Merger KVSA

Valo Health and Khosla Ventures Acquisition Co. to merge

, PR Newswire

Valo Health, LLC ("Valo"), the technology company using human-centric data and artificial intelligence (AI) powered computation to transform the drug discovery and development process, and Khosla Ventures Acquisition Co. ("KVAC")(NASDAQ: KVSA), a special purpose acquisition company founded by affiliates of Khosla Ventures, LLC, announced today that they have entered into a definitive merger agreement. 

Valo Health, LLC ("Valo") is a technology company built to transform the drug discovery and development process using human-centric data and artificial intelligence ("AI") computation. As a digitally native company, Valo aims to fully integrate human-centric data across the entire drug development lifecycle into a single unified architecture, thereby accelerating the discovery and development of life-changing drugs while simultaneously reducing the cost, time, and failure rate. The company's Opal Computational Platform™ consists of an integrated set of capabilities designed to transform data into valuable insights that may accelerate discoveries and enable Valo to advance a robust pipeline of programs across cardiovascular metabolic renal, oncology, and neurodegenerative disease. Founded by Flagship Pioneering and headquartered in Boston, MA, Valo also has offices in Lexington, MA, San Francisco, CA, Princeton, NJ, and in Branford, CT.

The transaction values the combined company at a pro forma market value of approximately $2.8 billion. The combined company is anticipated to have a pro forma cash balance of approximately $750 million before deducting anticipated transaction expenses, including existing Valo cash of approximately $250 million as of the date hereof, approximately $333 million of net cash held in KVAC's trust, after deducting deferred underwriting commissions and assuming no redemptions, and a $168.5 million private investment in public equity ("PIPE") priced at $10.00 per share.

Institutional and strategic investors or their affiliates and existing Valo shareholders that have committed to participate in the PIPE include a leading integrated healthcare delivery network, Khosla Ventures, NG MGG Strategic, Caz Investments, and returning investors Koch Disruptive Technologies, Flagship Pioneering, Public Sector Pension Investment Board (PSP Investments), Invus, State of Michigan Retirement Systems, HBM Healthcare Investments and Longevity Vision Fund.

Net proceeds from this transaction after transaction expenses will be used to advance Valo's preclinical and clinical assets, develop its software platform, support new and existing growth initiatives and working capital, and other general purposes.

The sponsor of KVAC has agreed to a 12-month lock-up following the acquisition, with early release based on the achievement of performance targets

The sponsor has also agreed to subject half of its sponsor promote to a tiered structure that rewards success at performance vesting thresholds, significantly above the current stock price further detailed in the prospectus. In addition, the KVAC sponsor is supporting the SPAC with a $25 million forward purchase agreement backstop and KVAC has no warrants.

The closing of this transaction is anticipated to occur in the third quarter of 2021 and is subject to the approval of KVAC's stockholders and the satisfaction or waiver of certain other customary closing conditions.

Samir Kaul, Founding Partner and Managing Director at Khosla Ventures, is expected to join Valo's Board of Directors following the completion of the business combination.

J.P. Morgan Securities LLC is serving as the financial advisor to Valo and as KVAC's sole placement agent for the PIPE. Goodwin Procter LLP is acting as legal counsel to Valo.

Latham & Watkins LLP is acting as legal counsel to KVAC. Cooley LLP is acting as legal counsel to the placement agent.

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