $155       $231       $290       $385       $437  

Gross Profit

     $35       $40       $64       $82       $96       $117       $171       $222       $285       $340  

Operating Expenses

     ($111     ($114     ($132     ($136     ($141     ($149     ($181     ($181     ($197     ($212

EBIT(1)

     ($76     ($74     ($68     ($55     ($44     ($32     ($10     $41       $88       $128  

 

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    2033     2034     2035     2036     2037     2038     2039     2040     2041     2042  

Total Revenue

    $515       $589       $712       $1,148       $1,528       $2,142       $2,762       $3,214       $3,080       $2,951  

Gross Profit

    $411       $474       $590       $940       $1,259       $1,819       $2,366       $2,760       $2,650       $2,543  

Operating Expenses

    ($212     ($223     ($247     ($315     ($379     ($473     ($560     ($632     ($614     ($603

EBIT(1)

    $199       $251       $343       $625       $879       $1,346       $1,805       $2,128       $2,036       $1,940  

 

(1) 

EBIT is a non-GAAP financial measure defined as gross profit, less total operating expenses, which include the impact of stock-based compensation.

Set forth below is a summary of estimated, non probability-adjusted unlevered free cash flow for Orchard for fiscal years 2023 through 2042, which were calculated based on the Non Probability-Adjusted Forecasts and other projected financial information provided by Orchard management and used by Guggenheim Securities in connection with its fairness opinion. Unlevered free cash flow is a non-GAAP financial measure defined as EBIT, plus proceeds from the sale of priority review vouchers associated with certain of Orchard’s research and development-stage programs, less taxes, less change in net working capital. The non probability-adjusted forecasts of unlevered free cash flow for Orchard for the applicable fiscal years are summarized below (in millions):

 

     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032  

EBIT

     ($76     ($74     ($68     ($55     ($44     ($32     ($10     $41       $88       $128  

Plus: Priority Review Vouchers

     —         —         —         —         —         —         100       —         —         100  

Less: Tax Expense(1)

     —         —         —         —         —         —         (17     (8     (17     (43

Less: Change in Net Working Capital

     (2     (5     (3     (4     (5     (5     (18     (12     (16     (14

Unlevered Free Cash Flow

     ($78     ($79     ($71     ($58     ($49     ($37     $55       $21       $56       $171  

 

    2033     2034     2035     2036     2037     2038     2039     2040     2041     2042  

EBIT

    $199       $251       $343       $625       $879       $1,346       $1,805       $2,128       $2,036       $1,940  

Plus: Priority Review Vouchers

    100       —         —         —         —         —         —         —         —         —    

Less: Tax Expense(1)

    (57     (48     (65     (119     (167     (256     (343     (404     (387     (369

Less: Change in Net Working Capital

    (16     (15     (24     (86     (77     (113     (104     (103     24       23  

Unlevered Free Cash Flow

    $227       $188       $254       $421       $635       $977       $1,358       $1,621       $1,673       $1,595  

 

(1) 

Weighted average global effective tax rate of 19% per Orchard management. Guggenheim Securities separately calculated the present value of tax savings from Orchard’s estimated usage of net operating losses and included the result in its determination of estimated implied equity values.

Probability-Adjusted Forecasts

Set forth below is a summary of the Probability-Adjusted Forecasts, which were probability-adjusted to reflect Orchard management’s assessment of the following: (A) for OTL-200 (Libmeldy), 95% PoS; (B) for OTL-203, 68% PoS; (C) for OTL-201, 51% PoS; (D) for OTL-206, 20% PoS; (E) for OTL-204, 15% PoS; and (F) for OTL-104, 10% PoS. The Probability-Adjusted Forecasts for the applicable fiscal years are summarized below (in millions):

 

     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032  

Total Revenue

     $45       $56       $82       $92       $114       $134       $195       $241       $303       $349  

Gross Profit

     $35       $38       $62       $70       $84       $97       $142       $182       $217       $267  

Operating Expenses

     ($111     ($109     ($122     ($111     ($112     ($101     ($118     ($114     ($115     ($120

EBIT(1)

     ($76     ($70     ($61     ($41     ($28     ($4     $25       $68       $103       $147  

 

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     2033     2034     2035     2036     2037     2038     2039     2040     2041     2042  

Total Revenue

     $396       $438       $491       $563       $615       $701       $787       $846       $845       $846  

Gross Profit

     $309       $342       $393       $451       $494       $571       $650       $702       $702       $703  

Operating Expenses

     ($127     ($139     ($141     ($145     ($159     ($169     ($181     ($191     ($194     ($198

EBIT(1)

     $182       $204       $252       $306       $335       $402       $469       $511       $508       $506  

 

(1) 

EBIT is a non-GAAP financial measure defined as gross profit, less total operating expenses, which include the impact of stock-based compensation.

Set forth below is a summary of estimated, probability-adjusted unlevered free cash flow for Orchard for fiscal years 2023 through 2042, which were calculated based on the Probability-Adjusted Forecasts and other projected financial information provided by Orchard management and used by Guggenheim Securities in connection with its fairness opinion. Unlevered free cash flow is a non-GAAP financial measure defined as EBIT, plus proceeds from the sale of priority review vouchers associated with certain of Orchard’s research and development-stage programs, less taxes, less change in net working capital. The probability-adjusted forecasts of unlevered free cash flow for Orchard for the applicable fiscal years are summarized below (in millions):

 

     2023     2024     2025     2026     2027     2028     2029     2030     2031     2032  

EBIT

     ($76     ($70     ($61     ($41     ($28     ($4     $25       $68       $103       $147  

Plus: Priority Review Vouchers

     —         —         —         —         —         —         68       —         —         51  

Less: Tax Expense(1)

     —         —         —         —         —         —         (18     (13     (20     (38

Less: Change in Net Working Capital

     (2     (4     (2     (3     (4     (5     (13     (9     (12     (10

Unlevered Free Cash Flow

     ($78     ($75     ($63     ($44     ($32     ($9     $62       $46       $72       $150  

 

     2033     2034     2035     2036     2037     2038     2039     2040     2041     2042  

EBIT

     $182       $204       $252       $306       $335       $402       $469       $511       $508       $506  

Plus: Priority Review Vouchers

     20       —         —         —         —         —         —         —         —         —    

Less: Tax Expense(1)

     (38     (39     (48     (58     (64     (76     (89     (97     (96     (96

Less: Change in Net Working Capital

     (9     (9     (10     (14     (10     (16     (14     (14     (0     (1

Unlevered Free Cash Flow

     $154       $156       $194       $234       $261       $310       $366       $400       $411       $409  

 

(1)

Weighted average global effective tax rate of 19% per Orchard management. Guggenheim Securities separately calculated the present value of tax savings from Orchard’s estimated usage of net operating losses and included the result in its determination of estimated implied equity values.

In light of the foregoing factors and the uncertainties inherent in each of the Forecasts, shareholders are cautioned not to place undue, if any, reliance on the Forecasts.

Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction

Orchard’s non-employee directors and executive officers may be deemed to have, similar to other transactions of this type, certain financial interests in the Transaction that may be different from, or in addition to, the interests of the Orchard shareholders generally. The members of the Orchard Board were aware of and considered these interests in reaching the determination to approve the agreement and recommend to the Orchard shareholders that they vote to approve the Proposals.

Orchard’s executive officers for purposes of the discussion below are Bobby Gaspar, M.D., Ph.D. (Chief Executive Officer) and Frank Thomas (President and Chief Operating Officer).

Dr. Gaspar’s UK-based cash compensation is delivered in British pounds. In calculating the U.S. dollar equivalent for such amounts reported for Dr. Gaspar, amounts in British pounds have been converted to U.S. dollars based on the currency exchange rate on October 23, 2023, which is £1= U.S.$1.22.

 

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Treatment of Equity and Equity-Based Awards

For information regarding beneficial ownership of Orchard’s ordinary shares, Orchard’s ADSs and share options, other than the unvested equity-based awards described below, by each of Orchard’s non-employee directors and named executive officers and all of the directors and executive officers as a group, please see the section entitled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 119 of this proxy statement. Each of Orchard’s non-employee directors and executive officers will be entitled to receive, for each Orchard ordinary share or Orchard ADS he or she holds, the same transaction deliverables as other shareholders as described in the section entitled “The Transaction Agreement—Scheme Deliverables to Orchard Shareholders” beginning on page 86 of this proxy statement.

As described further in the section entitled “The Transaction Agreement—Treatment of Equity and Equity-Based Awards” beginning on page 87 of this proxy statement, prior to the Effective Time, each holder of an In-the-Money Vested Orchard Option will have the opportunity to exercise such holder’s In-the-Money Vested Orchard Option for such period determined by the Board that ends on or prior to the tenth Business Day prior to the Effective Time, subject in all cases to any Orchard trading blackout period. At the Effective Time, each In-the-Money Vested Orchard Option will automatically be cancelled and converted into the right to receive for each underlying ordinary share (y) an amount in cash from KKC equal to the excess of the Cash Consideration over the per share exercise price of such award and (z) one CVR. Additionally, by virtue of the Transaction, at the Effective Time, each Unvested In-the-Money Option, Orchard Share Option, whether vested or unvested, with an exercise price per share equal to or greater than the Cash Consideration, Orchard RSU and Orchard PSU that is outstanding and unvested as of immediately prior to the Effective Time will automatically be cancelled at the Effective Time without payment of any consideration being made in respect thereof.

KKC will, conditional on the closing of the Transaction, implement a new transitional cash plan (“Transitional Cash Plan”) and grant (or procure the grant of) cash awards (each, a “Transition Award”) under such Transitional Cash Plan to all holders of Unvested In-the-Money Options, Unvested Orchard RSUs and Unvested Orchard PSUs (the “Unvested Awards”). The Transitional Award will be equal to the aggregate of the value of (i) the excess of the Cash Consideration over the per share exercise price for each Orchard Ordinary Share underlying such Unvested Awards (in the case of Orchard PSUs, determined based on maximum level of achievement for all performance objectives) (the “Unvested Cash Consideration”), and (ii) one CVR for each Orchard Ordinary Share underlying such Unvested Award (in the case of Orchard PSUs, determined based on maximum level of achievement for all performance objectives) (the “Unvested CVR Consideration”), less any required deductions and withholdings for income tax and National Insurance contributions or social security contributions. The Unvested Cash Consideration and the Unvested CVR Consideration shall vest and be paid pursuant to the original vesting terms, subject to the holder’s continued service with KKC and its subsidiaries through each applicable vesting date; provided, however, that any portion of the Transition Award that, per the terms of the original Unvested Award, remains outstanding and unvested as of December 31, 2024, shall vest on December 31, 2024 (subject to the holder’s continued service with KKC and its subsidiaries through such date).

The following table sets forth the number of Unvested In-the-Money Options and Orchard PSUs held by each of Orchard’s non-employee directors and executive officers as of October 27, 2023, the latest practicable date to determine such amounts before the filing of this proxy statement, and the cash amounts payable (on a pre-tax basis) in respect thereof. None of Orchard’s executive officers and non-employee directors hold any Orchard RSUs as of October 27, 2023.

The amounts reflected in the table below include the value of Unvested In-the-Money Options and Unvested PSUs prior to October 27, 2023 but exclude any Orchard award that is expected to vest or be paid in accordance with their terms prior to January 31, 2024 (the assumed date of the completion of the Transactions solely for purposes of this transaction-related compensation disclosure). Each Unvested In-the-Money Option and Unvested PSU is valued based on the difference between the per ADS exercise price, if any, and the value of the transaction deliverables, valued at approximately $17.00 per Orchard ADS (or $1.70 per Orchard ordinary share) in cash. However, as discussed above, each Unvested In-the-Money Option and Unvested PSU will be canceled

 

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for no consideration. Holders will instead receive Transitional Awards under the Transitional Cash Plan, with the amounts of such awards calculated based on the number of Orchard ordinary shares underlying such Unvested Award and the Cash Consideration.

 

Name

   Unvested In-the-Money
Share Options
     Total  
     (# Orchard ADSs)      ($)      ($)  

Directors

        

Steven Altschuler, M.D.

     10,500        126,526        126,526  

Joanne Beck, Ph.D.

     10,500        126,526        126,526  

John Curnutte, M.D., Ph.D.

     10,500        126,526        126,526  

Marc Dunoyer

     10,500        126,526        126,526  

Jim Geraghty

     10,500        126,526        126,526  

Charles Rowland, Jr.

     10,500        126,526        126,526  

Alicia Secor

     10,500        126,526        126,526  

 

Name

   Unvested In-the-Money
Share Options
     Unvested PSUs      Total  
     (# Orchard
ADSs)
     ($)      (# Orchard
ADSs)
     ($)      ($)  

Executive Officers

              

Bobby Gaspar, M.D., Ph.D.

     180,721        2,111,673        19,500        331,500        2,443,173  

Frank Thomas

     107,695        1,254,142        —          —          1,254,142  

Severance Entitlements

Orchard previously entered into an employment agreement with each of Dr. Gaspar and Mr. Thomas (the “Executive Agreements”). The Executive Agreements provide that in the event of a termination of the executive officer’s employment without cause or for good reason, which occurs within a 12-month period following a Change of Control (a “Qualifying Termination”).

Upon a Qualifying Termination, Dr. Gaspar would be entitled to:

 

   

a lump sum payment equal to 18 months of his base salary; provided, that, in the case of a termination without cause, Dr. Gaspar shall be entitled to receive 12 months of his base salary if a 6 months’ written notice of his termination (or payment in lieu of such notice) is given;

 

   

1.5 times the amount of Dr. Gaspar’s target annual incentive compensation for the financial year in which Dr. Gaspar’s employment terminates;

 

   

continued health, long-term disability and other insurance programs for a period of 18 months;

 

   

accelerated vesting of all unvested equity awards; and

 

   

up to £15,000 in outplacement benefits.

Upon a Qualifying Termination, Mr. Thomas would be entitled to:

 

   

a lump sum payment equal to the sum of (a) 12 months of his annual base salary and (b) one times his target annual cash compensation;

 

   

continued health insurance coverage for up to 12 months;

 

   

accelerated vesting of all unvested equity awards; and

 

   

up to $20,000 in outplacement benefits.

All severance payments and benefits under the Executive Agreements are subject to the execution of a separation and release agreement by the executive containing, among other provisions, a general release of claims in favor of Orchard.

 

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In the event that any payments made to Mr. Thomas in connection with a change in control or termination would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, the payments to Mr. Thomas would be reduced such that Mr. Thomas received the maximum amount payable without the imposition of an excise tax under Section 4999, but only if such reduction provided a higher benefit on an after-tax basis to Mr. Thomas. The Employment Agreement does not provide for any tax gross-up payments.

The Transaction will constitute a Change of Control of Orchard for purposes of the employment agreements. The estimated aggregate value of the cash severance payments Orchard’s executive officers would receive in the event of a qualifying termination upon the completion of the Transaction is $8,341,672. The foregoing estimate is based on compensation and benefit levels in effect as of October 27, 2023.

Transaction Bonuses

On October 4, 2023, in connection with approving the Transaction Agreement, the Orchard Board, effective upon the execution of the Transaction Agreement, approved the grant of cash bonuses to Bobby Gaspar, in the amount of $350,000 and Frank Thomas in the amount of $275,000 (the “Transaction Bonuses”). The Transaction Bonuses are contingent and payable only upon the closing of the Transaction, and were adopted by the Orchard Board to, among other reasons, recognize significant contributions with respect to the consummation of the Transaction.

Transaction Fees

On October 4, 2023, in connection with approving the Transaction Agreement, the Orchard Board, effective upon the execution of the Transaction Agreement, approved the grant of cash transaction fees of $150,000 for Jim Geraghty and $100,000 to each other non-employee director (the “Transaction Fees”). The Transaction Fees are contingent and payable only upon the closing of the Transaction, and were adopted by the Orchard Board to, among other reasons, recognize significant contributions with respect to the consummation of the Transaction.

New Management Arrangements

KKC will establish a Cash Incentive Plan for the benefit of Continuing Employees, including Orchard’s executive officers. Incentive awards will be allocated to recipients, including to Dr. Gaspar in an amount of $1,217,200 and Mr. Thomas in an amount of $622,200 (the “Incentive Awards”). The Incentive Awards will vest and become payable as to 50% on the first anniversary of the Closing and 50% on the second anniversary of the Closing, in each case, subject to recipient remaining continuously employed with KKC through each applicable vesting date. Notwithstanding the foregoing, in the event a recipient’s employment is terminated by KKC without cause or by the recipient for good reason, the recipient will be entitled to the payment of his or her Incentive Award within ten business days following such termination of employment.

Continuing Employee Benefits

The Transaction Agreement provides that from the Effective Time through the date that is twelve (12) months thereafter (such period being the “benefits continuation period”), KKC will cause Orchard to provide, to each individual who continues to be employed by KKC or Orchard (the “Continuing Employees”), (i) base salary or wages or target annual bonus opportunity that is not less than the base salary or wages provided to such Continuing Employee immediately prior to the Effective Time and (ii) employee benefits (excluding any equity or equity-based incentive compensation, defined benefit pension, post-employment or retiree health and welfare benefits (collectively, the “Excluded Benefits”)) that are no less favorable in the aggregate to the employee benefits (other than the Excluded Benefits) provided to the Continuing Employees immediately prior to the Effective Time.

For all purposes (including purposes of vesting, eligibility to participate and level of benefits) under the employee benefit plans of KKC or its subsidiaries providing benefits to any Continuing Employees after the

 

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Effective Time (the “New Plans”), each Continuing Employee will, subject to applicable law and applicable tax qualification requirements, be credited with his or her years of service with Orchard and their respective predecessors before the Effective Time, unless such application would result in a duplication of benefits. In addition, (i) each Continuing Employee will be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such plan is of the same type as an employee plan in which such Continuing Employee participated immediately before the Effective Time, and (ii) KKC shall use commercially reasonable efforts to cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such Continuing Employee and his or her covered dependents, and to cause any eligible expense incurred by Continuing Employees prior to the Effective Time to be taken into account under such New Plan for purposes of satisfying all deductible, co-insurance and maximum out-of-pocket requirements.

Quantification of Payments and Benefits

In accordance with Item 402(t) of Regulation S-K, the table below sets forth for each of Orchard’s named executive officers estimates of the amounts of compensation that are based on or otherwise relate to the Transaction and that will or may be paid or become payable to the named executive officer either immediately at the effective time (i.e., on a “single-trigger” basis) or in the event of a qualifying termination of employment following the Transaction (i.e., on a “double-trigger” basis). Orchard shareholders are being asked to approve, on a non-binding, advisory basis, such compensation for these named executive officers. Because the vote to approve such compensation is advisory only, it will not be binding on either Orchard, the Orchard Board or KKC. Accordingly, if the Scheme of Arrangement and related proposals are approved by Orchard shareholders and the Transaction is completed, the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions applicable thereto, which are described in the footnotes to the tables below and above under “—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction”.

The potential payments in the tables below are quantified in accordance with Item 402(t) of Regulation S-K. The estimated values are based on (i) an assumption that the Transaction is completed on October 27, 2023, (ii) the per share transaction deliverables of $17.00, (iii) the named executive officers’ salary and total eligible bonus levels as in effect as of October 27, 2023, (iv) the number of unvested Orchard awards held by the named executive officers as of October 27, 2023, the latest practicable date to determine such amounts before the filing of this proxy statement, and excluding any additional grants that may occur following such date and any Orchard awards that are expected to vest or be paid in accordance with their terms prior to January 31, 2024, and (v) an assumption that each named executive officer experiences a “qualifying termination” for purposes of receiving benefits under the applicable Executive Agreement, immediately following the completion of the Transaction (except in the case of the 2023 annual bonus, for which a termination date of December 31, 2023 is assumed). In addition, the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement, and do not reflect certain compensation actions that may occur before completion of the Transaction. As a result, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.

Potential Payments to Named Executive Officers

 

Name

   Cash ($)(1)      Perquisites /
Benefits
($)(2)
     Total ($)  

Dr. Bobby Gaspar

     5,352,021        23,908        5,375,929  

Frank Thomas

     2,943,342        22,401        2,965,743  

 

(1)

The estimated amounts shown in this column include the sum of (i) the value of cash severance payments (assuming annual base salary and target bonus amounts in effect as of October 27, 2023) that would be

 

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  provided to the named executive officer upon a termination of employment by Orchard without “cause” or by the named executive officer for “good reason”, conditioned upon the executive officer executing a release, (ii) the full value of the Transaction Bonuses and Incentive Bonuses payable to the named executive officers, and (iii) the full value of the Transitional Cash Awards, as further detailed below:

 

Name

   Cash
Severance
($)(A)
     Transaction/
Incentive
Bonuses

($)(B)
     Transitional
Cash
Awards
($)(C)
     Total ($)  

Dr. Bobby Gaspar

     1,341,648        1,567,200        2,443,173        5,352,021  

Frank Thomas

     792,000        897,200        1,254,142        2,943,342  

 

(A)

As described in the section entitled “—Interests of Orchard’s Non-Employee Directors and Executive Officers in the Transaction—Severance Entitlements” on page 79: Dr. Gaspar would be entitled to the following: (i) in the case of a termination for good reason, a lump sum payment equal to 18 months of his base salary; provided that, in the case of a termination without cause, Dr. Gaspar would be entitled to receive 12 months’ written notice (or payment in lieu of such notice, plus an amount equal to six months of his base salary, and (ii) 1.5 times his target annual incentive compensation for the year of termination. For purposes herein, we have assumed Dr. Gaspar would receive a lump sum payment equal to 18 months of his base salary. Mr. Thomas would be entitled to a lump sum payment equal to the sum of 12 months of his annual base salary and one times his target annual cash compensation. Such amounts are “double-trigger” payments as they will be paid to the named executive officer only if the named executive officer experiences a qualifying termination of employment following the effective time.

(B)

The amounts shown include the full value of the Transaction Bonuses payable to the named executive officers, in an amount equal to $350,000 for Dr. Gaspar and $275,000 for Mr. Thomas. In addition, the amounts shown also include the Incentive Awards to be granted by KKC to the named executive officers following the Effective Date, in an amount equal to $1,217,200 for Dr. Gaspar and $622,200 for Mr. Thomas. Such amounts are “single trigger” payments as they do not require a termination of employment to become payable (although as noted above, a qualifying termination may accelerate the payment of the Incentive Awards).

(C)

The estimated amounts shown in this column represents the aggregate value of the named executive officers’ Unvested Awards, which include both Orchard Share Options held by both executive officers and Orchard PSUs held by Dr. Gaspar. As described above, each executive officer will be entitled to receive a Transitional Cash Award equal in value to the Unvested Awards, which will vest on their original terms through December 31, 2024, with any remaining unvested amounts vesting as of December 31, 2024. In the event such executive’s employment is terminated without cause or he resigns for good reason, he will be entitled to the accelerated payment of the unvested portion of his Transitional Cash Award. Such amount are “single trigger” payments as they do not require termination of employment to become payable (although as noted above, a qualifying termination may accelerate the payment of such Transitional Cash Awards).

 

Name

   Share Options      PSUs      Total ($)  

Dr. Bobby Gaspar

     180,721        19,500        2,443,173  

Frank Thomas

     107,695        —          1,254,142  

 

(2)

The estimated amounts shown in this column represent (i) the Orchard-paid portion of the continued medical for 18 months for Dr. Gaspar and 12 months for Mr. Thomas following termination and (ii) outplacement benefits of £15,000 for Dr. Gaspar and $20,000 for Mr. Thomas. Such amounts are “double-trigger” benefits as they will be paid to the named executive officer only if the named executive officer experiences a qualifying termination of employment following the effective time.

Orchard ADSs

Orchard ADS holders should refer to the section entitled “Scheme Proposal and the Court Meeting and the General Meeting-Explanatory Statement—9. Orchard ADS Holders” beginning on page 30 of this proxy statement.

 

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Regulatory and Court Approvals Required for the Transaction

Completion of the Transaction is conditional on, among other things, (i) required antitrust clearances and (ii) the sanction of the Scheme of Arrangement by the Court.

Regulatory Approval

The completion of the Transaction is also conditioned upon the clearance or approval by the relevant authorities in certain jurisdictions under foreign investment laws in Germany, Italy, France, and possibly Sweden and the Netherlands. The Transaction cannot be completed until Orchard and KKC obtain clearance or approval to consummate the Transaction. There can be no assurances that all of the required regulatory approvals will be obtained and, if obtained, there can be no assurances as to the timing of any approvals, Orchard’s or KKC’s ability to obtain the approvals on satisfactory terms or the absence of any litigation challenging such approvals.

The Transaction Agreement includes covenants obligating each of the parties to use their reasonable best efforts to take, or cause to be taken (including by their respective subsidiaries), all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable law to consummate the transactions contemplated by the Transaction Agreement. For more information regarding these covenants, see the section of this proxy statement titled “Transaction Agreement – Efforts to Complete the Transaction.”

Court Approval

The Scheme of Arrangement requires the approval of the Court, which involves an application by Orchard to the Court to sanction the Scheme of Arrangement.

For a description of the commitments made by Orchard and KKC to obtain the necessary regulatory and Court approvals for the Transaction, see the section entitled “The Transaction Agreement—Efforts to Complete the Transaction” beginning on page 94 of this proxy statement. There can be no assurance that the requisite approvals will be obtained on a timely basis or at all.

Accounting Treatment

The Transaction is anticipated to be accounted for as an acquisition of a business, pending final assessment upon closing of the Transaction. KKC anticipates it will record assets acquired and liabilities assumed from Orchard primarily at their respective fair values at the date of completion of the Transaction. Any excess of the transaction deliverables is anticipated to be recorded to goodwill. The financial condition and results of operations of KKC after completion of the Transaction will reflect Orchard balances and results after completion of the Transaction but will not be restated retroactively to reflect the historical financial condition or results of operations at Orchard.

Delisting and Deregistration of Orchard ADSs

Following the consummation of the Transaction, Orchard ADSs will be delisted from Nasdaq and deregistered under the Exchange Act, and Orchard will no longer be required to file periodic reports with the SEC.

No Appraisal or Dissenters’ Rights

No appraisal or dissenters’ rights are available to holders of Orchard ordinary shares and Orchard ADSs under the laws of England and Wales in connection with the Transaction.

 

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THE TRANSACTION AGREEMENT

Explanatory Note Regarding the Transaction Agreement

The following is a summary of certain material terms of the Transaction Agreement and is qualified in its entirety by reference to the complete text of the Transaction Agreement, which is included as Annex A to this proxy statement and is incorporated herein by reference in its entirety. This summary is not intended to provide you with any other factual information about Orchard or KKC. You are urged to read the Transaction Agreement carefully and in its entirety as well as this proxy statement before making any decisions regarding the Transaction.

The Transaction Agreement contains representations and warranties by each of the parties to the Transaction Agreement. These representations and warranties have been made solely for the benefit of the parties to the Transaction Agreement; have been made only for purposes of the Transaction Agreement; have been qualified by certain documents filed with, or furnished to, the SEC by Orchard or by KKC; have been qualified by confidential disclosures made to Orchard or KKC, as applicable, in connection with the Transaction Agreement; are subject to materiality qualifications contained in the Transaction Agreement that may differ from what may be viewed as material by investors; were made only as of October 5, 2023 or such other date as is specified in the Transaction Agreement; and have been included in the Transaction Agreement for the purpose of allocating risk between Orchard, on the one hand, and KKC, on the other hand, rather than establishing matters as facts.

You should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of Orchard or KKC or any of their respective affiliates or businesses. Moreover, information concerning the subject matter of the representations and warranties may change after October 5, 2023, which subsequent information may or may not be fully reflected in Orchard’s or KKC’s public disclosures. Accordingly, the representations and warranties and other provisions of the Transaction Agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference into this proxy statement. See “Where You Can Find More Information” beginning on page 133 of this proxy statement.

Structure of the Transaction

The Transaction Agreement provides that, subject to the satisfaction or waiver of the conditions to the completion of the Transaction, KKC (and/or, at KKC’s election, KKC and/or the Nominee) will acquire the entire issued and to be issued share capital of Orchard pursuant to a scheme of arrangement under Part 26 of the Companies Act (the “Scheme of Arrangement”). Upon completion of the Transaction, Orchard will be an indirect, wholly owned subsidiary of KKC.

Closing and Effective Time

Unless Orchard and KKC agree otherwise, the closing of the Transaction (the “closing”) will take place as promptly as practicable (and in any event within two business days) following the satisfaction or (to the extent permitted by applicable law) waiver of the conditions to the completion of the Transaction (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions). The date on which the closing actually occurs is referred to as the “closing date”.

The Scheme of Arrangement will become effective upon delivery by Orchard of the Court Order to the Registrar of Companies in England and Wales.

Scheme Deliverables to Orchard Shareholders

At the effective time, the holders of Orchard ordinary shares (including the Orchard ordinary shares held by the Depositary that underlie the outstanding Orchard ADSs) as of a record time of 6:00 p.m. (London time) on

 

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the business day immediately preceding the effective time will have the right to receive for each Orchard ordinary share held by them at such time (i) an amount equal to $1.60 in cash, without interest, per Orchard ordinary share (the “Cash Consideration”), plus (ii) one contractual contingent value right (each, a “CVR”) per Orchard ordinary share, which each represents the right to receive a contingent payment of $0.10 in cash, without interest, if a certain milestone is achieved, pursuant to the Contingent Value Rights Agreement (the “CVR Agreement”) to be entered into between KKC and a rights agent mutually agreeable to Orchard and KKC (the “Rights Agent”) in connection with the completion of the transaction (together with the Cash Consideration, the “scheme deliverables”). Because each Orchard ADS represents a beneficial interest in 10 Orchard ordinary shares, holders of Orchard ADSs will be entitled to receive (i) the per ADS Cash Consideration and (ii) 10 CVRs (the “per ADS share deliverable” and, together with the per ADS Cash Consideration, the “ADS deliverables”).

The Cash Consideration and per ADS Cash Consideration is denominated in US dollars.

Following the effective time, each holder of Orchard ordinary shares will cease to have any rights with respect to such Orchard ordinary shares, except for the right in accordance with the Scheme of Arrangement to receive the scheme deliverables in consideration therefor.

If, between October 5, 2023 and the effective time, the outstanding Orchard ordinary shares or KKC ordinary shares are changed into, or exchanged for, a different number or class of shares or securities by reason of any stock dividend, bonus issue, scrip dividend, subdivision, reorganization, merger, consolidation, reclassification, redesignation, recapitalization, share split, reverse share split, combination or exchange of shares, or a stock or scrip dividend will be declared with a record date within such period, or any similar event occurs (or if the number of Orchard ordinary shares represented by each Orchard ADS is changed pursuant to the Deposit Agreement), then the Cash Consideration and/or exchange ratio (and/or the per ADS Cash Consideration and/or the per ADS share deliverable), as applicable, will be appropriately adjusted to provide to KKC and the holders of Orchard ordinary shares the same economic effect as contemplated by the Transaction Agreement prior to such event.

Treatment of Equity and Equity-Based Awards

At the effective time:

 

   

Each vested Orchard Share Option that has a per share exercise price that is less than the Cash Consideration (each, an “In-the-Money Vested Orchard Share Option”) that is outstanding and unexercised immediately prior to the Effective Time shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled and converted into the right to receive, for each Orchard Ordinary Share underlying such In-the-Money Vested Orchard Share Option, without interest and subject to deduction and withholding for employee income tax and employee National Insurance contributions or social security contributions, (i) an amount in cash equal to the excess of the Cash Consideration over the per share exercise price of such In-the-Money Vested Orchard Share Option and (ii) one CVR. KKC shall cause Orchard (or another applicable Subsidiary of KKC) to pay such cash amount through the payroll systems of Orchard (or another applicable Subsidiary of KKC) and deliver such CVR as soon as practicable on or following the Effective Time (but in no event later than the first ordinary payroll of Orchard (or another applicable Subsidiary of KKC) following the Effective Time).

 

   

Each unvested Orchard Share Option that has a per share exercise price that is less than the Cash Consideration (each, an “In-the-Money Unvested Orchard Share Option”) that is outstanding immediately prior to the Effective Time, shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or holder thereof, be canceled without payment of any consideration being made in respect thereof.

 

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Each Orchard Share Option, whether vested or unvested, with an exercise price per share equal to or greater than the Cash Consideration shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled at the Effective Time without payment of any consideration being made in respect thereof.

 

   

Each vested Orchard RSU that is outstanding immediately prior to the Effective Time shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled and converted into the right to receive, for each Orchard Ordinary Share underlying such Orchard RSU, without interest and subject to deduction and withholding for employee income tax and employee National Insurance contributions or social security contributions, (i) an amount in cash equal to the Cash Consideration and (ii) one CVR. KKC shall cause Orchard (or another applicable Subsidiary of KKC) to pay such cash amount through the payroll systems of Orchard (or another applicable Subsidiary of KKC) and deliver such CVR as soon as practicable on or following the Effective Time (but in no event later than the first ordinary payroll of Orchard (or another applicable Subsidiary of KKC) following the Effective Time). Each unvested Orchard RSU that is outstanding immediately prior to the Effective Time (each, an “Unvested Orchard RSU”), shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or holder thereof, be canceled without payment of any consideration being made in respect thereof.

 

   

Each vested Orchard PSU that is outstanding immediately prior to the Effective Time, shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or the holder thereof, be canceled and converted into the right to receive, for each Orchard Ordinary Share underlying such Orchard PSU, determined based on maximum level of achievement for all performance objectives, without interest and subject to deduction and withholding for employee income tax and employee National Insurance contributions or social security contributions, (i) an amount in cash equal to the Cash Consideration and (ii) one CVR. KKC shall cause Orchard (or another applicable Subsidiary of KKC) to pay such cash amount through the payroll systems of Orchard (or another applicable Subsidiary of KKC) and deliver such CVR as soon as practicable on or following the Effective Time (but in no event later than the first ordinary payroll of Orchard (or another applicable Subsidiary of KKC) following the Effective Time). Each unvested Orchard PSU that is outstanding immediately prior to the Effective Time (each, an “Unvested Orchard PSU”), shall, by virtue of the Transaction, automatically and without any action on the part of the Parties or holder thereof, be canceled without payment of any consideration being made in respect thereof.

 

   

KKC also agrees to implement a new transitional cash plan (“Transitional Cash Plan”) and grant (or procure the grant) of cash awards (each, a “Transition Award”) under such Transitional Cash Plan to all holders of In-the-Money Unvested Orchard Share Options, Unvested Orchard RSUs and/or Unvested Orchard PSUs immediately prior to the Effective Time that are cancelled by virtue of the Transaction for no consideration.

Representations and Warranties

The Transaction Agreement contains representations and warranties by each of the parties to the Transaction Agreement. These representations and warranties have been made solely for the benefit of the other parties to the Transaction Agreement; have been made only for purposes of the Transaction Agreement; have been qualified by certain documents filed with, or furnished to, the SEC by Orchard; have been qualified by confidential disclosures made to Orchard or KKC, as applicable, in connection with the Transaction Agreement; are subject to materiality qualifications contained in the Transaction Agreement that may differ from what may be viewed as material by investors; were made only as of October 5, 2023 or such other date as is specified in the Transaction Agreement; and have been included in the Transaction Agreement for the purpose of allocating risk between Orchard, on the one hand, and KKC, on the other hand, rather than establishing matters as facts.

 

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The Transaction Agreement contains substantially reciprocal representations and warranties of Orchard, on one hand, and KKC, on the other hand, regarding, among other things:

 

   

corporate existence and power;

 

   

authority relative to the execution, delivery and performance of the Transaction Agreement, and the enforceability of the Transaction Agreement;

 

   

absence of conflicts with, or violations of, organizational documents and other agreements or obligations in connection with the execution, delivery and performance of the Transaction Agreement and the consummation of the Transaction and required governmental filings and consents;

 

   

the absence of certain material litigation, claims and actions;

 

   

compliance with applicable laws since January 1, 2017; and

 

   

broker’s, finder’s, financial advisor’s or similar fees payable in connection with the Transaction.

In addition, Orchard has further made representations and warranties regarding, among other things:

 

   

capital structure;

 

   

corporate existence and power of its subsidiaries;

 

   

SEC filings and financial statements contained in those filings;

 

   

absence of undisclosed liabilities and off-balance-sheet arrangements;

 

   

conduct of business in the ordinary course of business from December 31, 2022 through October 5, 2023;

 

   

absence of certain changes and events that would have had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (as defined below) from December 31, 2022;

 

   

compliance with applicable permits since November 1, 2018;

 

   

certain regulatory matters relating to the products, product candidates and businesses of Orchard and its subsidiaries, including compliance with the U.S. Food, Drug and Cosmetic Act of 1938, as amended, other U.S. and foreign healthcare laws applicable to Orchard and its subsidiaries and the Controlled Substances Act and other U.S. and foreign controlled substance laws applicable to Orchard and its subsidiaries;

 

   

material contracts;

 

   

tax matters;

 

   

employee compensation and benefits matters;

 

   

labor matters;

 

   

intellectual property, data privacy and information security matters;

 

   

owned and leased real property;

 

   

environmental matters;

 

   

compliance with anti-bribery, anti-corruption and anti-money laundering laws;

 

   

insurance policies;

 

   

absence of certain affiliate transactions;

 

   

the inapplicability of anti-takeover laws and regulations to the Transaction; and

 

   

opinion from Orchard’s financial advisor.

 

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In addition, KKC has further made representations and warranties regarding, among other things, the accuracy of information supplied or to be supplied for use in this proxy statement.

A “Material Adverse Effect” with respect to Orchard and its subsidiaries is defined in the Transaction Agreement to mean any event, change, effect, circumstance, fact, development or occurrence that has a material adverse effect on (i) the business, operations or financial condition of Orchard and its subsidiaries, taken as a whole or (ii) the ability of Orchard to consummate the Transaction prior to the End Date or otherwise comply with the terms of the Transaction Agreement, excluding any such event, change, effect, circumstance, fact, development or occurrence to the extent resulting from, arising out of or relating to any of the following:

 

  (i)

any changes in general U.S. or global economic conditions or other general business, financial or market conditions,

 

  (ii)

any changes in conditions generally affecting the industry in which Orchard or any of its subsidiaries operate,

 

  (iii)

fluctuations in the value of any currency, interest rates or foreign exchange rates,

 

  (iv)

any decline, in and of itself, in the market price or trading volume of Orchard ADSs (except that any events, changes, effects, circumstances, facts, developments or occurrences giving rise to or contributing to such decline that are not otherwise excluded from the definition may be taken into account),

 

  (v)

regulatory, legislative or political conditions or conditions in securities, credit, financial, debt or other capital markets, in each case in the U.S. or any foreign country,

 

  (vi)

any failure, in and of itself, by Orchard or any of its subsidiaries to meet any internal or published projections, forecasts, estimates or predictions, revenues, earnings or other financial or operating metrics for any period (except that any events, changes, effects, circumstances, facts, developments or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition may be taken into account),

 

  (vii)

the execution and delivery of the Transaction Agreement, the public announcement or the pendency of the Transaction Agreement or the pendency or completion of the transactions contemplated by the Transaction Agreement, the taking of any action required by the Transaction Agreement (other than, to the extent not excluded by another clause of the definition, Orchard’s compliance with its covenants regarding the conduct of business by Orchard prior to the effective time, except to the extent that KKC has unreasonably withheld consent sought by Orchard under such covenant), or the identity of, or any facts or circumstances relating to, KKC or any of its subsidiaries, including the impact of any of the foregoing on the relationships, contractual or otherwise, of Orchard or any of its subsidiaries with governmental authorities, customers, suppliers, partners, officers, employees or other material business relations (except that such factors may be taken into account with respect to any representation or warranty that addresses the consequences of the execution, delivery or performance of the Transaction Agreement or the completion of the Transaction),

 

  (viii)

any adoption, implementation, promulgation, repeal, modification, amendment, authoritative interpretation, change or proposal of any applicable law of or by any governmental authority or any recommendations, statements or other pronouncements made, published or proposed by professional medical organizations,

 

  (ix)

any changes in generally accepted accounting principles in the U.S. (or authoritative interpretations thereof),

 

  (x)

geopolitical conditions, the outbreak or escalation of hostilities, civil or political unrest, any acts of war, sabotage, cyberattack or terrorism, or any escalation or worsening of the foregoing,

 

  (xi)

any epidemic, pandemic (including COVID-19), any hurricane, earthquake, flood, calamity or other natural disasters, acts of God or any change resulting from weather conditions (or any worsening of any of the foregoing),

 

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  (xii)

any claims, actions, suits or proceedings arising from allegations of a breach of fiduciary duty or violation of securities laws, in each case relating to the Transaction Agreement or the Transaction, or

 

  (xiii)

with respect to any Orchard product, (A) any rejection or refusal of, any request to refile or any delay in obtaining or submitting any regulatory application or filing, (B) the decision by any Governmental Authority to seek scientific or other advice from external advisors, experts or other parties prior to making a regulatory decision, including a decision to take, delay or withhold an action, and the result of any such consultation, including but not limited to the decision to convene an advisory committee meeting or hearing and the result of any such meeting or hearing, (C) any nonclinical, pre-clinical or clinical studies, tests or results or announcements thereof, including any delays in commencing or completing such studies or tests, (D) any decision, delay or action by any Governmental Authority (or other payor) with respect to pricing and/or reimbursement, (E) any delay, hold or termination of any clinical trial or any delay, hold or termination of any planned application for marketing approval or (F) any increased incidence or severity of any previously identified side effects, adverse effects, adverse events or safety observations or reports of new side effects, adverse effects, adverse events or safety observations, in each of (A) – (F), solely to the extent not resulting from or arising out of any wrongdoing, fraud or intentional misconduct or misrepresentation, any violation of any applicable law, or any negligent or reckless actions or omissions of Orchard or its representatives.

However, the matters referred to in clauses (i), (ii), (iii), (v), (viii), (ix), (x) or (xi) may be taken into account (to the extent not excluded by another clause of the definition) to the extent that the impact on Orchard and its subsidiaries, taken as a whole, is materially disproportionately adverse relative to the impact of such matters on companies operating in the industry in which Orchard and its subsidiaries operate, and then solely to the extent of such disproportionality.

Covenants Regarding Conduct of Business by Orchard Pending the Effective Time

Interim operating covenants

Orchard has agreed to certain restrictions on the conduct of its business between October 5, 2023 and the effective time which apply unless KKC consents in writing (which consent may not be unreasonably withheld, conditioned or delayed) or unless the relevant action or inaction is required by applicable law or was otherwise required or expressly contemplated by the Transaction Agreement, as described more specifically in the next two paragraphs.

Orchard agreed to use commercially reasonable efforts to conduct its business in the ordinary course in all material respects and to preserve intact its business organization and business relationships, subject to reasonable advance consultation with KKC if reasonably practicable.

Orchard agreed that it will not, and will cause its subsidiaries not to, subject to certain exceptions, among other things, do the following:

 

   

adopt or propose any change to its certificate of incorporation, articles of association or other organizational or constitutional documents or the Deposit Agreement;

 

   

acquire (including by merger, consolidation, takeover offer, scheme of arrangement or acquisition of securities or assets or by any other means) or authorize or announce an intention to so acquire, or enter into any agreements providing for any acquisitions of, any securities of or other equity interest in or assets comprising a business or division, or otherwise engage in any consolidations or business combinations;

 

   

authorize, declare, set aside, make or pay any dividends or distributions with respect to its shares or other equity securities (including any Orchard ADS) or enter into any agreement or arrangement with respect to voting or registration, or file any registration statement with the SEC with respect to any of its shares or other equity securities (in each case, subject to exceptions);

 

   

split, combine, consolidate, subdivide, reduce, reclassify or redesignate any of its share capital or other equity securities, or redeem, purchase, cancel or otherwise acquire or offer to acquire any of its share

 

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capital or other equity securities, or issue or authorize the issuance of any of its share capital or other equity securities (including any Orchard ADS) in Orchard or any subsidiary of Orchard, in each case, subject to certain exceptions, including (x) the acceptance of Orchard ordinary shares or Orchard ADSs as payment of the exercise price of Share Options or for withholding taxes in respect of Orchard Share Options, (y) certain intercompany transactions and (z) certain actions under the Deposit Agreement;

 

   

amend any term or alter any rights of any of the outstanding Orchard ordinary shares or other equity securities of Orchard;

 

   

issue, deliver, grant, sell, pledge, dispose of, charge, mortgage or encumber, or authorize the issuance, delivery, grant, sale, pledge, disposition, charging, mortgaging or encumbrance of, any shares, voting securities or other equity securities (including any Orchard ADS) in Orchard or any subsidiary of Orchard or take any action to cause to be exercisable or vested any otherwise unexercisable or unvested Orchard Share Option under any existing employee plan providing for equity or equity-based compensation, including the 2016 Employee Share Option Plan with Non-Employee Sub Plan and US Sub-Plan, 2018 Share Option and Incentive Plan and 2020 Inducement Equity Plan (“Orchard Stock Plan”) (except as otherwise provided by the terms of any Orchard employee plan or the Transaction Agreement), other than (A) issuances or grants of Orchard ordinary shares, Orchard ADSs or other securities as required pursuant to equity awards or obligations under Orchard employee plans outstanding on October 5, 2023 in accordance with the terms of the applicable Orchard employee plan in effect on October 5, 2023 or granted after October 5, 2023 and not in violation of the Transaction Agreement, (B) sales of Orchard ordinary shares or Orchard ADSs pursuant to the exercise of Share Options, settlement of Orchard RSUs or Orchard PSUs or exercise of options under the Orchard 2018 Employee Share Purchase Plan (“Orchard ESPP”) if necessary to effectuate an optionee direction upon exercise or pursuant to the settlement of Orchard Share Options, Orchard RSUs or Orchard PSUs or exercise of options under the Orchard ESPP in order to satisfy tax withholding obligations, (C) certain intercompany transactions or (D) certain actions under the Deposit Agreement;

 

   

except as required by any Orchard benefit plan as in existence as of or established after October 5, 2023 not in contravention of the provisions of the Transaction Agreement, (A) materially increase the compensation or benefits payable or to become payable to certain of its directors, executive officers or employees, (B) grant or pay or commit to grant or pay to any of its directors, executive officers or employees any bonuses (except for (i) the payment of a cash bonus in respect of the 2023 financial year, as determined in accordance with the provisions of the Transaction Agreement, in the event the normal bonus payment date occurs prior to the effective time and (ii) the payment of a cash bonus in respect of the financial year in which the effective time occurs, as determined in accordance with the provisions of the Transaction Agreement), incentive compensation, retention awards or increases in severance or termination pay, (C) establish, adopt, enter into, amend in any material respect or terminate any collective bargaining agreement or material Orchard benefit plan, (D) take any action to amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any Orchard benefit plan, (E) terminate the employment of any Executive Directors or above, in each case, of Orchard or any of its subsidiaries (a “senior employee”), other than for cause (as defined in the Orchard Stock Plans), (F) hire or promote any new senior employees other than to replace any departed employee, provided that such hired or promoted employee is provided with compensation terms that are substantially similar to the terms of the departed employee’s employment with Orchard immediately prior to his or her departure, (G) provide any funding for any rabbi trust or similar arrangement, (H) enter into or terminate a contract or relationship with a professional employer organization, or (I) form or otherwise establish any employing entity in any country that does not currently have an employing entity;

 

   

negotiate, modify, extend, or enter into any labor agreement or recognize or certify any labor union, labor organization, works council, or group of employees as the bargaining representative for any employees of Orchard or its subsidiaries;

 

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waive or release any noncompetition, nonsolicitation, nondisclosure, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor;

 

   

liquidate, wind up, dissolve, place into administration or receivership, enter into any voluntary arrangement or other compromise with creditors, restructure, recapitalize or effect any other reorganization, or adopt any plan or resolution, or take any other action providing for any of the foregoing other than the winding up and dissolution of dormant subsidiaries of Orchard;

 

   

make any loans, advances or capital contributions to, or investments in, any other person, except for (A) certain intercompany transactions, (B) advances for reimbursable employee expenses in the ordinary course of business consistent with past practice, (C) the extension of trade credit in the ordinary course of business consistent with past practice;

 

   

sell, lease, license, assign, abandon, permit to lapse, transfer, exchange, swap or otherwise dispose of, or subject to any lien (other than permitted liens), any of its material properties, rights or assets (including shares in the capital of Orchard or its subsidiaries), except (A) dispositions of obsolete or worthless equipment in the ordinary course of business consistent with past practice, (B) non-exclusive licenses of Orchard intellectual property or Orchard products or product candidates entered into in the ordinary course of business, (C) certain intercompany transactions and (D) sales of Orchard products in the ordinary course of business;

 

   

enter into or become bound by, or amend, modify, terminate or waive any contract related to the acquisition or disposition or grant of any license with respect to material intellectual property rights, other than amendments, modifications, terminations or waivers in the ordinary course of business consistent with past practice, or otherwise encumber any material Orchard intellectual property (including by the granting of any covenants, including any covenant not to sue or covenant not to assert), other than (A) non-exclusive licenses of (x) Orchard intellectual property (other than patents on a stand-alone basis) or (y) Orchard products or product candidates, in each case entered into in the ordinary course of business consistent with past practice and (B) distribution rights for Orchard products or product candidates made or entered into in the ordinary course of business;

 

   

(A) enter into any contract that, if entered into prior to the date hereof, would have been a material contract, or (B) modify, amend, extend or terminate (other than non-renewals or auto-renewals occurring in the ordinary course of business consistent with past practice or termination at the end of the Contract term in accordance with the terms of the contract) any material contract, or (C) waive, release or assign any rights or claims under any material contract;

 

   

except in accordance with Orchard’s capital budget as disclosed to KKC, make any capital expenditure or expenditures, enter into agreements or arrangements providing for capital expenditure or expenditures or otherwise commit to do so

 

   

waive, release, assign, compromise or settle any proceeding (for the avoidance of doubt, including with respect to matters in which Orchard or any subsidiary of Orchard is a plaintiff or defendant, or in which any of their officers or directors in their capacities as such are parties), other than the compromise or settlement of any proceeding that is not brought by a Governmental Authority and that: (A) is for an amount not to exceed, for any such compromise or settlement individually, $500,000, or in the aggregate, $1,000,000, (B) does not impose any injunctive relief (or any other non-monetary relief) on Orchard or its Subsidiaries and does not involve the admission of wrongdoing by Orchard, any subsidiary of Orchard or any of their respective officers or directors, (C) does not impose any restrictions on the business or operations of Orchard or Orchard’s subsidiaries and (D) does not relate to the Transaction Agreement or the transactions contemplated thereby;

 

   

make any change in financial accounting policies, practices, principles or procedures or any of its methods of reporting income, deductions or other items for financial accounting purposes, except as required by GAAP or applicable law;

 

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make, change or revoke any tax election, adopt or change any tax accounting period or method of tax accounting, amend any tax return, file a claim for a refund of an amount of taxes, file any tax return that is inconsistent with a previously filed tax return of the same type for a prior taxable period, settle or compromise any liability for taxes or any tax proceeding relating to an amount of taxes, enter into any advance pricing agreement or “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or non-U.S. law), request any ruling from any taxing authority, surrender any right to claim a refund of taxes, assume any liability for an amount of taxes of any other person by contract, change its jurisdiction of tax residence or request or otherwise agree to an extension or waiver of the statute of limitations with respect to an amount of taxes;

 

   

incur, assume, guarantee, endorse or otherwise become liable for, or modify the terms of, any indebtedness or any derivative financial instruments or arrangements (including swaps, caps, floors, futures, forward contracts and option agreements) or issue or sell any debt securities or calls, options, warrants or other rights to acquire any debt securities (directly, contingently or otherwise), except for the incurrence of any Indebtedness solely among Orchard and its wholly owned subsidiaries or solely among wholly owned subsidiaries of Orchard;

 

   

redeem, repurchase, defease or prepay any Indebtedness for borrowed money or any derivative financial instruments or arrangements (including swaps, caps, floors, futures, forward contracts and option agreements), except for (A) the repayment of any indebtedness at its scheduled maturity or expiration of the applicable term, (B) the termination and settlement of currency derivatives entered into in the ordinary course of business consistent with past practice and nor for speculative purposes in accordance with their terms and (C) solely among Orchard and its wholly owned subsidiaries or solely among wholly owned subsidiaries of Orchard;

 

   

enter into any transactions or contracts with any affiliate or other person that would be required to be disclosed by Orchard under Item 404 of Regulation S-K of the SEC;

 

   

adopt or otherwise implement any shareholder rights plan, “poison-pill” or other comparable agreement with respect to KKC or any of its affiliates;

 

   

form any subsidiary, enter into any new line of business, abandon or discontinue any existing line of business or authorize or effect any material change to the principal business of Orchard as currently conducted and as currently proposed to be conducted;

 

   

fail to use commercially reasonable efforts to commercialize the BLA for OLT-200; or

 

   

agree or authorize, in writing or otherwise, to take any of the foregoing actions.

Efforts to Complete the Transaction

Orchard and KKC have each agreed to use reasonable best efforts to take all actions and to do all things necessary, proper or advisable under applicable law to complete the transaction as promptly as reasonably practicable, including (i) preparing and filing as promptly as practicable with any governmental authority or other third party all documentation to effect all filings as are necessary, proper or advisable to consummate the transaction and the other transactions contemplated hereby, (ii) using reasonable best efforts to obtain, as promptly as practicable, and thereafter maintain, all consents from any governmental authority or other third party that are necessary, proper or advisable to consummate the transaction or other transactions contemplated hereby, and to comply with the terms and conditions of each such consent (including by supplying as promptly as reasonably practicable any additional information or documentary material that may be requested pursuant to any applicable regulatory laws), (iii) cooperating with the other party in its efforts to comply with their obligations under the Transaction Agreement, including in seeking to obtain as promptly as practicable any consents necessary, proper or advisable to consummate the transaction or the other transactions contemplated hereby and (iv) using reasonable best efforts to (A) defend any lawsuit or other legal proceeding, whether judicial or administrative, brought by any governmental authority or third party challenging the Transaction Agreement or

 

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seeking to enjoin, restrain, prevent, prohibit or make illegal consummation of the transaction or any of the other transactions contemplated hereby and (B) contest any order that enjoins, restrains, prevents, prohibits or makes illegal consummation of the Transaction or any of the other transactions contemplated hereby. This shall not apply with respect to filings with or the consents of the court to implement the Scheme of Arrangement

Notwithstanding the above, neither KKC nor any of its subsidiaries will be required to, and Orchard will not, and will cause its subsidiaries not to, without the prior written consent of KKC, propose, negotiate, commit to or effect, by consent decree, hold separate order or otherwise, (i) the sale, license, assignment, transfer, divestiture, holding separate or other disposition of any assets, business or portion of business of Orchard, KKC or any subsidiary thereof or (ii) any conduct of business restrictions, including the imposition of any restriction, requirement or limitation on the operation of the business or portion of the business of Orchard, KKC or any subsidiary thereof. However, if requested by KKC, Orchard or its subsidiaries will become subject to, consent to or offer or agree to, or otherwise take any action with respect to, any such items, and that in no event will Orchard or any of its subsidiaries be required to effect any such items that is not conditioned upon the closing occurring.

Efforts to Implement the Scheme of Arrangement

In order to implement the Scheme of Arrangement, Orchard has agreed to, among other matters:

 

   

cooperate with KKC in the preparation of this proxy statement;

 

   

cooperate with KKC in the preparation of any documents to be submitted to the Court in connection with the Scheme of Arrangement; and

 

   

make all necessary applications to the Court in connection with the implementation of the Scheme of Arrangement as promptly as reasonably practicable.

Orchard will also otherwise generally use reasonable best efforts to cooperate fully and in good faith, and cause its subsidiaries representatives cooperate in good faith, with KKC and its representatives in preparing the documentation for the Shareholder Meetings and Court hearings, convening and holding the Shareholder Meetings and obtaining the sanction of the Court, and KKC is subject to a similar reciprocal obligation.

Orchard has agreed to hold the Court Meeting and General Meeting as soon as reasonably practicable after October 5, 2023 (and to use commercially reasonable efforts to hold such meetings no later than 40 calendar days after the mailing of this proxy statement) and, unless the Orchard Board has effected an Orchard adverse recommendation change, to use its reasonable best efforts to obtain Orchard shareholder approval for the Scheme Proposal and the Scheme Implementation Proposal (the “required Orchard shareholder approvals”).

Notwithstanding the foregoing obligations, and except as required by applicable law or the Court, Orchard may, without the consent of KKC, adjourn or postpone the Court Meeting and/or the General Meeting:

 

   

after consultation with KKC, to the extent necessary to ensure that any required (or, as determined by the Orchard Board acting reasonably and in good faith after consulting with outside counsel, advisable) supplement or amendment to this proxy statement or Scheme Document Annex or information which is material to the Orchard shareholders voting at the Orchard Shareholder Meetings, with such postponement or adjournment to extend for no longer than the period that the Orchard Board determines in good faith (after consulting with outside counsel) is reasonably necessary or (having first consulted with KKC) advisable to give the Orchard shareholders sufficient time to evaluate any such disclosure or information so provided or disseminated (provided, that no such postponement or adjournment under this clause (A) may be to a date that is after the 10th Business Day after the date of such disclosure or dissemination other than to the extent required by applicable law);

 

   

if, as of the time for which the Scheme Meeting or the Orchard general meeting is scheduled (as set forth in the Scheme Document Annex), there are insufficient Orchard Ordinary Shares or Scheme

 

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Shares (as applicable) represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Scheme Meeting or the Orchard general meeting, but only until a meeting can be held at which there are a sufficient number of Orchard ordinary shares or Scheme Shares (as applicable) represented to constitute a quorum; or

 

   

to solicit additional proxies for the purpose of obtaining the Orchard Shareholder Approvals, but only until a meeting can be held at which there are sufficient number of votes of the Orchard Shareholders or Scheme Shareholders (as applicable) to obtain the relevant Orchard Shareholder Approvals.

No postponement or adjournment pursuant to the last two bullets above may be for a period of more than 10 business days on any single occasion or, on any occasion, to a date after the earlier of (x) 30 business days after the date on which the Court Meeting or the General Meeting was originally scheduled, as applicable, and (y) 15 business days before the end date.

No Solicitation; Change in Board Recommendation

Orchard has agreed that until the earlier of the effective time and the valid termination of the Transaction Agreement, it will not, and will cause its subsidiaries and its and its subsidiaries’ respective representatives not to, subject to certain exceptions, directly or indirectly:

 

  i.

solicit, initiate, participate in, knowingly facilitate, knowingly assist or knowingly encourage any inquiries regarding, or the making or submission of, any acquisition proposal (as defined below) or any inquiry, indication of interest, proposal, offer or request that would reasonably be expected to lead to an acquisition proposal;

 

  ii.

(A) enter into, continue or participate in any discussions or negotiations in respect of any acquisition proposal or any such inquiry, indication of interest, proposal, offer or request or (B) furnish to any third party any information in connection with any of the foregoing;

 

  iii.

enter into or adopt any letter of intent, heads of terms, memorandum of understanding or similar document, agreement, commitment, or agreement in principle (whether written or oral, binding or nonbinding) with respect to, or which would reasonably be expected to lead to, an acquisition proposal other than an acceptable confidentiality agreement referred to below;

 

  iv.

adopt, recommend or approve or publicly propose to recommend, adopt or approve any Acquisition Proposal;

 

  v.

withdraw, or qualify, amend or modify in a manner adverse to KKC (or publicly propose to do any of the foregoing), the recommendation of the Orchard Board in favor of the approval of the Scheme Proposal at the Court Meeting and the Scheme Implementation Proposal at the General Meeting (the “Orchard Board recommendation”), or resolve or agree to take any such action;

 

  vi.

fail to include Orchard Board recommendation in the proxy statement and the Scheme Document Annex;

 

  vii.

take any action to make any “moratorium,” “control share acquisition,” “fair price,” “supermajority,” “affiliate transactions” or “business combination statute or regulation” or other similar anti-takeover laws and regulations inapplicable to any acquisition proposal; or

 

  viii.

resolve or agree to do any of the foregoing (any of the foregoing clauses (iv)-(vi) or clause (viii) (to the extent relating to clauses (iv)-(vi)), a “Orchard adverse recommendation change”).

An “acquisition proposal” means any indication of interest, proposal or offer from any person or group, other than KKC or any of its subsidiaries, relating to any:

 

   

direct or indirect acquisition of assets of Orchard or any of its subsidiaries (including securities of subsidiaries) equal to 20% or more of the consolidated assets of Orchard and its subsidiaries, taken as a

 

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whole, or to which 20% or more of the revenues or earnings of Orchard and its subsidiaries, taken as a whole, on a consolidated basis are attributable for the most recent fiscal year for which audited financial statements are then available;

 

   

direct or indirect acquisition of 20% or more of the outstanding voting or equity securities of Orchard, including Orchard ADSs (whether by voting power or number of shares);

 

   

takeover offer, tender offer or exchange offer that, if completed, would result in such person or group beneficially owning 20% or more of the outstanding voting or equity securities of Orchard, including Orchard ADSs (whether by voting power or number of shares); or

 

   

merger, consolidation, share exchange, scheme of arrangement, business combination, joint venture, reorganization, recapitalization, liquidation, dissolution or similar transaction or series of related transactions involving Orchard or any of its subsidiaries pursuant to which persons other than the shareholders of Orchard immediately preceding such transaction would hold 20% or more of the voting or equity securities in Orchard (including Orchard ADSs) or, as applicable, in such surviving, resulting or ultimate parent entity as a result of such transaction (in each case whether by voting power or number of shares).

The foregoing notwithstanding, if at any time prior to the receipt of the required Orchard shareholder approvals, the Orchard Board receives a bona fide written acquisition proposal made after October 5, 2023 that has not resulted from a willful breach of the obligations described in this section (the “non-solicitation covenant”), the Orchard Board may, if it determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal is or would reasonably be expected to lead to a superior proposal (as defined below) and that the failure to take such action would be inconsistent with its fiduciary duties under applicable law:

 

   

engage in negotiations or discussions with such third party and its representatives and financing sources; and

 

   

furnish to such third party and its representatives and financing sources information relating to Orchard or any of its subsidiaries pursuant to an acceptable confidentiality agreement, a copy of which will be provided to KKC promptly after its execution, so long as all such non-public information is provided or made available to KKC substantially concurrently with the time it is provided or made available to such third party.

A “superior proposal” means any unsolicited, bona fide, written acquisition proposal made after October 5, 2023, by any person or group (with all references to “20%” in the definition of acquisition proposal being deemed to be references to “50%”) on terms that the Orchard Board determines in good faith, after consultation with its financial advisor and outside legal counsel, and taking into account all the terms and conditions of the acquisition proposal that the Orchard Board considers to be appropriate (including the identity of the person or group making the acquisition proposal and the expected timing and likelihood of consummation, conditions to consummation and availability of necessary financing (including, if a cash transaction (in whole or in part), the availability of such funds and the nature, terms and conditionality of any committed financing)), is more favorable from a financial point of view to Orchard’s shareholders than the Transaction, and is reasonably capable of being completed on the terms proposed.

The Transaction Agreement requires that Orchard will notify KKC as promptly as practicable (but in no event later than 24 hours) after receipt by Orchard or its subsidiaries or to Orchard’s knowledge, its representatives, of any acquisition proposal, any inquiry, indication of interest, proposal or offer that would reasonably be expected to lead to any acquisition proposal or any request for information relating to Orchard or any of its subsidiaries in connection with any of the foregoing, which notice will be provided in writing and will identify the person(s) making, and the material terms and conditions of, any such acquisition proposal, inquiry, indication of interest, proposal offer or request. Orchard will thereafter (i) keep KKC reasonably informed, on a

 

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reasonably current basis, of any material developments or changes in the status and details of any such acquisition proposal, inquiry, indication of interest, proposal, offer or request and (ii) as promptly as practicable (but in no event later than 24 hours after receipt) provide to KKC unredacted copies of any written materials relating to the financial terms or other material terms and conditions of such acquisition proposal, inquiry, indication of interest, proposal, offer or request.

At any time prior to the receipt of the required Orchard shareholder approvals, if the Orchard Board receives a bona fide written acquisition proposal made after October 5, 2023 that has not resulted from a willful breach of the non-solicitation covenant and the Orchard Board determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal constitutes a superior proposal and that the failure to take such action in response to such superior proposal would be inconsistent with its fiduciary duties under applicable law, the Orchard Board may, subject to compliance with its obligations under the non-solicitation covenant, (i) make an Orchard adverse recommendation change or (ii) terminate the Transaction Agreement in order to enter into a definitive agreement providing for such superior proposal as described in “—Termination” below, except that (A) Orchard will first notify KKC in writing at least four business days before taking such action that Orchard intends to take such action, which notice will include an unredacted copy of such proposal and a copy of any financing commitments relating thereto (and, to the extent not in writing, the material terms and conditions thereof and the identity of the person(s) making any such acquisition proposal), (B) Orchard and its representatives will negotiate in good faith with KKC and its representatives during such four business day notice period, if KKC wishes to negotiate and make themselves reasonably available to do so, to enable KKC to propose revisions to the terms of the Transaction Agreement, (C) upon the end of such notice period, the Orchard Board will have considered in good faith any revisions to the terms of the Transaction Agreement committed to in a binding written proposal by KKC, and will have determined in good faith, after consultation with its financial advisor and outside legal counsel, that such superior proposal would nevertheless continue to constitute a superior proposal and that the failure to take such action in response to such superior proposal would continue to be inconsistent with its fiduciary duties under applicable law and (D) in the event of any change, from time to time, to any of the financial terms or any other material terms of such superior proposal, Orchard will, in each case, deliver to KKC an additional notice and a new notice period consistent with the foregoing will commence each time, except each such notice period will be two business days (instead of four business days).

Notwithstanding the foregoing restrictions, at any time prior to the receipt of the required Orchard shareholder approvals, the Orchard Board may make an Orchard adverse recommendation change of the type described in the above clauses (v), (vi) or, if related to the foregoing, clause (viii) in response to an intervening event (as defined below) if the Orchard Board determines in good faith, after consultation with its financial advisor and outside legal counsel that the failure to make such Orchard adverse recommendation change would be inconsistent with its fiduciary duties under applicable law.

Prior to making an Orchard adverse recommendation change in response to an intervening event Orchard will:

 

   

first notify KKC in writing at least four business days before taking such action that Orchard intends to take such action, which notice will include a reasonably detailed description of such intervening event;