| Item 1.01 | Entry Into a Material Definitive Agreement. |
On September 10, 2020, Spero Therapeutics, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Cowen and Company, LLC and Evercore Group L.L.C., as representatives of the several underwriters named therein (the “Underwriters”), relating to the underwritten public offering of (i) an aggregate of 4,785,000 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), and (ii) an aggregate of 3,215,000 shares of newly designated Series D Convertible Preferred Stock, $0.001 par value per share (“Series D Preferred Stock”), which is referred to herein as the “Offering”. The price to the public in the Offering was $10.00 per share with respect to the Common Stock and the Series D Preferred Stock. In addition, under the terms of the Underwriting Agreement, the Company granted the Underwriters an option, exercisable for 30 days, to purchase up to 1,200,000 additional shares of Common Stock.
The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), other obligations of the parties and termination provisions. The Offering was made pursuant to the Company’s effective registration statement on Form S-3 (Registration Statement No. 333-228661) previously filed with the U.S. Securities and Exchange Commission (“SEC”) and a related prospectus supplement and accompanying prospectus.
The net proceeds to the Company from the Offering are expected to be approximately $74.8 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company and assuming the Underwriters’ option to purchase additional shares of Common Stock is not exercised.
The Offering is scheduled to close on or about September 15, 2020, subject to customary closing conditions.
The foregoing description of the terms of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the Underwriting Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
A copy of the opinion of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C. relating to the legality of the issuance and sale of the shares in the Offering is attached hereto as Exhibit 5.1.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Effective September 15, 2020, immediately prior to the closing of the Offering, the Company designated 3,215,000 shares of its authorized and unissued preferred stock as Series D Preferred Stock, pursuant to a Certificate of Designation of Preferences, Rights and Limitations of Series D Preferred Stock (the “Certificate of Designation”) filed with the Delaware Secretary of State on September 14, 2020. The shares of Series D Preferred Stock are convertible on a one-to-one basis into shares of Common Stock (subject to adjustment as provided in the Certificate of Designation) at any time at the option of the holder, provided that the holder will be prohibited from converting the Series D Preferred Stock into shares of Common Stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of shares of Common Stock then issued and outstanding, subject to certain exceptions. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series D Preferred Stock will receive a payment equal to $0.001 per share of Series D Preferred Stock before any proceeds are distributed to the holders of Common Stock and pari passu with any distributions to the holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. Shares of Series D Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series D Preferred Stock will be required to amend the terms of the Series D Preferred Stock. Shares of Series D Preferred Stock will be entitled to receive any dividends payable to holders of Common Stock, and will rank:
| | • | | senior to all of the Common Stock; |
| | • | | senior to any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms junior to the Series D Preferred Stock; |
| | • | | on parity with all shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms on parity with the Series D Preferred Stock; and |
| | • | | junior to any class or series of capital stock of the Company created after the designation of the Series D Preferred Stock specifically ranking by its terms senior to the Series D Preferred Stock; |
in each case, as to distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntarily or involuntarily and/or the right to receive dividends.
