On August 19, 2024, Phathom Pharmaceuticals, Inc. (“Phathom” or the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Evercore Group L.L.C., Stifel, Nicolaus & Company, Incorporated and Guggenheim Securities, LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale of (i) 8,695,652 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at an offering price of $11.50 per share, and (ii) with respect to certain investors, pre-funded warrants to purchase an aggregate of 2,608,922 shares of Common Stock at a price of $11.499 per pre-funded warrant (the “Pre-Funded Warrants”), which represents the per share price for the Shares less a nominal $0.001 per share exercise price for each Pre-Funded Warrant. The net proceeds to the Company from the Offering are expected to be approximately $121.7 million, before deducting underwriting discounts and commissions and estimated offering expenses. The offering is expected to close on August 20, 2024, subject to the satisfaction of customary closing conditions.
Each Pre-Funded Warrant will have an exercise price of $0.001 per share of Common Stock, will be immediately exercisable on the date of issuance and will not expire. 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, which, upon giving effect to such exercise, would cause a holder (together with its affiliates) to own more than a specified beneficial ownership limitation of 19.99% (or such other percentage that was elected by such holder prior to the issuance of the Pre-Funded Warrants) 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 Pre-Funded 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 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, as well as upon any distribution of assets, including cash, stock or other property, to Company’s stockholders.
In the event of certain fundamental transactions (as described in the Pre-Funded Warrants), a holder of Pre-Funded Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or property that such holder would have received had they exercised in full the Pre-Funded Warrants immediately prior to such fundamental transaction without regard to any limitations on exercise contained in the Pre-Funded Warrants.
The offering is being made pursuant to the Company’s shelf registration statement on Form S-3 (Registration Statement No. 333-275431), including the prospectus included therein, previously filed with and declared effective by the Securities and Exchange Commission (the “SEC”), and a prospectus supplement and the accompanying prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”).
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, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties.
The foregoing description of the Underwriting Agreement and the Pre-Funded Warrants are not complete and are qualified in their entirety by reference to the full text of the Underwriting Agreement and form of Pre-Funded Warrant, copies of which are filed as Exhibit 1.1 and Exhibit 4.1, respectively to this report and which are incorporated by reference herein. A copy of the opinion of Latham & Watkins LLP, relating to the legality of the issuance and sale of the Shares and Pre-Funded Warrants in the Offering is attached as Exhibit 5.1 to this report.
The Company issued a press release on August 19, 2024 announcing the pricing of the offering, which is attached as Exhibit 99.1 to this report.
