Dr. Don Cilla reports

APPILI THERAPEUTICS SIGNS DEFINITIVE AGREEMENT TO BE ACQUIRED BY ADITXT, INC.

Appili Therapeutics Inc. has entered into a definitive arrangement agreement pursuant to which Aditxt Inc., a Richmond, Va.-based company dedicated to discovering, developing and deploying promising health innovation, through its wholly owned subsidiary, Adivir Inc. (the buyer), agreed to acquire all of the issued and outstanding Class A common shares of Appili by way of a court-approved plan of arrangement under the Canada Business Corporations Act.

Overview and rationale for the transaction

Under the terms of the arrangement agreement, shareholders of Appili will receive (i) 0.002745004 of a share of common stock of Aditxt and (ii) 4.67 U.S. cents (or approximately 6.33 cents with reference to the Bank of Canada closing exchange rate on March 29, 2024) for each Appili share held, representing implied total consideration per Appili share of approximately 5.61 U.S. cents (or approximately 7.598 cents with reference to the Bank of Canada closing exchange rate on March 29, 2024) based on the closing price of the Aditxt shares on March 28, 2024. The transaction consideration represents an approximately 117-per-cent premium to the trading price of the Appili shares based on the closing price of the shares of Appili on April 1, 2024 (the last trading prior to the execution of the arrangement agreement), and an approximately 141-per-cent premium to the 30-day volume-weighted average price of the Appili shares prior to the date of the arrangement agreement.

The transaction is expected to provide much-needed resources and access to capital which will allow the combined enterprise to execute its development plans more efficiently. Aditxt and its subsidiaries have complementary medical and scientific knowledge in immunology and immune profiling and expertise in diagnostics and other tools, which can be used to expedite development programs and be used in clinical practice.

"This transaction with Aditxt aligns with our goals on multiple levels. Through the Aditxt platform, we can amplify our impact and reach in the fight against life-threatening infectious diseases. We see this as an opportunity for growth, innovation and collaboration. Our shared vision and combined expertise will undoubtedly accelerate our mission to develop innovative treatments and solutions for some of the most challenging health threats facing the world today. Appili's programs can now leverage Aditxt's proven research and development, operations, and commercialization expertise to accelerate the development of our three programs. Secondly, as a Nasdaq-listed company, Aditxt will facilitate access to capital for Appili's programs in this challenging economic environment. We welcome this new chapter, confident that together, we will achieve even greater heights in deploying innovative health care solutions," said Dr. Don Cilla, president and chief executive officer of Appili Therapeutics.

The transaction is expected to enhance the combined entity's portfolio of products and potentially create substantive synergies among existing programs, particularly precision diagnostics. Integrating Appili's expertise and product lines with Aditxt could pave the way for a comprehensive approach to population health, from early detection and prevention to treatment. Collaboration within the Aditxt ecosystem has the potential to streamline patient care, from early detection through precision diagnostics to the development of tailored treatment strategies. This synergy provides an opportunity to accelerate innovation and enhances the effectiveness and personalization of healthcare delivery.

Amro Albanna, co-founder, chairman and CEO of Aditxt, elaborated on the significance of this acquisition, stating: "The acquisition of Appili would represent another step in Aditxt's journey towards advancing promising innovations in health. Our mission is to accelerate some of the most promising health innovations, like those developed by Appili, to reach their full potential and to have a lasting impact. The urgency for innovative and effective public health solutions is unprecedented. The need to discover and bring new treatments to the market or to enhance existing ones to combat public health challenges has never been more critical. By integrating Appili's proven expertise and diverse portfolio in the infectious disease and biodefence domain, Aditxt can substantially contribute to advancing public health solutions."

Additional transaction details

The transaction will be effected by way of a court-approved plan of arrangement pursuant to the Canada Business Corporations Act. Under the terms of the arrangement agreement, Adivir will acquire all of the issued and outstanding Appili shares, with each Appili shareholder receiving the transaction consideration. In connection with the transaction, each outstanding option and warrant of Appili will be cashed out based on the implied in-the-money value of the transaction consideration.

In connection with the transaction Aditxt will: (i) agree to repay no less than 50 per cent in outstanding senior secured debt at the closing of the transaction and to repay the remaining outstanding senior secured debt by no later than Dec. 31, 2024; (ii) assume all of Appili's remaining outstanding liabilities and indebtedness; and (iii) agree to satisfy certain payables of Appili at closing as further detailed in the arrangement agreement.

Additional details of the transaction will be described in the management information circular that will be mailed to the Appili shareholders in connection with a special meeting of the Appili shareholders currently expected to be held prior to end of calendar Q2 2024 to approve the transaction. Additional information regarding the terms of the arrangement agreement, the background to the transaction, the rationale for the recommendations made by the special committees (as defined below), and how shareholders can participate in and vote at the Appili meeting will be provided in the Appili circular.

The transaction is subject to the approval of at least two-thirds of the votes cast by the Appili shareholders at the Appili meeting.

All of Appili's directors and officers, and certain shareholders holding approximately 11.9 per cent of the total voting power of the issued and outstanding Appili shares have entered into voting support agreements with the buyer to vote in favour of the transaction.

The transaction is conditional upon Aditxt raising at least $20-million (U.S.) in financing prior to Closing. In addition, completion of the transaction is subject to other customary conditions, including the receipt of all necessary court, regulatory and stock exchange approvals. Subject to the receipt of all required approvals, closing is currently expected to occur not later than early calendar Q3 2024.

The arrangement agreement contains customary terms and conditions, including non-solicitation provisions which are subject to Appili's right to consider and accept a superior proposal subject to a matching right in favour of Aditxt. The arrangement agreement also provides for the payment of a termination fee of $1.25-million in certain circumstances.

A copy of the arrangement agreement will be available through Appili's filings with the securities regulatory authorities in Canada on SEDAR+.

If the transaction is completed, the Appili shares will be delisted from the Toronto Stock Exchange and the OTCQX and Appili will apply to cease to be a reporting issuer.

Recommendation of Appili's special committee and Appili's board

The special committee of the board of directors of Appili, comprising Theresa Matkovits, Jurgen Froehlich and Prakash Gowd, after receiving legal and financial advice, including the fairness opinion from its independent financial adviser discussed below, has unanimously recommended the transaction having determined that the consideration to be received by the Appili shareholders pursuant to the transaction is fair, from a financial point of view, to the Appili shareholders.

The Appili special committee has obtained a fairness opinion from BDO Canada LLP to the effect that, as of the date of the arrangement agreement, and subject to the assumptions, limitations and qualifications on which such opinions are based, the consideration to be received by the Appili shareholders pursuant to the transaction is fair, from a financial point of view, to the Appili shareholders.

After receiving the recommendations of the Appili special committee, and the fairness opinion from its financial adviser discussed above, the Appili board has unanimously determined that: (i) the consideration to be received by the Appili shareholders pursuant to the transaction is fair, from a financial point of view, to the Appili shareholders; (ii) the transaction is in the best interests of Appili; and (iii) it approve and authorize the transaction and the entering into of the arrangement agreement and all ancillary agreements; and (iv) in accordance with and subject to the terms of the arrangement agreement, it recommend to the Appili shareholders that they vote in favour of the resolution to approve the transaction at the Appili meeting.

Additional details concerning the rationale for the recommendations made by the Appili special committee and the Appili board, including copies of the fairness opinion prepared by the independent financial adviser to the Appili special committee and the Appili board, will be set out in the Appili circular to be filed and mailed to the Appili shareholders in the coming weeks, which, together with the arrangement agreement, will be available under Appili's profile on SEDAR+.

Lender approval

Appili's senior secured lender, Long Zone Holdings (LZH), has provided the requisite consent to the transaction along with certain waivers required pursuant to the terms of the loan agreement between Appili and LZH. In connection with such consent and waivers, Appili has agreed to issue to LZH an aggregate of $18,000 worth of Appili shares prior to the closing, subject to TSX approval.

Advisers

Dentons Canada LLP acted as legal counsel to Appili. Bloom Burton Securities Inc. acted as financial adviser to the Appili board and BDO Canada LLP acted as independent financial adviser to the Appili special committee.

Aird & Berlis LLP acted as Canadian legal counsel to Aditxt. Sheppard, Mullin, Richter & Hampton LLP acted as U.S. securities counsel to Aditxt and Nelson Mullins Riley & Scarborough LLP acted as U.S. merger and acquisition counsel to Aditxt.

About Appili Therapeutics Inc.

Appili is an infectious disease biopharmaceutical company that is purposefully built, portfolio driven and people focused to fulfill its mission of solving life-threatening infections. By systematically identifying urgent infections with unmet needs, Appili's goal is to strategically develop a pipeline of novel therapies to prevent deaths and improve lives. Appili is currently advancing a diverse range of anti-infectives, including a Food and Drug Administration-approved ready-made suspension of metronidazole for the treatment of anti-microbial infections, a vaccine candidate to eliminate a serious biological weapon threat and a topical anti-parasitic for the treatment of a disfiguring disease. Led by a proven management team, Appili is at the epicentre of the global fight against infection.

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