| Item 1.01. | Entry into a Material Definitive Agreement. |
On August 7, 2023, IO Biotech, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue (i) 37,065,647 shares of the Company’s common stock (“Common Stock”), and (ii) 37,065,647 warrants to purchase up to 37,065,647 shares of Common Stock (the “Warrants”) in a private placement transaction (the “Private Placement”). Each Purchaser’s Warrant is exercisable for a number of shares of Common Stock equal to one hundred percent of the aggregate number of shares of Common Stock purchased by such Purchaser. The purchase price per share of Common Stock and Warrant is $2.025 per share (the “Purchase Price”). The closing of the Private Placement is expected to occur on or before August 9, 2023 (the “Closing”), subject to customary closing conditions. The total gross proceeds to the Company at the Closing are expected to be approximately $75.1 million, which does not include any proceeds that may be received upon exercise of the Warrants. The Warrants have an exercise price of $2.47 per share, in each case subject to proportional adjustments in the event of stock splits or combinations or similar events. The Warrants will be exercisable for a period of 42 months following the date of issuance.
Lundbeckfonden BioCapital, Novo Holdings, Kurma Growth Opportunities Fund, and Sunstone Life Science Ventures, each a holder of more than 5% of our total Common Stock outstanding on the date of the Purchase Agreement, are Purchasers in the Private Placement.
Morgan Stanley & Co. LLC and Piper Sandler & Co. acted as the joint placement agents (together, the “Placement Agents”) for the Private Placement. The Placement Agents are entitled to receive a portion of a combined fee equal to approximately 6% of the aggregate gross proceeds from the securities sold in the Private Placement, plus the reimbursement of certain expenses.
On August 7, 2023, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers. Under the terms of the Registration Rights Agreement, the Company has agreed to prepare and file, within 30 days after the Closing (the “Filing Deadline”), one or more registration statements with the Securities and Exchange Commission (the “SEC”) to register for resale the Common Stock issued under the Purchase Agreement and the shares of Common Stock issuable upon conversion of the Warrants issued pursuant to the Purchase Agreement (the “Registrable Securities”), and to cause the applicable registration statements to become effective within a specified period after the Filing Deadline. Certain cash penalties will apply to the Company in the event of registration failures, as described in the Registration Rights Agreement.
The Purchase Agreement contains customary representations, warranties and covenants that were made solely for the benefit of the parties to the Purchase Agreement. Such representations, warranties and covenants (i) are intended as a way of allocating risk between the parties to the Purchase Agreement and not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of transaction and not to provide investors with any other factual information regarding the Company. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.
The foregoing is only a summary of the terms of the Purchase Agreement and the Warrants issued under the Purchase Agreement, does not purport to be complete and is qualified in its entirety by reference to the full text of (i) the Purchase Agreement, a copy of which is attached to this report as Exhibit 10.1, (ii) the Registration Rights Agreement, a copy of which is attached to this report as Exhibit 10.2 and (iii) the form of Warrant issued under the Purchase Agreement, a copy of which is attached to this report as Exhibit 4.1.
