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Table of Contents
As filed with the Securities and Exchange Commission on August 12, 2020
Registration No. 333-239372
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
AMENDMENT NO. 2
TO
FORM
S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
resTORbio, Inc.
(Exact name of Registrant as specified in its charter)
 
 
 
Delaware
 
2834
 
81-3305277
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer
Identification Number)
resTORbio, Inc.
500 Boylston Street, 13
th
Floor
Boston, MA 02116
(857)
315-5528
(Address including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
 
 
Chen Schor
President and Chief Executive Officer
resTORbio, Inc.
500 Boylston Street, 13
th
Floor
Boston, MA 02116
(857)
315-5528
(Name, address, including zip code, and telephone number, including area code of agent for service)
 
 
Copies to:
 
Mitchell S. Bloom, Esq.
Danielle M. Lauzon, Esq.
Andrew H. Goodman, Esq.
Goodwin Procter LLP
100 Northern Ave
Boston, Massachusetts 02210
Telephone: (617)
570-1000
 
James M. Krenn, Esq.
John A. de Groot, Esq.
Morrison & Foerster LLP
12531 High Bluff Drive, Suite 100
San Diego, California 92011
Telephone: (858)
720-5100
 
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the merger agreement described herein.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.  ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Rule 12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
Non-accelerated
filer
     Smaller reporting company  
     Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule
13(e)-4(i)
(Cross-Border Issuer Tender Offer)  ☐
Exchange Act Rule
14d-1(d)
(Cross-Border Third-Party Tender Offer)  ☐
 
 
CALCULATION OF REGISTRATION FEE
 
 
Title of Each Class of
Security Being Registered
 
Amount
to be
Registered
(1)
 
Proposed
Maximum
Offering Price
Per Share
 
Proposed
Maximum
Aggregate
Offering Price
(2)
 
Amount of
Registration Fee
(3)
Common stock, $0.0001 par value per share
 
28,141,955
 
N/A
 
$4,384.99
 
$1.00
(4)
 
 
(1)
Relates to shares of common stock, $0.0001 par value per share, of resTORbio, Inc., a Delaware corporation (referred to as “resTORbio”), issuable to holders of common stock, $0.0001 par value per share, of Adicet Bio, Inc., a Delaware corporation (referred to as “Adicet”), holders of preferred stock, $0.0001 par value per share, of Adicet and warrants and options to purchase common stock or preferred stock of Adicet in the proposed merger of Project Oasis Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of resTORbio, with and into Adicet (referred to as the “merger”). The amount of resTORbio common stock to be registered is based on the estimated number of shares of resTORbio common stock that are expected to be issued pursuant to the merger, after taking into account the effect of a reverse stock split of resTORbio common stock, assuming an exchange ratio of 0.8555 shares of resTORbio common stock for each outstanding share of Adicet common stock or Adicet preferred stock and for each option and warrant exercisable for shares of Adicet common stock or Adicet preferred stock.
(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(f)(2) of the Securities Act of 1933, as amended. Adicet is a private company with no market for its securities and has an accumulated capital deficit. Therefore, the proposed maximum aggregate offering price is one-third of the aggregate par value of the Adicet securities expected to be exchanged in the proposed merger.
(3)
This fee has been calculated pursuant to Section 6(b) of the Securities Act of 1933, as amended.
(4)
The Registrant previously paid $1.00 of the total registration fee in connection with the previous filing of this registration statement on June 23, 2020 with respect to 28,141,955 shares of resTORbio common stock listed on the calculation fee table of such filing.
 
 
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
 
 

Table of Contents
The information in this proxy statement/prospectus/information statement is not complete and may be changed. resTORbio may not sell its securities pursuant to the proposed transactions until the Registration Statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus/information statement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
 
PRELIMINARY—SUBJECT TO COMPLETION—DATED AUGUST 1
2
, 2020
 
 
PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT
To the Stockholders of resTORbio, Inc. and Adicet Bio, Inc.:
resTORbio, Inc. (referred to as “resTORbio”) and Adicet Bio, Inc. (referred to as “Adicet”) have entered into an Agreement and Plan of Merger (referred to as the “merger agreement”) pursuant to which Project Oasis Merger Sub, Inc., a wholly owned subsidiary of resTORbio, will merge with and into Adicet, with Adicet surviving as a wholly owned subsidiary of resTORbio (referred to as the “merger”). Adicet and resTORbio believe that the merger will result in a combined company that will leverage Adicet’s scientific and product development expertise and pipeline of engineered immune cell therapeutics for cancer based on its proprietary gamma delta T cell therapy platform, provide the resources for the combined company to advance multiple programs into the clinic, including Adicet’s lead
candidate, ADI-001, a
gamma delta chimeric antigen receptor
(“CAR”)-T cell
therapy targeting CD20, and expand the combined company’s pipeline in oncology and other indications.
At the effective time of the merger, each share of (x) common stock of Adicet, $0.0001 par value per share (referred to as “Adicet common stock”), and (y) preferred stock of Adicet, $0.0001 par value per share (referred to as “Adicet preferred stock” and, together with the Adicet common stock, “Adicet capital stock”), outstanding immediately prior to the effective time, excluding any shares of Adicet capital stock held as treasury stock and shares held by Adicet stockholders who have exercised and perfected appraisal rights, will be converted into the right to receive approximately 0.8555 shares of resTORbio common stock (referred to as the “exchange ratio”), subject to adjustment to account for the effect of a reverse stock split of resTORbio common stock, at a ratio mutually agreed to by resTORbio and Adicet in the range of
1-for-4
to
1-for-12
shares outstanding (or any number in between) (referred to as the “reverse stock split”), to be implemented immediately prior to and contingent upon the consummation of the merger, as discussed in this proxy statement/prospectus/information statement. This exchange ratio is an estimate only and is based upon resTORbio’s and Adicet’s capitalization as of August 4, 2020. The final exchange ratio will be determined pursuant to a formula described in more detail in the merger agreement and in this proxy statement/prospectus/information statement.
At the effective time of the merger, each outstanding and unexercised option to purchase Adicet’s common stock (referred to as “Adicet options”), whether vested or unvested, issued pursuant to the Adicet 2015 Stock Incentive Plan (referred to as the “Adicet 2015 plan”) and a subset of options issued pursuant to the Adicet 2014 Share Option Plan (referred to as the “Adicet 2014 plan” and, together with the Adicet 2015 plan, referred to collectively as the “Adicet plans”) will be converted into options to purchase a number of shares of resTORbio common stock based on the exchange ratio, subject to the terms of and adjustments in the merger agreement. Adicet warrants with rights to acquire Adicet capital stock will be converted into rights to acquire a certain number of shares of resTORbio common stock based on the exchange ratio, subject to the terms of and adjustments in the merger agreement.
resTORbio’s stockholders will continue to own and hold their existing shares of resTORbio common stock, subject to adjustment for the reverse stock split. The vesting of all outstanding resTORbio options will be accelerated in full as of immediately prior to the effective time of the merger. All
out-of-the-money
resTORbio options will be cancelled for no consideration. All
in-the-money
resTORbio options will remain outstanding after the completion of the merger in accordance with their terms. In addition, all outstanding unvested resTORbio restricted stock units will be accelerated in full effective as of immediately prior to the effective time of the merger, and for each outstanding and unsettled resTORbio restricted stock unit, the holder thereof shall receive a number of shares of resTORbio common stock equal to the number of vested and unsettled shares underlying such resTORbio restricted stock units (reduced by the number of shares of resTORbio common stock necessary to satisfy applicable tax withholding obligations at the maximum statutory rate).
Immediately following the effective time of the merger, the former equityholders of Adicet are expected to hold approximately 75% of the outstanding shares of resTORbio common stock on a fully-diluted basis and the current equityholders of resTORbio are expected to hold approximately 25% of the outstanding shares of resTORbio common stock on a fully-diluted basis (in each case excluding equity incentives available for grant).
Shares of resTORbio common stock are currently listed on The Nasdaq Global Market (referred to as “Nasdaq”) under the symbol “TORC.” In connection with completion of the merger, resTORbio will be renamed “Adicet Bio, Inc.” and expects to trade on Nasdaq under the symbol “ACET.” On August 11, 2020, the last trading day before the date of this proxy statement/prospectus/information statement, the closing sale price of resTORbio common stock on Nasdaq was $2.38 per share.
resTORbio is holding a special meeting of its stockholders (referred to as the “special meeting”) in order to obtain the stockholder approvals necessary to complete the merger and related matters. The special meeting will be held at 8:00 a.m., Eastern Time, on September 15, 2020, unless postponed or adjourned to a later date. In light of the novel coronavirus disease (referred to as “COVID-19”) pandemic and to support the well-being of resTORbio’s stockholders and partners, the special meeting will be completely virtual. You may attend the meeting and vote your shares electronically during the meeting via live webcast by visiting
www.virtualshareholdermeeting.com/TORC2020SM
. You will need the control number that is printed on your proxy card to enter the special meeting. resTORbio recommends that you log in at least 15 minutes before the meeting to ensure you are logged in when the special meeting starts. Please note that you will not be able to attend the special meeting in person.
At the special meeting, resTORbio will ask its stockholders:
 
 
1)
To approve the issuance of resTORbio common stock pursuant to the merger agreement, which approval is necessary to complete the merger and the other transactions contemplated by the merger agreement (referred to as the “contemplated transactions”). Pursuant to the rules of The Nasdaq Stock Market LLC (referred to as the “Nasdaq rules”), the issuance of resTORbio common stock requires the approval of resTORbio’s stockholders because it exceeds 20% of the number of shares of resTORbio common stock outstanding prior to the issuance. Furthermore, the issuance of the shares requires resTORbio’s approval under the Nasdaq rules because it will result in a “change of control” of resTORbio (referred to as the “share issuance proposal” or “Proposal No. 1”);
 
 
2)
To approve an amendment to resTORbio’s third amended and restated certificate of incorporation to effect a reverse stock split of resTORbio common stock (referred to as the “reverse stock split proposal” or “Proposal No. 2”);
 
 
3)
To approve an amendment of the resTORbio 2018 Stock Option and Incentive Plan (referred to as the “resTORbio 2018 Plan”) to increase the total number of shares of resTORbio common stock currently available for issuance under the resTORbio 2018 Plan by 14,855,157 shares, prior to giving effect to the reverse stock split to be effected in connection with the merger (referred to as the “option pool increase proposal” or “Proposal No. 3”); and
 
 
4)
To approve an adjournment or postponement of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1, Proposal No. 2 and/or Proposal No. 3 (referred to as the “adjournment proposal” or “Proposal No. 4”).
As described in this proxy statement/prospectus/information statement, certain of Adicet’s stockholders who in the aggregate own approximately 98% of the outstanding shares of Adicet capital stock on an as-converted to common stock basis, and certain of resTORbio’s stockholders who in the aggregate own approximately 24% of the outstanding shares of resTORbio common stock, in each case, outstanding as of the date of the merger agreement, are parties to support agreements with Adicet and resTORbio, whereby such stockholders have agreed to vote their shares in favor of the adoption or approval, as applicable, of the merger agreement and the approval of the contemplated transactions, including the merger, in the case of Adicet capital stock holders, and the share issuance proposal and the reverse stock split proposal, in the case of resTORbio stockholders, subject to the terms of the support agreements.
In addition, following the registration statement on Form
S-4,
of which this proxy statement/prospectus/information statement is a part, being declared effective by the U.S. Securities and Exchange Commission (referred to as the “SEC”) and pursuant to the conditions of the merger agreement and the Adicet support agreement, Adicet’s stockholders who are party to the Adicet support agreement are each obligated to execute an action by written consent of Adicet’s stockholders (referred to as the “written consent”), adopting the merger agreement, thereby approving the contemplated transactions, including the merger, no later than five business days after the registration statement on Form S-4, of which this proxy statement/prospectus/information statement forms a part, is declared effective. Therefore, holders of a sufficient number of shares of Adicet capital stock required to adopt the merger agreement are expected to adopt the merger agreement, and no meeting of Adicet’s stockholders to adopt the merger agreement and approve the merger and contemplated transactions is expected to be held. Nevertheless, all of Adicet’s stockholders will have the opportunity to elect to adopt the merger agreement, thereby approving the merger and contemplated transactions, by signing and returning to Adicet a written consent.
After careful consideration, the board of directors of resTORbio (referred to as the “resTORbio Board”) has (i) determined that the contemplated transactions and the reverse stock split are fair to, advisable and in the best interests of resTORbio and its stockholders, (ii) approved and declared advisable the merger agreement and the contemplated transactions, including the issuance of resTORbio common stock to Adicet equityholders pursuant to the terms of the merger agreement, and the reverse stock split and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the merger agreement, that its stockholders vote “FOR” Proposal No. 1, Proposal No. 2, Proposal No. 3 and, if necessary, Proposal No. 4.
After careful consideration, the Adicet board of directors (referred to as the “Adicet Board”) has (i) determined that the contemplated transactions are fair to, advisable and in the best interests of its stockholders, (ii) approved and declared advisable the merger agreement and the contemplated transactions and (iii) determined to recommend that the Adicet stockholders vote to adopt or approve the merger agreement and thereby approve the contemplated transactions. The Adicet Board recommends that the Adicet stockholders sign and return the written consent indicating their approval and adoption of the merger agreement and the contemplated transactions.
More information about resTORbio, Adicet and the merger is contained in this proxy statement/prospectus/information statement. resTORbio and Adicet urge you to read this proxy statement/prospectus/information statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER THE SECTION ENTITLED “” BEGINNING ON PAGE 28 OF THIS PROXY STATEMENT/PROSPECTUS/INFORMATION STATEMENT.
resTORbio and Adicet are excited about the opportunities the merger brings to both resTORbio’s and Adicet’s stockholders, and thank you for your consideration and continued support.
 
Chen Schor
President and Chief Executive Officer

resTORbio, Inc.
  
Anil Singhal, Ph.D.
President and Chief Executive Officer

Adicet Bio, Inc.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus/information statement. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus/information statement is dated August     , 2020, and is first being mailed to resTORbio’s and Adicet’s stockholders on or about August     , 2020.
 

Table of Contents
PRELIMINARY—SUBJECT TO COMPLETION—DATED AUGUST 1
2
, 2020
 
resTORbio, Inc.
500 Boylston Street, 13
th
Floor
Boston, MA 02116
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 15, 2020
Dear Stockholders of resTORbio, Inc.:
On behalf of the board of directors of resTORbio, Inc. (referred to as the “resTORbio Board”), a Delaware corporation (referred to as “resTORbio”), resTORbio is pleased to deliver this proxy statement/prospectus/information statement for the proposed merger between resTORbio and Adicet Bio, Inc., a Delaware corporation (referred to as “Adicet”), pursuant to which Project Oasis Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of resTORbio (referred to as “merger subsidiary”), will merge with and into Adicet, with Adicet surviving as a wholly owned subsidiary of resTORbio. A special meeting of resTORbio’s stockholders will be held virtually, conducted via live audio webcast at 8:00 a.m., Eastern Time, on September 15, 2020. You may attend the meeting and vote your shares electronically during the meeting via live webcast by visiting
www.virtualshareholdermeeting.com/TORC2020SM
. You will need the control number that is printed on your proxy card to enter the special meeting. resTORbio recommends you log in at least 15 minutes before the special meeting to ensure you are logged in when the meeting starts. Please note that you will not be able to attend the special meeting in person. The special meeting will be held for the purpose of allowing stockholders of resTORbio to consider and vote upon the following matters:
(1)
To approve the issuance of resTORbio common stock pursuant to the Agreement and Plan of Merger, dated as of April 28, 2020 (referred to as the “merger agreement”), by and among resTORbio, merger subsidiary and Adicet and the resulting “change of control” of resTORbio under the rules of The Nasdaq Stock Market LLC (referred to as the “Nasdaq rules”) (referred to as the “share issuance proposal” or “Proposal No. 1”);
 
(2)
To approve an amendment to resTORbio’s third amended and restated certificate of incorporation to effect a reverse stock split of resTORbio common stock (referred to as the “reverse stock split proposal” or “Proposal No. 2”);
 
(3)
To approve an amendment of the resTORbio 2018 Stock Option and Incentive Plan (referred to as the “resTORbio 2018 Plan”) to increase the total number of shares of resTORbio common stock currently available for issuance under the resTORbio 2018 Plan by 14,855,157 shares, prior to giving effect to the reverse stock split to be effected in connection with the merger (referred to as the “option pool increase proposal” or “Proposal No. 3”); and
 
(4)
To approve an adjournment or postponement of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1, Proposal No. 2 and/or Proposal No. 3 (referred to as the “adjournment proposal” or “Proposal No. 4”).
If resTORbio is to complete the merger with Adicet, stockholders must approve Proposal No. 1 and Proposal No. 2. The approval of Proposal No. 3 and Proposal No. 4 is not a condition to the completion of the merger with Adicet.
resTORbio common stock is the only type of security entitled to vote at the special meeting. The resTORbio Board has fixed August 13, 2020, as the record date for the determination of stockholders entitled to notice of,
 

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and to vote at, the special meeting and any adjournment or postponement thereof. Only holders of record of shares of resTORbio common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. At the close of business on the record date, there were              shares of resTORbio common stock outstanding and entitled to vote. Each holder of record of shares of resTORbio common stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the special meeting.
 
Your vote is important. The affirmative vote of the holders of a majority of the votes properly cast on such matter at the special meeting is required for approval of Proposal No. 1, Proposal No. 3 and Proposal No. 4. The affirmative vote of holders of a majority of the outstanding shares of resTORbio common stock as of the record date for the special meeting is required for approval of Proposal No. 2. Each of Proposal No. 1 and Proposal No. 2 are conditioned upon each other. Therefore, the merger cannot be consummated without the approval of Proposal No. 1 and Proposal No. 2.
Whether or not you plan to attend the special meeting online, please submit your proxy promptly by telephone or via the internet in accordance with the instructions on the enclosed proxy card or complete, date, sign and promptly return the accompanying proxy card in the enclosed postage paid envelope to ensure that your shares of resTORbio common stock will be represented and voted at the special meeting. If you date, sign and return your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of Proposal No. 1, Proposal No. 2, Proposal No. 3 and Proposal No. 4.
By Order of resTORbio’s Board of Directors,
Chen Schor
President and Chief Executive Officer
Boston, Massachusetts
 
August     , 2020
 
THE RESTORBIO BOARD HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, RESTORBIO AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. THE RESTORBIO BOARD RECOMMENDS THAT RESTORBIO’S STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

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REFERENCES TO ADDITIONAL INFORMATION
Additional business and financial information about resTORbio can be found in documents previously filed by resTORbio with the SEC. You may obtain this information without charge through the SEC website (www.sec.gov) or upon your written or oral request by contacting the Investor Relations Department, resTORbio, Inc., 500 Boylston Street, 13
th
 Floor, Boston, Massachusetts 02116, or by calling (857)
315-5521
.
You may also request additional copies from resTORbio’s proxy solicitor, The Proxy Advisory Group, LLC, using the following contact information:
18 East 41st Street, 20th Floor
New York, NY 10017-6219
(212)
616-2181
To ensure timely delivery of these documents, any request should be made no later than September 4, 2020 to receive them before the special meeting.
For additional details about where you can find information about resTORbio, please see the section entitled “
Where You Can Find More Information
” on page 436 of this proxy statement/prospectus/information statement.

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QUESTIONS AND ANSWERS ABOUT THE MERGER
Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus/information statement does not give effect to the proposed reverse stock split described in the section entitled
“Matters Being Submitted to a Vote of resTORbio Stockholders—Proposal No. 2: The Reverse Stock Split Proposal”
beginning on page 238 in this proxy statement/prospectus/information statement (referred to as the “reverse stock split”).
The following section provides answers to frequently asked questions about the merger. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.
 
Q:
What is the merger?
 
A:
resTORbio, Adicet and the merger subsidiary have entered into an Agreement and Plan of Merger, dated as of April 28, 2020, as may be amended from time to time (referred to as the “merger agreement”), that contains the terms and conditions of the proposed business combination of resTORbio and Adicet. Under the merger agreement, at the effective time of the merger, the merger subsidiary will merge with and into Adicet, with Adicet surviving as a wholly owned subsidiary of resTORbio (referred to as the “merger”).
At the effective time of the merger, each share of Adicet capital stock outstanding immediately prior to the effective time, excluding any shares of Adicet capital stock held as treasury stock and shares held by Adicet stockholders who have exercised and perfected appraisal rights, will be converted into the right to receive approximately 0.8555 shares of resTORbio common stock, subject to adjustment to account for the reverse stock split of within the range between 1-for-4 and 1-for-12. This exchange ratio is an estimate only and is based upon resTORbio’s and Adicet’s capitalization as of August 4, 2020. The final exchange ratio will be determined pursuant to a formula described in more detail in the merger agreement and in the section entitled “
The Merger Agreement—Merger Consideration and Exchange Ratio
” beginning on page 207 of this proxy statement/prospectus/information statement, and is generally calculated by dividing (a) (i) the Adicet valuation per the merger agreement of $220,000,000 divided by (ii) the number of Adicet’s outstanding shares immediately prior to the effective time on a fully diluted basis (excluding equity incentives available for grant) by (b) (i) the resTORbio valuation per the merger agreement of $73,333,333 divided by (ii) the number of resTORbio’s outstanding shares immediately prior to the effective time on a fully diluted basis (excluding equity incentives available for grant).
Immediately following the effective time of the merger, the former equityholders of Adicet are expected to hold approximately 75% of the outstanding shares of resTORbio common stock on a fully diluted basis, and the current equityholders of resTORbio are expected to hold approximately 25% of the outstanding shares of resTORbio common stock on a fully diluted basis (in each case excluding equity incentives available for grant).
After the completion of the merger, resTORbio will change its corporate name from “resTORbio, Inc.” to “Adicet Bio, Inc.” as contemplated by the merger agreement.
 
Q:
What will happen to resTORbio if, for any reason, the merger does not close?
 
A:
resTORbio has invested significant time and incurred, and expects to continue to incur, significant expenses related to the merger. In the event the merger does not close, resTORbio will have a limited ability to continue its current operations without obtaining additional financing. Although the resTORbio Board may elect, among other things, to attempt to complete another strategic transaction if the merger with Adicet does not close, the resTORbio Board may instead divest all or a portion of resTORbio’s business or take steps necessary to liquidate or dissolve resTORbio’s business and assets if a viable alternative strategic transaction is not available. If resTORbio decides to dissolve and liquidate its assets, resTORbio would be
 
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  required to pay all of its contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurance as to the amount or the timing of such a liquidation and distribution of available cash left to distribute to stockholders after paying the obligations of resTORbio and setting aside funds for reserves. Under certain circumstances, Adicet and resTORbio may be obligated to pay the other party a termination fee of up to $6,100,000 or reimburse certain expenses of the other party up to $1,000,000, as more fully described in the section entitled “
The Merger Agreement—Termination
” beginning on page 223 and the section entitled “
The Merger Agreement—Termination Fee
” beginning on page 225 of this proxy statement/prospectus/information statement.
 
Q:
Why are the two companies proposing to merge?
 
A:
Adicet and resTORbio believe that the merger will result in a combined company that will leverage Adicet’s scientific and product development expertise and pipeline of engineered immune cell therapeutics for cancer based on its proprietary gamma delta T cell therapy platform, provide the resources for the combined company to advance multiple programs into the clinic, including Adicet’s lead candidate,
ADI-001,
a gamma delta chimeric antigen receptor (CAR)-modified T cell therapy targeting CD20, and expand the combined company’s pipeline in oncology and other indications.
The resTORbio Board and the Adicet Board considered a number of factors that supported their respective decisions to approve the merger agreement. In the course of its deliberations, the resTORbio Board and the Adicet Board also considered a variety of risks and other countervailing factors related to entering into the merger agreement.
For a more complete discussion of resTORbio’s and Adicet’s reasons for the merger, please see the section entitled “
The
Merger—resTORbio Reasons for the Merger
” beginning on page 177 of this proxy statement/prospectus/information statement and the section entitled “
The
Merger—Adicet Reasons for the Merger;
” beginning on page 179 of this proxy statement/prospectus/information statement.
 
Q:
Why am I receiving this proxy statement/prospectus/information statement?
 
A:
You are receiving this proxy statement/prospectus/information statement because you have been identified as a stockholder of resTORbio as of the record date or a stockholder of Adicet eligible to execute the Adicet written consent. If you are a stockholder of resTORbio, you are entitled to vote at resTORbio’s special stockholder meeting (referred to as the “special meeting”) to approve the issuance of shares of resTORbio common stock pursuant to the merger agreement and the reverse stock split. If you are a stockholder of Adicet, you are entitled to sign and return the Adicet written consent to adopt the merger agreement and approve the transactions contemplated in the merger agreement (referred to as the “contemplated transactions”), including the merger. This document serves as:
 
   
a proxy statement of resTORbio used to solicit proxies for the special meeting;
 
   
a prospectus of resTORbio used to offer shares of resTORbio common stock in exchange for shares of Adicet capital stock in the merger and issuable upon exercise of Adicet warrants and options, as applicable; and
 
   
an information statement of Adicet used to solicit the written consent of its stockholders for the adoption of the merger agreement and the approval of the merger and the contemplated transactions.
 
Q:
What is required to consummate the merger?
 
A:
The consummation of the merger is subject to a number of closing conditions, including the condition that resTORbio’s stockholders approve the issuance of shares of resTORbio common stock in the merger and the resulting “change of control” of resTORbio under the Nasdaq rules, which requires the affirmative vote of a majority of the votes properly cast on such matter at the special meeting, and the reverse stock split, which requires the affirmative vote of the holders of a majority of the outstanding shares of resTORbio common stock entitled to vote on such matter, and the condition that the requisite Adicet stockholders adopt the merger agreement and, thereby, approve the contemplated transactions.
 
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The adoption of the merger agreement and the approval of the contemplated transactions by Adicet’s stockholders requires the affirmative vote (or written consent) of the holders of a majority of (a) the outstanding shares of Adicet capital stock (on an
as-converted
to Adicet common stock basis), (b) the outstanding shares of Adicet preferred stock, voting together as one class (on an
as-converted
to Adicet common stock basis) and (c) the outstanding shares of Adicet Series B Preferred Stock, par value $0.0001 per share (referred to as “Adicet Series B preferred stock”), voting together as one class, in each case, outstanding on the record date for the Adicet written consent and entitled to vote thereon (referred to as the “Required Adicet Stockholder Vote”).
In addition, following the registration statement on Form
S-4,
of which this proxy statement/prospectus/information statement is a part, being declared effective by SEC and pursuant to the conditions of the merger agreement and the support agreement entered into by and among Adicet, resTORbio and certain holders of Adicet capital stock (referred to as the “Adicet support agreement”), Adicet’s stockholders who are party to the Adicet support agreement are each obligated to execute the written consent adopting the merger agreement, thereby approving the contemplated transactions, including the merger, no later than five business days after the registration statement on Form S-4, of which this proxy statement/prospectus/information statement forms a part, is declared effective. Therefore, holders of a sufficient number of shares of Adicet capital stock required to adopt the merger agreement are expected to adopt the merger agreement, and no meeting of Adicet’s stockholders to adopt the merger agreement and approve the merger and contemplated transactions is expected to be held.
For a more complete description of the closing conditions under the merger agreement, please see the section entitled “
The Merger Agreement—Conditions to the Completion of the Merger
” beginning on page 212 of this proxy statement/prospectus/information statement.
 
Q:
What will Adicet’s stockholders, warrantholders and optionholders receive in the merger?
 
A:
At the effective time of the merger, and subject to the terms of the merger agreement, each share of Adicet capital stock outstanding immediately prior to the effective time of the merger, excluding any shares of Adicet capital stock held as treasury stock and shares held by Adicet stockholders who have exercised and perfected appraisal rights, will be converted into the right to receive approximately 0.8555 shares of resTORbio common stock, subject to adjustment to account for the reverse stock split. This exchange ratio is an estimate only and is based upon resTORbio’s and Adicet’s capitalization as of August 4, 2020. The final exchange ratio will be determined pursuant to a formula described in more detail in the merger agreement and in the section entitled “
The Merger Agreement—Merger Consideration and Exchange Ratio
” beginning on page 207 of this proxy statement/prospectus/information statement.
Upon the effective time of the merger, each Adicet option, whether vested or unvested, issued pursuant to the Adicet 2015 Stock Incentive Plan (referred to as the “Adicet 2015 plan”) and a subset of options pursuant to the Adicet 2014 Share Option Plan (referred to as the “Adicet 2014 plan”) will be converted into options to purchase a number of shares of resTORbio common stock based on the exchange ratio, subject to the terms of and adjustments in the merger agreement. The assumed options will remain subject to the terms of the Adicet plans under which they were issued, accordingly, and applicable stock option agreements. Adicet warrants with rights to acquire Adicet capital stock will be converted into rights to acquire a certain number of shares of resTORbio common stock based on the exchange ratio, subject to the terms of and adjustments in the merger agreement and the applicable warrant.
For a more complete description of what Adicet’s stockholders, warrantholders and option holders will receive in the merger, please see the section entitled “
The Merger Agreement—Merger Consideration and Exchange Ratio
” beginning on page 207 of this proxy statement/prospectus/information statement.
 
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Q:
What will resTORbio’s stockholders, restricted stock unit holders, and optionholders receive in the merger?
 
A:
resTORbio’s stockholders will continue to own and hold their existing shares of resTORbio common stock, subject to adjustment for the reverse stock split. The vesting of all outstanding resTORbio options will be accelerated in full as of immediately prior to the effective time of the merger. All
out-of-the-money
resTORbio options will be cancelled for no consideration. All
in-the-money
resTORbio options will remain outstanding after the completion of the merger in accordance with their terms. In addition, all outstanding unvested resTORbio restricted stock units will be accelerated in full effective as of immediately prior to the effective time of the merger, and for each outstanding and unsettled resTORbio restricted stock unit, the holder thereof shall receive a number of shares of resTORbio common stock equal to the number of vested and unsettled shares underlying such resTORbio restricted stock units less the number of resTORbio shares withheld for purposes of tax withholding obligations.
In addition, the merger agreement contemplates that at or prior to completion of the merger, resTORbio, the Holders’ Representative (as defined therein) and the Rights Agent (as defined therein) will execute and deliver a contingent value rights agreement (referred to as the “CVR agreement”), pursuant to which each holder of resTORbio common stock as of immediately prior to the completion of the merger shall be entitled to one contractual contingent value right (referred to as a “CVR”) issued by resTORbio, subject to and in accordance with the terms and conditions of the CVR agreement, for each share of resTORbio common stock held by such holder. Each CVR shall entitle the holder thereof to receive net proceeds of the commercialization, if any, received from a third party commercial partner of RTB101, resTORbio’s small molecule product candidate that is a potent inhibitor of target of rapamycin complex 1 (TORC1), for a
COVID-19
related indication, with clinical data expected by the first quarter of 2021. The CVRs are not transferable, except in certain limited circumstances as will be provided in the CVR agreement, will not be certificated or evidenced by any instrument and will not be registered with the SEC or listed for trading on any exchange.
For a more complete description of what resTORbio’s stockholders, restricted stock unit holders and option holders will receive in the merger, please see the section entitled “
The Merger Agreement—Merger Consideration and Exchange Ratio
” beginning on page 207 of this proxy statement/prospectus/information statement.
 
Q:
Who will be the directors of the combined company following the merger?
 
A:
In connection with the merger, the combined company is anticipated to initially have a seven member board of directors, which will include five designated from Adicet, one designated from resTORbio and Chen Schor, the current President and Chief Executive Officer of resTORbio (until each of their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal). Anil Singhal, the current President and Chief Executive Officer of Adicet, will serve as a senior advisor to Adicet. It is anticipated that, following the completion of the merger, the combined company’s board of directors will be constituted as follows:
 
Name
  
Current Affiliation
Chen Schor
  
resTORbio Director and Chief Executive Officer
Erez Chimovits
  
Adicet, Director
Carl Gordon, Ph.D.
  
Adicet, Director
Aya Jakobovits, Ph.D.
  
Adicet, Director
Yair Schindel, M.D.
  
Adicet, Director
Jeffery A. Chodakewitz, M.D.
  
resTORbio, Director
Steve Dubin
  
N/A
(1)
 
(1)
It is anticipated that Steve Dubin will be appointed to serve as a director of the combined company following the closing of the merger. Mr. Dubin is not currently affiliated with Adicet or resTORbio.
 
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Q:
Who will be the executive officers of the combined company immediately following the merger?
 
A:
Immediately following the consummation of the merger, the executive management team of the combined company is expected to include the following individuals:
 
Name
 
Position with the Combined Company
 
Current Position
Chen Schor   President and Chief Executive Officer  
President and Chief Executive
Officer of resTORbio
Stewart Abbot, Ph.D.   Senior Vice President, Chief Operating and Scientific Officer   Senior Vice President, Chief Operating and Scientific Officer of Adicet
Francesco Galimi, M.D., Ph.D.   Senior Vice President and Chief Medical Officer   Senior Vice President and Chief Medical Officer of Adicet
Lloyd Klickstein, M.D., Ph.D.   Chief Innovation Officer   Chief Scientific Officer of resTORbio
Carrie Krehlik   Senior Vice President and Chief Human Resource Officer  
Senior Vice President and Chief Human Resource Officer of
Adicet
 
Q:
As a stockholder of resTORbio, how does the resTORbio Board recommend that I vote?
 
A:
After careful consideration, the resTORbio Board recommends that resTORbio’s stockholders vote:
 
  1.
FOR Proposal No. 1 to approve the issuance of resTORbio common stock pursuant to the merger agreement and the resulting “change of control” of resTORbio under the Nasdaq rules;
 
  2.
FOR Proposal No. 2 to approve an amendment to resTORbio’s third amended and restated certificate of incorporation to effect the reverse stock split of resTORbio common stock;
 
  3.
FOR Proposal No. 3 to approve an amendment of the resTORbio 2018 Plan to increase to the total number of shares of resTORbio Common Stock available for issuance under the resTORbio 2018 Plan by 14,855,157 shares, prior to giving effect to the reverse stock split to be effected in connection with the merger; and
 
  4.
FOR Proposal No. 4 to approve an adjournment or postponement of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1, Proposal No. 2 and/or Proposal No. 3.
 
Q:
As a stockholder of Adicet, how does the Adicet Board recommend that I vote?
 
A:
After careful consideration, the Adicet Board recommends that Adicet’s stockholders execute the written consent indicating their vote in favor of the adoption of the merger agreement and the approval of the merger and the contemplated transactions.
 
Q:
Have any of Adicet’s stockholders agreed to vote in favor of the merger?
 
A:
Yes. In connection with the execution of the merger agreement, holders of approximately 98% of the outstanding shares of Adicet capital stock on an as-converted to common stock basis have entered into the Adicet support agreement, as further described in the section entitled “
Agreements Related To The Merger
” beginning on page 229 of this proxy statement/prospectus/information statement, with resTORbio and Adicet that provides, among other things, that the stockholders of Adicet subject to this agreement will vote their shares in favor of the approval of the merger agreement and the contemplated transactions.
The merger agreement requires that, promptly after the registration statement on Form S-4, of which this proxy statement/prospectus/information statement forms a part, is declared effective, and no later than five (5) business days thereafter, Adicet must solicit for approval by written consent from Adicet’s stockholders the approval and adoption of the merger agreement and other contemplated transactions.
 
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Q:
Have any of resTORbio’s stockholders agreed to vote in favor of the issuance of the shares in the merger and the reverse stock split?
 
A:
Yes. In connection with the execution of the merger agreement, holders of approximately 24% of the outstanding shares of resTORbio common stock have entered into a support agreement (referred to as the “resTORbio support agreement”), as further described in the section entitled “
Agreements Related To The Merger
” beginning on page 229 of this proxy statement/prospectus/information statement, with resTORbio and Adicet that provides, among other things, that the stockholders of resTORbio subject to this agreement will vote their shares in favor of Proposal No. 1, Proposal No. 2 and Proposal No. 3.
 
Q:
What risks should I consider in deciding whether to vote in favor of Proposal No. 1, Proposal No. 2 and Proposal No. 3 or to execute and return the written consent, as applicable?
 
A:
You should carefully review the section entitled “
Risk Factors
” beginning on page 28 of this proxy statement/prospectus/information statement, which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of resTORbio and Adicet, as an independent company, is subject.
 
Q:
When do you expect the merger to be consummated?
 
A:
resTORbio and Adicet anticipate that the merger will occur sometime in the second half of 2020 but neither can predict the exact timing. For more information, please see the section entitled “
The Merger Agreement—Conditions to the Completion of the Merger
” beginning on page 212 of this proxy statement/prospectus/information statement.
 
Q:
What are the material U.S. federal income tax consequences of the merger to U.S. Holders of Adicet capital stock?
 
A:
The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming the merger so qualifies, a U.S. Holder (as defined in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” beginning on page 200 of this proxy statement/prospectus/information
statement) generally will not recognize gain or loss for U.S. federal income tax purposes on the exchange of Adicet capital stock for shares of resTORbio common stock pursuant to the merger. Adicet’s obligation to effect the merger is subject to the satisfaction or waiver, at or prior to the closing date of the merger, of the condition that Adicet receive an opinion of tax counsel, dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
Please review the information in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” beginning on page 200 of this proxy statement/prospectus/information statement for a more complete description of the material U.S. federal income tax consequences of the merger to U.S. Holders. The tax consequences to you of the merger will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the merger.
 
Q:
What are the material U.S. federal income tax considerations of the receipt of the CVRs and the resTORbio Reverse Stock Split to resTORbio U.S. Holders?
 
A:
resTORbio intends to report the issuance of the CVRs to resTORbio U.S. Holders (as defined in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” beginning on page 200 of this proxy statement/prospectus/information
statement) as a distribution of property with respect to its stock. Please review the information in the section entitled “
Agreements Related to the Merger—Contingent Value Rights Agreement—Material U.S.
Federal Income Tax Consequences of the Receipt of CVRs
” on page 233 of this proxy statement/prospectus/information statement
for a more
 
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  complete description of the material U.S. federal income tax consequences of the receipt of CVRs to resTORbio U.S. Holders, including possible alternative treatments. A resTORbio U.S. Holder generally should not recognize gain or loss upon the resTORbio reverse stock split, except to the extent a resTORbio U.S. Holder receives cash in lieu of a fractional share of resTORbio common stock. Please review the information in the section entitled “
Matters Being Submitted to a Vote of resTORbio Stockholders—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
” on page 242 of this proxy statement/prospectus/information statement for a more complete description of the material U.S. federal income tax consequences of the resTORbio reverse stock split to resTORbio U.S. Holders.
The tax consequences to you of the receipt of CVRs and the resTORbio reverse stock split will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you.
 
Q:
What do I need to do now?
 
A:
resTORbio and Adicet urge you to read this proxy statement/prospectus/information statement carefully, including its annexes, and to consider how the merger affects you.
If you are a stockholder of resTORbio, you may provide your proxy instructions in one of two different ways. First, you can mail your signed proxy card in the enclosed return envelope. You may also provide your proxy instructions via phone or via the internet by following the instructions on your proxy card or voting instruction form. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the special meeting.
If you are a stockholder of Adicet, you may execute and return your written consent to Adicet in accordance with the instructions provided by Adicet.
 
Q:
What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?
 
A:
The failure to return your proxy card or otherwise fail to provide proxy instructions will have the same effect as voting against Proposal No. 2, and your shares will not be counted for purposes of determining whether a quorum is present at the special meeting. Abstentions and broker non-votes will not, however, be considered votes cast at the special meeting and will therefore not have any effect with respect to Proposal Nos. 1, 3 and 4. If your shares are held in “street name”, which means your shares are held by a broker, bank or other holder of record, and you do not provide voting instructions, your broker or nominee can still vote the shares with respect to matters that are considered to be “discretionary,” but may not vote the shares with respect to
“non-discretionary”
matters. Under rules applicable to broker-dealers, Proposal No. 1 and Proposal No. 3 are considered
non-discretionary
matters. Proposal No. 2 and Proposal No. 4 qualify as a discretionary matters.
 
Q:
When and where is the special meeting of resTORbio’s stockholders?
 
A:
The special meeting will be held at 8:00 a.m., Eastern Time, on September 15, 2020, unless postponed or adjourned to a later date. In light of the
COVID-19
(coronavirus) pandemic and to support the well-being of resTORbio’s stockholders and partners, the special meeting will be completely virtual.
 
Q:
How can resTORbio’s stockholders attend the special meeting?
 
A:
You may attend the special meeting and vote your shares electronically during the meeting via live webcast by visiting
www.virtualshareholdermeeting.com/TORC2020SM
. You will need the control number that is printed on your proxy card to enter the special meeting. resTORbio recommends that you log in at least 15 minutes before the special meeting to ensure you are logged in when the meeting starts. Please note that you will not be able to attend the special meeting in person.
 
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If your shares are held in “street name,” you may attend the special meeting. In the event that you do not have the control number required to access the special meeting, please contact your broker, bank, or other nominee as soon as possible and no later than September 11, so that you can be provided with a control number and gain access to the meeting. Please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote online at the special meeting, you must request a proxy, executed in your favor, from your bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the special meeting.
 
Q:
Why is the special meeting a virtual meeting?
 
A:
resTORbio has decided to hold the special meeting virtually due to the
COVID-19
pandemic; resTORbio is sensitive to the public health and travel concerns of resTORbio’s stockholders and employees and the protocols that federal, state and local governments may impose. resTORbio believes that hosting a virtual meeting will enable greater stockholder attendance and participation from any location around the world.
 
Q:
What if during the
check-in
time or during the special meeting I have technical difficulties or trouble accessing the virtual meeting website?
 
A:
If you encounter any difficulties accessing the virtual meeting during the
check-in
or meeting time, please call the technical support number that will be posted on the virtual stockholder meeting log in page.
 
Q:
As a resTORbio stockholder, how can I vote?
 
A:
Whether or not you expect to attend the special meeting online, we urge you to vote your shares of resTORbio common stock as promptly as possible by: (1) accessing the internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares of resTORbio common stock may be represented and voted at the special meeting. If your shares of resTORbio common stock are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.
Stockholders who choose to participate in the special meeting can vote their shares electronically during the meeting via live webcast by visiting
www.virtualshareholdermeeting.com/TORC2020SM
. You will need the control number that is printed on your proxy card to enter the special meeting. resTORbio recommends that you log in at least 15 minutes before the meeting to ensure you are logged in when the meeting starts.
Even if you plan to participate in the special meeting online, we recommend that you also vote by proxy as described above so that your vote will be counted if you later decide not to participate in the special meeting.
 
Q:
If my resTORbio shares are held in “street name” by my broker, will my broker vote my shares for me?
 
A:
Broker
non-votes
occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed
“non-discretionary.”
Generally, if shares are held in “street name”, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “discretionary,” but may not vote the shares with respect to
“non-discretionary”
matters. Your broker will not be able to vote your shares of resTORbio common stock without specific instructions from you for
“non-discretionary”
matters. You should instruct your broker to vote your shares, following the procedures provided by your broker. Under rules applicable to broker-dealers, Proposal No. 1 and Proposal No. 3 are considered a
non-discretionary
matters. Proposal No. 2 and Proposal No. 4 qualify as discretionary matters.
 
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Q:
May I change my vote after I have submitted a proxy or provided proxy instructions?
 
A:
resTORbio’s stockholders of record, other than those of resTORbio’s stockholders who are parties to the resTORbio support agreement, may change their vote at any time before their proxy is voted at the special meeting virtually in one of three ways. First, a stockholder of record of resTORbio can send a written notice to the Secretary of resTORbio stating that it would like to revoke its proxy. Second, a stockholder of record of resTORbio can submit new proxy instructions either on a new proxy card or via the internet or telephone before 11:59 p.m. Eastern Time on September 14, 2020. Third, a stockholder of record of resTORbio can attend the special meeting virtually and vote online. Attendance alone will not revoke a proxy. If a stockholder of resTORbio of record or a stockholder who owns resTORbio shares in “street name” has instructed a broker to vote its shares of resTORbio common stock, the stockholder must follow directions received from its broker to change those instructions.
 
Q:
How many shares must be represented to have a quorum and hold the special meeting?
 
A:
A quorum of resTORbio stockholders is necessary to hold a valid meeting. A quorum will be present if resTORbio stockholders of record holding at least a majority of resTORbio’s outstanding common stock entitled to vote at the special meeting are present or represented by proxy. Abstentions and broker
non-votes
will be counted toward a quorum. On the record date, there were              shares of resTORbio common stock outstanding and entitled to vote. Thus, the holders of              shares of resTORbio common stock must be represented by proxy or vote via the Internet at the special meeting to have a quorum. As a resTORbio stockholder, your shares will be counted towards the quorum if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote via the Internet or telephone at the special meeting. Abstentions and broker
non-votes,
if applicable, will also be counted towards the quorum requirement. If there is no quorum, the holders of voting stock representing a majority of the voting power present at the meeting represented by proxy or voting via the Internet or telephone during the special meeting or the presiding officer may adjourn the meeting to another date.
 
Q:
Who is paying for this proxy solicitation?
 
A:
resTORbio and Adicet will share equally the cost of printing and filing of this proxy statement/prospectus/information statement and the proxy card. In addition, resTORbio has engaged The Proxy Advisory Group, LLC, a proxy solicitation firm, to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $20,000 in total. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of resTORbio common stock for the forwarding of solicitation materials to the beneficial owners of resTORbio common stock. resTORbio will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable
out-of-pocket
expenses they incur in connection with the forwarding of solicitation materials.
 
Q:
Who can help answer my questions?
 
A:
If you are a stockholder of resTORbio and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the merger, including the procedures for voting your shares, you should contact:
The Proxy Advisory Group, LLC
Telephone: (212) 616-2181
If you are a stockholder of Adicet and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the merger, including the procedures for voting your shares, you should contact:
Adicet Bio, Inc.
200 Construction Drive
Menlo Park, California 94025
Telephone: 650-503-9095
Attn: Anil Singhal, CEO
 
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PROSPECTUS SUMMARY
This summary highlights selected information from this proxy statement/prospectus/information statement and may not contain all of the information that is important to you. To better understand the merger, the proposals being considered at the special meeting and Adicet’s stockholders’ actions that are the subject of the written consent, you should read this entire proxy statement/prospectus/information statement carefully, including the merger agreement attached as Annex A (referred to as the “merger agreement”), the opinion of JMP Securities LLC attached as Annex B and the other annexes to which you are referred herein and which are incorporated by reference herein. For more information, please see the section entitled “Where You Can Find More Information” on page 436 of this proxy statement/prospectus/information statement.
The Companies
resTORbio, Inc.
500 Boylston Street, 13
th
Floor
Boston, Massachusetts 02116
Tel: (857)
315-5528
resTORbio is a clinical-stage biopharmaceutical company developing innovative medicines that target the biology of aging to prevent or treat age-related diseases with the potential to extend healthy lifespan. resTORbio’s lead program selectively inhibits the target of rapamycin complex 1, or TORC1, an evolutionarily conserved pathway that contributes to the age-related decline in function of multiple organ systems. resTORbio’s lead product candidate, RTB101, is an oral, selective, and potent inhibitor of TORC1. RTB101 inhibits the phosphorylation of multiple targets downstream of TORC1. Inhibition of TORC1 has been observed to extend lifespan and healthspan in aging preclinical species and to enhance immune, neurologic and cardiac functions, suggesting potential benefits in several aging-related diseases. In May 2020, resTORbio initiated a randomized, double-blind, placebo-controlled trial to determine if prophylaxis with RTB101 as compared to placebo reduces the severity of laboratory-confirmed COVID-19 in adults age 65 years and older who reside in a nursing home with one or more residents or staff who have laboratory-confirmed novel coronavirus disease (referred to as “COVID-19”). The primary endpoint for the study is the percentage of subjects who develop laboratory-confirmed COVID-19 with protocol-defined progressive symptoms or are hospitalized or die beginning at randomization through Week 4. Approximately 550 subjects are expected to enroll in the study. Subjects will be randomized 1:1 to RTB101 10 mg once daily or matching placebo once daily. As of August 4, 2020, sixteen (16) subjects have been randomized to receive RTB101 10 mg once daily or matching placebo. The study is conducted in collaboration with Investigators at Brown University’s Schools of Medicine and Public Health. On July 28, 2020, resTORbio announced it received a grant award from the National Institute on Aging to fund a clinical trial to obtain preliminary data on the feasibility of studying RTB101 as compared to placebo for COVID-19 post-exposure prophylaxis in adults age 65 years and older. Approximately sixty (60) subjects are expected to enroll in the clinical trial, which will be fully funded by the grant. The clinical trial is anticipated to start in the second half of 2020.
In November 2019, resTORbio announced that top line data from the PROTECTOR 1 Phase 3 study, evaluating the safety and efficacy of RTB101 in preventing clinically symptomatic respiratory illness in adults age 65 and older, did not meet its primary endpoint and that resTORbio has stopped the development of RTB101 for clinically symptomatic respiratory illness. In May 2020, resTORbio terminated its Phase 1b/2a with RTB101 alone or RTB101 in combination with sirolimus in Parkinson’s disease. Except for the studies described above for COVID-19, there are no additional clinical studies ongoing with RTB101.
Adicet Bio, Inc.
200 Constitution Drive
Menlo Park, CA 94025
Tel: (650)
503-9095
 
 
 
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Adicet is a biotechnology company that is advancing a new generation of chimeric antigen receptor
(CAR)-modified-T
cell therapies in oncology and other indications. Adicet’s approach is based on gamma delta T cells, an immune cell population that Adicet believes has potentially significant advantages over alpha beta T cells, which are the basis of standard
CAR-T
cell therapies. Adicet believes that it is at the forefront to take tumor targeting gamma delta
CAR-T
cell product candidates into
IND-enabling
studies and clinical trials for specific tumor types. Adicet is developing proprietary processes for engineering and manufacturing product candidates based on gamma delta T cells from the blood of healthy donors, resulting in high yields of cells with efficacious tumor-killing activity in preclinical experiments. The ability to administer product candidates based on gamma delta T cells to patients without inducing a graft versus host immune response means that Adicet’s products can potentially be produced as
off-the-shelf
therapies. This is in contrast to products based on alpha beta T cells, which either must be manufactured for each patient from his or her own T cells or which require significant gene editing to manufacture allogeneic therapies, that is, therapies that are based on T cells derived from donors that are unrelated to the patient. Based on what Adicet believes is the enormous promise of these cells and associated modifications, Adicet is initially developing product candidates in oncology, both for hematological malignancies and for solid tumor indications. Due to certain unique properties of gamma delta T cells, Adicet believes that its product candidates will have an inherent capacity to recognize and kill circulating tumor cells and to infiltrate and kill solid tumors, the cause of over 90% of all cancer deaths as estimated by the American Cancer Society in 2020. Adicet intends to file an IND application with the FDA in 2020 for ADI-001, the company’s lead product candidate, in Non-Hodgkin’s Lymphoma, or NHL. Subject to the FDA regulatory process for review of INDs, Adicet intends to initiate a clinical trial and treat the first patient with ADI-001 in the first half of 2021. Adicet expects initial clinical results from this trial in 2021. Adicet intends to file an IND application with the FDA in 2021 for ADI-002, the company’s first solid tumor product candidate. Subject to the FDA regulatory process for review of INDs, Adicet intends to initiate a clinical trial and treat the first patient with ADI-002 in 2021.
Project Oasis Merger Sub, Inc.
Project Oasis Merger Sub, Inc. is a wholly owned subsidiary of resTORbio, and was formed solely for the purposes of carrying out the merger.
The Merger (page 160)
Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, the merger subsidiary will merge with and into Adicet, with Adicet surviving as a wholly owned subsidiary of resTORbio. The merger agreement provides that upon the consummation of the merger, the separate existence of merger subsidiary shall cease and Adicet will continue as the surviving corporation and as a wholly owned subsidiary of resTORbio.
At the effective time of the merger, each share of Adicet capital stock outstanding immediately prior to the effective time of the merger, excluding any shares of Adicet capital stock held as treasury stock and shares held by Adicet stockholders who have exercised and perfected appraisal rights as more fully described in the section entitled “
The Merger—Appraisal Rights
” below, will be converted into the right to receive approximately 0.8555 shares of resTORbio common stock, subject to adjustment to account for the reverse stock split at a ratio mutually agreed to by resTORbio and Adicet in the range of
1-for
4 to
1-for-12
shares outstanding (or any number in between), to be implemented immediately prior to and contingent upon the completion of the merger. This exchange ratio is an estimate only and is based upon resTORbio’s and Adicet’s capitalization as of August 4, 2020. The final exchange ratio will be determined pursuant to a formula described in more detail in the merger agreement and in the section entitled “
The Merger Agreement—Merger Consideration and Exchange Ratio
” on page 207 of this proxy statement/prospectus/information statement.
Immediately following the effective time of the merger, the former Adicet equityholders are expected to hold approximately 75% of the outstanding shares of resTORbio common stock on a fully-diluted basis and the
 
 
 
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current equityholders of resTORbio are expected to hold approximately 25% of the outstanding shares of resTORbio common stock on a fully-diluted basis (in each case excluding equity incentives available for grant).
The completion of the merger will occur no later than the second business day after all conditions to closing are satisfied or waived, or at such other time as resTORbio and Adicet agree. resTORbio and Adicet anticipate that the consummation of the merger will occur in the second half of fiscal year 2020. However, because the merger is subject to a number of conditions, neither resTORbio nor Adicet can predict exactly when the completion of the merger will occur or if it will occur at all. In connection with the completion of the merger, resTORbio will be renamed “Adicet Bio, Inc.” and expects to trade on Nasdaq under the symbol “ACET.”
Reasons for the Merger (177 and 179)
The resTORbio Board considered various reasons to reach its determination (i) that the contemplated transactions are advisable and fair to, and in the best interests of, resTORbio and resTORbio stockholders and (ii) to approve and declare advisable the authorization and issuance of shares of resTORbio common stock to the Adicet stockholders in accordance with the terms of the merger agreement.
The Adicet Board also considered various reasons to reach its determination (i) that the merger is advisable and fair to, and in the best interests of, Adicet and Adicet stockholders, (ii) to approve the merger agreement, and the contemplated transactions and deem the merger agreement advisable and (iii) to recommend that the Adicet stockholders vote to approve the merger agreement and the contemplated transactions.
The resTORbio Board considered reasons for the merger, including, among others, the following factors:
 
   
resTORbio’s business, financial performance (both past and prospective) and its financial condition, results of operation (both past and prospective), business and strategic objectives, as well as the risks of accomplishing those objectives;
 
   
resTORbio’s business and financial prospects if it were to remain an independent company and the resTORbio Board’s determination that resTORbio could not continue to operate as an independent company and needed to enter into an agreement with a strategic partner;
 
   
the possible alternatives to the merger, the range of possible benefits and risks to the resTORbio stockholders of those alternatives and the timing and the likelihood of accomplishing the goal of any of such alternatives and the resTORbio Board’ assessment that the merger presented a superior opportunity to such alternatives for resTORbio stockholders;
 
   
the resTORbio Board’s view of the valuation of the potential merger candidates. In particular, the resTORbio Board’s view that Adicet was the most attractive candidate because of its
off-the-shelf
gamma delta
CAR-T
cell therapy platform resulting in a potential pipeline of clinical candidates, and the resTORbio Board’s belief that the merger would create a publicly traded company focused on the development of Adicet’s
off-the-shelf
allogeneic gamma delta T cell therapies for oncology and other indications, and its belief that the merger with Adicet will create more value for resTORbio stockholders than any of the other proposals that the resTORbio Board had received or that resTORbio could create as a standalone company;
 
   
the ability of resTORbio stockholders to participate in the future growth potential of the combined company following the merger, while potentially receiving all net proceeds derived from the commercialization of RTB101 for prophylaxis for
COVID-19
on account of the CVR agreement to be executed at the closing of the merger;
 
   
that the combined company will be led by an experienced senior management team, with Mr. Schor serving as the chief executive officer; and
 
   
the results of discussions with third parties relating to a variety of strategic transactions, including a licensing transaction and possible business combination or similar transaction with resTORbio.
 
 
 
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resTORbio’s reasons for the merger and the negative factors considered by the resTORbio Board are described in more detail in the section entitled “
resTORbio Reasons for the Merger
” beginning on page 177 of this proxy statement/prospectus/information statement.
In addition, the Adicet Board approved the merger based on its consideration of a number of factors, including, among others:
 
   
Adicet’s need for capital to support the
pre-clinical
and clinical development of its product candidates and the potential to access public market capital, including sources of capital from a broader range of investors than it could otherwise obtain if it continued to operate as a privately-held company;
 
   
the expectation that the merger would be a more time- and cost-effective means to access capital than other options considered;
 
   
the potential to provide its current stockholders with greater liquidity by owning stock in a public company listed on Nasdaq;
 
   
the Adicet Board’s belief that no alternatives to the merger were reasonably likely to create greater value for Adicet’s stockholders, after reviewing the various financing and other strategic options to enhance stockholder value that were considered by the Adicet Board, including remaining as an independent company;
 
   
the historical operations, resources, assets, technology and reputation of resTORbio (including, without limitation, the failure of its main drug candidate to meet its primary endpoints in a previous clinical trial); and
 
   
the projected financial position, operations, management structure, geographic locations, operating plans, cash burn rate and financial projections of the combined company, including the impact of the CVR agreement and the expected cash resources of the combined organization (including the ability to support the combined company’s current and planned clinical trials and operations).
Adicet’s reasons for the merger and the risks and uncertainties considered by the Adicet Board are described in more detail in the section entitled “
Adicet Reasons for the Merger
” beginning on page 179 of this proxy statement/prospectus/information statement.
Opinion of the resTORbio Financial Advisor (page 186)
JMP Securities LLC (referred to as “JMP”) delivered its opinion to the resTORbio Board that, as of April 28, 2020 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio (referred to as the “exchange ratio”) was fair, from a financial point of view, to resTORbio.
The full text of the written opinion of JMP, dated April 28, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as
Annex B
to this proxy statement/prospectus/information statement and incorporated herein by reference. JMP provided advisory services and its opinion for the information and assistance of the resTORbio Board in connection with its consideration of the merger. The JMP opinion is not a recommendation as to how any holder of resTORbio common stock should vote with respect to the merger or any other matter. Pursuant to an engagement letter between resTORbio and JMP, resTORbio has agreed to pay JMP a transaction fee estimated as of the date of the announcement of the merger at $1,250,000, $250,000 of which became payable upon the rendering of the opinion, and the remainder of which is contingent upon the completion of the merger.
 
 
 
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Overview of the Merger Agreement
Merger Consideration (page 199)
At the effective time of the merger:
 
   
any shares of Adicet capital stock held as treasury stock immediately prior to the effective time of the merger shall be canceled and retired and shall cease to exist with no consideration delivered in exchange therefor;
 
   
each share of Adicet capital stock outstanding immediately prior to the effective time (excluding shares of Adicet capital stock held as treasury stock and any dissenting shares held by stockholders who have exercised and perfected appraisal rights as more fully described in the section entitled “
The Merger—Appraisal Rights
” beginning on page 203 of this proxy statement/prospectus/information statement below) shall be converted solely into the right to receive a number of shares of resTORbio common stock equal to the exchange ratio of approximately 0.8555; and
 
   
no fractional shares of resTORbio common stock will be issuable to Adicet’s stockholders pursuant to the merger; however, any fractional shares of resTORbio common stock a holder of Adicet capital stock would otherwise be entitled to receive is to be aggregated before eliminating any remaining fractional share.
This exchange ratio is an estimate only and is based upon resTORbio’s and Adicet’s capitalization as of August 4, 2020. The final exchange ratio will be determined pursuant to a formula described in more detail in the merger agreement and in the section entitled “
The Merger Agreement—Merger Consideration and Exchange Ratio
” beginning on page 207 of this proxy statement/prospectus/information statement, and is generally calculated by dividing (a) (i) the Adicet valuation per the merger agreement of $220,000,000 divided by (ii) the number of Adicet’s outstanding shares immediately prior to the effective time on a fully diluted basis (excluding equity incentives available for grant) by (b) (i) the resTORbio valuation per the merger agreement of $73,333,333 divided by (ii) the number of resTORbio’s outstanding shares immediately prior to the effective time on a fully diluted basis (excluding equity incentives available for grant).
Immediately following the effective time of the merger, the former Adicet equityholders are expected to hold approximately 75% of the outstanding shares of resTORbio common stock on a fully-diluted basis and the current equityholders of resTORbio are expected to hold approximately 25% of the outstanding shares of resTORbio common stock on a fully-diluted basis (in each case excluding equity incentives available for grant).
The merger agreement does not include a price-based termination right, and there will be no adjustment to the total number of shares of resTORbio’s common stock that Adicet’s stockholders will be entitled to receive for changes in the market price of resTORbio’s common stock after the date the merger agreement was signed. Accordingly, the market value of the shares of resTORbio’s common stock issued pursuant to the merger will depend on the market value of the shares of resTORbio’s common stock at the time the merger closes, and could vary significantly from the market value on the date of this proxy statement/prospectus/information statement.
Treatment of resTORbio Equity Awards (page 209)
Prior to the completion of the merger, the resTORbio Board will adopt appropriate resolutions and take all other actions necessary and appropriate, including using commercially reasonable efforts to obtain any necessary consents from the holders of options to purchase resTORbio common stock (referred to as “resTORbio options”), to provide the following:
 
   
that each unexpired, unexercised and unvested resTORbio option shall be accelerated in full effective as of immediately prior to the effective time of the merger. The number of shares of resTORbio
 
 
 
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common stock underlying such options and the exercise price for such options will be adjusted to account for the reverse stock split;
 
   
that each unexpired and unexercised resTORbio option with an exercise price that equals or exceeds the volume weighted average share price of the resTORbio common stock for a five trading day period, starting with the opening of trading on the first trading day of such period to the closing of the second to last trading day prior to the effective time of the merger, as reported by Nasdaq (or, in the event Nasdaq does not report such information, such third-party service as is mutually agreed upon by the parties) (referred to as the
“in-the-money
price”) shall be cancelled for no consideration; and
 
   
that each unexpired and unexercised resTORbio option with an exercise price that is less than the
in-the-money
price shall remain outstanding after the close of the merger in accordance with its terms.
The resTORbio 2018 Stock Option and Incentive Plan (referred to as the “resTORbio 2018 Plan”) and, the resTORbio 2017 Stock Incentive Plan (referred to as the “resTORbio 2017 Plan”) and the resTORbio 2018 Employee Stock Purchase Plan (referred to as the “resTORbio 2018 ESPP,” and with the resTORbio 2018 Plan and resTORbio 2017 Plan collectively referred to as the “resTORbio Stock Plans”) shall remain in effect following the effective time of the merger.
Prior to the completion of the merger, the resTORbio Board will adopt appropriate resolutions and take all other actions necessary and appropriate to provide that (i) the vesting of each outstanding unvested equity award with respect to resTORbio common stock that represents the right to receive in the future shares of resTORbio common stock pursuant to any resTORbio Stock Plan (referred to as “resTORbio RSUs”) shall be accelerated in full effective as of immediately prior to the effective time of the merger and (ii) for each outstanding and unsettled resTORbio RSU (including any resTORbio RSUs that are accelerated as stated in (i) above), each holder thereof shall receive, immediately prior to the effective time of the merger, a number of shares of resTORbio common stock equal to the number of vested and unsettled restricted stock units underlying such resTORbio RSU (reduced by the number of shares of resTORbio common stock necessary to satisfy applicable tax withholding obligations at the maximum statutory rate). The number of shares of resTORbio common stock underlying such resTORbio RSUs will be adjusted to account for the reverse stock split.
Treatment of Adicet Equity Awards and Warrants (page 209)
At the effective time of the merger, each outstanding and unexercised Adicet option, whether vested or unvested, issued pursuant to the Adicet 2015 plan and a subset of options issued pursuant to the Adicet 2014 plan will be converted into options to purchase a number of shares of resTORbio common stock based on the exchange ratio, subject to the terms of and adjustments in the merger agreement.
Pursuant to the merger agreement, at the effective time of the merger, each Adicet option that is outstanding and unexercised immediately prior to the effective time of the merger, whether or not vested, issued pursuant to the Adicet 2015 plan and a subset of options issued pursuant to the Adicet 2014 plan, without any action on the part of the holder thereof, will be converted into and become a resTORbio option, and resTORbio shall assume the Adicet plans and each such Adicet option in accordance with the terms of the Adicet plans (as in effect as of the date of the merger agreement) and the terms of the applicable stock option agreement. All rights with respect to Adicet options assumed by resTORbio shall thereupon be converted into rights with respect to resTORbio common stock. Accordingly, from and after the effective time of the merger: (i) each Adicet option assumed by resTORbio may be exercised solely for shares of resTORbio common stock; (ii) the number of shares of resTORbio common stock subject to each Adicet option assumed by resTORbio shall be determined by multiplying (A) the number of shares of Adicet common stock that were subject to such Adicet option, as in effect immediately prior to the effective time of the merger, by (B) the exchange ratio, and rounding the resulting number down to the nearest whole number of shares of resTORbio common stock and (iii) the per share exercise
 
 
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price for the resTORbio common stock issuable upon exercise of each Adicet option assumed by resTORbio shall be determined by dividing (A) the per share exercise price of Adicet common stock subject to such Adicet option, as in effect immediately prior to the effective time of the merger, by (B) the exchange ratio and rounding the resulting exercise price up to the nearest whole cent. Any restriction on the exercise of any Adicet option assumed by resTORbio shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Adicet option shall otherwise remain unchanged.
At the effective time of the merger, all rights with respect to Adicet capital stock under Adicet warrants shall be converted into rights with respect to resTORbio common stock and thereupon assumed by resTORbio. Accordingly, from and after the effective time of the merger: (i) each Adicet warrant assumed by resTORbio may be exercised solely for shares of resTORbio common stock; (ii) the number of shares of resTORbio common stock subject to each Adicet warrant assumed by resTORbio shall be determined by multiplying (x) the number of shares of Adicet capital stock that were subject to such Adicet warrant (on an
as-converted
basis with respect to shares of Adicet preferred stock), as in effect immediately prior to the effective time of the merger, by (y) the exchange ratio, and rounding the resulting number down to the nearest whole number of shares of resTORbio common stock; (iii) the per share exercise price for the resTORbio common stock issuable upon exercise of each Adicet warrant assumed by resTORbio shall be determined by dividing (x) the exercise price per share of Adicet common stock subject to such Adicet warrant (or, in the case of Adicet warrants exercisable for shares of Adicet preferred stock, the exercise price per share of such series of Adicet preferred stock divided by the number of shares of Adicet common stock into which such share of Adicet preferred stock is then convertible), as in effect immediately prior to the effective time of the merger, by (y) the exchange ratio, and rounding the resulting exercise price up to the nearest whole cent; and (iv) any restriction on the exercise of any Adicet warrant assumed by resTORbio shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Adicet warrant shall otherwise remain unchanged.
Conditions to the Completion of the Merger (page 212)
To consummate the merger, resTORbio stockholders must approve (a) the issuance of shares of resTORbio common stock in the merger by a majority of the votes properly cast at the special meeting and (b) an amendment to the third amended and restated certificate of incorporation of resTORbio (referred to as the “resTORbio certificate of incorporation”) effecting the reverse stock split by a majority of the outstanding shares of resTORbio common stock as of the record date for the special meeting.
Additionally, Adicet’s stockholders must adopt the merger agreement thereby approving the merger and the contemplated transactions. The adoption of the merger agreement and the approval of the contemplated transactions by Adicet’s stockholders requires the affirmative vote (or written consent) of the holders of a majority of (a) the outstanding shares of Adicet capital stock (on an
as-converted
to Adicet common stock basis), (b) the outstanding shares of Adicet preferred stock, voting together as one class (on an
as-converted
to Adicet common stock basis) and (c) the outstanding shares of Adicet Series B preferred stock, voting together as one class, in each case, outstanding on the record date for the Adicet written consent and entitled to vote thereon.
Additionally, each of the other closing conditions set forth in the merger agreement and described in the section entitled “
The Merger Agreement—Conditions to the Completion of the Merger
” on page 212 of this proxy statement/prospectus/information statement must be satisfied or waived.
No Solicitation (page 215)
Each of resTORbio and Adicet agreed that, except as described below, from the date of the merger agreement until the earlier of the consummation of the merger or the termination of the merger agreement in accordance with its terms, resTORbio and Adicet and any of their respective subsidiaries will not, nor will either party or any
 
 
 
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of its subsidiaries authorize any of the directors, officers, employees, agents, attorneys, accountants, investment bankers, advisors or representatives retained by it or any of its subsidiaries to, directly or indirectly:
 
   
solicit, initiate or knowingly encourage, induce or facilitate the communication, making, submission or announcement of, any “acquisition proposal” (as defined in the section entitled “
The Merger Agreement—No Solicitation
” on page 215 of this proxy statement/prospectus/information statement), or “acquisition inquiry” (as defined in the section entitled “
The Merger Agreement—No Solicitation
” on page 215 of this proxy statement/prospectus/information statement);
 
   
furnish any
non-public
information with respect to it to any person in connection with or in response to an acquisition proposal or acquisition inquiry;
 
   
engage in discussions or negotiations with any person with respect to any acquisition proposal or acquisition inquiry;
 
   
subject to certain exceptions, approve, endorse or recommend an acquisition proposal;
 
   
execute or enter into any letter of intent or similar document or any contract contemplating or otherwise relating to an acquisition transaction (as defined in the section entitled “
The Merger Agreement—No Solicitation
” on page 215 of this proxy statement/prospectus/information statement);
 
   
take any action that could reasonably be expected to lead to an acquisition proposal or acquisition inquiry; or
 
   
publicly propose to do any of the foregoing.
Termination of the Merger Agreement (page 223)
Either resTORbio or Adicet can terminate the merger agreement under specified circumstances, which would prevent the merger from being consummated.
Termination Fee (page 225)
The merger agreement provides for the payment of a termination fee of $6,100,000 by each of resTORbio and Adicet to the other party upon termination of the merger agreement under specified circumstances.
Expense Reimbursement (page 225 and 226)
The merger agreement provides for the payment of an expense reimbursement of up to $1,000,000 by each of resTORbio and Adicet to the other party upon termination of the merger agreement under specified circumstances.
resTORbio Support Agreement (page 231)
Concurrently and in connection with the execution of the merger agreement, resTORbio and Adicet entered into the resTORbio support agreement with resTORbio’s current directors and certain officers and resTORbio’s largest stockholder, which collectively own an aggregate of approximately 24% of outstanding resTORbio common stock. The resTORbio support agreement provides, among other things, that each of such stockholders of resTORbio has agreed to vote or cause to be voted all of the shares of resTORbio common stock held by them in favor of the contemplated transactions, including the share issuance proposal and the reverse stock split proposal.
Adicet Support Agreement (page 230)
Concurrently with or promptly following with the execution of the merger agreement, resTORbio and Adicet also entered into the Adicet support agreement with Adicet’s current directors and officers and certain
 
 
 
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stockholders, which collectively own an aggregate of approximately 98% of Adicet’s outstanding capital stock on an as-converted to common stock basis. The Adicet support agreement provides, among other things, that the stockholders of Adicet subject to this agreement will vote their shares in favor of the approval of the merger agreement and the contemplated transactions.
The merger agreement requires that, promptly after the registration statement on Form
S-4,
of which this proxy statement/prospectus/information statement is a part, is declared effective by the SEC, and no later than five (5) business days thereafter, Adicet must solicit for approval by written consent from Adicet’s stockholders sufficient for the approval and adoption of the merger agreement and other contemplated transactions.
In addition, following the registration statement on Form
S-4,
of which this proxy statement/prospectus/information statement is a part, being declared effective by SEC and pursuant to the conditions of the merger agreement and the Adicet support agreement, Adicet’s stockholders who are party to the Adicet support agreement are each obligated to execute the written consent, adopting the merger agreement, thereby approving the contemplated transactions, including the merger, no later than five business days after the registration statement on Form S-4, of which this proxy statement/prospectus/information statement forms a part, is declared effective. Therefore, holders of a sufficient number of shares of Adicet capital stock required to adopt the merger agreement are expected to adopt the merger agreement, and no meeting of Adicet’s stockholders to adopt the merger agreement and approve the merger and contemplated transactions is expected to be held.
Lock-up
Agreements (page 232)
Concurrently with or promptly following the execution of the merger agreement, certain of Adicet’s current directors and officers and certain stockholders of Adicet, which collectively own an aggregate of approximately 98% of Adicet’s outstanding capital stock on an as-converted to common stock basis, and resTORbio’s current directors, certain officers of resTORbio and resTORbio’s largest stockholder, which collectively own an aggregate of approximately 24% of outstanding resTORbio common stock, entered into
lock-up
agreements with resTORbio and Adicet, pursuant to which each stockholder has agreed not to, except in limited circumstances, sell or transfer, or engage in swap or similar transactions with respect to, shares of resTORbio common stock, including, as applicable, shares received in the merger and issuable upon exercise of certain warrants and options, from the completion date of the merger until 180 days from the completion date of the merger.
Funding Agreement (page 229)
Concurrently with the execution of the merger agreement, Adicet and resTORbio entered into a funding agreement (referred to as the “funding agreement”) with certain investors of Adicet (referred to as the “Investors”), pursuant to which the Investors committed to fund up to an aggregate of $15,000,000 (referred to as the “funding amount”) into an escrow account, which will be used to subscribe for shares of resTORbio common stock in a concurrent private placement in connection with a private placement or public offering of resTORbio common stock for aggregate gross proceeds (including the funding amount) to the combined company of at least $30,000,000 (referred to as a “qualified financing”), on the same economic conditions (including the price per share paid by other investors in a qualified financing) and similar other terms and conditions as set forth in such a qualified financing. If resTORbio fails to consummate a qualified financing within twelve months of the completion of the merger or certain other events occur, the funding amount will be distributed back to the Investors.
Contingent Value Rights Agreement (page 232)
The merger agreement contemplates that at or prior to completion of the merger, resTORbio, the Holders’ Representative (as defined therein) and the Rights Agent (as defined therein) will execute and deliver a
 
 
 
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contingent value rights agreement (referred to as the “CVR agreement”), pursuant to which each holder of resTORbio common stock as of immediately prior to the completion of the merger shall be entitled to one contractual contingent value right (each referred to as a “CVR”) issued by resTORbio, subject to and in accordance with the terms and conditions of the CVR agreement, for each share of resTORbio common stock held by such holder. Each CVR shall entitle the holder thereof to receive net proceeds of the commercialization, if any, received from a third party commercial partner of RTB101, resTORbio’s small molecule product candidate that is a potent inhibitor of target of rapamycin complex 1 (TORC1), for
a COVID-19 related
indication, with clinical data expected by the first quarter of 2021. The CVRs are not transferable, except in certain limited circumstances as will be provided in the CVR agreement, will not be certificated or evidenced by any instrument and will not be registered with the SEC or listed for trading on any exchange.
Pursuant to the CVR agreement, and subject to the limitations set forth therein, from the closing of the merger until September 30, 2021, the combined company will be required to use its Commercially Reasonable Efforts (as such term is defined in the CVR agreement) to perform the key tasks necessary to continue and conduct resTORbio’s clinical trials for a COVID-19 related indication for RTB101 in strict accordance with such trials’ protocols. Pursuant to the CVR agreement, the Clinical Trial Cap (as such term is defined in the CVR agreement) for the total fees and expenses of resTORbio’s clinical trials for a COVID-19 related indication of RTB101 is $3,000,000, less any fully burdened costs accrued or incurred by resTORbio or its affiliates in connection with such clinical trials, between the date of the merger agreement and the closing of the merger. In the event the total fees and expenses of such clinical trials exceed such Clinical Trial Cap, the combined company may terminate the CVR agreement without any further liability whereupon the combined company shall be relieved of any and all obligations which will be contained therein. In addition, pursuant to the CVR agreement, and subject to the combined company’s termination rights set forth therein, from the closing of the merger until September 30, 2021, the combined company will be required to use its Commercially Reasonable Efforts to reasonably support the Finder (as such term is defined in the CVR agreement) to identify one or more partners and negotiate a CVR Commercial Agreement (as such term is defined in the CVR agreement) with such partner for the commercialization of RTB101 for a COVID-19 related indication, subject to certain limitations set forth in the CVR agreement.
The right of any holder of a CVR to receive any payments pursuant to the CVR agreement is contingent upon the combined company entering into a CVR Commercial Agreement with a third party commercial partner prior to September 30, 2021. If the combined company does enter into a CVR Commercial Agreement with a third party commercial partner prior to September 30, 2021, the Net Proceeds (as such term is defined in the CVR agreement) received by the combined company pursuant to such CVR Commercial Agreement in consideration for the rights to commercialize a COVID-19 related indication of RTB101 will then be distributed to the holders of the CVRs as set forth in the CVR agreement. If the combined company does not enter into a CVR Commercial Agreement with a third party commercial partner prior to September 30, 2021, or if the combined company does enter into such CVR Commercial Agreement but does not receive any Net Proceeds pursuant to such CVR Commercial Agreement, no payments will be made under the CVRs, and the CVRs will expire valueless.
Loan Agreement (page 237)
On April 28, 2020, Adicet entered into a Loan and Security Agreement with Pacific Western Bank for a term loan not exceeding $12.0 million (as amended, referred to as the “Loan Agreement”) to finance leasehold improvements for its new corporate headquarters in Redwood City, California and other purposes permitted under the Loan Agreement, with an interest rate equal to the greater of 0.25% above the Prime Rate (as defined in the Loan Agreement) or 5.00%. The Loan Agreement granted to Pacific Western Bank a security interest on substantially all of Adicet’s assets other than intellectual property to secure the performance of Adicet’s obligations under the Loan Agreement, and contains a variety of affirmative and negative covenants, including required financial reporting, limitations on certain dispositions of assets or distributions, limitations on the 
 
 
 
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incurrence of additional debt or liens and other customary requirements. Pacific Western Bank consented to the delivery of audited consolidated financial statements that include a going concern explanatory paragraph by Adicet’s independent registered public accounting firm for the year ended December 31, 2019 in accordance with the terms of the financial statement covenants set forth in the Loan Agreement. Therefore, as of the date of this proxy statement/prospectus/information statement, Adicet was in compliance with such covenants and had no indebtedness outstanding under the Loan Agreement.
In connection with the entrance into the Loan Agreement, Adicet issued Pacific Western Bank a warrant to purchase shares of its Series B redeemable convertible preferred stock (described below) at an exercise price of $1.4034 per share (referred to as the “Existing PacWest Warrant”) which was later assigned to an affiliate of Pacific Western Bank. The Existing PacWest Warrant is initially exercisable for 42,753 shares of Adicet’s Series B redeemable convertible preferred stock and shall be exercisable for an additional number of shares of its Series B redeemable convertible preferred stock equal to 1.00% of the aggregate original principal amount of all term loans made pursuant to the Loan Agreement (up to an aggregate maximum of 128,259 shares). Pursuant to the terms of the Existing PacWest Warrant and the merger agreement, at the effective time of the merger, resTORbio will issue a new warrant to the holder of the Existing PacWest Warrant (referred to as the “New PacWest Warrant”) which will replace the Existing PacWest Warrant. The New PacWest Warrant will be exercisable solely for shares of resTORbio common stock and the number of shares of resTORbio common stock subject to the warrant shall be determined by multiplying (x) the number of shares of Adicet capital stock that were subject to the Existing PacWest Warrant (on an as-converted basis with respect to shares of Adicet preferred stock), as in effect immediately prior to the effective time of the merger, by (y) the exchange ratio, and rounding the resulting number down to the nearest whole number of shares of resTORbio common stock. The per share exercise price for the resTORbio common stock issuable upon exercise of the New PacWest Warrant shall be determined by dividing (x) the exercise price per share of Adicet capital stock subject to the Existing PacWest Warrant (on an as-converted basis), as in effect immediately prior to the effective time of the merger, by (y) the exchange ratio, and rounding the resulting exercise price up to the nearest whole cent. Any restriction on the exercise set forth in the Existing PacWest Warrant shall continue in full force and effect in the New PacWest Warrant and the term, exercisability, vesting schedule and other provisions of the Existing PacWest warrant shall otherwise remain unchanged in the New PacWest Warrant.
Pursuant to the terms of the Loan Agreement, Pacific Western Bank has consented in principle to the consummation of the merger as a Permitted Transaction (as defined in the Loan Agreement) subject to certain conditions, including: (i) that the merger is consummated in accordance with the merger agreement (unless otherwise approved by Pacific Western Bank in writing), (ii) Adicet providing copies of all material transaction documents to Pacific Western Bank, (iii) Adicet providing any diligence materials reasonably requested by Pacific Western Bank, (iv) resTORbio entering into a secured guaranty agreement in form and substance satisfactory to Pacific Western Bank and granting Pacific Western Bank a security interest in substantially all of its assets other than its intellectual property and (v) resTORbio issuing the New PacWest Warrant to the holder of the Existing PacWest Warrant pursuant to the terms of the merger agreement and the Existing PacWest Warrant. If the conditions set forth in the consent provided by Pacific Western Bank are not satisfied, Adicet would effectively need to terminate the Loan Agreement and repay any outstanding loan funds or refinance the facility with another lender.
Management Following the Merger (page 368)
Effective as of the completion of the merger, the combined company’s executive officers are expected to include:
 
Name
 
Position with the Combined Company
 
Current Position
Chen Schor   President and Chief Executive Officer  
President and Chief Executive
Officer of resTORbio
Stewart Abbot, Ph.D.   Senior Vice President, Chief Operating and Scientific Officer   Senior Vice President, Chief Operating and Scientific Officer of Adicet
 
 
 
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Name
 
Position with the Combined Company
 
Current Position
Francesco Galimi, M.D., Ph.D.   Senior Vice President and Chief Medical Officer   Senior Vice President and Chief Medical Officer of Adicet
Lloyd Klickstein, M.D., Ph.D.   Chief Innovation Officer   Chief Scientific Officer of resTORbio
Carrie Krehlik   Senior Vice President and Chief Human Resource Officer  
Senior Vice President and Chief Human Resource Officer of
Adicet
Interests of the resTORbio Directors and Executive Officers in the Merger (page 192)
In considering the recommendation of the resTORbio Board with respect to the issuance of resTORbio common stock pursuant to the merger agreement and the other matters to be acted upon by resTORbio stockholders at the special meeting, resTORbio stockholders should be aware that certain members of the resTORbio Board and executive officers of resTORbio have interests in the merger that may be different from, or in addition to, interests they have as resTORbio stockholders. For example, pursuant to the terms of certain employment offer letters or employment agreements in effect prior to the execution of the merger agreement, each of resTORbio’s executive officers could receive cash severance payments and other benefits with a total value of approximately $2.3 million (collectively, not individually, and excluding the value attributable to any accelerated vesting of resTORbio options or resTORbio RSUs), the acceleration of resTORbio options and the acceleration of the vesting of resTORbio RSUs held by those officers, based on data available as of August 4, 2020 and assuming a qualifying termination of employment of each executive officer’s employment as of such date.
resTORbio and Adicet have agreed that Mr. Schor will serve as the chief executive officer and a director of the combined company. Mr. Schor and Adicet expect to agree upon Mr. Schor’s post-closing employment terms prior to completion of the merger and resTORbio will make appropriate disclosure of any such definitive terms.
As of August 4, 2020, resTORbio’s directors and executive officers beneficially owned, in the aggregate, approximately 11.8% of the outstanding shares of resTORbio common stock. Certain of resTORbio’s officers and directors, and their affiliates, have also entered into the resTORbio support agreement in connection with the merger. The resTORbio support agreement is discussed in greater detail in the section entitled “
Agreements Related to the Merger—resTORbio Support Agreement
” on page 231 of this proxy statement/prospectus/information statement.
Interests of the Adicet Directors and Executive Officers in the Merger (page 195)
In considering the recommendation of the Adicet Board with respect to approving the merger and contemplated transactions by written consent, Adicet’s stockholders should be aware that certain members of the Adicet Board and certain of Adicet’s executive officers have interests in the merger that may be different from, or in addition to, interests they have as Adicet’s stockholders. For example, certain of Adicet’s directors and executive officers have Adicet options, subject to vesting, which, at the completion of the merger, shall be converted into and become resTORbio options, certain of Adicet’s directors and executive officers are expected to become directors and executive officers of resTORbio upon the completion of the merger, certain Adicet executive officers are subject to employment agreements which provide for severance and benefit payments if employment of such officers terminates without cause or for good reason, certain affiliates of Adicet directors and resTORbio directors have overlapping ownership and/or commercial interests in resTORbio and Adicet and all of Adicet’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the merger agreement.
As of August 4, 2020, all of Adicet’s directors and executive officers, together with their affiliates, beneficially owned in the aggregate approximately 69.5% of the outstanding shares of Adicet capital stock, on an
 
 
 
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as-converted
to common stock basis. Certain of Adicet’s officers and directors, and their affiliates, have also entered into the Adicet support agreement in connection with the merger. The Adicet support agreement is discussed in greater detail in the section entitled “
Agreements Related to the Merger—Adicet Support Agreement
” on page 230 of this proxy statement/prospectus/information statement.
Risk Factors (page 28)
Both resTORbio and Adicet are subject to various risks associated with their businesses and their industries. In addition, the merger poses a number of risks to each company and its respective stockholders, including the possibility that the merger may not be completed and the following risks:
 
   
The exchange ratio is not adjustable based on the market price of resTORbio common stock, so the merger consideration at the completion of the merger may have a greater or lesser value than at the time the merger agreement was signed;
 
   
The exchange ratio is not adjustable based on the net cash of either resTORbio or Adicet at the effective time of the merger, so the relative ownership of the combined organization as between current stockholders of resTORbio and current stockholders of Adicet may not reflect the ratio of net cash of resTORbio and Adicet, respectively, at the closing of the merger;
 
   
Failure to complete the merger may result in resTORbio and Adicet paying a termination fee or expenses to the other and could harm the price of resTORbio common stock and the future business and operations of each company;
 
   
The merger may be completed even though material adverse changes may result solely from the announcement of the merger, changes in the industry in which resTORbio and Adicet operate that apply to all companies generally and other causes, including the
COVID-19
pandemic;
 
   
Some of resTORbio’s and Adicet’s respective officers and directors have interests that are different from or in addition to those considered by other stockholders of Adicet and resTORbio and which may influence them to support or approve the merger;
 
   
The market price of the combined company’s common stock may decline as a result of the merger;
 
   
resTORbio’s and Adicet’s stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger;
 
   
During the pendency of the merger, resTORbio and Adicet may not be able to enter into a business combination with another party under certain circumstances because of restrictions in the merger agreement, which could adversely affect their respective businesses;
 
   
Certain provisions of the merger agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the merger agreement;
 
   
resTORbio stockholders may not receive any payment on the CVRs and the CVRs may otherwise expire valueless;
 
   
Because the lack of a public market for shares of Adicet capital stock makes it difficult to evaluate the fairness of the merger, Adicet’s stockholders may receive consideration in the merger that is less than the fair market value of the shares of Adicet capital stock and/or resTORbio may pay more than the fair market value of the shares of Adicet capital stock; and
 
   
If the conditions to the merger are not met, the merger will not occur.
These risks and other risks are discussed in greater detail under the section entitled “
Risk Factors
” on page 28 of this proxy statement/prospectus/information statement. resTORbio and Adicet both encourage you to read and consider all of these risks carefully.
 
 
 
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Regulatory Approvals (page 200)
In the United States, resTORbio must comply with applicable federal and state securities laws and the rules and regulations of The Nasdaq Global Market (referred to as “Nasdaq”) in connection with the issuance of shares of resTORbio common stock and the filing of this proxy statement/prospectus/information statement with the SEC. As of the date hereof, the registration statement of which this proxy statement/prospectus/information statement is a part has not become effective.
Nasdaq Stock Market Listing (page 202)
Pursuant to the merger agreement, resTORbio agreed to use its commercially reasonable best efforts to, among other things, cause the shares of resTORbio common stock being issued in the merger to be approved for listing on Nasdaq at or prior to the effective time of the merger.
Anticipated Accounting Treatment (page 203)
The merger will be treated by resTORbio as a reverse merger under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States (referred to as “U.S. GAAP”). For accounting purposes, Adicet is considered to be acquiring resTORbio in the merger.
Appraisal Rights (page 203)
Holders of resTORbio common stock are not entitled to appraisal rights in connection with the merger. Adicet’s stockholders are entitled to appraisal rights in connection with the merger under Delaware law. For more information about such rights, see the provisions of Section 262 of the General Corporation Law of the State of Delaware (referred to as the “DGCL”) attached hereto as
Annex C
and incorporated herein by reference and the section entitled “
The Merger—Appraisal Rights
” on page 203 of this proxy statement/prospectus/information statement.
Material U.S. Federal Income Tax Considerations of the Merger (page 200)
The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Adicet’s obligation to effect the merger is subject to the satisfaction or waiver, at or prior to the closing date of the merger, of the condition that Adicet receive an opinion of counsel, dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming the merger so qualifies, a U.S. Holder (as defined in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” beginning on page 200 of this proxy statement/prospectus/information statement) generally will not recognize gain or loss for U.S. federal income tax purposes on the exchange of Adicet capital stock for shares of resTORbio common stock pursuant to the merger.
Please review the information in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” on page 200 of this proxy statement/prospectus/information statement for a more complete description of the material U.S. federal income tax consequences of the merger to U.S. Holders.
Material U.S. Federal Income Tax Consequences of the CVR Agreement (page 233)
resTORbio intends to report the issuance of the CVRs to be received by resTORbio stockholders pursuant to the merger agreement, to resTORbio U.S. Holders (as defined in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” beginning on page 200 of this proxy statement/prospectus/
 
 
 
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information statement) as a distribution of property with respect to its stock. Please review the information in the section entitled “
Agreements Related to the Merger—Contingent Value Rights Agreement—Material U.S.
Federal Income Tax Consequences of the Receipt of CVRs
” on page 233 of this proxy statement/prospectus/information statement
for a more complete description of the material U.S. federal income tax consequences of the receipt of CVRs to resTORbio U.S. Holders, including possible alternative treatments.
Material U.S. Federal Income Tax Consequences of the Reverse Stock Split (page 242)
A resTORbio U.S. Holder (as defined in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” beginning on page 200 of this proxy statement/prospectus/information statement) generally should not recognize gain or loss upon the resTORbio reverse stock split, except to the extent a resTORbio U.S. Holder receives cash in lieu of a fractional share of resTORbio common stock. Please review the information in the section entitled “
Matters Being Submitted to a Vote of resTORbio Stockholders—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split
” on page 242 of this proxy statement/prospectus/information statement for a more complete description of the material U.S. federal income tax consequences of the resTORbio reverse stock split to resTORbio U.S. Holders.
Comparison of Stockholder Rights (page 412)
Both resTORbio and Adicet are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. If the merger is completed, Adicet’s stockholders will become stockholders of resTORbio, and their rights will be governed by the DGCL, the bylaws of resTORbio (referred to as the “resTORbio bylaws”) and, the resTORbio certificate of incorporation, as amended by the amendment set forth in
Annex D
assuming Proposal No. 2 is approved. The rights of resTORbio stockholders contained in the resTORbio certificate of incorporation and the resTORbio bylaws differ from the rights of Adicet’s stockholders under Adicet’s amended and restated certificate of incorporation and Adicet’s bylaws, as more fully described under the section entitled “
Comparison of Rights of Holders of resTORbio Stock and Adicet Stock
” on page 412 of this proxy statement/prospectus/information statement.
 
 
 
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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA
The information below reflects the historical per share information for resTORbio and Adicet and the unaudited pro forma per share information for the combined organization as if resTORbio and Adicet had been combined as of and for all periods presented.
The unaudited pro forma amounts in the tables below have been derived from the unaudited pro forma combined financial information included in the section titled “
Unaudited Pro Forma Condensed Combined Financial
Information
” of this proxy statement/prospectus/information statement. The pro forma amounts are presented for illustrative purposes only and are not necessarily indicative of what the financial position, results of operations or per share information of the combined organization would have been had resTORbio and Adicet been combined as of or for the periods presented. The unaudited pro forma amounts in the table below do not give effect to the proposed reverse stock split because the proposed reverse stock split is a range and is not definitive.
The tables below should be read in conjunction with the consolidated financial statements and related notes thereto of resTORbio and Adicet included elsewhere in this proxy statement/prospectus/information statement.
 
    
Six Months
Ended June 30,
2020
    
Year Ended
December 31,
2019
 
resTORbio
     
Book value per share—historical
(1)
   $ 1.94      $ 2.24  
Basic and diluted net loss per share—historical
   $ (0.35    $ (2.41
Cash dividends declared per share—historical
   $ —        $ —    
Adicet
     
Book value per share—historical
(1)
   $ (4.12    $ (3.47
Basic and diluted net loss per share—historical
   $ (0.74    $ (1.63
Cash dividends declared per share—historical
   $ —        $ —    
Pro Forma Combined
     
Book value per share—pro forma
(2)
   $ 0.98        N/A  
Basic and diluted net loss per share—pro forma
   $ (0.14    $ (1.10
Cash dividends declared per share—pro forma
   $ —        $ —    
Adicet Pro Forma Equivalent Per Common Share
(3)
     
Book value per share—pro forma
   $ 0.84        N/A  
Basic and diluted net loss per share—pro forma
   $ (0.12    $ (0.94
Cash dividends declared per share—pro forma
   $ —        $ —    
 
(1)
Historical book value per share is calculated by taking total stockholders’ equity divided by total outstanding common shares.
(2)
Combined pro forma book value per share is calculated by taking pro forma combined total stockholders’ equity divided by pro forma combined total outstanding common shares.
(3)
Adicet pro forma equivalent data per common share is calculated by applying the assumed Common Stock Exchange Ratio of 0.8555 to the unaudited pro forma combined per share data.
 
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As the reverse stock split is a range and is not definitive, resTORbio’s historical per share information and the unaudited pro forma per share information have not been adjusted to give retrospective effect to the reverse stock split. Upon the effectiveness of the reverse stock split, the outstanding shares of resTORbio common stock will be combined into a lesser number of shares such that one share of resTORbio common stock will be issued for a specified number of shares, which shall be equal to or greater than four (4) and equal to or less than twelve (12), with the exact number within the range to be mutually determined by resTORbio and Adicet prior to the effective time. The exchange ratio will then be subject to adjustment to account for the effect of the reverse stock split of resTORbio common stock to be implemented immediately prior to and contingent upon the consummation of the merger. The following table is presented for illustrative purposes to give effect to the range of the proposed reverse stock split as the unaudited pro forma per share information above does not reflect the proposed reverse stock split that is expected to be effected immediately prior to consummation of the merger.
 
    
Six months
Ended June 30,
2020
    
Year Ended
December 31,
2019
 
Pro Forma Combined - 1:4 Reverse Stock Split
     
Book value per share—pro forma
(4)
   $ 3.93        N/A  
Basic and diluted net loss per share—pro forma
   $ (0.54    $ (4.41
Cash dividends declared per share—pro forma
   $ —        $ —    
Adicet Pro Forma Equivalent Per Common Share—1:4 Reverse Stock Split
(5)
     
Book value per share—pro forma
   $ 0.84        N/A  
Basic and diluted net loss per share—pro forma
   $ (0.12    $ (0.94
Cash dividends declared per share—pro forma
   $ —        $ —    
Pro Forma Combined—1:12 Reverse Stock Split
     
Book value per share—pro forma
(4)
   $ 11.80        N/A  
Basic and diluted net loss per share—pro forma
   $ (1.63    $ (13.23
Cash dividends declared per share—pro forma
   $ —        $ —    
Adicet Pro Forma Equivalent Per Common Share—1:12 Reverse Stock Split
(6)
     
Book value per share—pro forma
   $ 0.84        N/A  
Basic and diluted net loss per share—pro forma
   $ (0.12    $ (0.94
Cash dividends declared per share—pro forma
   $ —        $ —    
 
(4)
Combined split-effected pro forma book value per share is calculated by taking pro forma combined total stockholders’ equity divided by the respective split-effected pro forma combined total outstanding common shares.
(5)
Adicet split-effected pro forma equivalent data per common share is calculated by applying the assumed split-effected Common Stock Exchange Ratio of 0.2139 to the unaudited split-effected pro forma combined per share data.
(6)
Adicet split-effected pro forma equivalent data per common share is calculated by applying the assumed split-effected Common Stock Exchange Ratio of 0.0713 to the unaudited split-effected pro forma combined per share data.
 
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MARKET PRICE AND DIVIDEND INFORMATION
resTORbio Common Stock
resTORbio common stock is currently listed on The Nasdaq Global Select Market under the symbol “TORC.” The closing price of resTORbio common stock on April 28, 2020, the full trading day immediately prior to the public announcement of the merger on April 29, 2020, as reported on The Nasdaq Global Select Market, was $1.22 per share. The closing price of resTORbio common stock on August 11, 2020, the last trading day before the date of this proxy statement/prospectus/information statement, as reported on The Nasdaq Global Select Market, was $2.38 per share.
Because the market price of resTORbio common stock is subject to fluctuation, the market value of the shares of resTORbio common stock that Adicet equityholders will be entitled to receive in the merger may increase or decrease.
Assuming successful application for initial listing with Nasdaq, following the consummation of the merger, resTORbio anticipates that the resTORbio common stock will continue to be listed on The Nasdaq Global Select Market and will trade under resTORbio’s new name “Adicet Bio, Inc.” and new trading symbol “ACET” on The Nasdaq Global Select Market.
As of August 4, 2020, there were approximately five (5) holders of record of the resTORbio common stock.
Adicet Capital Stock
Adicet is a private company and there is no established public trading market for its common stock or preferred stock. As of August 4, 2020, there were approximately 56 holders of record of the Adicet common stock and 21 holders of record of the Adicet preferred stock.
Dividends
resTORbio has never declared or paid any cash dividends on the resTORbio common stock and does not anticipate paying cash dividends on the resTORbio common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the merger will be at the discretion of the combined company’s then-current board of directors and will depend upon a number of factors, including the combined company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.
Adicet has never declared or paid any cash dividends on shares of the Adicet capital stock. Adicet anticipates that the combined company will retain all of its future earnings to advance the clinical trials for its products, and does not anticipate paying any cash dividends on shares of the combined company’s capital stock in the foreseeable future. Any future determination to declare cash dividends on shares of the combined company’s common stock will be made at the discretion of its board of directors, subject to applicable law and contractual restrictions and will depend on its financial condition, results of operations, capital requirements, general business conditions and other factors that its board of directors may deem relevant.
 
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RISK FACTORS
The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with resTORbio’s business and Adicet’s business because these risks may also affect the combined company. These risks can be found under the section entitled “Risk Factors—Risks Related to resTORbio” beginning on page 36 and “Risk Factors—Risks Related to Adicet” beginning on page 100 of this proxy statement/prospectus/information statement, including the financial statements appearing elsewhere herein and the annexes hereto, which are incorporated by reference herein. You should also read and consider the other information in this proxy statement/prospectus/information statement, including the financial statements appearing elsewhere herein and the annexes hereto, which are incorporated by reference herein. Please see the section entitled “Where You Can Find More Information” on page 436 in this proxy statement/prospectus/information statement.”
Risks Related to the Merger
Failure to complete the merger may result in resTORbio or Adicet paying a termination fee or expenses to the other party and could significantly harm the market price of resTORbio common stock and negatively affect the future business and operations of each company.
The consummation of the merger is subject to a number of closing conditions, including the approval by resTORbio’s and Adicet’s stockholders, approval by Nasdaq of resTORbio’s application for initial listing of resTORbio common stock in connection with the merger, and other customary closing conditions. The parties are targeting a closing of the transaction in the second half of 2020.
If the merger is not consummated, resTORbio and Adicet may be subject to a number of material risks, and their respective businesses and resTORbio’s stock price could be adversely affected, as follows:
 
   
Each company has incurred and expects to continue to incur significant expenses related to the merger even if the merger is not consummated;
 
   
The merger agreement contains covenants relating to each company’s solicitation of competing acquisition proposals and the conduct of each company’s respective businesses between the date of signing the merger agreement and the completion of the merger. As a result, significant business decisions and transactions of either resTORbio or Adicet before the completion of the merger require the consent of the other party. Accordingly, each company may be unable to pursue business opportunities that would otherwise be in its respective best interests as standalone companies. If the merger agreement is terminated after resTORbio has invested significant time and resources in the transaction process, resTORbio will have a limited ability to continue its current operations without obtaining additional financing to fund its operations;
 
   
resTORbio or Adicet could be obligated to pay the other party a $6,100,000 termination fee in connection with the termination of the merger agreement, depending on the reason for the termination;
 
   
resTORbio or Adicet could be obligated to pay the other party a $1,000,000
out-of-pocket
expense reimbursement in connection with the termination of the merger agreement, depending on the reason for the termination;
 
   
resTORbio’s or Adicet’s collaborators and other business partners and investors in general may view the failure to consummate the merger as a poor reflection on its business or prospects;
 
   
Some of resTORbio’s or Adicet’s suppliers, collaborators and other business partners may seek to change or terminate their relationships with resTORbio or Adicet, as applicable, as a result of the merger;
 
   
As a result of the proposed merger, current and prospective employees of resTORbio or Adicet could experience uncertainty about their future roles within the combined company. This uncertainty may
 
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adversely affect either company’s ability to retain its respective key employees, who may seek other employment opportunities;
 
   
resTORbio’s or Adicet’s respective management teams may be distracted from day to day operations as a result of the merger; and
 
   
The market price of resTORbio common stock may decline to the extent that the current market price reflects a market assumption that the merger will be completed.
In addition, if the merger agreement is terminated and the resTORbio Board or the Adicet Board determines to seek another business combination, there can be no assurance that either resTORbio or Adicet will be able to find a third party willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the merger. In such circumstances, the resTORbio Board may elect to, among other things, divest all or a portion of resTORbio’s business, or take the steps necessary to liquidate all of resTORbio’s business and assets, and in either such case, the consideration that resTORbio receives may be less attractive than the consideration to be received by resTORbio pursuant to the merger agreement.
If resTORbio does not successfully consummate the merger or another strategic transaction, the resTORbio Board may decide to pursue a dissolution and liquidation of resTORbio. In such an event, the amount of cash available for distribution to resTORbio stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.
There can be no assurance that the merger will be completed on the timeline anticipated or at all. If the merger is not completed, the resTORbio Board may decide to pursue a dissolution and liquidation of resTORbio. In such an event, the amount of cash available for distribution to resTORbio stockholders will depend heavily on the timing of such decision and, as with the passage of time the amount of cash available for distribution will be reduced as resTORbio continues to fund its operations. In addition, if the resTORbio Board were to approve and recommend, and resTORbio stockholders were to approve, a dissolution and liquidation of resTORbio, resTORbio would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to resTORbio stockholders. As a result of this requirement, a portion of resTORbio’s assets may need to be reserved pending the resolution of such obligations, and the timing of any such resolution is uncertain. In addition, resTORbio may be subject to litigation or other claims related to a dissolution and liquidation of resTORbio. If a dissolution and liquidation were pursued, the resTORbio Board, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of resTORbio common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of resTORbio.
Some of resTORbio’s and Adicet’s officers and directors have conflicts of interest that may influence them to support or approve the merger.
Certain officers and directors of resTORbio and Adicet participate in arrangements that provide them with interests in the merger that are different from yours, including, among others, their continued service as an officer or a director of the combined company, retention and severance benefits, the acceleration of restricted stock units and option vesting, overlapping ownership and/or commercial interests of their affiliates in Adicet and resTORbio and continued indemnification. These interests, among others, may influence the officers and directors of resTORbio or Adicet to support or approve the merger. For a more detailed discussion please see the section entitled “
The Merger—Interests of the resTORbio Directors and Executive Officers in the Merger
” beginning on page 192 of this proxy statement/prospectus/information statement and “
The Merger—Interests of the Adicet Directors and Executive Officers in the Merger
” beginning on page 195 of this proxy statement/prospectus/information statement.
 
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The merger may be completed even though material adverse changes may result from the announcement of the merger, industry-wide changes and other causes.
In general, either party can refuse to complete the merger if there is a material adverse change affecting the other party between April 28, 2020, the date of the merger agreement, and the completion of the merger. However, some types of changes do not permit either party to refuse to complete the merger, even if such changes would have a material adverse effect on resTORbio or Adicet, to the extent they resulted from the following and do not have a materially disproportionate effect on resTORbio or Adicet, as the case may be:
 
   
the announcement or pendency of the merger agreement or the contemplated transactions;
 
   
the taking of any action, or the failure to take any action, by any party that is required to comply with the terms of the merger agreement;
 
   
any natural disaster or epidemics, pandemics or other force majeure events, or any act or threat of terrorism or war, any armed hostilities or terrorist activities (including any escalation or general worsening of any of the foregoing) anywhere in the world, or any governmental or other response or reaction to any of the foregoing;
 
   
any change in generally accepted accounting principles or any change in applicable laws, rules or regulations or the interpretation thereof;
 
   
general economic or political conditions or conditions generally affecting the industries in which either party or its subsidiaries operate;
 
   
with respect to resTORbio, any change in the stock price or trading volume of resTORbio common stock (it being understood, however, that any effect causing or contributing to, or resulting from, any change in stock price or trading volume of resTORbio common stock may be taken into account in determining whether a material adverse effect has occurred, unless such effects are otherwise excepted from causing a material adverse effect under the merger agreement);
 
   
with respect to resTORbio, subject to certain exceptions, the suspension of trading in or delisting of resTORbio common stock on Nasdaq; or
 
   
with respect to Adicet, any change in the cash position of Adicet or its subsidiary which results from operations in the ordinary course of business.
If adverse changes occur but resTORbio and Adicet must still complete the merger, the combined company’s stock price may suffer. This in turn may reduce the value of the merger to the stockholders of resTORbio, Adicet or both.
The market price of the combined company’s stock may decline as a result of the merger.
The market price of the combined company’s stock may decline as a result of the merger for a number of reasons including if:
 
   
the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts;
 
   
the effect of the merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts;
 
   
investors react negatively to the effect on the combined company’s business and prospects from the merger; or
 
   
the combined company fails to demonstrate appropriate
pre-clinical
or clinical efficacy in oncology and other indications.
 
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resTORbio’s and Adicet’s stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.
If the combined company is unable to realize the strategic and financial benefits currently anticipated from the merger, resTORbio’s and Adicet’s stockholders will have experienced substantial dilution of their ownership interest without receiving any commensurate benefit. Significant management attention and resources will be required to integrate the two companies. Delays in this process could adversely affect the combined company’s business, financial results, financial condition and stock price following the merger.
During the pendency of the merger, resTORbio or Adicet may not be able to enter into a business combination with another party and will be subject to contractual limitations on certain actions because of restrictions in the merger agreement.
Covenants in the merger agreement impede the ability of resTORbio or Adicet to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the merger. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors. In addition, while the merger agreement is in effect and subject to limited exceptions, each party is prohibited from soliciting, initiating, encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to the entering into of certain extraordinary transactions with any third party, such as a sale of assets, an acquisition of resTORbio common stock, a tender offer for resTORbio common stock, a merger or other business combination outside the ordinary course of business. Any such transactions could be favorable to such party’s stockholders.
Because the lack of a public market for Adicet capital stock makes it difficult to evaluate the fairness of the merger, Adicet’s stockholders may receive consideration in the merger that is greater than or less than the fair market value of Adicet capital stock.
The outstanding share capital of Adicet is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Adicet. Since the percentage of resTORbio’s equity to be issued to Adicet’s stockholders was determined based on negotiations between the parties, it is possible that the value of the resTORbio common stock to be issued in connection with the merger will be greater than the fair market value of Adicet. Alternatively, it is possible that the value of the shares of resTORbio common stock to be issued in connection with the merger to Adicet’s stockholders will be less than the fair market value of Adicet.
The combined company will incur significant transaction costs as a result of the merger, including investment banking, legal and accounting fees. In addition, the combined company will incur significant consolidation and integration expenses which cannot be accurately estimated at this time. These costs could include the possible relocation of certain operations from Massachusetts to other offices of the combined company as well as costs associated with terminating existing office leases and the loss of benefits of certain favorable office leases. Actual transaction costs may substantially exceed Adicet’s estimates and may have an adverse effect on the combined company’s financial condition and operating results.
If the merger does not qualify as a “reorganization” for U.S. federal income tax purposes, Adicet stockholders may be required to pay substantial U.S. federal income taxes.
The U.S. federal income tax consequences of the merger will depend on whether the merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code. Adicet’s obligation to effect the merger is subject to the satisfaction or waiver, at or prior to the closing date of the merger, of the condition that Adicet receive an opinion of counsel, dated as of the closing date of the merger, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The opinion will be based on customary assumptions and representations from Adicet and resTORbio, as well as certain covenants and undertakings by
 
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Adicet and resTORbio. If any of the representations, assumptions, covenants or undertakings upon which the opinion is based is incorrect, incomplete, inaccurate or violated, the validity of the opinion may be affected and the tax consequences of the merger could differ from those described in this proxy statement/prospectus/information statement. An opinion of counsel represents such counsel’s best legal judgment, but is not binding on the Internal Revenue Service (the “IRS”) or any court. Neither Adicet nor resTORbio intends to obtain a ruling from the IRS with respect to the tax consequences of the merger. Accordingly, there can be no assurances that the IRS will not assert, or that a court will not sustain, a position contrary to that contained in such opinion. If, contrary to the opinion from counsel, the IRS or a court determines that the merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, a holder of Adicet capital stock would recognize gain or loss for U.S. federal income tax purposes on each share of Adicet capital stock surrendered in the merger for resTORbio common stock. For a more complete discussion of the material U.S. federal income tax consequences of the merger, please carefully review the information set forth in the section entitled “
The Merger—Material U.S. Federal Income Tax Considerations of the Merger
” on page 200 of this proxy statement/prospectus/information statement.
Certain stockholders could attempt to influence changes within resTORbio which could adversely affect resTORbio’s operations, financial condition and the value of resTORbio common stock.
resTORbio stockholders may from
time-to-time
seek to acquire a controlling stake in resTORbio, engage in proxy solicitations, advance stockholder proposals or otherwise attempt to effect changes. Campaigns by stockholders to effect changes at publicly-traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, and could disrupt resTORbio’s operations and divert the attention of the resTORbio Board and senior management from the pursuit of the merger. These actions could adversely affect resTORbio’s operations, financial condition, ability to consummate the merger and resTORbio’s common stock value.
resTORbio and Adicet are involved in securities litigation related to the merger and may become involved in additional securities litigation or stockholder derivative litigation in connection with the merger, and this could divert the attention of resTORbio and Adicet management and harm the combined company’s business, and insurance coverage may not be sufficient to cover all related costs and damages.
Securities litigation or stockholder derivative litigation frequently follows the announcement of certain significant business transactions, such as a business combination transaction. resTORbio and Adicet may become involved in this type of litigation in connection with the merger, and the combined company may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect the business of resTORbio, Adicet and the combined company.
In connection with the merger, a putative class action lawsuit,
Plumley v. resTORbio Inc., et al.,
1:20-cv-00858, was filed on June 26, 2020 by purported resTORbio stockholder Patrick Plumley against resTORbio, its directors, Adicet, and Merger Sub in the U.S. District Court for the District of Delaware. On July 2, 2020, in connection with the merger, a complaint,
Azzara v. resTORbio, Inc., et al.,
1:20-cv-05088, was filed as an individual action by purported resTORbio stockholder Salvatore Azzara against resTORbio and its directors in the U.S. District Court for the Southern District of New York. On July 6, 2020, in connection with the merger, a complaint,
Miller v. resTORbio, Inc., et al.,
1:20-cv-05170, was filed as an individual action by purported resTORbio stockholder Megan Miller against resTORbio and its directors in the U.S. District Court for the Southern District of New York. On July 9, 2020, in connection with the merger, a complaint,
Feagan v. resTORbio, Inc., et al.,
1:20-cv-03063, was filed as an individual action by purported resTORbio stockholder Douglas Feagan against resTORbio and its directors in the U.S. District Court for the Eastern District of New York. On July 10, 2020, in connection with the merger, a complaint,
Lowen v. resTORbio, Inc. et al.,
1:20-cv-11305, was filed as an individual action by purported resTORbio stockholder Robert Lowen against resTORbio and its directors in the U.S. District Court for the District Massachusetts. On July 19, 2020, in connection with the merger, a complaint,
Mercier v. resTORbio, Inc, et al.,
1:20-cv-05556, was filed as an individual action by purported resTORbio stockholder Ronald Mercier against
 
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resTORbio and its directors in the U.S. District Court for the Southern District of New York. The
Plumley, Azzara, Miller, Feagan, Lowen
and
Mercier
cases are collectively referred to as the “merger actions.” The merger actions generally allege that resTORbio’s proxy statement/prospectus/information statement filed with the SEC on June 23, 2020 misrepresents and/or omits certain purportedly material information relating to financial projections, analysis performed by JMP, past engagements of JMP, and the process leading up to the execution of the merger agreement. The merger actions assert violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against resTORbio and its directors and violations of Section 20(a) of the Exchange Act against resTORbio’s directors. The
Plumley
merger action also asserts violations of Section 20(a) of the Exchange Act against Adicet and Merger Sub. The
Azzara
merger action also asserts claims for breach of fiduciary duty against resTORbio’s directors. The merger actions seek, among other things: an injunction enjoining consummation of the merger, costs of the action, including plaintiff’s attorneys’ fees and experts’ fees, declaratory relief, and any other relief the court may deem just and proper.
It is possible that additional similar cases could be filed in connection with the merger.
Failure to complete the merger may result in resTORbio and Adicet paying a termination fee or expenses to the other party and could harm the price of resTORbio common stock and the future business and operations of each company.
If the merger is not completed and the merger agreement is terminated under certain circumstances, resTORbio or Adicet may be required to pay the other party a termination fee of $6,100,000 and/or an
out-of-pocket
expense reimbursement of up to $1,000,000. Even if a termination fee or
out-of-pocket
expense reimbursement is not payable in connection with a termination of the merger agreement, each of resTORbio and Adicet will have incurred significant fees and expenses, which must be paid whether or not the merger is completed. Further, if the merger is not completed, it could significantly harm the market price of resTORbio common stock.
The exchange ratio is not adjustable based on the market price of resTORbio common stock, so the merger consideration at the completion of the merger may have greater or lesser value than the market price at the time the merger agreement was signed.
The merger agreement has set the exchange ratio for Adicet capital stock, and the exchange ratio is based on valuations ascribed to each company in the merger agreement and the outstanding Adicet capital stock and the outstanding resTORbio common stock, in each case immediately prior to the completion of the merger as described under the section entitled “
The Merger—Merger Consideration
” on page 199 of this proxy statement/prospectus/information statement. Applying the exchange ratio formula in the merger agreement, the former equityholders of Adicet are expected to hold 75% of the outstanding capital stock of resTORbio immediately following the merger, and the current equityholders of resTORbio are expected to hold approximately 25% of the outstanding capital stock of resTORbio immediately following merger (in each case excluding equity incentives available for grant), subject to certain assumptions.
Any changes in the market price of resTORbio common stock before the completion of the merger will not affect the number of shares of resTORbio common stock issuable to Adicet’s stockholders pursuant to the merger agreement. Therefore, if before the completion of the merger the market price of resTORbio common stock declines from the market price on the date of the merger agreement, then Adicet’s stockholders could receive merger consideration with substantially lower value than the value of such merger consideration on the date of the merger agreement. Similarly, if before the completion of the merger the market price of resTORbio common stock increases from the market price of resTORbio common stock on the date of the merger agreement, then Adicet’s stockholders could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the merger agreement. The merger agreement does not include a price-based termination right. Because the exchange ratio does not adjust as a result of changes in the market price of resTORbio common stock, for each one percentage point change in the market price of resTORbio common stock, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration payable to Adicet’s stockholders pursuant to the merger agreement.
 
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Certain provisions of the merger agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the merger agreement.
The terms of the merger agreement prohibit each of resTORbio and Adicet from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when the resTORbio Board or the Adicet Board determines in good faith that a bona fide written acquisition proposal, after consultation with such party’s financial advisors and outside legal counsel, constitutes, or is reasonably likely to result in, a superior takeover proposal and the board of directors of such party concludes in good faith based on the advice of outside legal counsel that the failure to cooperate with the proponent of the proposal would be reasonably be expected to be inconsistent with the resTORbio Board’s or the Adicet Board’s respective fiduciary duties.
resTORbio stockholders may not receive any payment on the CVRs and the CVRs may otherwise expire valueless.
The merger agreement contemplates that at or prior to completion of the merger, resTORbio, the Holders’ Representative (as defined in the CVR agreement) and the Rights Agent (as defined in the CVR agreement) will execute and deliver the CVR agreement, pursuant to which each holder of resTORbio common stock as of immediately prior to the effective time of the merger shall be entitled to one contractual CVR issued by resTORbio, subject to and in accordance with the terms and conditions of the CVR agreement, for each share of resTORbio common stock held by such holder. Each CVR shall entitle the holder thereof to receive net proceeds of the commercialization, if any, received from a third party commercial partner of RTB101, resTORbio’s small molecule product candidate that is a potent inhibitor of target of rapamycin complex 1 (TORC1), for a
COVID-19
related indication, with clinical data expected by the first quarter of 2021. The CVRs are not transferable, except in certain limited circumstances as will be provided in the CVR agreement, will not be certificated or evidenced by any instrument and will not be registered with the SEC or listed for trading on any exchange.
Pursuant to the CVR agreement, and subject to the limitations set forth therein, from the closing of the merger until September 30, 2021, the combined company will be required to use its Commercially Reasonable Efforts (as such term is defined in the CVR agreement) to perform the key tasks necessary to continue and conduct resTORbio’s clinical trials for a COVID-19 related indication for RTB101 in strict accordance with such trials’ protocols. Pursuant to the CVR agreement, the Clinical Trial Cap (as such term is defined in the CVR agreement) for the total fees and expenses of resTORbio’s clinical trials for a COVID-19 related indication of RTB101 is $3,000,000, less any fully burdened costs accrued or incurred by resTORbio or its affiliates in connection with such clinical trials, between the date of the merger agreement and the closing of the merger. In the event the total fees and expenses of such clinical trials exceed such Clinical Trial Cap, the combined company may terminate the CVR agreement without any further liability whereupon the combined company shall be relieved of any and all obligations which will be contained therein. In addition, pursuant to the CVR agreement, and subject to the combined company’s termination rights set forth therein, from the closing of the merger until September 30, 2021, the combined company will be required to use its Commercially Reasonable Efforts to reasonably support the Finder (as such term is defined in the CVR agreement) to identify one or more partners and negotiate a CVR Commercial Agreement (as such term is defined in the CVR agreement) with such partner for the commercialization of RTB101 for a COVID-19 related indication, subject to certain limitations set forth in the CVR agreement, which allow for the consideration of a variety of factors in determining the efforts that the combined company is required to use to reasonably support Finder to identify one or more partners and negotiate a CVR Commercial Agreement with such partner for the commercialization of RTB101 for a COVID-19 related indication and it does not require the combined company to take all possible actions to continue efforts to reasonably support the Finder to identify one or more partners and negotiate a CVR Commercial Agreement with such partner for the commercialization of RTB101 for a COVID-19 related indication. Accordingly, under certain circumstances, including if the Clinical Trial Cap is exceeded, the combined company may not be required to continue efforts to reasonably support the Finder to identify one or more partners and negotiate a CVR Commercial Agreement with such partner for the commercialization of RTB101 for a COVID-19 related indication, or may allocate resources to other projects, which would have an adverse effect on the value, if any, of the CVRs. resTORbio currently expects to engage JMP Securities LLC to act as the Finder pursuant to the CVR agreement. The right of any holder of a CVR to receive any payments pursuant to the CVR agreement is contingent upon the combined company entering into a CVR Commercial Agreement with a third party commercial partner prior to September 30, 2021. If the combined company does enter into a CVR Commercial Agreement with a third party commercial partner
 
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prior to September 30, 2021, the Net Proceeds (as such term is defined in the CVR agreement) received by the combined company pursuant to such CVR Commercial Agreement in consideration for the rights to commercialize a COVID-19 related indication of RTB101 will then be distributed to the holders of the CVRs as set forth in the CVR agreement. If the combined company does not enter into a CVR Commercial Agreement with a third party commercial partner prior to September 30, 2021, or if the combined company does enter into such CVR Commercial Agreement but does not receive any Net Proceeds pursuant to such CVR Commercial Agreement, no payments will be made under the CVRs, and the CVRs will expire valueless. Furthermore, the CVRs will be unsecured obligations of the combined company and all payments under the CVRs, all other obligations under the CVR agreement and the CVRs and any rights or claims relating thereto will be subordinated in right of payment to the prior payment in full of all current or future senior obligations of the combined company. Finally, the U.S. federal income tax treatment of the CVRs is unclear. There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of, and payments on, the CVRs, and there can be no assurance that the IRS, would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the CVRs. The CVR agreement is discussed in greater detail in the section entitled
“Agreements Related to the Merger—Contingent Value Rights Agreement”
on page 232 of this proxy statement/ prospectus/information statement.
The tax treatment to resTORbio stockholders for the receipt of the CVRs is uncertain.
The U.S. federal income tax treatment of the issuance of the CVRs to resTORbio stockholders is uncertain. resTORbio intends to report the issuance of the CVRs as a distribution of property with respect to its stock for U.S. federal income tax purposes. Under such tax treatment, resTORbio U.S. Holders would be subject to the tax consequences described below under the section entitled “
Tax Consequences if Treated as a Distribution of Property
” beginning on page 235 of this proxy statement/prospectus/information statement. However, there is no authority directly addressing whether the issuance of contingent value rights with characteristics similar to the CVRs should be treated as a distribution of property with respect to the corporation’s stock, a distribution of equity, a “debt instrument” or an “open transaction” for U.S. federal income tax purposes. As a result, no assurance can be given that the IRS will not assert, or that a court would not sustain, a position contrary to resTORbio’s intended reporting position, and no opinion of counsel shall be given regarding the tax treatment of the issuance of the CVRs. In the event the IRS were to successfully challenge resTORbio’s intended treatment of the CVRs, it is possible that the issuance of the CVRs could be treated as a distribution of equity, a “debt instrument” or an “open transaction” for U.S. federal income tax purposes. The tax consequences of such alternative treatments are described below under the sections entitled,
“Tax Consequences if Treated as a Distribution of Equity,” “Tax Consequences if Treated as a Debt Instrument,” and “Tax Consequences if Treated as an Open Transaction”
beginning on page 236 of this proxy statement/prospectus/information statement. resTORbio stockholders should consult their tax advisors with respect to the proper tax treatment of the receipt of the CVRs.
Risks Related to the Reverse Stock Split
The reverse stock split may not increase the combined company’s stock price over the long-term.
The principal purpose of the reverse stock split is to increase the
per-share
market price of resTORbio common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of the combined company and the shares of resTORbio common stock being issued in the merger on Nasdaq will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of resTORbio common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio, or result in any permanent or sustained increase in the market price of resTORbio common stock, which is dependent upon many factors, including the combined company’s business and financial performance, general market conditions, and prospects for future success. Thus, while the stock price of the combined company might meet the continued listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.
The reverse stock split may decrease the liquidity of resTORbio common stock.
Although the resTORbio Board believes that the anticipated increase in the market price of resTORbio common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders,
 
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such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for resTORbio common stock.
The reverse stock split may lead to a decrease in resTORbio’s overall market capitalization.
Should the market price of resTORbio common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in resTORbio’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the
per-share
stock price of companies that have effected reverse stock splits subsequently declined back to
pre-reverse
split levels, and accordingly, it cannot be assured that the total market value of resTORbio common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on resTORbio’s stock price due to the reduced number of shares outstanding after the reverse stock split.
Risks Related to resTORbio
Risks Related to resTORbio’s Financial Position and Need for Capital
resTORbio has incurred significant losses since inception. resTORbio anticipates that it will continue to incur significant losses for the foreseeable future, and may never achieve or maintain profitability.
resTORbio is a clinical-stage biopharmaceutical company with a limited operating history. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. resTORbio has no products approved for commercial sale and has not generated any revenue from product sales to date, and resTORbio will continue to incur significant research and development and other expenses related to resTORbio’s ongoing operations. As a result, resTORbio is not profitable and has incurred losses in each period since resTORbio’s inception in July 2016. resTORbio has devoted a majority of resTORbio’s financial resources and efforts to research and development, including preclinical studies and resTORbio’s clinical trials. resTORbio’s financial condition and operating results, including net losses, may fluctuate significantly from quarter to quarter and year to year. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance. Additionally, net losses and negative cash flows have had, and will continue to have, an adverse effect on resTORbio stockholders’ equity and working capital. For the years ended December 31, 2019 and 2018, resTORbio reported a net loss of $82.7 million and $37.6 million, respectively. For the three and six months ended June 30, 2020, resTORbio reported a net loss of $5.6 million and $12.6 million, respectively. As of June 30, 2020, resTORbio had an accumulated deficit of $166.8 million. resTORbio expects to continue to incur significant losses for the foreseeable future, and resTORbio expects these losses to increase as resTORbio continues research and development of, and seek regulatory approvals for, RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, and other product candidates.
resTORbio anticipates that its expenses will increase substantially if and as it:
 
   
continues to develop and conduct clinical trials for resTORbio’s lead product candidate, RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus;
 
   
initiates and continues research, preclinical and clinical development efforts for any current or future product candidates;
 
   
seeks to identify additional product candidates;
 
   
seeks regulatory approvals for RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, or any other product candidates that successfully complete clinical development, if any;
 
   
establishes sales, marketing, distribution, manufacturing, supply chain and other commercial infrastructure in the future to commercialize various products for which resTORbio may obtain regulatory approval, if any;
 
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requires the manufacture of larger quantities of RTB101 alone or in fixed dose combination with a rapalog, such as everolimus or sirolimus, for clinical development and, potentially, commercialization;
 
   
maintains, expands and protects resTORbio’s intellectual property portfolio;
 
   
hires and retains additional personnel, such as clinical, quality control, scientific and commercial personnel;
 
   
adds operational, financial and management information systems and personnel, including personnel to support resTORbio’s product development and help it comply with resTORbio’s obligations as a public company;
 
   
adds equipment and physical infrastructure to support resTORbio’s research and development; and
 
   
acquires or
in-licenses
other product candidates and technologies.
resTORbio’s ability to become and remain profitable depends on resTORbio’s ability to generate revenue. resTORbio does not expect to generate significant revenue unless and until resTORbio is, or any future collaborator is, able to obtain regulatory approval for, and successfully commercialize, RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, or any other product candidates. Successful commercialization will require achievement of key milestones, including demonstrating safety and efficacy in clinical trials, obtaining regulatory, including marketing, approval for these product candidates, manufacturing, marketing and selling those products for which resTORbio, or any of resTORbio’s future collaborators, may obtain regulatory approval, satisfying any post-marketing requirements and obtaining reimbursement for resTORbio’s products from private insurance or government payors. Because of the uncertainties and risks associated with these activities, resTORbio is unable to accurately and precisely predict the timing and amount of revenues, the extent of any further losses or if or when resTORbio might achieve profitability. resTORbio, and any future collaborators, may never succeed in these activities and, even if resTORbio does, or any future collaborators do, resTORbio may never generate revenues that are large enough for it to achieve profitability. Even if resTORbio does achieve profitability, resTORbio may not be able to sustain or increase profitability on a quarterly or annual basis. Additionally, resTORbio’s expenses could increase if resTORbio is required by the FDA or any comparable foreign regulatory authority to perform studies in addition to those currently expected, or if there are any delays in completing resTORbio’s clinical trials or the development of any of resTORbio’s product candidates.
resTORbio’s failure to become and remain profitable would depress the market price of resTORbio common stock and could impair resTORbio’s ability to raise capital, expand resTORbio’s business, diversify resTORbio’s product offerings or continue resTORbio’s operations. If resTORbio continues to suffer losses as resTORbio has in the past, investors may not receive any return on their investment and may lose their entire investment.
resTORbio has a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate the prospects for its future viability.
resTORbio was formed in July 2016 and commenced research and development operations in March 2017. resTORbio’s operations to date have been limited to organizing, staffing and financing, raising capital,
in-licensing
resTORbio’s technology and conducting research and development activities for resTORbio’s product candidates. resTORbio has not yet demonstrated an ability to obtain regulatory approvals, manufacture a commercial-scale product, or arrange for a third party to do so on resTORbio’s behalf, or conduct sales and marketing activities necessary for successful product commercialization. Accordingly, you should consider resTORbio’s prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in clinical development, especially clinical-stage biopharmaceutical companies such as resTORbio. Any predictions you make about resTORbio’s future success or viability may not be as accurate as they could be if resTORbio had a longer operating history or a history of successfully developing and commercializing pharmaceutical products.
resTORbio may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving resTORbio’s business objectives. resTORbio will eventually need to transition from a company with a development focus to a company capable of supporting commercial activities. resTORbio may not be successful in such a transition.
 
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resTORbio will need substantial additional funding, and if resTORbio is unable to raise capital when needed, resTORbio could be forced to delay, reduce or eliminate resTORbio’s product discovery and development programs or commercialization efforts.
resTORbio’s operations have required substantial amounts of cash since inception. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. For the foreseeable future, resTORbio expects to continue to rely on additional financing to achieve resTORbio’s business objectives.
For the years ended December 31, 2019 and 2018, resTORbio used $73.7 million and $35.5 million, respectively, in net cash for resTORbio’s operating activities, of which a majority related to research and development activities. For the six months ended June 30, 2020, resTORbio used $20.4 million in net cash for resTORbio’s operating activities, of which a majority related to research and development activities. If resTORbio obtains regulatory approval for RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, or any other product candidates, resTORbio expects to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Some of these expenses may be incurred in advance of regulatory approval and could be substantial. Furthermore, resTORbio expects to incur significant additional costs associated with resTORbio’s continued operation as a public company. Accordingly, resTORbio will need to obtain substantial additional funding in connection with resTORbio’s continuing operations. If resTORbio is unable to raise capital when needed or on attractive terms, it may be forced to delay, reduce or eliminate resTORbio’s research and development programs or any future commercialization efforts.
resTORbio may use resTORbio’s existing cash, cash equivalents and marketable securities, to fund the development of RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, for Parkinson’s disease (referred to as “PD”) and other indications, and the remainder, if any, for working capital and general corporate purposes. resTORbio will be required to expend significant funds in order to advance the development of RTB101 alone or in combination with a rapalog, such as everolimus or sirolimus, as well as other product candidates resTORbio may seek to develop or acquire. In addition, while resTORbio may seek one or more collaborators for future development of RTB101 alone or in combination with a rapalog, such as everolimus or sirolimus, for one or more additional indications beyond PD or in geographies outside of the United States, Europe and key territories, resTORbio may not be able to enter into a collaboration for RTB101 or any other product candidates for such indications or in such geographies on suitable terms, on a timely basis, or at all. In any event, resTORbio’s existing cash, cash equivalents, and marketable securities will not be sufficient to fund all of the efforts that resTORbio plans to undertake or to activities related to the development of RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, for PD and other indications, and the development of other pipeline candidates. Accordingly, resTORbio will be required to obtain substantial additional funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources.
resTORbio cannot be certain that additional funding will be available on acceptable terms, or at all. Other than the funding agreement, resTORbio has no committed source of additional capital and if resTORbio is unable to raise additional capital in sufficient amounts or on terms acceptable to resTORbio, resTORbio may have to significantly delay, scale back or discontinue the development or commercialization of resTORbio’s product candidates or other research and development initiatives. Any of resTORbio’s current or future license agreements may also be terminated if resTORbio is unable to meet the payment or other obligations under the agreements. resTORbio could be required to seek collaborators for product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms resTORbio’s rights to product candidates in markets where resTORbio otherwise would seek to pursue development or commercialization itself.
resTORbio believes resTORbio’s existing cash, cash equivalents and marketable securities, will enable resTORbio to fund its operating expenses and capital expenditure requirements at least into 2022. resTORbio’s estimate may prove to be wrong, and resTORbio could use available capital resources sooner than resTORbio currently expects. Further, changing circumstances, some of which may be beyond resTORbio’s control, could cause resTORbio to consume capital significantly faster than resTORbio currently anticipates, and may need to
 
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seek additional funds sooner than planned. resTORbio’s future funding requirements, both short- and long-term, will depend on many factors, including:
 
   
the scope, progress, timing, costs and results of clinical trials of, and research and preclinical development efforts for, RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, and any future product candidates;
 
   
resTORbio’s ability to enter into, and the terms and timing of, any collaborations, licensing or other arrangements on favorable terms, if at all;
 
   
the number of future product candidates that resTORbio pursues and their development requirements;
 
   
the outcome, timing and costs of seeking regulatory approvals;
 
   
if approved, the costs of commercialization activities for RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, or any other product candidate that receives regulatory approval to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;
 
   
subject to receipt of regulatory approval, revenue, if any, received from commercial sales of RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, or any future product candidates;
 
   
the extent to which resTORbio
in-licenses
or acquires rights to other products, product candidates or technologies;
 
   
resTORbio’s headcount growth and associated costs as resTORbio expands resTORbio’s research and development and establish a commercial infrastructure;
 
   
the amount and timing of any payments resTORbio may be required to make, or that resTORbio may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments and patent prosecution fees that resTORbio is obligated to pay pursuant to resTORbio’s license agreement;
 
   
the costs of preparing, filing and prosecuting patent applications, maintaining and protecting resTORbio’s intellectual property rights including enforcing and defending intellectual property related claims; and
 
   
the costs of operating as a public company.
Raising additional capital may cause dilution to resTORbio stockholders, restrict resTORbio’s operations or require resTORbio to relinquish rights to resTORbio’s technologies or product candidates.
Unless and until resTORbio can generate a substantial amount of revenue from resTORbio’s product candidates, resTORbio expects to finance resTORbio’s future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing. In addition, resTORbio may seek additional capital due to favorable market conditions or strategic considerations, even if resTORbio believes that it has sufficient funds for resTORbio’s current or future operating plans.
To the extent that resTORbio raises additional capital through the sale of common stock, convertible securities or other equity securities, your ownership interest may be diluted, and the terms of these securities could include liquidation or other preferences and anti-dilution protections that could adversely affect your rights as a common stockholder. In addition, debt financing, if available, may result in fixed payment obligations and may involve agreements that include restrictive covenants that limit resTORbio’s ability to take specific actions, such as incurring additional debt, making capital expenditures, creating liens, redeeming stock or declaring dividends, that could adversely impact resTORbio’s ability to conduct resTORbio’s business. In addition, securing financing could require a substantial amount of time and attention from resTORbio’s management and may divert a disproportionate amount of their attention away from
day-to-day
activities, which may adversely affect resTORbio’s management’s ability to oversee the development of resTORbio’s product candidates.
 
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In April 2020, resTORbio entered into the merger agreement. There is no assurance that the merger will be completed.
If resTORbio raises additional funds through collaborations or marketing, distribution or licensing arrangements with third parties, resTORbio may have to relinquish valuable rights to its technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to resTORbio. If resTORbio is unable to raise additional funds when needed, resTORbio may be required to delay, limit, reduce or terminate its product development or future commercialization efforts or grant rights to develop and market product candidates that resTORbio would otherwise prefer to develop and market itself.
Risks Related to the Discovery, Development and Commercialization of resTORbio’s Product Candidates
resTORbio’s business depends virtually entirely upon the success of RTB101 alone or in combination with a rapalog, such as everolimus or sirolimus. If resTORbio is unable to successfully develop, obtain regulatory approval for or successfully commercialize RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, resTORbio’s business may be materially harmed.
resTORbio currently has no products approved for sale and is investing the majority of resTORbio’s efforts and financial resources in the development of resTORbio’s lead product candidate, RTB101, either alone or in combination with a rapalog, such as everolimus or sirolimus. Successful continued development and ultimate regulatory approval of RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, for the treatment of aging-related diseases is critical to the future success of resTORbio’s business. resTORbio will need to raise sufficient funds for, and successfully enroll and complete, resTORbio’s clinical development program for RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, for indications such as PD and possibly other aging-related diseases. The future regulatory and commercial success of this product candidate is subject to a number of risks, including the following:
 
   
resTORbio may not have sufficient financial and other resources to initiate or complete the necessary clinical trials for RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus;
 
   
resTORbio may not be able to obtain adequate evidence of clinical efficacy and safety for RTB101, alone or in combination with a rapalog, such as everolimus or sirolimus, or to obtain regulatory approval of RTB101 for PD or other indications;
 
   
even if RTB101 monotherapy succeeds in its clinical development and is approved for one or more targeted indications, there can be no assurance that RTB101 in combination with a rapalog, such as everolimus or sirolimus, would be developed successfully and approved, and vice versa;
 
   
resTORbio may not be able to maintain an acceptable safety profile for RTB101 alone or in combination with a rapalog, such as everolimus or sirolimus, even if approved;
 
   
resTORbio does not know the degree to which RTB101 alone or in combination with a rapalog, such as everolimus or sirolimus, will have market uptake as a therapy by patients, the medical community or third-party payors, among others, if approved;
 
   
in resTORbio’s clinical programs, resTORbio may experience variability in the response of subjects to treatment, the need to adjust clinical trial procedures and the need for additional clinical trial sites, which could delay resTORbio’s clinical trial progress;
 
   
the results of resTORbio’s clinical trials may not meet the level of statistical significance required by the FDA, the European Medicines Agency, or EMA, or comparable foreign regulatory bodies for regulatory approval for the treatment of PD or for other indications;