| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT |
The information set forth below in Item 8.01 of this report with respect to the pre-funded warrants to be issued and sold in the Offering (as defined below) is incorporated by reference into this Item 1.01.
| ITEM 7.01 | REGULATION FD DISCLOSURE |
On January 26, 2022, Zymeworks Inc. (“Zymeworks” or the “Company”) issued a press release announcing the filing of a preliminary prospectus supplement in connection with the Offering, which was filed with the Canadian securities regulatory authorities in Canada on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. Additionally, on January 26, 2022, Zymeworks issued a press release announcing the pricing of the Offering, which was filed with the Canadian securities regulatory authorities in Canada on SEDAR. Copies of these press releases are attached as Exhibits 99.1 and 99.2 hereto.
The information provided under this Item (including Exhibits 99.1 and 99.2 attached hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such a filing.
On January 26, 2022, Zymeworks entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC and Evercore Group L.L.C., as representatives of the several underwriters named in Schedule II thereto (the “Underwriters”), relating to the issuance and sale of 9,160,000 of the Company’s common shares and, in lieu of common shares, to certain investors, pre-funded warrants to purchase up to 3,340,000 common shares (together, the “Offered Securities”). The common shares are being offered at a price to the public of US$8.00 per share and the pre-funded warrants are being offered at a price of US$7.9999 per pre-funded warrant (the “Offering”), which will result in approximately US$93.5 million of net proceeds to the Company after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. In addition, the Company granted the Underwriters a 30-day option to purchase up to an additional 1,875,000 common shares. The Offering is expected to close on or about January 31, 2022, subject to customary closing conditions.
The Offering is being made pursuant to the Company’s effective automatic shelf registration statement on Form S-3ASR (No. 333-259970) previously filed with the Securities and Exchange Commission (“SEC”) on October 1, 2021 and a related base prospectus included in the registration statement, as supplemented by a preliminary prospectus supplement dated January 26, 2022 and a final prospects supplement dated January 26, 2022.
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, 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 a 60-day period, subject to certain exceptions.
The exercise price and the number of common shares issuable upon exercise of each pre-funded warrant is subject to appropriate adjustment in the event of certain share dividends and distributions, share splits, share combinations, reclassifications or similar events affecting the common shares.
Each pre-funded warrant will be exercisable from the date of issuance until the date the pre-funded warrant is exercised in full. Each pre-funded warrant will be exercisable, in the holder’s discretion, by (i) payment in full in immediately available funds for the number of common shares purchased upon such exercise or (ii) a cashless exercise, in which case the holder would receive upon such exercise the net number of common shares determined according to the formula set forth in the pre-funded warrant. Subject to applicable law, upon exercise of a pre-funded warrant, a holder may elect to receive the same number of common shares as the number for which the pre-funded warrant is exercisable. Under the pre-funded warrants, the Company may not effect the exercise of any pre-funded warrant, and a holder will not be entitled to exercise any portion of any pre-funded warrant that, upon giving effect to such exercise, would cause: (i) the aggregate number of common shares beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the total number of common shares outstanding immediately after giving effect to the exercise; or (ii) the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the combined voting power of all of the Company’s securities immediately outstanding after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrant, which percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 19.99% upon at least 61 days’ notice to the Company.
