Item 1.01
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Entry into a Material Definitive Agreement.
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On October 16, 2017, Myovant Sciences
Ltd. (the Company) and its subsidiaries, Myovant Holdings Limited (MHL), Myovant Sciences GmbH (MSG), Myovant Sciences, Inc. (MSI) and Myovant Sciences Ireland Limited (MSIL, together
with MHL, MSG and MSI, the Guarantors and the Guarantors and the Company, collectively, the Loan Parties), entered into a Securities Purchase Agreement (the NovaQuest Securities Purchase Agreement) with the
purchasers from time to time party thereto (the Purchasers) and NovaQuest Pharma Opportunities Fund IV, L.P., as agent for itself and the Purchasers (NovaQuest) and a Loan and Security Agreement (the Hercules Loan
Agreement) with the lenders from time to time party thereto (the Lenders) and Hercules Capital, Inc., as agent for itself and the Lenders (Hercules), and the Company entered into an Equity Purchase Agreement (the
NovaQuest Equity Purchase Agreement) with NovaQuest and a Purchaser affiliated with NovaQuest (the NovaQuest Affiliate), collectively providing for up to $140 million of financing commitments.
NovaQuest Securities Purchase Agreement
The NovaQuest Securities Purchase Agreement provides, at the Companys discretion through December 31, 2018, for the purchase by the
Purchasers of up to $60 million principal amount of notes (the Notes) and concurrent with each purchase of Notes, the Purchasers are obligated to purchase up to $20 million of the Companys common shares on a pro rata
basis, subject to certain terms and conditions. The equity purchase price will be equal to 105% of the average of the volume-weighted average price for the five consecutive trading days immediately prior to the relevant purchase date. The Company
has agreed that it will issue and the Purchasers will purchase Notes in an aggregate principal amount of at least $30 million through December 31, 2018, subject to certain terms and conditions. The Company expects to issue $6 million aggregate
principal amount of Notes and $2 million of common shares to the Purchasers pursuant to the NovaQuest Securities Purchase Agreement on November 6, 2017.
The Notes bear interest at 15% per annum, of which 5% is payable quarterly and 10% of such interest is payable on a deferred basis on the
earlier of the Amortization Date (as defined below) and the repayment in full of the Notes. The Notes mature on October 16, 2023. The Company will be required to amortize the principal amount of the Notes in equal quarterly installments
commencing on November 1, 2020, subject to extension at the option of the Company to November 1, 2021 (the Amortization Date), provided certain terms and conditions are met. The Companys obligations under the Notes are
fully and unconditionally guaranteed by the Guarantors. The Loan Parties obligations under the Notes are secured by a second lien security interest in substantially all of their respective assets, other than intellectual property.
From and after October 16, 2019, the Company may redeem all or any portion of the Notes in excess of $5 million at a redemption
price equal to the outstanding principal amount thereof, plus accrued and unpaid interest, and a redemption charge equal to 4.0% if redeemed on or prior to October 16, 2020, 2.5% if redeemed on or prior to October 16, 2021 and 1.0% if
redeemed thereafter. Upon a Change of Control as defined in the NovaQuest Securities Purchase Agreement, the Company may, and the holders of a majority of the outstanding principal amount of the Notes may require the Company to, redeem
the Notes at a redemption price equal to the outstanding principal amount thereof, plus accrued and unpaid interest and a redemption charge equal to, if prior to October 16, 2019, 5.0% of the principal amount of the Notes then outstanding, and
if on or after October 16, 2019, the redemption charge otherwise applicable.
The NovaQuest Securities Purchase Agreement includes
customary affirmative and restrictive covenants and representations and warranties, including a minimum cash covenant that applies commencing on the Amortization Date. The NovaQuest Securities Purchase Agreement also includes
customary events of default, including payment defaults, breaches of covenants following any applicable cure period, cross acceleration to certain debt, certain events relating to bankruptcy or
insolvency and certain events relating to U.K. or Irish pension plans. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% will apply to the Secured Obligations as defined in the NovaQuest Securities
Purchase Agreement, and NovaQuest, as the agent for the holders of the Notes, may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the NovaQuest Securities Purchase Agreement. Upon the
occurrence of certain bankruptcy and insolvency events, the obligations under the Notes would automatically become due and payable.
The
descriptions of the Notes and NovaQuest Securities Purchase Agreement contained herein do not purport to be complete and are qualified in their entirety by reference to the complete text of the NovaQuest Securities Purchase Agreement which will be
filed as an exhibit to the Companys Quarterly Report on
Form 10-Q
for the quarter ending December 31, 2017.
NovaQuest Equity Purchase Agreement
Pursuant to the NovaQuest Equity Purchase Agreement, NovaQuest and the NovaQuest Affiliate have committed to purchase up to an additional
$20 million of the Companys common shares from time to time at the discretion of the Company through December 31, 2018 or subject to extension at the option of the NovaQuest to December 31, 2019, subject to certain terms and
conditions. The Company has agreed that it will exercise its option to sell and issue a minimum of $10 million of the Companys common shares through December 31, 2018, subject to certain terms and conditions. The purchase price for
the common shares issued pursuant to the NovaQuest Equity Purchase Agreement will also be equal to 105% of the average of the volume-weighted average price for the five consecutive trading days immediately prior to the relevant purchase date.
The description of the NovaQuest Equity Purchase Agreement contained herein does not purport to be complete and is qualified in its entirety
by reference to the complete text thereof, which will be filed as an exhibit to the Companys Quarterly Report on
Form 10-Q
for the quarter ending December 31, 2017.
Hercules Loan Agreement
The Hercules
Loan Agreement provides for up to $40 million principal amount of term loans (the Term Loans). A first tranche of $25 million principal amount was funded upon execution of the loan agreement on October 16,
2017, and the remaining $15 million principal amount is available at the Companys discretion through March 31, 2018, subject to certain terms and conditions. The Term Loans bear
interest at a variable per annum rate at the greater of either (i) the prime rate plus 4.00% and (ii) 8.25%. The Term Loan matures on May 1, 2021, subject to extension to November 1, 2021 if certain milestones are met. The
Company is obligated to make monthly payments of accrued interest until June 1, 2019 (the Interest-only Period), followed by monthly installments of principal and interest through the maturity date. The Interest-only Period may be
extended until June 1, 2020 if certain milestones are met. The Companys obligations under the Hercules Loan Agreement are fully and unconditionally guaranteed by the Guarantors. The Loan Parties obligations under the Hercules
Loan Agreement are secured by a security interest in substantially all of their respective assets, other than intellectual property.
Prepayments of the Term Loans prior to the maturity date, will be subject to a prepayment charge, based on a percentage of the
then-outstanding principal balance, equal to 3.0% if the prepayment occurs within the first twelve (12) months following October 16, 2017, 2.0% if the prepayment occurs after twelve (12) months but prior to twenty-four
(24) months following October 16, 2017, and 1.0% if the prepayment occurs thereafter. Upon repayment in full of the Term Loans, the Company will be obligated to pay an
end-of-term
charge equal to 6.55% of the aggregate amount of Term Loans funded.
The Hercules Loan Agreement includes customary affirmative and restrictive covenants and
representations and warranties, including a minimum cash covenant that applies commencing on December 31, 2017 and ceases to apply if the Company achieves certain clinical development and financial milestones as set forth in the Hercules Loan
Agreement,. The Hercules Loan Agreement also includes customary events of default, including payment defaults, breaches of covenants following any applicable cure period, the occurrence of certain events that could reasonably be expected to have a
material adverse effect as set forth in the Hercules Loan Agreement, cross acceleration to certain debt, certain events relating to bankruptcy or insolvency and certain events relating to U.K. or Irish pension plans. Upon the occurrence
of an event of default, a default interest rate of an additional 5.0% may be applied to the outstanding principal balance, and Hercules may declare all outstanding obligations immediately due and payable and take such other actions as set forth in
the Hercules Loan Agreement. Upon the occurrence of certain bankruptcy and insolvency events, the obligations under the Hercules Loan Agreement would automatically become due and payable.
In connection with each funding of the Term Loans, the Company is required to issue to Hercules a warrant (the Warrants) to
purchase a number of the Companys common shares equal to 3% of the principal amount of the relevant Term Loan funded divided by the exercise price, which will be based on the lowest three day volume-weighted average price for the three
consecutive trading days prior to the funding date for such Term Loan. The Warrants may be exercised on a cashless basis, and are immediately exercisable through the seventh anniversary of the applicable funding date. The number of common shares for
which each Warrant is exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in such Warrant. In connection with the first tranche of the Term Loans, the Company issued a Warrant to Hercules,
exercisable for an aggregate of 49,800 of the Companys common shares at an exercise price of $15.06 per share.
The descriptions of
the Hercules Loan Agreement and the Warrants contained herein do not purport to be complete and are qualified in their entirety by reference to the complete text of the Hercules Loan Agreement which will be filed as an exhibit to the Companys
Quarterly Report on
Form 10-Q
for the quarter ending December 31, 2017 and the form of Warrant filed as Exhibit 4.1 attached hereto.