UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Phoenix Biotech Acquisition Corp.
(Name of Issuer)
Class A Common Stock, par value $0.0001 per share
(Title of Class of Securities)
71902K 105
(CUSIP Number)
2201 Broadway, Suite 705
Oakland, CA 94612
Attn: Chris Ehrlich
(215) 731-9450
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
January 27, 2023
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ☒.
| * | The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. |
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or other subject to the liabilities of that section of Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP NO. 71902K 105
| 1 | NAME OF REPORTING PERSON
Phoenix Biotech Sponsor, LLC | |||||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ☐ (b) ☐
| |||||
| 3 | SEC USE ONLY
| |||||
| 4 | SOURCE OF FUNDS
WC | |||||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
☐ | |||||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware | |||||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH*
| 7 | SOLE VOTING POWER
5,296,246(1) | ||||
| 8 | SHARED VOTING POWER
0 | |||||
| 9 | SOLE DISPOSITIVE POWER
5,296,246(1) | |||||
| 10 | SHARED DISPOSITIVE POWER
0 | |||||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,296,246(1) | |||||
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
☐ | |||||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.2%(2) | |||||
| 14 | TYPE OF REPORTING PERSON
OO | |||||
| (1) | Comprised of 699,996 shares of the Issuer’s Class A common stock, par value $0.0001 per share, and 4,596,250 shares of the Issuer’s Class B common stock, par value $0.0001 per share. The Class B common stock will automatically convert into shares of Class A common stock at the time of the Issuer’s initial business combination on a one-for-one basis, subject to certain adjustments described in the Issuer’s charter documents. |
| (2) | Based on a denominator comprised of (a) 2,173,298 shares of Class A common stock outstanding as set forth in the Issuer’s Form 8-K filed on January 27, 2023, and (b) 4,596,250 shares of Class B common stock as set forth in the Issuer’s Form 10-Q for the quarter ended September 30, 2022. |
CUSIP NO. 71902K 105
| 1 | NAME OF REPORTING PERSON
Chris Ehrlich | |||||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ☐ (b) ☐
| |||||
| 3 | SEC USE ONLY
| |||||
| 4 | SOURCE OF FUNDS
OO | |||||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
☐ | |||||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION
United States | |||||
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH*
| 7 | SOLE VOTING POWER
0 | ||||
| 8 | SHARED VOTING POWER
5,296,246(1) | |||||
| 9 | SOLE DISPOSITIVE POWER
0 | |||||
| 10 | SHARED DISPOSITIVE POWER
5,296,246(1) | |||||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,296,246(1) | |||||
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
☐ | |||||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
78.2%(2) | |||||
| 14 | TYPE OF REPORTING PERSON
IN, HC | |||||
| (1) | Comprised of 699,996 shares of the Issuer’s Class A common stock, par value $0.0001 per share, and 4,596,250 shares of the Issuer’s Class B common stock, par value $0.0001 per share. The Class B common stock will automatically convert into shares of Class A common stock at the time of the Issuer’s initial business combination on a one-for-one basis, subject to certain adjustments described in the Issuer’s charter documents. Mr. Ehrlich is the Manager of Phoenix Biotech Sponsor, LLC, has voting and investment power over shares held by such entity and disclaims beneficial ownership over any securities in which he does not have any pecuniary interest. |
| (2) | Based on a denominator comprised of (a) 2,173,298 shares of Class A common stock outstanding as set forth in the Issuer’s Form 8-K filed on January 27, 2023, and (b) 4,596,250 shares of Class B common stock as set forth in the Issuer’s Form 10-Q for the quarter ended September 30, 2022. |
SCHEDULE 13D
| Item 1. | Security and Issuer. |
Securities Acquired: Phoenix Biotech Sponsor, LLC (the “Sponsor”) initially acquired shares of Class B common stock, par value $0.0001 per share (“Class B Common Stock”), as part of the formation and initial capitalization of Phoenix Biotech Acquisition Corp. (the “Issuer”). The Sponsor acquired units of the Issuer in the Issuer’s initial public offering in October 2021. Each unit of the issuer represents the right to receive one share of Class A common stock, $0.0001 par value per share (“Class A Common Stock”), and one-half of one redeemable warrant. The warrants are not currently exercisable, and they will not be exercisable within the next 60 days, accordingly, the warrants are not included in this Schedule 13D.
Issuer: Phoenix Biotech Acquisition Corp.
2201 Broadway, Suite 705
Oakland, CA 94612
| Item 2. | Identity and Background. |
(a) This statement is filed by:
(i) the Sponsor, which is the holder of record of approximately 78.2% of the issued and outstanding shares of all classes of common stock of the Issuer (5,296,246) based on the number of shares of Class A Common Stock (2,173,298) outstanding as set forth in the Issuer’s Form 8-K filed on January 27, 2023, and shares of Class B Common Stock (4,596,250) outstanding as set forth in the Issuer’s Form 10-Q for the quarter ended September 30, 2022; and
(ii) Chris Ehrlich, the Chief Executive Officer of the Issuer, and also the Manager of the Sponsor (together with the Sponsor, the “Reporting Persons”).
(b) The address of the principal business and principal office of each of the Sponsor and Mr. Ehrlich is 2201 Broadway, Suite 705, Oakland, CA 94612.
(c) The Sponsor’s principal business is to act as the Issuer’s sponsor. The principal occupation of Mr. Ehrlich, in addition to his duties as an officer of the Issuer, is to serve as Manager of Ehrlich Bioventures, LLC.
(d) None of the Reporting Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) None of the Reporting Persons has, during the last five years, been a party to civil proceeding of a judicial administrative body of competent jurisdiction and, as a result of such proceeding, was, or is subject to, a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws.
(f) The Sponsor is a Delaware limited liability company. Mr. Ehrlich is a citizen of the United States.
| Item 3. | Source and Amount of Funds or Other Consideration. |
The aggregate purchase price for the shares of Common Stock currently beneficially owned by the Reporting Persons was $7,024,960. The source of these funds was the capital of the Sponsor.
| Item 4. | Purpose of Transaction. |
In June 2021, the Sponsor purchased an aggregate of 4,598,750 shares of Class B common stock of the Issuer (the “Founder Shares”) for an aggregate purchase price of $25,000. In September 2021, the Issuer effected a 0.0174775754 for 1 stock dividend for each share of Class B common stock outstanding, and, as a result, the Sponsor held 4,679,125 Founder Shares. In October 2021, 82,875 Founder Shares were returned by the Sponsor to the Issuer for no consideration and cancelled because the underwriters’ over-allotment option was not exercised in full. As a result, the Sponsor holds 4,596,250 Founder Shares.
In October 2021, simultaneously with the consummation of the Issuer’s Initial Public Offering (the “IPO”), the Sponsor purchased 663,263 units of the Issuer, and an additional 36,733 units of the Issuer at the time of the underwriters’ partial over-allotment exercise, at $10.00 per Placement Unit (“Placement Units”), pursuant to a Unit Subscription Agreement dated October 5, 2021, by and between the Issuer and the Sponsor (the “Subscription Agreement”), as more fully described in Item 6 of this Schedule 13D, which information is incorporated herein by reference. Each Placement Unit consists of one share of Class A Common Stock and one-half of one warrant, each whole warrant exercisable to purchase one share of Class A Common Stock, at an exercise price of $11.50 per share.
In December 2022, the Issuer held a special meeting of shareholders for the purpose of, among other things, amending the Issuer’s charter (the “Charter Amendment”). As part of the Charter Amendment, holders of Class A Common Stock had the right to elect to have such shares redeemed by the Issuer for a pro rata portion of the Issuer’s trust account. While the Reporting Persons did not participate in the optional redemption, in December 2022, the Issuer redeemed approximately 16.2 million shares of Class A Common Stock, and the Reporting Person’s ownership increased to approximately 78.2% of all outstanding shares of Common Stock as a result of this transaction.
The shares of Common Stock owned by the Reporting Persons have been acquired for investment purposes. The Reporting Persons may make further acquisitions of the Common Stock from time to time, however, all of such shares are subject to lock-up restrictions as further described in Item 6 below.
Except for the foregoing, the Reporting Persons have no plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) and (c) through (j) of Item 4 of Schedule 13D.
With respect to paragraph (b) of Item 4, the Issuer is a blank check company formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Under various agreements between the Issuer and the Reporting Persons as further described in Item 6 below, the Reporting Persons have agreed (A) to vote their shares in favor of any proposed business combination and (B) not to redeem any shares in connection with a shareholder vote (or tender offer) to approve (or in connection with) a proposed initial business combination. The Reporting Persons may, at any time and from time to time, review or reconsider their position, change their purpose or formulate plans or proposals with respect to the Issuer.
| Item 5. | Interest in Securities of the Issuer. |
Sponsor
| a) | Amount beneficially owned: 5,296,246 | Percentage: 78.2% | ||||
| b) | Number of shares to which the Reporting Person has: | |||||
| i. | Sole power to vote or to direct the vote: | 5,296,246 | ||||
| ii. | Shared power to vote or to direct the vote: | 0 | ||||
| iii. | Sole power to dispose or to direct the disposition of: | 5,296,246 | ||||
| iv. | Shared power to dispose or to direct the disposition of: | 0 | ||||
Chris Ehrlich
| a) | Amount beneficially owned: 5,296,246 | Percentage: 78.2% | ||||
| b) | Number of shares to which the Reporting Person has: | |||||
| i. | Sole power to vote or to direct the vote: | 0 | ||||
| ii. | Shared power to vote or to direct the vote: | 5,296,246 | ||||
| iii. | Sole power to dispose or to direct the disposition of: | 0 | ||||
| iv. | Shared power to dispose or to direct the disposition of: | 5,296,246 | ||||
The Sponsor is controlled by its Manager, Chris Ehrlich. Mr. Ehrlich may be deemed to have beneficial ownership of securities reported herein, however, he disclaims any ownership of securities reported herein other than to the extent of any pecuniary interest he may have therein, directly or indirectly.
(c) Neither of the Reporting Persons has effected any transactions of Common Stock during the 60 days preceding the date of this report, except as described in Item 4 and Item 6 of this Schedule 13D which information is incorporated herein by reference.
(d) Not applicable.
(e) Not applicable.
| Item 6. | Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. |
Unit Subscription Agreement between the Issuer and Sponsor
In October 2021, simultaneously with the consummation of the IPO, the Sponsor purchased 663,263 Placement Units, and an additional 36,733 Placement Units at the time of the underwriters’ partial over-allotment exercise, pursuant to the Subscription Agreement. The Placement Units and the securities underlying such Placement Units are subject to a lock up provision in the Subscription Agreement, which provides that such securities shall not be transferable, saleable or assignable until 30 days after the consummation of the Issuer’s initial business combination, subject to certain limited exceptions as described in the Insider Letter.
The description of the Subscription Agreement is qualified in its entirety by reference to the full text of such agreement, a copy of which was filed by the Issuer as Exhibit 10.4 to the Current Report on Form 8-K filed by the Issuer with the SEC on October 12, 2021 (and is incorporated by reference herein as Exhibit 10.1).
Insider Letter
In October 2021, in connection with the IPO, the Issuer, the Sponsor, Mr. Ehrlich, and certain other parties thereto entered into a letter agreement (the “Insider Letter”). Pursuant to the Insider Letter, the parties agreed (A) to vote the Founder Shares, any shares of Common Stock underlying the Placement Units and any public shares in favor of any proposed business combination, (B) not to propose an amendment to the Issuer’s Amended and Restated Certificate of Incorporation that would modify the substance or timing of the Issuer’s obligation to redeem the public shares if the Issuer does not consummate a business combination within 18 months from the completion of the IPO, unless the Issuer provides the holders of public shares with the opportunity to redeem such shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Issuer’s trust account set up in connection with the IPO (the “Trust Account”), (C) not to redeem any Founder Shares and any shares underlying the Placement Units into the right to receive cash from the Trust Account in connection with a shareholder vote to approve the Issuer’s proposed initial business combination or a vote to amend the provisions of the Issuer’s Amended and Restated Certificate of Incorporation relating to shareholders’ rights or pre-business combination activity and (D) that the Founder Shares and any shares of Common Stock underlying the Placement Units shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. The Sponsor also agreed that in the event of the liquidation of the Trust Account of the Issuer (as defined in the Insider Letter), it will indemnify and hold harmless the Issuer against any and all loss, liability, claims, damage and expense whatsoever which the Issuer may become subject to as a result of any claim by any vendor or other person who is owed money by the Issuer for services rendered or products sold to or contracted for the Issuer, or by any target business with which the Issuer has discussed entering into a transaction agreement, but only to the extent necessary to ensure that such loss, liability, claim, damage or expense does not reduce the amount of funds in the Trust Account; provided that such indemnity shall not apply if such vendor or prospective target business executes an agreement waiving any claims against the Trust Account.
The description of the Insider Letter is qualified in its entirety by reference to the full text of such agreement, a copy of which was filed by the Issuer as Exhibit 10.1 to the Current Report on Form 8-K filed by the Issuer with the SEC on October 12, 2021 (and is incorporated by reference herein as Exhibit 10.2).
Registration Rights Agreement
In October 2021, in connection with the IPO, the Issuer and the Sponsor entered into a registration rights agreement pursuant to which the Sponsor was granted certain demand and “piggyback” registration rights, which will be subject to customary conditions and limitations, including the right of the underwriters of an offering to limit the number of shares offered.
The summary of such registration rights agreement contained herein is qualified in its entirety by reference to the full text of such agreement, a copy of which was filed by the Issuer as Exhibit 10.3 to the Current Report on Form 8-K filed by the Issuer with the SEC on October 12, 2021 (and is incorporated by reference herein as Exhibit 10.3).
| Item 7. | Material to be Filed as Exhibits. |
| Exhibit 10.1 | Unit Subscription Agreement, dated October 5, 2021, between the Issuer and the Sponsor (incorporated by reference to Exhibit 10.4 to the Issuer’s Current Report on Form 8-K (File No. 001-40877) filed with the SEC on October 12, 2021). | |
| Exhibit 10.2 | Letter Agreement, dated October 5, 2021, by and among the Issuer and certain security holders, officers and directors (incorporated by reference to Exhibit 10.1 to the Issuer’s Current Report on Form 8-K (File No. 001-40877) filed with the SEC on October 12, 2021). | |
| Exhibit 10.3 | Registration Rights Agreement, dated October 5, 2021, between the Issuer and certain security holders (incorporated by reference to Exhibit 10.3 to the Issuer’s Current Report on Form 8-K (File No. 001-40877) filed with the SEC on October 12, 2021). | |
| Exhibit 99.1 | Joint Filing Agreement, dated January 30, 2023, by and between the Reporting Persons. | |
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| Dated: | January 31, 2023 | PHOENIX BIOTECH SPONSOR, LLC | ||||
/s/ Chris Ehrlich | ||||||
| Name: Chris Ehrlich | ||||||
| Title: Manager | ||||||
| Dated: | January 31, 2023 | |||||
/s/ Chris Ehrlich | ||||||
| Chris Ehrlich | ||||||
[Phoenix Schedule 13D]
