Aileron Therapeutics Announces Acquisition of Lung Therapeutics

Winston & Strawn is representing Clear Street LLC, the placement agent in Aileron Therapeutics, Inc.’s recently announced acquisition of Lung Therapeutics (Lung TX), a privately held biopharmaceutical company focused on developing novel therapies for the treatment of orphan pulmonary and fibrosis indications that have no approved or limited effective treatments. The acquisition of Lung Tx was structured as a stock-for-stock transaction whereby all of Lung Tx’s outstanding equity interests were exchanged in a merger for a combination of shares of Aileron common stock and shares of Aileron Series X preferred stock. Following the acquisition, Lung Tx became a wholly owned subsidiary of Aileron. Immediately after the acquisition of Lung Tx, Aileron entered into a definitive agreement for a private placement with existing Lung Tx investors and new investors to raise approximately US$18M, including the conversion of certain convertible promissory notes in the aggregate principal amount of approximately US$1.6M issued by Lung Tx to Bios prior to the acquisition. In the private placement, investors have agreed to purchase (i) an aggregate of 4,707 shares of Series X preferred stock and (ii) warrants to purchase up to an aggregate of 2,353,500 shares of Aileron common stock. The warrants will be exercisable any time after the later of May 2, 2024 and the date stockholder approval for the conversion rights of the Series X preferred stock is obtained and on or prior to May 2, 2027, at an exercise price of US$4.89. The private placement is expected to close on November 2, 2023, subject to the satisfaction of customary closing conditions.