| Item 1.01. | Entry into a Material Definitive Agreement. |
Securities Purchase Agreement
On November 19, 2024, Forte Biosciences, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) for a private placement (the “Private Placement”) with certain qualified institutional buyers, institutional accredited investors and certain executive officers and senior management (each, a “Purchaser” and collectively, the “Purchasers”). Pursuant to the Purchase Agreement, the Company agreed to sell to the Purchasers (i) 4,931,389 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), at a purchase price of $5.552 per Share, representing the average of the Nasdaq Official Closing Price of the Company’s Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Purchase Agreement, and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase 4,615,555 shares of Common Stock (the “Warrant Shares” and together with the Shares and the Pre-Funded Warrants, the “Securities”), at a purchase price of $5.551 per Pre-Funded Warrant, provided that each Purchaser may elect to change its allocation of Shares and Pre-Funded Warrants prior to closing. The Pre-Funded Warrants will have an exercise price of $0.001 per share of Common Stock, be immediately exercisable and remain exercisable until exercised in full. The holders of Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 19.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise or such lower percentage as determined by each Purchaser. The holders of Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice to the Company.
The Private Placement is expected to close on November 21, 2024, subject to the satisfaction of customary closing conditions. The gross proceeds of the Private Placement are expected to be approximately $53.0 million, before deducting offering expenses payable by the Company. The Company intends to use the net proceeds from the Private Placement to fund working capital and other general corporate purposes.
Certain executive officers and senior management of the Company participated in the Private Placement, purchasing approximately $475,000 of Securities in the aggregate. The participation of these executive officers in the Private Placement was disclosed to, and approved by, the Board of Directors of the Company (the “Board”) and the audit committee of the Board.
The foregoing description of the Purchase Agreement and the Pre-Funded Warrants does not purport to be complete and is qualified in its entirety by reference to the complete text of the Purchase Agreement and the form of the Pre-Funded Warrant, which are attached hereto as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K and are hereby incorporated by reference into this Item 1.01.
Registration Rights
In connection with the execution of the Securities Purchase Agreement, the Company and the Purchasers entered into a Registration Rights Agreement, dated November 19, 2024 (the “Registration Rights Agreement”), providing for the registration for resale of the Securities (including the Warrant Shares) pursuant to a registration statement (the “Registration Statement”) to be filed with the Securities and Exchange Commission (the “SEC”) within thirty (30) days following the closing of the Private Placement. The Company has agreed to use its best efforts to cause the Registration Statement to be declared effective as soon as possible, but in no event later than sixty (60) days after the closing of the Private Placement (or one hundred and twenty (120) days in the event of a full review of the Registration Statement by the SEC), and to keep the Registration Statement continuously effective from the date on which the SEC declares the Registration Statement to be effective until such date that all Registrable Securities (as such term is defined in the Registration Rights Agreement) covered by the Registration Statement have been publicly sold by the Purchasers or otherwise shall have ceased to be Registrable Securities under the Registration Rights Agreement.
The Company has granted the Purchasers customary indemnification rights in connection with the Registration Rights Agreement. The Purchasers have also granted the Company customary indemnification rights in connection with the Registration Rights Agreement.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 hereto and incorporated by reference into this Item 1.01.
Letter Agreements
In connection with, and as a condition to, the closing of the Private Placement, the Company has agreed to enter into letter agreements with each of OrbiMed Advisors LLC (“OrbiMed”) and Tybourne Strategic Opportunities Fund II, LP (“Tybourne”). Pursuant to the terms of the letter agreements, the Company has agreed that, during the period beginning ninety (90) days after the closing date of the Private Placement and ending on the three (3) year anniversary of the closing date of the Private Placement (or earlier upon OrbiMed or Tybourne, respectively, failing to meet certain ownership thresholds), if the Company’s Common Stock trades within certain specified parameters for thirty (30) consecutive trading days, each of OrbiMed and Tybourne shall be entitled to designate one individual to serve on the Board, in each case pursuant and subject to the terms of the applicable letter agreement and compliance with
