| Item 1.01 | Entry Into a Material Definitive Agreement |
Loan and Security Agreement
On September 29, 2020 (the “Closing Date”), Allena Pharmaceuticals, Inc. (the “Company”) (the “Borrower”), entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Pontifax Medison Finance (Israel) L.P. and Pontifax Medison Finance (Cayman) L.P., as lenders (collectively, referred to as “Lender”), and Pontifax Medison Finance GP, L.P., in its capacity as administrative agent and collateral agent for itself and Lender (in such capacity, “Agent”).
Amount. The Loan and Security Agreement provides for a term loan or loans in an aggregate principal amount of up to $25.0 million (the “Term Loan”) subject to funding in three tranches as follows: (a) on the Closing Date, a loan in the aggregate principal amount of $10.0 million (the “Initial Loan”), (b) on and after the Closing Date until September 29, 2021, a loan in the aggregate principal amount of $5.0 million (the “Credit Line”), and (c) a loan in the aggregate principal amount of $10.0 million (the “Third Installment Loan”), subject to Borrower’s achievement of one (1) of the following milestones by no later than December 29, 2021: (i) Borrower receives non-contingent non-refundable gross proceeds from one or more equity financings and/or strategic partnerships, in each case, consummated following the Closing Date, in the aggregate amount of at least $15,000,000 for all such equity financings and strategic partnerships or (ii) the 65th patient has been enrolled in the Company’s URIROX-2 clinical trial. The Borrower intends to use the proceeds of the Term Loan for working capital purposes and general corporate purposes.
Interest Rate, Fees. The outstanding principal of the Term Loan bears an interest rate of 9.0% per annum based on a year consisting of 365 days. Interest is payable on a quarterly basis based on the principal amount outstanding during the preceding quarter. In addition, the Company is required to pay to the Lender an unused line fee of 1.0% per annum payable quarterly on the amount not withdrawn under the Credit Line and, upon withdrawal of the Third Installment Loan, the Company is required to pay a fee of 1.0% of the Third Installment Loan to Lender.
Maturity, Amortization. The maturity date of the Term Loan is 48 months after the Closing Date . The Company will repay the Term Loan in eight equal quarterly installments commencing on the first business day of the calendar quarter after the amortization date, which is September 28, 2022, and continuing on the first business day of each quarter thereafter until the maturity date of Term Loan.
Prepayment. The Borrower may, at its option, prepay amounts withdrawn in whole or in part, at any time, from time to time, without premium or penalty, upon five (5) Business Days’ written notice to Agent. In the event that the Company has entered into substantive negotiations, signed a letter of intent or received a bona fide offer to consummate a Change of Control (as such term is defined in the Loan Agreement), then the Company may not prepay the Term Loan until the earlier of the termination of such negotiations or the public announcement of the entry into a definitive agreement to consummate such Change in Control; provided that the Company may give the Lender notice of its intent to prepay the Term Loan concurrent with the closing of the Change of Control transaction at any time.
Conversion by the Lender. The Lender may, at its option, elect to convert the then outstanding Term Loan amount and all accrued and unpaid interest thereon into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The “Conversion Price” for the Initial Loan and Credit Line shall be $4.10 subject to certain customary adjustments as specified in the Loan and Security Agreement. The Conversion Price for the Third Installment Loan will equal the higher of: (i) $4.10 and (ii) a price equal to 2 times the average closing price of the Company’s common stock during the 30 trading days prior to the date on which the Third Installment Loan becomes available for withdrawal.
Conversion by the Company. The Company shall have the right to convert at any time all or any portion of the then outstanding Term Loan and all accrued and unpaid interest thereon into shares of Common Stock at the applicable Conversion Price, subject to fulfilment of all of the following conditions: (i) the shares of Common Stock issuable upon conversion are unrestricted and freely tradable securities if held by a person that is not an affiliate (and has not been affiliate at any time during the three months preceding any such sale) of the Company pursuant to Rule 144 under the Securities Act or under an effective registration statement under the Securities Act, (ii) during a period of 30 consecutive trading days prior to the date on which the Company gives notice of the exercise of its conversion right, the closing price of the Common Stock was greater than 1.4 times the Conversion Price applicable to the Term Loan converted on at least 20 trading days, including on the trading day preceding the date on which the Company gives notice of the exercise of its conversion right, and (iii) the number of shares of Common Stock issuable upon conversion by the Company shall not exceed the average weekly number of traded shares on the stock market during the four weeks immediately preceding the date on which the Company gives notice of the exercise of its conversion rights. The Company may only effect a conversion once every four weeks.
Security. The Borrower’s obligations are secured by a security interest, senior to any current and future debts and to any security interest, in all of Borrower’s right, title, and interest in, to and under all of Borrower’s property and other assets, other than its intellectual property and other limited exceptions specified in the Loan and Security Agreement.
Covenants; Representations and Warranties; Other Provisions. The Loan and Security Agreement contains customary representations, warranties and covenants, including covenants by the Borrower limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes.
