Item 1.01 Entry into a Material Definitive Agreement
Warrant Exercise Price Reduction
As
previously reported, on July 23, 2019, Jaguar Health, Inc. (the “Company”) consummated a registered public offering
of (i) 2,886,500 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”),
(ii) 10,787 shares of Series B Convertible Preferred Stock, par value $0.0001 per share, (iii) warrants to purchase up to
8,280,000 shares of Common Stock that expire on the earlier of (A) five (5) years from the date of issuance and (B) 30
calendar days following the public announcement of Positive Interim Results (as defined in Registration Statement on Form S-1
(File No. 333-231399) and an additional registration statement filed pursuant to Rule 462(b) of the Securities Act of 1933,
as amended, together, the “Registration Statement”) related to the diarrhea results from the HALT-D investigator initiated
trial if and only if in those 30 calendar days (x) the volume weighted average price of Common Stock (“VWAP”)
exceeds 115% of the exercise price of such warrant for any 20 consecutive trading days (the “Measurement Period”) and
(y) the average dollar daily volume for such Measurement Period exceeds $500,000 per trading day (the “Series 1
Warrants”), and (iv) warrants to purchase up to 8,280,000 shares of Common Stock that expire on the first date on the earlier
of (A) 5 years from the date of issuance and (B) 30 calendar days following the public announcement by the Company that
a pivotal phase 3 clinical trial using crofelemer (Mytesi, or the same or similar product with a different name) for the treatment
of cancer therapy related diarrhea in humans has met its primary endpoint in accordance with the protocol if and only if in those
30 calendar days (x) the VWAP exceeds 150% of the exercise price of such warrant for the Measurement Period after such public
announcement and (y) the average dollar daily volume for such Measurement Period exceeds $500,000 per trading day (the “Series 2
Warrants”, and together with the Series 1 Warrants, the “Original Warrants”).
As previously reported, on September 24, 2019, the Company reduced
the exercise price of all the Series 1 Warrants outstanding from $2.00 per share to $1.40 per share by notifying American Stock
Transfer & Trust Company, LLC (“AST”) pursuant to the terms of the Warrant Agency Agreement, dated as of May 6,
2019, by and between the Company and AST (the “Warrant Agency Agreement”).
On
May 22, 2020, the Company reduced the exercise price of (i) all the Series 1 Warrants outstanding from $1.40 per share to $0.49
per share, (ii) all the Series 2 Warrants outstanding from $2.00 per share to $0.49 per share, and (iii) all the warrants to purchase
Common Stock previously issued in private placements by the Company in March through June of 2019 (the “Bridge Warrants”)
outstanding from $2.00 per share to $0.49 per share. The reduction in exercise price of the Series 1 Warrants and Series 2 Warrants
went into effect by notifying AST pursuant to the terms of the Warrant Agency Agreement, and the reduction in the exercise price
of the Bridge Warrants went into effect by notifying the holders of the Bridge Warrants.
The issuance of the Original Warrants to the public and the
issuance of the Common Stock upon exercise thereof have been registered on the Registration Statement previously filed with and
declared effective by the Securities and Exchange Commission (the “SEC”). A prospectus supplement relating to the reduction
of the exercise prices for the Original Warrants will be filed with the SEC.
The offer and sale of shares of Common Stock underlying the
Bridge Warrants has been registered on the Company’s registration statement on Form S-1 (File No. 333-233989), which was
previously filed and declared effective by the SEC.
The full text of the notices of reduction in the exercise prices
of the Series 1 Warrants and the Series 2 Warrants and the form of notice of reduction of the Bridge Warrants are attached hereto
as Exhibits 99.1, 99.2 and 99.3, respectively, and are incorporated herein by reference.
Warrant Exercise Inducement Letters and Issuance of Series
3 Warrants
On May 22, 2020, the Company entered
into warrant exercise inducement offer letters (“Inducement Letters”) with certain holders of Series 1 Warrants,
Series 2 Warrants, and Bridge Warrants (collectively, the “Exercising Holders”) pursuant to which such holders
agreed to exercise for cash Series 1 Warrants to purchase 4,572,040 shares of Common Stock, Series 2 Warrants to purchase
4,005,062 shares of Common Stock, and Bridge Warrants to purchase 93,750 shares of Common Stock in exchange for the
Company’s agreement to issue new Series 3 warrants to purchase up to 8,670,852 shares of Common Stock (the
“Series 3 Warrants”) to such holders as an inducement for the exercise of the Series 1 Warrants, Series 2
Warrants and Bridge Warrants by such holders (the “Warrant Exercise Transaction”) . The Company expects to
receive aggregate gross proceeds of approximately $ 4.25 million from the exercise of the Original Warrants and the Bridge
Warrants by such holders.
The Series 3 Warrants will have an exercise
price of $0.53 per share and will be exercisable beginning the earlier of (i) six months from the issuance date and (ii) receipt
of the requisite Stockholder Approval (defined hereafter) and ending five years thereafter. The Series 3 Warrants will have a
cashless exercise feature wherein, following the requisite Stockholder Approval, each such Series 3 Warrant will be exercisable
into 1.0 share of Common Stock for no consideration (the “Alternate Cashless Exercise”). The Company is required to
hold a special meeting of stockholders to seek approval of the Alternate Cashless Exercise (“Stockholder Approval”)
no later than 60 calendar days following May 22, 2020 and call a meeting every 90 days thereafter to the extent Stockholder Approval
is not obtained, which requirement will continue until the earlier of the date that Stockholder Approval is obtained or the Series
3 Warrants are no longer outstanding. The Company also agreed to file a registration statement covering the resale of the shares
of Common Stock issued or issuable upon the exercise of the Series 3 Warrants no later than 30 days following the date of the
Inducement Letters. Each of the Exercising Holders has a right to purchase its pro rata portion of new shares of Common Stock
and other securities offered by the Company in subsequent financings, subject to limited exceptions related to non-capital raising
circumstances, which right terminates on the earlier of the first anniversary of the date of the Inducement Letters and the consummation
of a transaction resulting in a change of control of the Company.
The
foregoing description of the Inducement Letters and form of Series 3 Warrant does not purport to be complete and is qualified
in its entirety by reference to the Series 3 Warrant and forms of Inducement Letters, copies of which are filed herewith as
Exhibit 4.1, 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference. For
further discussion of the terms of the Original Warrants and the Bridge Warrants, see the
Company’s Current Reports on Form 8-K, filed with the SEC on March
22, 2019 and July 23, 2019, respectively, which are incorporated herein by
reference.