ARIX.L Regulatory News (ARIX)

Arix Bioscience plc

VelosBio to be acquired by Merck for $2.75 billion

LONDON, 5 November 2020: Arix Bioscience plc ("Arix", LSE: ARIX) a global venture capital company focused on investing in and building breakthrough biotech companies, notes that its portfolio company VelosBio Inc. ("VelosBio"), today announced that it has entered into a definitive agreement with Merck (NYSE: MRK), known as MSD outside of the United States (U.S.) and Canada, pursuant to which Merck, through a subsidiary, will acquire all outstanding shares of VelosBio for $2.75 billion in cash, subject to certain customary adjustments. The sale of VelosBio is expected to deliver net proceeds to Arix of approximately $185 million (£142 million[1]), representing a 12x return on Arix's £12 million invested capital. This equates to a £121 million (89p per share) increase in the gross value of Arix's holding in VelosBio of £21 million[2].

VelosBio is a privately held, clinical-stage U.S. biopharmaceutical company, committed to developing first in class cancer therapies targeting tyrosine kinase-like orphan receptor 1 (ROR1), a novel oncology target. VelosBio's lead investigational candidate is VLS-101, an antibody-drug conjugate (ADC) targeting ROR1 that is currently being evaluated in a Phase 1 and a Phase 2 clinical trial for the treatment of patients with hematologic malignancies and solid tumours, respectively. In addition, VelosBio is developing a preclinical pipeline of next-generation ADCs and bispecific antibodies targeting ROR1 with the potential to complement VLS-101 by offering alternative methods of tumour cell killing.

Arix co-led the Series A financing and joined the VelosBio Board of Directors in October 2018. VelosBio has since progressed from a pre-clinical to clinical stage company and completed an oversubscribed Series B financing in July 2020, supported by new and existing shareholders.

Jonathan Tobin, Managing Director at Arix and VelosBio Board Director, commented: "Merck's acquisition of VelosBio is a testament to the VelosBio leadership team, the pipeline they have built and the development strategy they have executed. We have worked closely with the VelosBio team and our co-investors through the company's early development and we are incredibly proud of the progress the company has made in such a short period of time. As one of the top forces in oncology drug development globally, Merck makes the perfect partner to maximise the potential benefit of VelosBio's lead candidate, VLS-101, for the treatment of patients with cancer."

Naseem Amin, Executive Chairman of Arix, commented: "The trade sale of VelosBio to Merck is a major milestone for Arix, marking the first strategic acquisition from our portfolio, just four years since Arix's inception. This acquisition validates our ability to identify, assess and develop breakthrough biotechnology companies globally and to generate superior returns for our shareholders. It is also evidence of the potential we see in our maturing portfolio and our expectations of further significant value inflection points ahead, with the potential to deliver additional shareholder value.

"The strong return on this investment in approximately two years provides a very significant increase in our Net Asset Value ("NAV"), moving us significantly closer to our December 2023 NAV goal of £500 million, that we set out in our 2020 interim results. This transaction puts us in a strong position to continue to execute our strategy of providing support and flexible, long-term capital to the most innovative biotech companies across the globe, which we believe have the potential to deliver transformative new treatments to patients and superior returns to our shareholders."

The closing of the transaction, which is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, is expected by the end of 2020.

[ENDS]

Enquiries

For more information on Arix, please contact:

Arix Bioscience plc

Charlotte Parry, Head of Investor Relations

+44 (0)20 7290 1072

charlotte@arixbioscience.com

Optimum Strategic Communications

Mary Clark, Supriya Mathur, Shabnam Bashir

T: +44 (0) 20 3950 9144

optimum.arix@optimumcomms.com

This announcement includes information that is inside information as defined in Article 7 of the Market Abuse Regulation No.596/2014. The person responsible for arranging for the release of this announcement on behalf of Arix Bioscience plc is Robert Lyne, General Counsel Arix Bioscience plc.

About Arix Bioscience plc

Arix Bioscience plc is a global venture capital company focused on investing in and building breakthrough biotech companies around cutting edge advances in life sciences.

We collaborate with exceptional entrepreneurs and provide the capital, expertise and global networks to help accelerate their ideas into important new treatments for patients. As a listed company, we are able to bring this exciting growth phase of our industry to a broader range of investors. www.arixbioscience.com

About VelosBio

VelosBio Inc. is a clinical-stage biopharmaceutical company committed to transforming the lives of patients with cancer by developing first-in-class therapies targeting ROR1. Its lead candidate, VLS-101, is a ROR1-directed ADC being developed for patients with hematologic malignancies and solid tumors. The company is utilizing its ROR1-targeting antibody-based technology to develop a pipeline of ADCs and bispecific antibody product candidates for the treatment of hematologic malignancies and solid tumors. VelosBio is headquartered in San Diego. For more information, please visit www.velosbio.com.

[1] At prevailing GBP/USD FX rate on 5 November 2020. Arix proportion of $2.75 billion proceeds based on 6.8% fully diluted shareholding, as disclosed in Arix Bioscience plc 30 June 2020 interim financial statements

[2] £17.4 million valuation at 30 June 2020 plus £3.2 million investment in July 2020, as reported at interim results 2020