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Item 1.01
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Entry into a Material Definitive Agreement.
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On April 7, 2020, 89bio, Inc. (the “Company”) and certain of its subsidiaries party thereto, as co-borrowers (together with the Company,
the “Borrowers”), entered into a Loan and Security Agreement (the “Loan Agreement”) with the lenders referred to therein (the “Lenders”), and Silicon Valley Bank, as collateral agent (in such capacity, the
“Collateral Agent”). The Loan Agreement provides for (i) a secured term A loan facility (the “Term A Loan Facility”) of up to $10.0 million and (ii) a secured term B loan facility (the “Term B Loan
Facility”) of up to $5.0 million that is available upon the Company satisfying certain milestones. The Term A Loan Facility matures on November 1, 2022; provided, that if the Term B Loan Facility is funded, the facilities shall instead
mature on September 1, 2023.
The obligations of the Borrowers under the Loan Agreement are secured by certain assets of the Borrowers, including substantially all of the assets of
the Company, excluding the Company’s intellectual property.
At the Company’s option, the loan will bear interest at the greater of (i) 4.50% and (ii) the sum of (a) the Prime Rate as reported in The Wall
Street Journal plus (b) 1.25%.
The proceeds of borrowings under the Loan Agreement are expected to be used for working capital and general business requirements. Upon closing
of the Loan Agreement on April 7, 2020 (the “Closing Date”), no amounts were drawn.
The Loan Agreement also contains customary affirmative and negative covenants that, among other things, limit the ability of the Borrowers or their
subsidiaries to incur indebtedness; grant liens; enter into a merger or consolidation; sell all or a portion of their property, business or assets; or in the case of the Company’s wholly-owned subsidiaries, 89Bio Ltd. and UAB 89bio Lithuania,
to hold certain assets.
The Loan Agreement contains customary events of default, including a change in control. Upon the occurrence and continuation of an event of
default, all amounts due under the Loan Agreement become (in the case of a bankruptcy event), or may become (in the case of all other events of default and at the option of the Collateral Agent), immediately due and payable.
In addition, under the Loan
Agreement, the Company agreed to issue the Lenders warrants to purchase shares of the Company’s common stock (the “Warrants”). The exercise price per share for the Warrants is determined as the lower of (i) the average closing
price per share of the Company’s common stock for the 10 days prior to the date of issuance or (ii) the closing price per share of the Company’s common stock on the day prior to the date of issuance (the “Warrant Exercise
Price”). On the Closing Date, Warrants to purchase 25,000 shares of the Company’s common stock were issued with a Warrant Exercise Price of $22.06 per share. Additional Warrants exercisable for 8,333 shares of common stock will be issued
in connection with the Term B Loan Facility, if funded. The Warrants may be exercised on a cashless basis, and are immediately exercisable through the tenth anniversary of the applicable funding date. The number of shares of common stock for which
each Warrant is exercisable and the associated exercise price are subject to certain proportional adjustments.
The foregoing descriptions of the Loan Agreement and the Warrants do not purport to be complete and are qualified in their entirety by reference to the
complete text of the Loan Agreement filed as Exhibit 10.1 attached hereto and the form of Warrant filed as Exhibit 4.1 attached hereto.