| Item 1.01. | Entry into a Material Definitive Agreement. |
On July 7, 2022, Annexon, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain healthcare-focused institutional investors (the “Purchasers”). The Purchase Agreement provides for the sale and issuance by the Company of an aggregate of: (i) 9,013,834 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”), (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 24,696,206 shares of Common Stock and (iii) accompanying warrants (the “Common Warrants” and together with the Shares and the Pre-Funded Warrants, the “Securities”) to purchase up to 8,427,508 shares of Common Stock (collectively, the “Private Placement”). The combined price per Share and accompanying Common Warrant is $3.871250 and the combined price per Pre-Funded Warrant and accompanying Common Warrant is $3.870250. The Private Placement was led by Redmile Group, LLC, with participation by Adage Capital Partners LP, Bain Capital Life Sciences, Driehaus Capital Management, Fairmount, Satter Medical Technology Partners and Venrock Healthcare Capital Partners. The closing of the Private Placement is expected to occur on July 11, 2022 (the “Closing”), subject to the satisfaction of customary closing conditions. The Private Placement is being conducted in accordance with applicable Nasdaq rules and was priced to satisfy the “Minimum Price” requirements (as defined in the Nasdaq rules).
Each Pre-Funded Warrant will have an exercise price per share of $0.001 and will be immediately exercisable on the date of issuance through the date the Pre-Funded Warrants are exercised in full. Under the terms of 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 shares of Common Stock beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the total number of shares of Common Stock 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. However, any holder may increase or decrease such percentage to any other percentage not in excess of 19.99%, provided that any increase or decrease in such percentage shall not be effective until 61 days after such notice is delivered to the Company.
Each Common Warrant will have an exercise price per share of $5.806875, will be immediately exercisable on the date of issuance and will expire on June 30, 2025. Under the terms of the Common Warrants, the Company may not effect the exercise of any Common Warrant, and a holder will not be entitled to exercise any portion of any Common Warrant, which, upon giving effect to such exercise, would cause a holder (together with its affiliates) to own more than 4.99% (or, upon the election of the holder, prior to the issuance of the Common Warrant, 9.99%, 14.99% or 19.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise, as such percentage ownership is determined in accordance with the terms of the Common Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 19.99%, provided that any increase in such percentage shall not be effective until 61 days after such notice is delivered to the Company.
The exercise price and the number of shares of Common Stock issuable upon exercise of each Pre-Funded Warrant and Common Warrant will be subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Common Stock. The exercise price will not be adjusted below the par value of the Common Stock.
In the event of certain fundamental transactions (as described in the Pre-Funded Warrants and the Common Warrants), a holder of Pre-Funded Warrants or Common Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants or the Common Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Pre-Funded Warrants or Common Warrants immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the Pre-Funded Warrants or Common Warrants.
The net proceeds to the Company from the Private Placement are expected to be approximately $122.3 million, after deducting placement agent fees and estimated Private Placement expenses payable by the Company, and assuming no exercise of the Pre-Funded Warrants or the Common Warrants. The Company currently intends to use the net proceeds from the Private Placement, together with its existing cash and investments, for working capital and general corporate purposes.
The Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions.
Pursuant to the Purchase Agreement, the Company has agreed to certain restrictions on the issuance and sale of shares of the Company’s securities for a period of 60 days following the Closing, subject to certain exceptions. In addition, under the terms of the Purchase Agreement, one of the purchasers in the Private Placement will be granted certain information rights for so long as such purchaser holds shares of Common Stock and/or Pre-Funded Warrants representing, in the aggregate, at least 50% of the shares of Common Stock and/or the shares of Common Stock originally issuable pursuant to the Pre-Funded Warrants held by such purchaser as of the Closing (without giving effect to any ownership limitations in the Pre-Funded Warrants).
