| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 11, 2020, Phathom Pharmaceuticals, Inc. (the “Company”) entered into the first amendment (the “Amendment”) to the Company’s loan and security agreement with Silicon Valley Bank (“SVB”) as administrative and collateral agent, and lenders SVB and WestRiver Innovation Lending Fund VIII, L.P. (the “Loan Agreement”). Pursuant to the Amendment, the interest-only payment period, which ends on May 31, 2021, will be extended either (i) until December 31, 2021, if the Company receives positive data from its Phase 3 clinical trial inH. pylori infection sufficient to file an NDA with the FDA; or (ii) until November 30, 2022, if the Company receives positive data from its Phase 3 clinical trials in both indications for vonoprazan sufficient to file an NDA with the FDA; provided, in each case, that the Company had drawn down an additional $25.0 million pursuant to the Loan Agreement (“Term Loan B”).
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
In May 2019, the Company borrowed $25.0 million (“Term Loan A”) pursuant to the Loan Agreement and the Company had the right to borrow an additional $25.0 million (“Term Loan B” and together with Term Loan A, the “Term Loans”). On March 16, 2020, the Company completed the draw down of Term Loan B pursuant to the Loan Agreement. Term Loans bear interest at a floating rate of the higher of the Wall Street Journal Prime rate plus 1.75% or 7.25%. The monthly payments consist of interest-only through May 31, 2021, which date is subject to extension pursuant to the First Amendment to the Loan Agreement described above. Subsequent to the interest-only period, the Term Loans will be payable in equal monthly installments of principal, plus accrued and unpaid interest through the maturity date of May 1, 2024. In addition, the Company is obligated to pay a final payment fee of 8.25% of the original principal amount of the Term Loans.
The Loan Agreement contains certain customary affirmative and negative covenants and events of default. The affirmative covenants include, among others, covenants requiring us to maintain our legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding our operating accounts. The negative covenants include, among others, limitations on our ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions. Upon the occurrence of an event of default, subject to any specified cure periods, all amounts owed by us would begin to bear interest at a rate that is 4.00% above the rate effective immediately before the event of default and may be declared immediately due and payable by SVB, as collateral agent. As of March 16, 2020, the date in which we drew down Term Loan B, we were in compliance with all applicable covenants under the Loan Agreement. The description of the Amendment contained herein does not purport to be complete, and is qualified in its entirety by reference to the complete text of the Amendment which will be filed with our Quarterly Report on Form10-Q for the period ending March 31, 2020.
The Company intends to use the proceeds of Term Loan B to fund the clinical development of vonoprazan and for working capital and general corporate purposes, includingpre-commercial activities.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
Payment of Bonuses to Named Executive Officers
On March 11, 2020, the Company’s board of directors approved a cash bonus payments for 2019 to be paid to the Company’s executive officers who were eligible for bonuses for 2019 as follows: Terrie Curran, Chief Executive Officer, $23,091, David Socks, Chief Financial Officer, $197,625, Azmi Nabulsi, M.D., M.P.H., Chief Operating Officer, $142,507, and Aditya Kohli, Ph.D., Chief Business Officer, $80,015.
