Chinook Therapeutics Inc. entered into a definitive merger agreement to acquire Aduro Biotech, Inc. (NasdaqGS:ADRO) in a reverse merger transaction on June 1, 2020. As consideration, Aduro Biotech will issue approximately 50% of its outstanding common stock in exchange for all of the outstanding capital stock of Chinook. Chinook's existing investors have also committed to invest an additional $25 million in convertible notes prior to closing (note purchase agreement), which will convert into Aduro common stock following the merger. As of August 17, 2020, the note purchase agreement was terminated and Chinook Therapeutics Inc. entered into a subscription agreement to raise $106 million. Aduro and Chinook have entered into a support agreement with some shareholders of Aduro and Chinook respectively to vote all of their shares in favor of adoption of the transaction. In other related transactions, Aduro and Chinook have entered into a lock up agreement pursuant to which they accepted certain restrictions on transfers of shares of Company Common Stock for the 180-day period following the closing of the merger while Aduro and Computershare Trust Company, N.A will enter into a contingent value rights agreement pursuant to which Aduro's common stockholders will receive one contingent value right for each share held on the closing of the transaction. Upon completion, Aduro will be renamed Chinook Therapeutics, Inc. and is expected to trade on the Nasdaq Global Market under the ticker symbol “KDNY”. Upon termination, either party may be required to pay the other party a termination fee of $6.4 million or in some circumstances reimburse the other party's expenses up to a maximum of $2 million.

Upon closing, Eric Dobmeier will be the President and Chief Executive Officer of the combined company. Senior leadership of the combined company will also include Tom Frohlich as Chief Business Officer, Alan Glicklich, as Chief Medical Officer, Andrew King, as head of renal discovery and translational medicine and Renata Oballa, as Vice President of chemistry. In connection with the merger, Stephen T. Isaacs, Chairman, President and Chief Executive Officer of Aduro, will be stepping down. The Board of Directors of the combined company will be comprised of seven directors namely Eric Dobmeier, President and Chief Executive Officer of Chinook Therapeutics, Jerel Davis, Managing Director at Versant Ventures, Srini Akkaraju, Managing General Partner at Samsara BioCapital, William M. Greenman, President and Chief Executive Officer of Cerus Corporation and Ross Haghighat, Founder, Chairman and Managing Partner of Triton Systems, Inc. along with two additional independent directors. The combined company will be headquartered out of Chinook's existing facilities in Vancouver, BC and Seattle, Washington.

The transaction is subject to the satisfaction or waiver of customary closing conditions, including the receipt of the required approval of the shareholders of Aduro and Chinook. The transaction is also subject to closing of the sale and issuance of the Notes pursuant to the Note Purchase Agreement, the continuous listing of the shares of the new combined company, the shares of the combined company to be issued being approved for listing on Nasdaq as of the closing, the Registration Statement having become effective, lock up agreement between the parties, execution of the support agreement where the parties have agreed to vote all of their shares of capital stock in favor of the transaction, Aduro's net cash as of closing being equal to or greater than $135 million and Chinook's cash and cash equivalents as of closing being equal to or greater than $5 million. The transaction is also subject to any waiting period applicable to the consummation under the HSR Act shall have expired or been terminated. The transaction has been unanimously approved by the Board of Directors of both Aduro and Chinook. The Board of Aduro and Chinook recommend the shareholders to approve the transaction. As of October 1, 2020, the transaction was approved by shareholders of Aduro Biotech, Inc. Following stockholder approval, the company announced a one-for-five reverse stock split. The Aduro's common stock will begin trading on a split-adjusted basis on The Nasdaq Global Select Market effective with the open of the market on Friday, October 2, 2020. The transaction is expected to be completed in the second half of 2020. The transaction is expected to be completed in fourth quarter of 2020. As of October 1, 2020, the transaction is expected to close on or around October 5, 2020.

SVB Leerink is acting as financial advisor and will receive an aggregate fee of $2.0 million, $1.0 million of which became payable upon the rendering its opinion and the remainder of which is payable contingent upon consummation of the transaction and Luke Bergstrom, Alan Mendelson, James Metz, Maj Vaseghi, Grace Lee, Ben Haas, Joshua Holian, Patrick English, Robert Blamires, Christopher Hazuka and Kathleen Wells of Latham & Watkins LLP acted as legal counsels to Aduro Biotech, Inc. Andrew Weisenfeld and Samuel Ball-Brau of MTS Health Partners is acting as financial advisor and Effie Toshav, Ethan Skerry, Robert Freedman, Amanda Rose, Matthew Cantor, Stefano Quintini, Antonia Sequeira, Amy Klann and William Skinner of Fenwick & West LLP are acting as legal counsels to Chinook. MacKenzie Partners, Inc. acted as information agent and will receive a fees of approximately $20,000, plus reimbursement. Fried Frank acted as counsel to SVB Leerink LLC.