| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 15, 2024, Monte Rosa Therapeutics, Inc. (the “Company”) entered into an Underwriting Agreement (the “Underwriting Agreement”) with TD Securities (USA) LLC, as representative of the several underwriters listed on Schedule 1 thereto (collectively, the “Underwriters”), related to an underwritten public offering (the “Offering”) of 10,638,476 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), at a public offering price of $4.70 per share, and, in lieu of Common Stock to certain investors, pre-funded warrants (the “Pre-Funded Warrants”) to purchase 10,638,524 shares of Common Stock at a public offering price of $4.6999 per Pre-Funded Warrant, which represents the price per share at which shares of Common Stock are being sold to the public in this offering, minus $0.0001, which is the exercise price of each Pre-Funded Warrant.
The Company estimates that the net proceeds from the Offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, will be approximately $96.7 million. The Company may receive nominal proceeds, if any, from the exercise of the Pre-Funded Warrants. The Company intends to use the net proceeds from the Offering, together with its existing cash, cash equivalents, and marketable securities, to fund clinical development of MRT-6160, pre-clinical and clinical development of MRT-8102, as well the utilization of the QuEENTM platform to develop additional immunology and inflammation targets, and for working capital and other general corporate purposes. The Offering is expected to close on or about May 20, 2024, subject to the satisfaction of customary closing conditions. As a result of the Offering, the Company expects its cash and cash equivalents to be sufficient to fund planned operations and capital expenditures into the first half of 2027, enabling advancement of its MRT-2359, MRT-6160, and MRT-8102 programs through clinical milestones including results from proof-of-concept clinical studies in patients for each program.
The exercise price and the number of shares of Common Stock issuable upon exercise of each Pre-Funded Warrant are subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting Common Stock. The Pre-Funded Warrants are exercisable from the date of issuance and do not expire. Each Pre-Funded Warrant is exercisable, in the holder’s discretion, by delivery to the Company of an exercise notice along with (i) payment in full in immediately available funds for the number of shares of Common Stock purchased upon exercise, or (ii) a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of Common Stock determined according to the formula set forth in the Pre-Funded Warrant. Under the Pre-Funded Warrants, the Company may not effect the exercise of any Pre-Funded Warrants, and a holder will not be entitled to exercise any portion of any Pre-Funded Warrant that, upon giving effect to such exercise, would result in: (i) the aggregate number of shares of Common Stock beneficially owned by such holder (together with its affiliates) to exceed 4.99% (or, at the election of the holder, up to 19.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, or (ii) the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) to exceed 4.99% (or, at the election of the holder, up to 19.99%) of the combined voting power of all of the Company’s securities then outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the pre-funded warrants, which percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 19.99% upon at least 61 days’ notice to the Company.
In the event of a Fundamental Transaction (as defined 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 other property that such holder would have received had they exercised the Pre-Funded Warrants immediately prior to such Fundamental Transaction without regard to any limitations on exercise contained in the Pre-Funded Warrants.
The Company made certain customary representations, warranties and covenants concerning the Company and the registration statement in the Underwriting Agreement and also agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Offering is being made pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-266003), filed with the U.S. Securities and Exchange Commission (the “SEC”) on July 1, 2022 and declared effective by the SEC on July 13,
