| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 28, 2021 (the “Effective Date”), 89bio, Inc. (the “Company”) and certain of its subsidiaries party thereto, as co-borrowers (together with the Company, the “Borrowers”), entered into the Third Amendment to Loan and Security Agreement (the “Amendment”) with the lenders referred to therein (the “Lenders”) and Silicon Valley Bank, as collateral agent (in such capacity, the “Collateral Agent”), which amended the Loan and Security Agreement, dated April 7, 2020 (as amended, the “Loan Agreement”). The Amendment provides for a secured term A loan facility (the “Term A Loan Facility”) in an aggregate principal amount equal to $20.0 million and a secured term B loan facility (the “Term B Loan Facility”) in an aggregate principal amount equal to $5.0 million, which such Term B Loan Facility shall be available upon the Company satisfying certain milestones. The Term A Loan Facility and the Term B Loan Facility mature on September 1, 2024. On the Effective Date, pursuant to the terms of the Amendment, the Borrowers were required to draw down $1.5 million under the Term A Loan Facility.
The obligations of the Borrowers under the Loan Agreement are secured by certain assets of the Borrowers, including substantially all of the assets of the Company, excluding the Company’s intellectual property. The loans incurred under the Loan Agreement will bear interest at the greater of (i) 4.25% and (ii) the sum of (a) the Prime Rate as reported in The Wall Street Journal plus (b) 1.00%.
In connection with the Amendment, the Company agreed to issue the Lenders warrants to purchase shares of the Company’s common stock (the “Warrants”). The exercise price per share for the Warrants is determined as the lower of (i) the average closing price per share of the Company’s common stock for the 10 days prior to the date of issuance or (ii) the closing price per share of the Company’s common stock on the day prior to the date of issuance (the “Warrant Exercise Price”). On the Effective Date, Warrants to purchase 33,923 shares of the Company’s common stock were issued with a Warrant Exercise Price of $19.12 per share. The Warrants may be exercised on a cashless basis, and are immediately exercisable through the tenth anniversary of the applicable funding date. The number of shares of common stock for which each Warrant is exercisable and the associated exercise price are subject to certain proportional adjustments.
The foregoing descriptions of the Amendment and the Warrants do not purport to be complete and are qualified in their entirety by reference to the complete text of the Amendment filed as Exhibit 10.1 attached hereto and the form of Warrant filed as Exhibit 4.1 attached hereto.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 above regarding the Amendment is incorporated by reference into this Item 2.03.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in Item 1.01 above regarding the Warrants is incorporated by reference into this Item 3.02. The issuance of shares of the Company’s common stock underlying the Warrants will be made in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereunder.
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Item 9.01 Financial Statements and Exhibits |
EXHIBIT INDEX
