Item 1.01. Entry into a Material Definitive Agreement.
On November 7, 2019, Sierra Oncology, Inc. (the Company), entered into an underwriting agreement (the Underwriting Agreement) with
Jefferies LLC (Jefferies), as representative of the underwriters (the Underwriters) named in Schedule A of the Underwriting Agreement, pursuant to which the Company agreed to issue and sell an aggregate of (i) 103,000 shares
of its Series A convertible voting preferred stock, par value $0.001 per share (the Series A Preferred Stock); (ii) 312,090,000 Series A warrants to purchase up to an aggregate of 312,090,000 shares of the Companys common stock,
par value $0.001 per share (Common Stock) at an exercise price equal to $0.33 per underlying share of Common Stock (the Series A Warrants); and (iii) 312,090,000 Series B warrants to purchase up to an aggregate of 102,989,700
shares of Common Stock at an exercise price equal to $0.33 per underlying share of Common Stock (the Series B Warrants and together with the Series A Warrants, the Warrants) ((i) through (iii) collectively, the
Securities) to the Underwriters (the Offering). Each share of Series A Preferred Stock is accompanied by (i) 3,030 Series A Warrants to purchase an aggregate of 3,030 shares of Common Stock (which equates to 100% warrant
coverage), and (ii) 3,030 Series B Warrants to purchase an aggregate of 1,000 shares of Common Stock (which equates to 33% warrant coverage). Each share of Series A Preferred Stock, and the accompanying Warrants are being issued at a combined
price to the public of $1,000.
The rights, preferences and privileges of the Series A Preferred Stock are set forth in a Certificate of Designation of
Preferences, Rights and Limitations of Series A Convertible Voting Preferred Stock (the Certificate of Designation), which the Company expects to file with the Delaware Secretary of State on or before November 13, 2019.
Each share of Series A Preferred Stock will convert into that number of shares of Common Stock equal to the purchase price of the Series A Preferred Stock
divided by the conversion price of the Series A Preferred Stock, which is initially equal to $0.33.
The Series A Preferred Stock will automatically
convert into shares of Common Stock upon the 5th trading date following the Companys announcement of receiving stockholder approval for the first reverse stock split following the Offering, provided that, the Company will not effect any
conversion, and the holder will not have the right to convert, subject to certain exceptions, the Series A Preferred Stock for shares of Common Stock if, as a result of such conversion, the holder, together with its affiliates and other attribution
parties, would own more than 9.99% of the total number of shares of Common Stock then issued and outstanding, which percentage may be changed at the holders election to a lower percentage at any time or to a higher percentage upon 61
days notice to us, and provided further that such limitation on exercise will automatically increase to 19.99% of the total number of shares of Common Stock then issued and outstanding during the period that any employee, manager, partner,
managing director or affiliate of such holder is then serving on the Companys board of directors. Prior to the automatic conversion described above, the Series A Preferred Stock will vote together with the Common Stock on an as-converted
basis, subject to certain limitations on conversion. Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. Following the automatic conversion described above, the Series A Preferred
Stock will be non-voting. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or sale event, the assets of the Company available for distribution to its stockholders shall be distributed among the
holders of the shares of Series A Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Stock.
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