UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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SCHEDULE TO

 

Tender Offer Statement under Section 14(d)(1)

or 13(e)(1) of the Securities Exchange Act of 1934

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Zynerba Pharmaceuticals, Inc.

(Name of Subject Company (Issuer))

 

Xylophone Acquisition Corp.

a wholly owned subsidiary of

Harmony Biosciences Holdings, Inc.

(Names of Filing Persons (Offerors))

 

Common Stock, $0.001 par value per share

(Title of Class of Securities)

 

98986X109

(CUSIP Number of Class of Securities)

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Christian Ulrich

General Counsel and Corporate Secretary

630 W. Germantown Pike, Suite 215

Plymouth Meeting, PA 19462

484-539-9800

With copies to:

William Intner

Hogan Lovells US LLP

100 International Drive

Baltimore, MD 21202

(410) 659-2700

 

and to:

Peter Cohen-Millstein

Hogan Lovells US LLP

390 Madison Avenue

New York, NY 10017

(212) 918-3000

 

Check the appropriate boxes below to designate any transactions to which the statement relates:

 

Check the following box if the filing is a final amendment reporting the results of the tender offer: ☐

 

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

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This Tender Offer Statement on Schedule TO (together with any amendments and supplements hereto, the “Schedule TO”) relates to the offer by Xylophone Acquisition Corp. (“Purchaser”), a Delaware corporation and wholly owned subsidiary of Harmony Biosciences Holdings, Inc. (“Parent” or “Harmony”), to purchase all of the outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Zynerba Pharmaceuticals, Inc. (the “Company” or “Zynerba”), for (i) $1.1059 per Share in cash without interest and subject to deduction for any required withholding under applicable tax law, plus (ii) one non-tradable contingent value right (“CVR”) per share, which represents the contractual right to receive contingent payments in cash, without interest and subject to deduction for any required withholding under applicable tax law, upon the achievement of certain specified milestones upon the terms and subject to the conditions set forth in the Offer to Purchase (together with any amendments or supplements thereto, the “Offer to Purchase”), and in the accompanying Letter of Transmittal (together with any amendments or supplements thereto and with the Offer to Purchase, the “Offer”), which are annexed to and filed with this Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively. This Schedule TO is being filed on behalf of Harmony and Purchaser. Unless otherwise indicated, references to sections in this Schedule TO are references to sections of the Offer to Purchase.

 

All information contained in the Offer to Purchase (including Schedule I thereto) and the related Letter of Transmittal is hereby expressly incorporated herein by reference in response to Items 1 through 9 and Item 11 of this Schedule TO.

 

 

The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” is incorporated herein by reference.

 

(a) – (c) The information set forth in the first page immediately following the cover page, in the section titled “Summary Term Sheet,” and in the sections titled Section 6—“Price Range of Shares; Dividends on the Shares” and Section 7—“Certain Information Concerning Zynerba” of the Offer to Purchase is incorporated herein by reference.

 

(a) – (c) The information set forth in the section of the Offer to Purchase titled Section 8—“Certain Information Concerning Harmony and Purchaser” is incorporated herein by reference.

 

(a) The information set forth in the Offer to Purchase is incorporated herein by reference.

 

(a), (b) The information set forth in the section of the Offer to Purchase titled Section 8—“Certain Information Concerning Harmony and Purchaser” and Section 10—“Background of the Offer; Past Contacts or Negotiations with Zynerba”  incorporated herein by reference.

 

(a), (c) The information set forth in the sections of the Offer to Purchase titled Section 11—“The Merger Agreement; Other Agreements”, Section 12—“Purpose of the Offer; Plans for Zynerba” and Section 13—“Certain Effects of the Offer” are incorporated herein by reference.

 

(a), (b), (d) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 9—“Source and Amount of Funds” of the Offer to Purchase is incorporated herein by reference.

 

(a), (b) The information set forth in the section of the Offer to Purchase titled “Summary Term Sheet” and in Section 8—“Certain Information Concerning Harmony and Purchaser” of the Offer to Purchase is incorporated herein by reference.

 

(a) The information set forth in Section 3—“Procedures for Accepting the Offer and Tendering Shares,” Section 10—“Background of the Offer; Past Contacts or Negotiations with Zynerba” and Section 18—“Fees and Expenses” of the Offer to Purchase is incorporated herein by reference.

 

Not applicable.

 

(a) The information set forth in Section 11—“The Merger Agreement; Other Agreements,” Section 13—“Certain Effects of the Offer” and Section 16—“Certain Legal Matters; Regulatory Approvals” of the Offer to Purchase is incorporated herein by reference.

 

(c) The information set forth in the Offer to Purchase is incorporated herein by reference.

 

Not applicable.

 

SIGNATURES

 

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

•

If you hold your Shares directly as the holder of record, complete and sign the Letter of Transmittal (or, in the case of a book-entry transfer, deliver an Agent’s Message (as defined below) in lieu of the Letter of Transmittal) that accompanies this Offer to Purchase in accordance with the instructions set forth therein and mail or deliver the Letter of Transmittal with any required signature guarantees and all other required documents to the Depositary (as defined below in the “Summary Term Sheet”). These materials must be delivered to the Depositary prior to the Expiration Time (as defined below).

•

If you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee, request your broker, dealer, commercial bank, trust company or other nominee to tender your Shares through The Depository Trust Company’s (“DTC”) Automated Tender Offer Program (“ATOP”) prior to the Expiration Time.

SUMMARY TERM SHEET			1
INTRODUCTION			14
THE TENDER OFFER			16
	1.	Terms of the Offer	16
	2.	Acceptance for Payment and Payment for Shares	17
	3.	Procedures for Accepting the Offer and Tendering Shares	18
	4.	Withdrawal Rights	21
	5.	Material U.S. Federal Income Tax Consequences	22
	6.	Price Range of Shares; Dividends on the Shares	25
	7.	Certain Information Concerning Zynerba	26
	8.	Certain Information Concerning Harmony and Purchaser	27
	9.	Source and Amount of Funds	28
	10.	Background of the Offer; Past Contacts or Negotiations with Zynerba	29
	11.	The Merger Agreement; Other Agreements	34
	12.	Purpose of the Offer; Plans for Zynerba	50
	13.	Certain Effects of the Offer	51
	14.	Dividends and Distributions	52
	15.	Conditions of the Offer	52
	16.	Certain Legal Matters; Regulatory Approvals	54
	17.	Appraisal Rights	55
	18.	Fees and Expenses	57
	19.	Miscellaneous	57

Directors and Executive Officers of Purchaser and Harmony

Sch I-1

Securities Sought	Subject to certain conditions, including the satisfaction of the Minimum Condition (as described in Section 15 — “Conditions of the Offer”), all of the issued and outstanding shares of common stock, par value $0.001 per share, of Zynerba.
Price Offered Per Share	Upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal: (a) $1.1059 in cash, without interest and subject to deduction for any required withholding under applicable tax law, plus (b) one non-tradable CVR per Share, which represents the contractual right to receive contingent payments in cash, without interest and less any applicable tax withholding, upon the achievement of certain specified milestones in accordance with the terms and subject to the conditions set forth in the CVR Agreement.
Scheduled Expiration of Offer	5:00 p.m., Eastern Time, on September 26, 2023, unless the Offer is otherwise extended or earlier terminated.
Purchaser	Xylophone Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Harmony.
Zynerba Board Recommendation	The Zynerba Board unanimously resolved to recommend that Zynerba stockholders accept the Offer and tender their Shares to Purchaser pursuant to the Offer.
Harmony’s Existing Interests	As of August 24, 2023, none of Harmony, Purchaser or their respective associates or affiliates owned any Shares. Harmony and Purchaser may, however, be deemed to beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) 7,592,498 Shares, or approximately 13.1% of the outstanding Shares as of such date, as a result of certain voting rights granted pursuant to the Tender and Support Agreements (as defined below) (see Section 11 — “The Merger Agreement; Other Agreements —Tender and Support Agreements”).

Each Tender and Support Agreement provides, among other things, that the Supporting Stockholders will (i) tender all of the Shares held by such Supporting Stockholder in the Offer; (ii) vote in favor of the Merger and the other transactions contemplated by the Merger Agreement, if applicable; (iii) vote against other proposals that may impede, delay, postpone, interfere with, nullify, prevent or adversely affect the proposal to acquire Zynerba, and (iv) agree to certain other restrictions on such stockholder’s ability to take actions with respect to Zynerba and its Shares, including, subject to certain exceptions, transfer such Shares.

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Xylophone Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Harmony, which was formed solely for the purpose of facilitating the acquisition of Zynerba by Harmony, is offering to buy all Shares in exchange for the Offer Price.

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Unless the context indicates otherwise, in this Offer to Purchase, the terms “us,” “we” and “our” refers to Purchaser together with, where appropriate, Harmony. The term “Purchaser” refers to Xylophone Acquisition Corp. alone, the term “Harmony” refers to Harmony Biosciences Holdings, Inc. alone and the term “Zynerba” refers to Zynerba Pharmaceuticals, Inc., alone.

•

Purchaser is offering to purchase all of the issued and outstanding Shares on the terms and subject to the conditions set forth in this Offer to Purchase. In this Offer to Purchase, we use the term “Offer” to refer to this offer to purchase the Shares.

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We are making the Offer because we want to acquire control of, and ultimately the entire equity interest in, Zynerba. Following the consummation of the Offer, we intend to complete the Merger (as defined below) as soon as practicable. Upon completion of the Merger, Zynerba will become a wholly owned subsidiary of Harmony. In addition, we will cause the Shares to be delisted from the Nasdaq Capital Market (“Nasdaq”) and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after completion of the Merger, and Zynerba will cease to be a publicly-traded company.

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The Offer is open to all holders and beneficial owners of the Shares.

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Purchaser is offering to pay (a) $1.1059 per Share in cash, without interest and less any applicable tax withholding, plus (b) one non-tradable CVR per Share, which represents the contractual right to receive contingent payments in cash, without interest and subject to deduction for any required withholding under applicable tax law, upon the achievement of certain specified milestones in accordance with the terms and subject to the conditions set forth in the CVR Agreement.

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If you are the holder of record of your Shares and you directly tender your Shares to us in the Offer, you will not need to pay brokerage fees or similar expenses. If you own your Shares through a broker, dealer, commercial bank, trust company or other nominee, and your broker, dealer, commercial bank, trust company or other nominee tenders your Shares on your behalf, your broker, dealer, commercial bank, trust company or other nominee may charge you a fee for doing so. You should consult your broker, dealer, commercial bank, trust company or other nominee to determine whether any charges will apply.

•

Yes. Zynerba, Harmony and Purchaser have entered into an Agreement and Plan of Merger, dated as of August 14, 2023 (as it may be amended from time to time, the “Merger Agreement”). The Merger Agreement contains, among other things, the terms and conditions of the Offer and, following the consummation of the Offer, the Merger.

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The CVRs represent the right to receive contingent payments in cash, without interest and less any applicable tax withholding (collectively, the “Milestone Payments” and each individually, a “Milestone Payment”) payable to the Rights Agent for the benefit of the holders of CVRs upon the achievement of a specified milestone and otherwise in accordance with the Merger Agreement (each such milestone, a “Milestone”), as follows:

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an aggregate milestone payment of $15,000,000, payable upon the completion of the last patient’s last visit in Zynerba’s RECONNECT (ZYN2-CL-033) clinical trial (the “Pivotal Study”) for Zygel™ (ZYN002) (the “Product”) by or before June 30, 2026;

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upon the completion of the Pivotal Study and a finding that the data from the Pivotal Study meets the primary end point(s) with statistical significance as set forth in the protocol of the Pivotal Study (“Milestone 2”), an aggregate milestone payment of :

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an aggregate milestone payment of $35,000,000, payable upon the achievement of approval from the U.S. Food and Drug Administration of the New Drug Application (“NDA Approval”) with respect to the Product in Fragile X syndrome (“Milestone 3”);

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an aggregate milestone payment of $15,000,000, payable upon the achievement of NDA Approval with respect to the Product in the Second Indication (as defined in the CVR Agreement);

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an aggregate milestone payment of $15,000,000, payable upon the achievement of worldwide aggregate Net Sales (as defined in the CVR Agreement) of the Product (inclusive of all indications) of at least $250,000,000, calculated on a cumulative basis for all Calendar Years (as defined in the CVR Agreement) (or portion thereof) if Milestone 3 is achieved by or before December 31, 2030 (“Milestone 5”); and

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an aggregate milestone payment of $30,000,000, payable upon the achievement of worldwide aggregate Net Sales of the Product (inclusive of all Indications) of at least $500,000,000, calculated on a cumulative basis for all Calendar Years (or portion thereof) and inclusive of all Net Sales applied toward achievement of Milestone 5 if Milestone 3 is achieved by or before December 31, 2030.

•

The CVR Agreement and the rights of holders of CVRs to achieve Milestones thereunder will terminate automatically on December 31, 2040.

•

Each holder of a CVR and each holder of certain Company Stock Options (in accordance with the terms of the Merger Agreement) are entitled to the Milestone Payments, in each case in accordance with the terms of the CVR Agreement and the Merger Agreement.

•

For each Milestone, the amount payable per CVR and to each Company Stock Option entitled to payment under Section 3.7(b) of the Merger Agreement (the “Out-of-the-Money Option”) will be calculated by adding the amount by which the aggregate exercise price of all Out-of-the-Money Options exceeds the aggregate Closing Amount for such Out-of-the-Money Options to the applicable milestone payment, and dividing that amount by the “Fully Diluted Share Amount” at the time of achievement of the Milestone. “Fully Diluted Share Amount” means (1) the sum of the total number of Shares outstanding prior to the Effective Time plus (2) the total number of shares of common stock of Zynerba issuable pursuant to In-the-Money Company Stock Options plus (3) the total number of shares of common stock of Zynerba issuable pursuant to Company Restricted Stock Awards plus (4) the total number of shares of common stock of Zynerba issuable pursuant to Out-of-the-Money Options with respect to such Milestone.

•

Harmony will, and will cause its affiliates and any sublicensees to, use Commercially Reasonable Efforts to achieve each Milestone; provided that use of Commercially Reasonable Efforts does not guarantee that Harmony will achieve any Milestone by a specific date or at all. Whether any Milestone is achieved will depend on many factors, some within control of Harmony and others outside the control of Harmony. Neither Harmony nor any of its affiliates may act in bad faith for the purpose of avoiding achievement of any Milestone or the payment of the Milestone Payments.

•

More than one Milestone may be achieved in a given calendar year, but each Milestone may only be achieved once. There can be no assurance that any Milestone will be achieved prior to its expiration or termination of the CVR Agreement, or whether or when any of the payments will be required of Harmony with respect to any Milestone. If a Milestone is not achieved in the applicable timeframe, the associated Milestone Payment will not be due or payable to holders of the CVRs and any associated covenants and obligations of Harmony and Purchaser will irrevocably terminate in accordance with the terms of the CVR Agreement. No interest will accrue or be payable in respect of any of the amounts that may become payable in respect of the CVRs.

•

The right to payment described above is solely a contractual right governed by the terms and conditions set forth in the CVR Agreement. Holders of CVRs will have no greater rights against Harmony than those accorded to general, unsecured creditors under applicable law.

•

The U.S. federal income tax treatment of the CVRs is unclear. There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of, and payments on, the CVRs, and there can be no assurance that the Internal Revenue Service, or the IRS, would not assert, or that a court would not sustain, a position that could result in adverse U.S. federal income tax consequences to holders of the CVRs.

•

Yes. It is possible that none of the Milestones described above will be achieved, in which case you will receive only the Closing Amount for any Shares you tender in the Offer and no payment with respect to the CVRs you hold will be made. It is not possible to predict what payment (if any) will become payable with respect to the CVRs, or the timing of any such payment. The CVR Agreement requires Harmony to undertake Commercially Reasonable Efforts (as defined below in Section 11 — “The Merger Agreement; Other Agreements — CVR Agreement”) to achieve each Milestone, but there can be no assurance that any Milestone will be achieved or whether or when any of the payments described above will be made.

•

The CVRs will not be transferable except:

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by will or intestacy upon death of a holder;

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by instrument to an inter vivos or testamentary trust in which the CVRs are to be passed to beneficiaries upon the death of the settlor;

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pursuant to a court order;

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by operation of law (including by consolidation or merger of the holder) or if effectuated without consideration in connection with the dissolution, liquidation or termination of any holder that is a corporation, limited liability company, partnership or other entity;

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in the case of CVRs held in book-entry or other similar nominee form, from a nominee to a beneficial owner and, if applicable, through an intermediary;

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if the holder is a partnership or limited liability company, a distribution by the transferring partnership or limited liability company to its partners or members, as applicable; or

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to Harmony or one of its affiliates in connection with the abandonment of such CVR by the applicable holder in accordance with the CVR Agreement.

•

The CVRs will not be evidenced by a certificate or other instrument, will not have any voting or dividend rights or bear a stated rate of interest and will not represent any equity or ownership interest in Harmony, Purchaser, or Zynerba or any of their respective Affiliates or Subsidiaries. The CVRs will not be registered with the SEC or listed for trading.

•

Holders of CVRs are intended third-party beneficiaries of the CVR Agreement. The CVR Agreement provides that, other than the rights of the Rights Agent (as defined below) as set forth in the CVR Agreement, holders of at least 50% of outstanding CVRs set forth in the CVR Register (as defined below in Section 11 — “The Merger Agreement; Other Agreements — CVR Agreement”) (the “Acting Holders”) have the sole right, on behalf of all holders of CVRs, by virtue or under any provision of the CVR Agreement, to direct the Rights Agent to institute any action or proceeding with respect to the CVR Agreement, and no individual holder or other group of holders of CVRs will be entitled to exercise such rights. However, the foregoing does not limit the ability of an individual holder of CVRs to seek a payment due from the applicable party solely to the extent such payment amount has been finally determined and has not been paid within the period contemplated by the CVR Agreement.

•

Additionally, the CVR Agreement provides Harmony and Purchaser the right to amend, without the consent of holders of CVRs or the Rights Agent, the CVR Agreement in certain instances, including (i) adding to the covenants of Harmony and Purchaser for the protection of holders of CVRs (if such provisions do not adversely affect the interests of holders of CVRs), (ii) curing any ambiguities, correcting or supplementing any provisions of the CVR Agreement that may be defective or inconsistent therein or making any provisions with respect to matters or questions arising under the CVR Agreement (if such provisions do not adversely affect the interests of holders of CVRs), (iii) amendments as may be necessary or appropriate to ensure that the CVRs are not subject to registration under the Securities Act, the Exchange Act, or any rules and regulations promulgated thereunder, (iv) providing for a successor rights agent, (v) reducing the number of CVRs in the event any holder agrees to renounce its rights under the CVR Agreement in accordance with the terms thereunder and (vi) any other amendments for the purpose of adding, eliminating or changing any provisions of the CVR Agreement, unless such addition, elimination or change is adverse to the interests of holders of CVRs. Harmony or Purchaser may also amend the CVR Agreement in other circumstances, including in a manner that is materially adverse to your interests as a holder of CVRs, if Harmony and Purchaser obtain the written consent of the Acting Holders.

•

The exchange of Shares for cash and CVRs pursuant to the Offer or the Merger will be a taxable transaction for U.S. federal income tax purposes. The amount of gain or loss a U.S. Holder (as defined below in Section 5—“Material U.S. Federal Income Tax Consequences”) recognizes, and the timing and character of such gain or loss, depend in part on the U.S. federal income tax treatment of the CVRs. In general, the U.S. federal income tax treatment of the CVRs is unclear. There is no legal authority directly addressing the U.S. federal income tax treatment of the receipt of, and payments on, the CVRs. The installment method of reporting any gain attributable to the receipt of a CVR generally will not be available with respect to the disposition of Shares pursuant to the Offer or the Merger because the Shares are traded on an established securities market. Harmony intends to treat a stockholder’s receipt of a CVR pursuant to the Offer or the Merger as the receipt of additional consideration paid in the Offer or the Merger as part of a “closed transaction.” As part of a closed transaction for U.S. federal income tax purposes, a U.S. Holder who sells Shares pursuant to the Offer or receives cash and CVRs in exchange for Shares pursuant to the Merger generally is expected to (except to the extent any portion of such payment is required to be treated as imputed interest as defined below in Section 5—“Material U.S. Federal Income Tax Consequences”) recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (i) the amount of cash received plus the fair market value (determined as of the closing of the Offer or the Effective Time, as the case may be) of any CVRs received and (ii) the U.S. Holder’s adjusted tax basis in the Shares sold pursuant to the Offer or converted pursuant to the Merger. See Section 5 — “Material U.S. Federal Income Tax Consequences” for a more detailed discussion of the tax treatment of the Offer and the Merger and of subsequent payments (if any) received with respect to the CVRs.

•

Yes. We estimate that we will need approximately $60 million in cash to purchase all of the Shares not already owned by Harmony pursuant to the Offer and to complete the Merger. Harmony will provide us with sufficient funds to purchase all Shares validly tendered (and not validly withdrawn) in the Offer. In addition, Harmony will need approximately $140 million to pay the maximum aggregate amount that holders of CVRs may be entitled to receive if all Milestones are achieved. Harmony has or will have available to it, through a variety of sources, including cash on hand, funds necessary to satisfy all of Purchaser’s payment obligations under the Merger Agreement and resulting from the Transactions. The Offer is not conditioned upon Harmony’s or Purchaser’s ability to finance or fund the purchase of the Shares pursuant to the Offer.

•

We do not think Purchaser’s financial condition is relevant to your decision to tender Shares in the Offer because:

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the Offer is being made for all issued and outstanding Shares solely for cash (including the right to receive any amounts payable with respect to the CVRs, which will be payable by Harmony in cash upon the achievement of certain specified milestones in accordance with the terms and subject to the conditions of the CVR Agreement);

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through Harmony, we will have sufficient funds available to purchase all Shares validly tendered (and not validly withdrawn) in the Offer and, if we consummate the Offer and the Merger, all Shares converted into the right to receive the Offer Price in the Merger; and

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the Offer and the Merger are not subject to any financing condition.

•

While, for the reasons stated above, we do not believe Purchaser’s financial condition to be relevant to your decision to tender your Shares, you should consider the following in connection with your decision to tender your Shares in the Offer:

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Harmony’s future financial condition could deteriorate such that Harmony would not have the necessary cash or cash equivalents to pay, or cause to be paid, the Milestone Payments if and when due;

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holders of CVRs will have no greater rights against Harmony or the Surviving Corporation than those accorded to general unsecured creditors of Harmony or the Surviving Corporation, as applicable, under applicable law;

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the CVRs will be effectively subordinated in right of payment to all of Harmony’s and the Surviving Corporation’s secured obligations, if any, to the extent of the collateral securing such obligations;

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the CVRs will be effectively subordinated in right of payment to all existing and future indebtedness, claims of holders of capital stock and other liabilities, including trade payables, of Harmony’s subsidiaries; and

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the filing of a bankruptcy petition by or on behalf of Harmony or the Surviving Corporation may prevent Harmony or the Surviving Corporation from making some or all payments that may become payable with respect to the CVRs, or the timing of any such payment.

•

Yes. The obligation of Purchaser to accept for payment and pay for Shares validly tendered (and not validly withdrawn) pursuant to the Offer is subject to various conditions set forth in Section 15 — “Conditions of the Offer,” including the Minimum Condition. The “Minimum Condition” means that there will have been validly tendered in the Offer and not validly withdrawn prior to the Expiration Time (as defined below) that number of Shares that, together with the number of Shares, if any, then owned beneficially by Harmony and Purchaser (together with their wholly owned subsidiaries), would represent a one more Share than 50% of the Shares outstanding as of the Expiration Time. See Section 15 — “Conditions of the Offer.”

•

As of August 24, 2023, none of Harmony, Purchaser or their respective associates or affiliates owned any Shares. Harmony and Purchaser may, however, be deemed to beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) 7,592,498 Shares, or approximately 13.1% of the outstanding Shares as of such date, as a result of certain voting rights granted pursuant to the Tender and Support Agreements (as defined below) (see Section 11 — “The Merger Agreement; Other Agreements —Tender and Support Agreements”).

•

Yes. On August 14, 2023, in connection with the execution and delivery of the Merger Agreement, the executive officers and directors of Zynerba, solely in their respective capacities as stockholders of Zynerba, entered into the tender and support agreements (the “Tender and Support Agreements”) with Harmony and Purchaser, pursuant to which each Supporting Stockholder agreed, among other things, to (i) tender all of the Shares held by such Supporting Stockholder in the Offer; (ii) vote in favor of the Merger and the other transactions contemplated by the Merger Agreement, if applicable; (iii) vote against any other proposal that may impede, delay, postpone, interfere with, nullify, prevent or adversely affect the proposal to acquire Zynerba, and (iv) agree to certain other restrictions on its ability to take actions with respect to Zynerba and its Shares, including, subject to certain exceptions, transfer such Shares. The Supporting Stockholders collectively beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) approximately 13.1% of the outstanding Shares as of August 24, 2023.

•

Each Tender and Support Agreement terminates upon the earliest of (i) the valid termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, (iii) mutual written consent of each of Harmony, Purchaser and the Supporting Stockholder or (iv) the date on which any amendment to the Merger Agreement or the Offer is effected without such Supporting Stockholder’s consent that decreases the amount, or changes the form or terms, of consideration payable to all stockholders of Zynerba pursuant to the terms of the Merger Agreement.

•

Neither we nor Zynerba are under any obligation to pursue or consummate the Merger if the Offer is not consummated as set forth in this Offer to Purchase. See Section 11 — “The Merger Agreement; Other Agreements.”

•

You will have until the Expiration Time to tender your Shares in the Offer. The term “Expiration Time” means 5:00 p.m., Eastern Time, on September 26, 2023, unless the expiration of the Offer is extended to a subsequent date in accordance with the terms of the Merger Agreement, in which case the term “Expiration Time” means such subsequent time on such subsequent date. In addition, if, pursuant to the Merger Agreement, we decide to, or are required to, extend the Offer as described below, you will have an additional period of time to tender your Shares.

•

Yes. The Merger Agreement contains provisions that govern the circumstances under which Purchaser is required or permitted to extend the Offer. Specifically, the Merger Agreement provides:

(i)

if, at the scheduled Expiration Time, any Offer Condition (as defined in Section 15 — “Conditions of the Offer”) has not been satisfied (subject to the right of Harmony to waive any Offer Condition, other than the Minimum Condition and Termination Condition), Purchaser may, and at the request of Zynerba, Purchaser will, extend the Offer for one or more consecutive increments of up to ten (10) business days each (or such longer period as may be agreed by the Zynerba and Harmony), until such time as such conditions have been satisfied or waived; and

(ii)

Purchaser will extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC, the staff thereof or Nasdaq applicable to the Offer.

•

Notwithstanding clauses (i) and (ii) above, Purchaser is not required to extend the Offer beyond the earlier to occur of (i) the first business day immediately following November 12, 2023 or (ii) the valid termination of the Merger Agreement.

•

No. A subsequent offering period for the Offer is not contemplated.

•

If we extend the Offer, we intend to inform Equiniti Trust Company, LLC, the depositary and paying agent for the Offer (the “Depositary”), of any extension, and will issue a press release announcing the extension no later than 9:00 a.m., Eastern Time, on the business day after the previously scheduled Expiration Time.

•

The obligation of Purchaser to accept for payment and pay for Shares validly tendered (and not validly withdrawn) pursuant to the Offer is subject to the satisfaction of a number of conditions by the scheduled Expiration Time of the Offer, including, among other conditions:

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the Minimum Condition (as defined below in Section 15 — “Conditions of the Offer”);

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The Termination Condition (as defined below in Section 15 — “Conditions of the Offer”);

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the Order Condition (as defined below in Section 15 — “Conditions of the Offer”);

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the Representations Condition (as defined below in Section 15 — “Conditions of the Offer”);

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the Covenants Condition (as defined below in Section 15 — “Conditions of the Offer”); and

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the absence of a Company Material Adverse Effect (as defined below in Section 11 — “The Merger Agreement; Other Agreements — Merger Agreement”).

•

If you hold your Shares directly as the holder of record, complete and sign the Letter of Transmittal (or, in the case of a book-entry transfer, deliver an Agent’s Message in lieu of the Letter of Transmittal) that accompanies this Offer to Purchase in accordance with the instructions set forth therein and mail or deliver the Letter of Transmittal with any required signature guarantees and all other required documents to the Depositary. These materials must be delivered to the Depositary prior to the Expiration Time.

•

If you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee, request your broker, dealer, commercial bank, trust company or other nominee to tender your Shares through ATOP prior to the Expiration Time.

•

We are not providing for guaranteed delivery procedures. Therefore, Zynerba stockholders must allow sufficient time for the necessary tender procedures to be completed during normal business hours of DTC. Normal business hours of DTC are between 8:00 a.m. and 6:00 p.m., Eastern Time, Monday through Friday. Zynerba stockholders must tender their Shares in accordance with the procedures set forth in this Offer to Purchase and the related Letter of Transmittal. Tenders received by the Depositary after the Expiration Time will be disregarded and of no effect.

•

If the Offer Conditions are satisfied and we accept your validly tendered Shares for payment, payment will be made by deposit of the aggregate Closing Amount for the Shares accepted in the Offer with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting payments, subject to any tax withholding required by applicable law, to tendering stockholders whose Shares have been accepted for payment.

•

You may withdraw your previously tendered Shares at any time until the Expiration Time. In addition, if we have not accepted your Shares for payment within sixty (60) days of commencement of the Offer, you may withdraw them at any time after October 27, 2023, the 60th day after commencement of the Offer, until we accept your Shares for payment.

•

To validly withdraw previously tendered Shares, you must deliver a written notice of withdrawal with the required information to the Depositary prior to the Expiration Time. If you tendered Shares by giving instructions to a broker, dealer, commercial bank, trust company or other nominee, you must instruct the broker, dealer, commercial bank, trust company or other nominee to arrange for the withdrawal of your Shares in a timely manner prior to the Expiration Time.

•

Yes. The Zynerba Board unanimously (i) approved, adopted and declared advisable the execution, delivery and performance by Zynerba of the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger (collectively, the “Transactions”), (ii) determined that the Transactions are in the best interest of Zynerba and its stockholders, (iii) resolved that the Merger Agreement will be governed by and effected under Section 251(h) and of the DGCL and (iv) recommended that Zynerba stockholders accept the Offer and tender their Shares to Purchaser pursuant to the Offer.

•

Descriptions of the reasons for the Zynerba Board’s recommendation and approval of the Offer are set forth in Zynerba Solicitation/Recommendation Statement on Schedule 14D-9 (the “Schedule 14D-9”), which is being mailed to Zynerba stockholders together with the Offer materials (including this Offer to Purchase and the related Letter of Transmittal). Stockholders should carefully read the information set forth in the Schedule 14D-9, including the information set forth in Item 4 thereof under the sub-headings “Background of the Offer and the Merger” and “Recommendation of the Zynerba Board.”

•

No. We expect to complete the Merger as soon as practicable following the consummation of the Offer. Once the Merger takes place, Zynerba will become a wholly owned subsidiary of Harmony. Following the Merger, we will cause the Shares to be delisted from Nasdaq and deregistered under the Exchange Act.

•

If the Offer is consummated, subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement (See Section 11 — “The Merger Agreement; Other Agreements”), Purchaser will merge with and into Zynerba pursuant to Section 251(h) of the DGCL. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares) will be converted into the right to receive the Offer Price from Purchaser, without interest and less any applicable tax withholding.

•

If the Merger is completed, Zynerba stockholders who do not tender their Shares in the Offer (other than stockholders who properly exercise appraisal rights) will receive the same Offer Price per Share that they would have received had they tendered their Shares in the Offer. Therefore, if the Offer is consummated and the Merger is completed, the only differences to you between tendering your Shares and not tendering your Shares in the Offer are that (i) you may be paid earlier if you tender your Shares in the Offer and (ii) appraisal rights will not be available to you if you tender Shares in the Offer, but will be available to you in the Merger if you do not tender Shares in the Offer and you comply in all respects with Section 262 of the DGCL. See Section 17 — “Appraisal Rights.”

•

However, in the unlikely event that the Offer is consummated but the Merger is not completed, the number of Zynerba stockholders and the number of Shares that are still in the hands of the public may be so small that there will no longer be an active public trading market (or, possibly, there may not be any public trading market) for the Shares. Also, in such event, it is possible that the Shares will be delisted from Nasdaq and Zynerba will no longer be required to make filings with the SEC under the Exchange Act.

•

At the Effective Time, each option to purchase Shares granted under the Company Equity Plan (each such option, a “Company Stock Option”) outstanding and unexercised immediately prior to the Effective Time with a per share exercise price less than $2.71, whether or not vested, will be immediately cancelled and automatically converted into the right to receive, without interest and subject to any required withholding:

-

(i) for each Company Stock Option that has a per share exercise price that is less than the Closing Amount (the “In-the-Money Company Stock Options”), an amount equal to (A) an amount in cash from Harmony or the Surviving Corporation equal to the excess of the Closing Amount over the per share exercise price of such In-the-Money Company Stock Option and (B) one CVR; or

-

(ii) for each Company Stock Option that has a per share exercise price that is equal to or greater than the Closing Amount but less than $2.71 (the “Eligible Options”), an amount equal to (A) the amount, if any, by which (I) the Closing Amount plus the applicable Milestone Payment plus any Milestone Payment that was previously paid exceeds (II) the per share exercise price of such Eligible Option minus (B) the gross amount of Milestone Payments previously paid with respect to such Company Common Stock Option underlying such Eligible Option.

•

Each Company Stock Option that has a per share exercise price equal to or greater than $2.71 will be canceled without any consideration payable therefor.

•

Each restricted stock award (each such award, a “Company Restricted Stock Award”) granted under the Company Equity Plan that is outstanding immediately prior to the Effective Time will be cancelled and automatically converted into the right to receive (without interest and subject to any required withholding) (i) an amount in cash from Harmony or the Surviving Corporation equal to the Closing Amount and (ii) one CVR.

•

On August 11, 2023, the last full day of trading before the public announcement of the execution of the Merger Agreement, the reported closing price of the Shares on Nasdaq was $0.339 per Share. On August 25, 2023, the last full day of trading before commencement of the Offer, the reported closing price of the Shares on Nasdaq was $1.325 per Share. We encourage you to obtain a recent market quotation for the Shares before deciding whether to tender your Shares.

•

No appraisal rights will be available to holders of Shares who tender such Shares in connection with the Offer. However, if Purchaser purchases Shares pursuant to the Offer and the Merger is completed, holders of Shares immediately prior to the Effective Time who (i) did not tender their Shares in the Offer, (ii) follow the procedures set forth in Section 262 of the DGCL and (iii) do not thereafter lose their appraisal rights (by withdrawal, failure to perfect or otherwise), in each case in accordance with the DGCL, will be entitled to have their Shares appraised by the Delaware Court of Chancery and to receive payment of the “fair value” of such Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest thereon. The “fair value” could be greater than, less than or the same as the Offer Price. More information regarding Section 262 of the DGCL, including how to access it without subscription or cost, is set forth in Zynerba’s Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed to Zynerba stockholders together with the Offer materials (including this Offer to Purchase and the related Letter of Transmittal).

•

You may call MacKenzie Partners, Inc., the information agent for the Offer (the “Information Agent”), toll free at (800) 322-2885. See the back cover of this Offer to Purchase for additional contact information for the Information Agent.

(i)

if, at the scheduled Expiration Time, any Offer Condition (as defined in Section 15 — “Conditions of the Offer”) has not been satisfied (subject to the right of Harmony to waive any Offer Condition, other than the Minimum Condition and Termination Condition), Purchaser may, and at the request of Zynerba, Purchaser will, extend the Offer for one or more consecutive increments of up to ten (10) business days each (or such longer period as may be agreed by the Zynerba and Harmony), until such time as such conditions have been satisfied or waived, to the extent permitted; and

(ii)

Purchaser will extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC, the staff thereof or Nasdaq applicable to the Offer.

(i)

decrease the Closing Amount or Offer Price, decrease the number of CVRs issued per share of common stock, or change the form of consideration payable in the Offer;

(ii)

impose any additional condition to the Offer beyond the Offer Conditions;

(iii)

decrease the number of Shares sought pursuant to the Offer;

(iv)

amend, modify or waive the Minimum Condition or the Termination Condition;

(v)

amend, modify, or supplement any of the terms of the Offer or the Offer Conditions in any manner adversely affecting any of the holders of Shares or that could reasonably be expected to have an adverse effect on any of the holders of Shares or prevent or materially delay the consummation of the Offer or prevent, materially delay or materially impair the ability of Harmony or Purchaser to consummate the Offer, the Merger or the other Transactions;

(vi)

terminate the Offer, accelerate, extend or otherwise change the Expiration Time (except as required or expressly permitted by the Merger Agreement) or provide any subsequent offering period; or

(vii)

amend or modify the terms of the CVRs or the CVR Agreement; or

(viii)

take any action that would result in the Merger not being permitted to be effected pursuant to Section 251(h) of the DGCL.

		High				Low
2023
Second Quarter		$	0.443			$	0.300
First Quarter		$	0.700			$	0.390
2022
Fourth Quarter		$	0.830			$	0.490
Third Quarter		$	1.390			$	0.732
Second Quarter		$	2.105			$	0.836
First Quarter		$	3.085			$	1.810
2021
Fourth Quarter		$	4.355			$	2.840
Third Quarter		$	5.390			$	3.664
Second Quarter		$	6.070			$	3.680
First Quarter		$	9.000			$	3.230

(i)

decrease the Closing Amount or Offer Price, decrease the number of CVRs issued per share of common stock, or change the form of consideration payable in the Offer;

(ii)

impose any additional condition to the Offer;

(iii)

decrease the number of Shares sought pursuant to the Offer;

(iv)

amend, modify or waive the Minimum Condition or the Termination Condition;

(v)

amend, modify, or supplement any of the terms of the Offer or the Offer Conditions in any manner adversely affecting any of the holders of Shares or reasonably be expected to prevent or materially delay the consummation of the Offer or prevent, materially delay or materially impair the ability of Harmony or Purchaser to consummate the Offer, the Merger or the other Transactions;

(vi)

terminate the Offer or accelerate, extend or otherwise change the Expiration Time except as required or expressly permitted by the Merger Agreement or provide any subsequent offering period; or

(vii)

amend or modify the terms of the CVRs or the CVR Agreement; or

(viii)

take any action that would result in the Merger not being permitted to be effected pursuant to Section 251(h) of the DGCL.

(i)

if, at the scheduled Expiration Time, any Offer Condition (as defined in Section 15 — “Conditions of the Offer”) has not been satisfied (subject to the right of Harmony to waive any Offer Condition, other than the Minimum Condition and Termination Condition), Purchaser may, and at the request of Zynerba, Purchaser will, extend the Offer for one or more consecutive increments of up to ten (10) business days each (or such longer period as may be agreed by the Zynerba and Harmony), until such time as such conditions have been satisfied or, if permissible, waived; and

(ii)

Purchaser will extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC, the staff thereof or Nasdaq applicable to the Offer.

•

corporate organizations, good standing of Zynerba and its subsidiary and organizational documents of Zynerba and its subsidiary;

•

corporate authority of Zynerba to enter into the Merger Agreement and to consummate the Transactions, and due execution and delivery of the Merger Agreement;

•

capitalization and equity securities of Zynerba and its subsidiary;

•

absence of violations of organizational documents, applicable laws and contracts as a result of the Transactions, including the Offer and the Merger;

•

required consents, approvals and filings as a result of the Transactions, including the Offer and the Merger;

•

timely filing of SEC filings, accuracy and completeness of the SEC filings and absence of certain SEC investigations;

•

preparation of financial statements in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis, maintenance of system of internal control over financial reporting and disclosure controls and off-balance sheet arrangements;

•

absence of certain changes and events since March 31, 2023;

•

compliance with law;

•

owned and leased tangible assets and real property;

•

tax matters;

•

material contracts and commitments;

•

intellectual property rights;

•

absence of material litigation;

•

insurance matters;

•

employee benefit plan matters;

•

environmental matters;

•

employment and labor matters;

•

compliance with the Federal Food, Drug and Cosmetic Act of 1938, the regulations of the U.S. Food and Drug Administration, health law and regulations of the applicable regulatory agencies that are applicable to Zynerba and its product candidates and possession of necessary permits;

•

compliance with privacy laws;

•

compliance with anti-corruption and money laundering laws, trade controls and sanctions;

•

financial advisors and brokers;

•

absence of anti-takeover agreements or plans and exemption from the takeover laws of Delaware, including Section 203 of the DGCL;

•

receipt of fairness opinion from the financial advisor; and

•

no vote required or stockholder consents needed to authorize the Merger Agreement or for the consummation of the Transactions.

•

changes in Zynerba’s stock price or trading volume;

•

any failure by Zynerba to meet, or changes to, published or internal estimates, projections, expectations, budgets, guidance, milestones, or forecasts of revenue, earnings, cash burn-rate, cash flow, cash position, or any other financial or performance measures or operating statistics (whether made by Zynerba or any Third Parties);

•

any continued losses from operations or decreases in the cash balances of the Acquired Companies;

•

changes occurring after the date hereof in the financial, credit, banking, capital, or currency markets in the United States or any other country or region in the world;

•

changes in general conditions in any industry in which the Acquired Companies operate;

•

changes in political conditions in the United States or any other country or region in the world;

•

acts of hostilities, war, sabotage, cyberterrorism, terrorism, or military actions (including any outbreak, escalation, or general worsening of any such acts of hostilities, war, sabotage, cyberterrorism, terrorism, or military actions) in the United States or any other country or region in the world;

•

earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires, weather conditions, epidemics, pandemics, quarantines, plagues, other outbreaks of illness or public health events, or other natural or man-made disasters or acts of God in the United States or any other country or region in the world;

•

changes or proposed changes occurring after the date hereof in applicable Law or other legal or regulatory conditions;

•

changes occurring after the date hereof in GAAP or other accounting standards applicable to Zynerba;

•

the negotiation, execution, announcement or performance of this Agreement or the pendency or consummation of the Transactions, or the identity of Harmony or any of its Affiliates as the acquiror of Zynerba (or any facts and circumstances concerning Harmony or any of its Affiliates);

•

any Transaction Litigation or any demand or Legal Proceeding for appraisal of the fair value of any Shares pursuant to the DGCL in connection herewith; and

•

(A) any delay (I) in any ongoing clinical trial or (II) by Zynerba in making any currently planned application for marketing approval with respect to any Company Product (it being understood that, in the case of either subclause (I) or (II), any underlying facts giving rise or contributing to any such delay that are not otherwise excluded from the definition of “Company Material Adverse Effect” may be taken into account in determining whether there has been a Company Material Adverse Effect), and in each case other than arising out of or relating to any clinical hold or similar adverse event, or (B) any changes in the approved labeling of any product that is a competitor to a Company Product or any legal action taken with respect to any product that is a competitor to a Company Product.

•

corporate organization and good standing of Harmony and Purchaser;

•

corporate authority of Harmony and Purchaser to enter into the Merger Agreement and the CVR Agreement and to consummate the Transactions, and the due execution and delivery of the Merger Agreement and, when executed and delivered, the CVR Agreement;

•

absence of violations of organizational documents or applicable laws as a result of the Transactions, including the Offer and the Merger;

•

required consents and approvals and filings as a result of the Transactions, including the Offer and the Merger;

•

absence of litigation;

•

financial advisors and brokers; and

•

sufficiency of funds to consummate the Transactions, including the Offer and the Merger.

(i)

amend the organizations documents of Zynerba or its subsidiary;

(ii)

declare, set aside or pay any dividends, split, combine or reclassify any capital stock of the Acquired Companies, or purchase, redeem, or otherwise acquire, or offer to purchase, redeem, or otherwise acquire, any securities;

(iii)

issue, deliver, sell, grant, pledge, transfer, subject to any Encumbrance or dispose of any securities;

(iv)

adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization, or other reorganization;

(v)

take certain actions with respect to Zynerba employees, including increase compensation, hire or terminate employees at the level of Vice President or higher, grant equity incentive awards, and enter into, modify or terminate any employment, consulting, change in control, severance or similar agreement of officers at the level of Vice President or higher;

(vi)

acquire any business, assets or capital stock of any Person;

(vii)

sell, lease, license, pledge, transfer, subject to any Encumbrance or otherwise dispose of any intellectual property, material assets or material properties;

(viii)

change any of the accounting methods, except for such changes that are required by GAAP or Regulation S-X promulgated under the Exchange Act;

(ix)

incur or assume any indebtedness for borrowed money, or assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for indebtedness for borrowed money of any other Person;

(x)

incur certain capital expenditures;

(xi)

institute or settle certain Legal Proceedings;

(xii)

commence any preclinical or clinical development, study, trial or test with respect to any products or product candidates;

(xiii)

fail to file, report, complete or otherwise make any submission required under Healthcare Laws;

(xiv)

adopt, modify, or terminate any collective bargaining or other agreement of any type with a Union, in each case whether written or oral;

(xv)

enter into or amend or modify in any material respect, or consent to the termination of, any Company Material Contract, any Contract with respect to any joint venture, strategic partnership or alliance, or any agreement concerning Leased Real Property or any other Contract that, if in effect as of the date hereof would constitute a Material Contract hereunder;

(xvi)

except as otherwise required by Law, (A) fail to file any income or other material Tax Return of the Acquired Companies when due (after giving effect to any properly obtained extensions of time in which to make such filings), (B) make or change any material Tax election in a manner which is materially inconsistent with past practice, or change any Tax accounting period or method of Tax accounting of the Acquired Companies, (C) amend any income or other material Tax Return, (D) settle or compromise any material Tax audit or Tax proceeding relating to the Acquired Companies, (E) change the U.S. federal income tax classification, or (F) agree to an extension or waiver of the statute of limitations in respect of any Tax of the Acquired Companies;

(xvii)

adopt or implement any stockholder rights plan or similar arrangement;

(xviii)

engage in any transaction with, or enter into any agreement, arrangement or understanding with, any Affiliate of Zynerba or other Person covered by Item 404 of Regulation S-K promulgated by the SEC that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC; or

(xix)

authorize, commit or agree to take any of the foregoing actions.

•

solicit, initiate or encourage the submission or announcement of Acquisition Proposal (as described below);

•

furnish any non-public information regarding the Company to any Person for the purpose of encouraging, or in response to, an Acquisition Proposal;

•

engage in discussions or negotiations with any Person with respect to an Acquisition Proposal or that would reasonably likely result in an Acquisition Proposal;

•

adopt, approve or enter into any letter of intent, acquisition agreement, agreement in principle or other agreement with respect to an Acquisition Proposal; or

•

waive or release any Person from, or fail to use reasonable best efforts to enforce, any standstill agreement or any standstill provisions of any agreement in respect of a potential Acquisition Proposal.

•

withdraw, modify, amend or qualify the Zynerba Board’s recommendation that holders of the Shares accept the Offer and tender their Shares pursuant to the Offer (the “Zynerba Board Recommendation”);

•

approve, adopt, recommend or declare advisable an Acquisition Proposal (together with the Zynerba Board Recommendation, a “Change in Recommendation”); or

•

cause Zynerba to enter into any contract (other than an Acceptable Confidentiality Agreement entered into in compliance with the Merger Agreement) contemplating an Acquisition Proposal (such contract, an “Alternative Acquisition Agreement”).

(i)

make a Change in Recommendation in response to an Acquisition Proposal and/or cause Zynerba to enter into an Alternative Acquisition Agreement concerning an Acquisition Proposal if: (A) such Acquisition Proposal did not arise out of or relate to a breach of the No Solicitation provision of the Merger Agreement; (B) the Zynerba Board or a committee thereof determines in good faith (I) after consultation with Zynerba’s outside legal counsel and financial advisor, that the Acquisition Proposal constitutes a Superior Proposal and (II) after consultation with Zynerba’s outside legal counsel, that in light of such Acquisition Proposal, a failure to make a Change in Recommendation and/or to cause Zynerba to enter into an Alternative Acquisition Agreement concerning such Acquisition Proposal would be inconsistent with the Zynerba Board’s fiduciary obligations; (C) Zynerba delivers to Harmony a written notice that states that the Zynerba Board intends to make a Change in Recommendation and, in the event the Zynerba Board intends to enter into an Alternative Acquisition Agreement, incudes a summary of the material terms and conditions of the Alternative Acquisition Agreement; (D) during the Notice Period, Zynerba will have made its representatives available to negotiate with Harmony regarding a possible amendment of the Merger Agreement or the Offer or a possible alternative transaction so that the Acquisition Proposal ceases to be a Superior Proposal; (E) after the expiration of the Notice Period, the Zynerba Board or a committee thereof determines in good faith, after taking into account any amendments or adjustments to the Merger Agreement and the Offer that Harmony and Purchaser have agreed in writing as a result of the negotiations, that (I) after consultation with Zynerba’s outside legal counsel and financial advisor, the Acquisition Proposal still constitutes a Superior Proposal, and (II) after consultation with Zynerba’s outside legal counsel, the failure to make a Change in Recommendation and/or enter into the Alternative Acquisition Agreement would be inconsistent with the Zynerba Board’s fiduciary obligations, and (F) in the event that Zynerba intends to enter into an Alternative Acquisition Agreement, Zynerba terminates the Merger Agreement in accordance with the terms thereof; and

(ii)

make a Change in Recommendation not related to an Acquisition Proposal if: (A) any Intervening Event arises after the date hereof; (B) the Zynerba Board or a committee thereof determines in good faith, after consultation with its outside legal counsel, that, in light of such Intervening Event, a failure to effect a Change in Recommendation would be in consistent with the Zynerba Board’s fiduciary obligations; (C) such Change in Recommendation is not effected prior to the fifth (5th) day after Harmony receives written notice from Zynerba confirming that the Zynerba Board intends to effect such Change in Recommendation; (D) during the Notice Period, Zynerba engages in good faith negotiations with Harmony to amend or adjust the Merger Agreement or the Offer or enter into an alternative transaction; and (E) at the end of such Notice Period, the Zynerba Board or a committee thereof determines in good faith, after consultation with its outside legal counsel and after taking into account any amendments or adjustments to this Agreement and the Offer that Harmony and Purchaser have irrevocably agreed in writing to make as a result of the negotiations, that, in light of such Intervening Event, a failure to effect a Change in Recommendation would be inconsistent with the Company Board’s fiduciary obligations.

(i)

No order, injunction or degree issued by any governmental authority of competent jurisdiction preventing the consummation of the Merger will be in effect; and

(ii)

Purchaser will have irrevocably accepted for purchase the Shares validly tendered (and not validly withdrawn) pursuant to the Offer.

•

an aggregate milestone payment of $15,000,000, payable upon the completion of the last patient’s last visit in Zynerba’s RECONNECT (ZYN2-CL-033) clinical trial (the “Pivotal Study”) for Zygel™ (ZYN002) (the “Product”) by or before June 30, 2026;

•

upon the completion of the Pivotal Study and a finding that the data from the Pivotal Study meets the primary end point(s) with statistical significance as set forth in the protocol of the Pivotal Study (“Milestone 2”), an aggregate milestone payment of :

•

an aggregate milestone payment of $35,000,000, payable upon the achievement of approval from the U.S. Food and Drug Administration of the New Drug Application (“NDA Approval”) with respect to the Product in Fragile X syndrome (“Milestone 3”);

•

an aggregate milestone payment of $15,000,000, payable upon the achievement of NDA Approval with respect to the Product in the Second Indication (as defined in the CVR Agreement);

•

an aggregate milestone payment of $15,000,000, payable upon the achievement of worldwide aggregate Net Sales (as defined in the CVR Agreement) of the Product (inclusive of all indications) of at least $250,000,000, calculated on a cumulative basis for all Calendar Years (as defined in the CVR Agreement) (or portion thereof) if Milestone 3 is achieved by or before December 31, 2030 (“Milestone 5”); and

•

an aggregate milestone payment of $30,000,000, payable upon the achievement of worldwide aggregate Net Sales of the Product (inclusive of all Indications) of at least $500,000,000, calculated on a cumulative basis for all Calendar Years (or portion thereof) and inclusive of all Net Sales applied toward achievement of Milestone 5 if Milestone 3 is achieved by or before December 31, 2030.

•

by will or intestacy upon death of a holder;

•

by instrument to an inter vivos or testamentary trust in which the CVRs are to be passed to beneficiaries upon the death of the settlor;

•

pursuant to a court order;

•

by operation of law (including by consolidation or merger of the holder) or if effectuated without consideration in connection with the dissolution, liquidation or termination of any holder that is a corporation, limited liability company, partnership or other entity;

•

in the case of CVRs held in book-entry or other similar nominee form, from a nominee to a beneficial owner and, if applicable, through an intermediary;

•

if the holder is a partnership or limited liability company, a distribution by the transferring partnership or limited liability company to its partners or members, as applicable; or

•

to Harmony or one of its affiliates in connection with the abandonment of such CVR by the applicable holder in accordance with the CVR Agreement.

(i)

there will have been validly tendered and not validly withdrawn prior to the Expiration Date that number of Shares that, considered together with all other Shares, if any, beneficially owned by Harmony and its controlled affiliates, represent one more than 50% of the sum of the total number of Shares outstanding at the time of the expiration of the Offer (such condition, the “Minimum Condition”);

(ii)

the Merger Agreement shall not have been terminated in accordance with its terms (the “Termination Condition”);

(iii)

no Governmental Entity of competent and applicable jurisdiction shall have enacted, issued, promulgated, enforced or entered any Order or Law that is in effect and restrains, enjoins or otherwise prohibits or makes illegal consummation of the Offer or the Merger (the “Order Condition”);

(iv)

(A) the representations and warranties in the Merger Agreement of Zynerba concerning Organization and Good Standing, Authority and Binding Nature of Agreement, Tax Matters, Non-Contravention and Consents, and Brokers are true and correct in all material respects as of the date of the Merger Agreement and as of the Expiration Date; (B) the representations and warranties of Zynerba concerning Capitalization are true and correct in all respects (other than de minimis inaccuracies or inaccuracies resulting from actions permitted by the Merger Agreement or consented to by Harmony) as of the date of the Merger Agreement and as of the Expiration Date; and (C) all other representations and warranties of Zynerba set forth in the Merger Agreement are true and correct in all respects (without giving effect to any limitation indicated by the words “Company Material Adverse Effect,” “in all material respects,” “in any material respect,” “material,” or “materially”) as of the date of the Merger Agreement and as of the Expiration Date, except in the case of this clause (C) only where the failure of such representations and warranties of the Company to be so true and correct would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (clauses (A) through (C), collectively, the “Representations Condition”);

(v)

Zynerba will have performed or complied with in all material respects the obligations or covenants it is required to perform or comply with under the Merger Agreement prior to the Expiration Date (the “Covenants Condition”);

(vi)

since the date of the Merger Agreement, there will not have occurred nor shall there be a continuing Company Material Adverse Effect or any event, condition, change, occurrence, development, or effect that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; or

(vii)

Zynerba will have delivered to Harmony, dated as of the Expiration Date, a certificate signed on behalf of Zynerba by an executive officer of Zynerba, certifying to the effect that the conditions set forth in paragraphs (v) and (vi) immediately above have been satisfied.

•

within the later of the consummation of the Offer, which occurs when Purchaser has accepted for payment Shares tendered into the Offer following the Expiration Time, and twenty (20) days after the date of mailing of the Schedule 14D-9, deliver to Zynerba at 80 W. Lancaster Avenue, Suite 300, Devon, Pennsylvania 19333, Attention: Albert P. Parker, Chief Legal Officer, a written demand for appraisal of Shares held, which demand must reasonably inform Zynerba of the identity of such stockholder or beneficial owner and that such stockholder or beneficial owner is demanding appraisal;

•

not tender such stockholder’s or beneficial owner’s Shares in the Offer;

•

continuously hold of record or beneficially own, as applicable, the Shares from the date on which the written demand for appraisal is made through the Effective Time; and

•

comply with the procedures of Section 262 of the DGCL for perfecting appraisal rights thereafter.

Name and Position		Present Principal Occupation or Employment; Material Positions Held During the Last Five Years; Citizenship (if not United States)
Sandip Kapadia*		Sandip Kapadia has served on Xylophone’s board of directors, and as Chief Executive Officer and Chief Financial Officer, since August 2023. Mr. Kapadia also serves as Harmony’s Chief Financial Officer. Mr. Kapadia previously served as Chief Financial Officer at Intercept Pharmaceuticals, Inc. (“Intercept”), a biopharmaceutical company, from July 2016 to March 2021. Prior to joining Intercept, Mr. Kapadia served as Vice President and Chief Financial Officer at Sandoz Inc., a division of Novartis AG, from July 2014 to June 2016. CEO and Director
Christian Ulrich*		Christian Ulrich has served on Xylophone’s board of directors, and as Secretary, since August 2023. Mr. Ulrich also serves as Harmony’s General Counsel and Corporate Secretary.

Name and Position		Present Principal Occupation or Employment; Material Positions Held During the Last Five Years; Citizenship (if not United States)
Jeffrey S. Aronin*		Jeffrey S. Aronin founded Harmony and has served on its board of directors since October 2017, and as Executive Chairman since January 2023. From October 2017 to January 2023, he served as non-executive Chairman. In June 2017, Mr. Aronin founded Paragon Biosciences which he leads as Chairman and Chief Executive Officer. From January 2011 to May 2017, Mr. Aronin was the Chairman and Chief Executive Officer of Marathon Pharmaceuticals, LLC, a private research-based biopharmaceutical company that developed drugs for rare diseases, which was subsequently acquired by PTC Therapeutics. Prior to that, Mr. Aronin founded Ovation Pharmaceuticals, Inc., or Ovation, where he served as President and Chief Executive Officer from 2000 to 2009. After Lundbeck A/S acquired Ovation in 2009, Mr. Aronin served as Chief Executive Officer of Lundbeck Inc. until 2011.

Jeffrey Dayno, M.D.*		Jeffrey Dayno, M.D., has served as Harmony’s President and Chief Executive Officer since January 2023, in both interim and permanent capacities. Dr. Dayno also served as Chief Medical Officer of Eaglet Co., now known as Zyla Life Sciences, from July 2014 to October 2017. Prior to joining Eaglet Co., Dr. Dayno served as Vice President of Global Medical Affairs at ViroPharma, Inc., from August 2011 to January 2014, at which time it was acquired by Shire Pharmaceuticals. Since March 2016, Dr. Dayno has served on the board of directors of Atrin Pharmaceuticals, LLC, a private biopharmaceutical company. Dr. Dayno completed his residency in neurology at Temple University Hospital then completed a fellowship in stroke and cerebrovascular diseases at Henry Ford Hospital in Detroit, Michigan, as part of a National Institutes of Health program grant in stroke.
Antonio Gracias*		Antonio J. Gracias has served on Harmony’s board of directors since September 2017. Since September 2001, Mr. Gracias has been Chief Executive Officer and Chief Investment Officer of Valor Management LLC, or Valor, a private equity firm. Mr. Gracias has served as a director of Castle Creek Pharmaceuticals since September 2018. He also served as a director of Marathon Pharmaceuticals, LLC from November 2013 until its acquisition by PTC Therapeutics in May 2017, and SolarCity Corporation from 2012 to 2016. Mr. Gracias has served on the board of directors of Tesla, Inc., since May 2007, including as Lead Independent Director from September 2010 to April 2019. Mr. Gracias also serves as director of SpaceX.
R. Mark Graf*		R. Mark Graf has served as a member of Harmony’s board of directors since November 2020. Mr. Graf served as Chief Financial Officer of Discover Financial Services, a publicly traded financial services company, from April 2011 to September 2019. Prior to joining Discover, he served as an Investment Advisor at Aquiline Capital Partners from 2008 to 2011 and a Partner at Barrett Ellman Stoddard Capital Partners from 2006 to 2008. Mr. Graf served as Chief Financial Officer of Fifth Third Bancorp from 2004 to 2006, and was its Corporate Treasurer from 2001 to 2004. He also served in various roles at AmSouth Bancorporation from 1994 to 2001.
Jack Bech Nielsen*		Jack B. Nielsen has served on Harmony’s board of directors since September 2017. Mr. Nielsen has served as a Managing Partner at Vivo Capital, LLC, a healthcare-focused investment firm, since August 2017, and as a consultant at Vivo Capital from March 2017 to July 2017. From April 2001 to February 2017, Mr. Nielsen worked within the Novo Holdings A/S venture activities in several roles, most recently being employed as a Senior Partner. Mr. Nielsen has served on the board of directors of Reata Pharmaceuticals, Inc., a public pharmaceutical company, since June 2006. He has also served on the board of directors of Aligos Therapeutics, Inc. since August 2018, MacuLogix, Inc. since March 2019, and ALX Oncology Limited since April 2020.
Juan A. Sabater*		Juan A. Sabater has served on Harmony’s board of directors since 2017. Mr. Sabater has served in various roles at Valor since 2010, most recently as President. Prior to joining Valor, Mr. Sabater was a Managing Director of Goldman Sachs & Co. in their Investment Banking Division, from 1998 to 2006. He also currently serves on the board of several private companies and organizations including The Frick Collection and Girls Who Code Inc. Mr. Sabater currently serves as the Co-Chairman of Augeo Affinity Marketing, Inc., and also sits on the board of trustees of The Hewitt School.

Gary Sender*		Gary Sender has served as a member of Harmony’s board of directors since August 2020. Mr. Sender served as Chief Financial Officer of Nabriva Therapeutics plc, or Nabriva, a publicly traded biopharmaceutical company engaged in the commercialization and development of innovative anti-infective agents to treat serious infections, from May 2016 to March 2021. Prior to joining Nabriva, Mr. Sender served as Chief Financial Officer and Executive Vice President at Synergy Pharmaceuticals Inc., or Synergy, a publicly traded biopharmaceutical company, from November 2015 to April 2016. Prior to joining Synergy, from August 2009 to June 2015, Mr. Sender served as Senior Vice President, Finance at Shire plc, or Shire, a biopharmaceutical company since acquired by Takeda Pharmaceutical Company Limited, supporting its Specialty Pharmaceuticals business and subsequently its Global Commercial businesses. Prior to joining Shire, Mr. Sender served as founding Chief Financial Officer of Tengion, Inc., a regenerative medicine company, from August 2004 to July 2009.
Linda Szyper*		Linda Szyper has served on Harmony’s board of directors since November 2021. Ms. Szyper currently serves as an independent life sciences consultant. Previously, she served as the Chief Operating Officer of McCann Health, a global healthcare communications company, from January 2018 to October 2021. Prior to joining McCann Health, Ms. Szyper served as the Chief Commercial Officer of Circassia, a publicly traded biotechnology and medical device company headquartered in the United Kingdom, from October 2014 to March 2017, and as the Chief Development Officer of Publicis Healthcare Communications Group, a healthcare communications network, from January 2008 to October 2014.
Andreas Wicki, Ph.DD.*		Andreas Wicki, Ph.D., has served on Harmony’s board of directors since September 2017. Dr. Wicki has served as Chief Executive Officer of HBM Healthcare Investments AG (formerly HBM BioVentures AG) since July 2001. From 1998 to 2001, Dr. Wicki was the Senior Vice President of the European Analytical Operations at MDS Inc. From 1990 to 1998, he was co-owner and Chief Executive Officer of ANAWA Laboratorien AG and Clinserve AG, two life sciences contract research companies. Dr. Wicki currently serves on the board of directors of Pacira BioSciences, Inc., a public pharmaceutical company, Buchler GmbH, HBM Healthcare Investments (Cayman) Ltd., HBM BioCapital Ltd., Viela Bio, Inc., a public clinical-stage biotechnology company, and Vitaeris, Inc., a private clinical-stage biopharmaceutical company.

Sandip Kapadia		Sandip Kapadia has served as Harmony’s Chief Financial Officer since March 2021. Mr. Kapadia previously served as Chief Financial Officer at Intercept Pharmaceuticals, Inc., a biopharmaceutical company, from July 2016 to March 2021. Prior to joining Intercept, Mr. Kapadia served as Vice President and Chief Financial Officer at Sandoz Inc., a division of Novartis AG, from July 2014 to June 2016.
Jeffrey Dierks		Jeffrey Dierks has served as Harmony’s Chief Commercial Officer since July 2018. Prior to his role as Chief Commercial Officer, Mr. Dierks served as Harmony’s Vice President of Marketing from October 2017 to July 2018. Prior to joining Harmony, Mr. Dierks served in senior marketing roles leading the U.S. Pain Care & Wakefulness portfolio from June 2014 to December 2016 and U.S. Migraine Marketing from December 2016 to October 2017 at Teva Pharmaceuticals. Before joining Teva, Mr. Dierks held commercial roles of increasing responsibility at several major pharmaceutical companies, including Janssen Pharmaceuticals Inc., Endo Pharmaceuticals and Wyeth Pharmaceuticals.
Andrew Serafin		Andrew Serafin has served as Harmony’s Chief Strategy Officer since January 2021. Previously, Mr. Serafin served as Harmony’s Chief Business Officer from December 2018 to January 2021 and as Harmony’s Senior Vice President of Business Development and Corporate Strategy from September 2017 to December 2018. Previously, Mr. Serafin served as the Vice President of Business Development at Marathon Pharmaceuticals, LLC, a private development-stage biopharmaceutical company, from August 2015 to May 2017. He also served as the Vice President of Business Development and General Counsel of AltaThera Pharmaceuticals, LLC, a private pharmaceutical company, from April 2015 to August 2015, and the Vice President of Deal Integration and Associate General Counsel of Lundbeck Inc., or Lundbeck, from July 2006 to March 2015.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
Voluntary Corporate Action: COY ZYNE
DESCRIPTION OF SHARES AND SHARE CERTIFICATES (IF ANY) TENDERED
Name(s) and Address(es) of Registered Owner(s) (If blank, please fill in exactly as name(s) appear(s) on share certificate(s))		Shares and Share Certificates (if any) Tendered (Attach additional list if necessary)
		Share Certificate Number(s)*	Total Number of Shares Represented By Shares Certificate(s)*			Number of Shares Tendered**
	Total Shares (Including Shares held electronically through the Direct Registration System at the Transfer Agent (DRS))
*  Need not be completed by book-entry shareholders. If tendering Shares represented by certificates, list each certificate on a separate line. **  Unless otherwise indicated, it will be assumed that all shares of common stock, par value $0.001 per share, of Zynerba Pharmaceuticals, Inc. represented by certificates described above are being tendered hereby. See Instruction 4.

☐	CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AND PAYING AGENT WITH DTC AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE PARTICIPANTS IN DTC MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):

	Name of Tendering Institution:
	DTC Participant Number:
	Transaction Code Number

SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5 and 6)			SPECIAL PAYMENT INSTRUCTIONS (See Instructions 1, 5 and 6)
To be completed ONLY if Share Certificate(s) not tendered or not accepted for payment and/or the check for the aggregate Common Cash Amount of Shares accepted for payment are to be delivered in the name of someone other than the undersigned. Issue to:   ‘ Check        ‘ Certificate			To be completed ONLY if Share Certificate(s) not tendered or not accepted for payment and/or the check for the aggregate Common Cash Amount of Shares accepted for payment are to be issued in the name of someone other than the undersigned. Issue to:   ‘ Check        ‘ Certificate
Name:			Name
	(Please Print)			(Please Print)
Address			Address
(Include Zip Code)			(Include Zip Code)
(Taxpayer Identification or Social Security Number) (See Specific Instructions to Internal Revenue Service Form W-9 included in this Letter of Transmittal)

IMPORTANT—SIGN HERE
(Please also complete the Internal Revenue Service Form W-9 accompanying this Letter of Transmittal or the appropriate
Internal Revenue Service Form W-8, as applicable)
(Signature of Shareholder(s))
Sign Here:
Sign Here:

Dated:

(Must be signed by registered owner(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered owner(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5. For information concerning signature guarantees, see Instruction 1.)
Name(s):
(Please Print)

Capacity (full title):

Address:
(Include Zip Code)

Daytime Area Code and Telephone Number:
Taxpayer Identification or Social Security No:
GUARANTEE OF SIGNATURE(S) (For use by Eligible Institutions only; see Instructions 1 and 5)

Name of Firm:

Address:
(Include Zip Code)

Authorized Signature:

Name:
(Please Type or Print)

Daytime Area Code and Telephone Number:

Dated:

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	Very truly yours,
	MacKenzie Partners, Inc.

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Number of Shares to be Tendered:				SIGN HERE
Shares*				Signature(s)
Account No.:
Dated:
				Please Print Name(s) and Address(es) Here
Area Code and Phone Number
Tax Identification Number or Social Security Number

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	HARMONY BIOSCIENCES HOLDINGS, INC.
	By:
	Name:
	Title:
	[RIGHTS AGENT]
	By:
	Name:
	Title:

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(a)

is known by the Receiving Party at the time of disclosure by the Disclosing Party, or that the Receiving Party independently develops or discovers after disclosure by the Disclosing Party, without the aid, application or use of any item of the Disclosing Party’s Proprietary Information, as evidenced by written records;

(b)

is now, or subsequently becomes generally known or available, through no act or failure to act on the part of the Receiving Party;

(c)

is disclosed to the Receiving Party by a third party authorized to disclose it; or

(d)

is required by Law to be disclosed; provided, that the Receiving Party shall (i) use reasonable efforts to give Disclosing Party as much prior notice of such required disclosure as circumstances permit, (ii) allow Disclosing Party to contest such disclosure or seek a protective order or similar remedy, and reasonably cooperate with Disclosing Party in such efforts, and (iii) limit the disclosure to only the information required to be disclosed.

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