AXLA Axcella Health Inc

Securities Purchase Agreement

On September 20, 2022, Axcella Health Inc., doing business as “Axcella Therapeutics,” (the “Company” or “Axcella”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with funds associated with existing investor Flagship Pioneering (together, the “Purchasers” and each a “Purchaser”), pursuant to which the Company may sell unsecured convertible promissory notes in aggregate principal amount of up to $12 million (the “Notes”) in a private placement (the “Private Placement”) with the initial closing on the same date as the date of the Purchase Agreement, September 20, 2022 (the “Initial Closing” and such date, the “Initial Closing Date”). The Company sold $6 million in Notes at the Initial Closing. The Company may conduct any number of additional closings (each, including the Initial Closing, a “Closing”) so long as the final Closing occurs on or before the six month anniversary of the Initial Closing Date. The Notes mature one year from the date of issuance and bear interest at the rate of 8% per annum payable upon the earlier of (i) voluntary conversion of the Notes in accordance with the terms thereof and (ii) the maturity date. All principal and accrued interest under the Notes (the “Outstanding Balance”) will automatically convert at the Company’s next equity financing (the “Subsequent Financing”), without any action on the part of the Purchasers, into such securities of the Company as are issued in the Subsequent Financing. The Notes are subordinate and junior in right of payment to the senior secured debt issued pursuant to that certain Loan and Security Agreement, dated September 2, 2021, by and between the Company, its wholly owned subsidiaries as borrowers, SLR Investment Corp. (“SLR”) as designated agent, and the lenders listed on Schedule 1.1 thereof (the “Loan Agreement”).

The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. The Purchasers acquired the Notes for investment and each Purchaser acknowledged that it is an accredited investor as defined by Rule 501 under the Securities Act. Neither this Current Report on Form 8-K nor any of its exhibits is an offer to sell or the solicitation of an offer to buy any securities described in this Current Report on Form 8-K.

The Purchase Agreement includes customary covenants, representations and warranty provisions for agreements of its kind.

The foregoing summaries of the Purchase Agreement and the Notes do not purport to be complete and are qualified in their entirety by reference to the documents attached hereto as exhibits 10.1 and 10.2, respectively. The representations, warranties and covenants made by the Company in these agreements were made solely for the benefit of the parties to these agreements, including, in some cases, for the purpose of allocating risk among the parties thereto, and should not be deemed to be a representation, warranty or covenant to any other persons or investors.