| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT |
On January 22, 2020, Zymeworks Inc. (“Zymeworks” or the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with J.P. Morgan Securities LLC and Citigroup Global Markets Canada Inc. as representatives of the several underwriters named in Schedule II thereto (the “Underwriters”), relating to the issuance and sale of 4,924,729 of the Company’s common shares and, in lieu of common shares, to a certain investor,pre-funded warrants to purchase up to 1,075,271 common shares (together the “Offered Securities”). The common shares are being offered at a price to the public of US$46.50 per share and thepre-funded warrants are being offered at a price of US$46.4999 perpre-funded warrant (the “Offering”), which will result in approximately US$261.7 million of net proceeds to the Company after deducting underwriting discounts and commissions and estimated offering expenses payable by us. In addition, the Company granted the Underwriters a30-day option to purchase up to an additional 900,000 common shares to cover over-allotments, if any. The Offering is expected to close on or about January 27, 2020, subject to customary closing conditions.
The Offering is being made pursuant to the Company’s effective automatic shelf registration statement on FormS-3ASR (No.333-234517) previously filed with the Securities and Exchange Commission (“SEC”), including the prospectus, dated November 5, 2019, and the prospectus supplement, dated January 22, 2020. The offering is also being made in Canada pursuant to the Company’s prospectus supplement dated June 22, 2020 to its Canadian short form base shelf prospectus dated November 18, 2019 filed with the securities regulatory authorities in each of the provinces and territories of Canada.
The Underwriting Agreement contains customary representations, warranties and agreements by the Company, conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, and other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement were made only for the purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. In addition, pursuant to the terms of the Underwriting Agreement, the Company and the executive officers and directors of the Company have entered into“lock-up” agreements with the Underwriters, which generally prohibit the sale, transfer or other disposition of common shares of the Company or securities convertible into, exchangeable for, exercisable for or repayable with common shares of the Company for a90-day period with respect to the Company and a60-day period with respect to the Company’s executive officers and directors, subject to certain exceptions. The foregoing restrictions do not apply, among other limited exceptions, to sales of up to an aggregate of 50,000 of the Company’s common shares on the open market by all directors and employees that have entered intolock-up agreements, collectively, beginning 45 days after the date of the prospectus supplement.
The foregoing is only a brief description of the terms of the Underwriting Agreement and the transactions contemplated thereby, and is qualified in its entirety by reference to the Underwriting Agreement that is filed as Exhibit 1.1 hereto.
