KEZAR LIFE SCIENCES, INC. : conclusion of a material definitive agreement, operating results and financial condition, creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant, financial statements and supporting documents (Form 8 -K)

Item 1.01 Conclusion of a Material Definitive Agreement.

At November 4, 2021, Kezar Life Sciences, Inc. (the “Company”) has entered into a loan and guarantee agreement (the “Loan Agreement”) with Oxford Finance LLC, a
Delaware limited liability company, as lender (the “Lender”) and guarantee agent (the “Agent”). The loan agreement provides for maximum total borrowings of up to $ 50.0 million (the “Loan”), consisting of (i) a term loan of up to $ 10.0 million, which was fully funded on November 4, 2021; (ii) at the option of the Company, an additional term loan of up to $ 10.0 million, available for loan from July 1, 2022 To December 30, 2022; (iii) if the Company obtains positive baseline data in its MISSION Phase 2 clinical trial sufficient to advance the program to Phase 2 (b) or a registration trial, an additional term loan of up to $ 20.0 million, available for loan until the earliest of the following dates: June 30, 2023 and nine months after the achievement of the aforementioned milestone (the “Tranche C Advance”); (iv) once the Company obtains positive baseline data in its PRESIDIO Phase 2 clinical trial sufficient to move the program forward to a registration trial, an additional term loan of up to $ 20.0 million, available for borrowing until the earliest of the following dates: June 30, 2023 and nine months after the achievement of the aforementioned milestone (the “Tranche D Advance”); and (v) after drawing either Tranche C Advance or Tranche D Advance and the Company has obtained positive data on the safety and tolerability of the dose escalation portion of the Phase 1 clinical trial for KZR-261 in oncology indications sufficient to advance the program in the dose expansion portion of clinical trials, an additional term loan of up to $ 20.0 million, available for borrowing until the earliest of the following dates: December 31, 2023 and nine months after the achievement of the aforementioned milestone. The total maximum borrowings under the Loan Agreement are capped at $ 50.0 million, regardless of the slices drawn. The final maturity date of the loan agreement is November 1, 2026.

Initially, through November 30, 2021, the Loan will bear interest at the annual rate of 7.9575%. Thereafter, the Loan will bear interest at a variable annual rate (based on the actual number of days elapsed divided by a year of 360 days) equal to the sum of (a) the greater of (i) the period of 30 days we LIBOR rate published in the Wall Street Journal on the last business day of the month immediately preceding the month in which interest will accrue and (ii) 0.08%, plus (b) 7.87%. The Loan Agreement also provides for the selection of an alternative reference rate in the event of termination of LIBOR or any subsequent reference rate. The Company is authorized to prepay the loan in whole or in part at any time upon 10 business days written notice to the Lender, subject to applicable prepayment charges (as defined below). On the first occurrence of the due date, loan acceleration or early repayment of the loan, the Company is required to make a final payment equal to 6.5% of the total principal amount of the loan (the “ final costs’). Any early repayment of the Loan, whether compulsory or voluntary, must include an amount equal to the sum of (a) the part of the principal unpaid of the Loan prepaid plus accrued and unpaid interest thereon until the prepayment date, (b) the Fee, (c) the expenses of the Lender and all other obligations which are due and payable to the Lender, and (d) a prepayment charge of (i) 2% of the portion of the Prepaid loan if repayment is made on or before the second anniversary of the financing date of this term loan or (ii) 1.0% of the prepaid portion of the loan if repayment is made after the second anniversary of the financing date but no later than the third anniversary of the financing date of this loan term (the “prepayment charge”). There is no prepayment charge for prepayments made after the third anniversary of the funding date of this term loan.

The Company is required to make monthly interest payments only prior to the amortization date of January 1, 2025, whose amortization date will extend to
January 1, 2026 if the Company chooses to borrow the Tranche C Advance or the Tranche D Advance.

The Company’s obligations under the Loan Agreement are secured by a security interest over all of the Company’s assets, except the Company’s intellectual property, which is negatively pledged. The Loan Agreement contains customary declarations and commitments which, subject to exceptions, restrict the Company’s ability to, among other things: declare dividends or buy back or buy back holdings; incur additional privileges; make loans and investments; take on additional debt; engage in mergers, acquisitions and asset sales; carry out transactions with affiliated companies; undergo a change of control; add or modify commercial locations; and engage in businesses that are unrelated to its existing activities.

In the event of default, an additional 5% default interest rate may be applied to the outstanding loan balances, and the lender may declare any outstanding obligations immediately due and payable and take the other actions set out in the loan agreement. Events of default under the Loan Agreement include customary events of default, including, but not limited to: (i) failure to (a) make any payment of principal or interest

————————————————– ——————————

on its maturity date, or (b) pay any other obligation within three business days of the due date of such obligations; (ii) failure to meet any obligation under specified commitments; (iii) the occurrence of a material adverse change; (iv) the Company or any of its subsidiaries is or becomes insolvent, initiates insolvency proceedings or is the subject of insolvency proceedings which are not dismissed or suspended within 45 days; (v) a default under an agreement with a third party resulting in the right of that third party to accelerate the maturity of any debt in an amount greater than $ 500,000
or which could reasonably be expected to have a material adverse change; (vi) the pronouncement of judgments, orders or decrees for the payment of money in an amount, individually or collectively, of at least $ 500,000 who remain dissatisfied, not released or not stayed for a period of 10 days after their entry; (vii) revocation, cancellation, suspension or adverse modification of any government approval, or non-renewal of a government approval in the ordinary course for a full term, which could reasonably result in a material adverse change; (viii) failure of a lien created under the Loan Agreement or any other loan document to constitute a valid and perfect lien on any of the collateral purported to be secured by it, subject to any lien prior or equal, other than permitted privileges; and (ix) the delisting of the ordinary shares of the Company.

The foregoing description of the loan agreement does not claim to be complete and is qualified in its entirety by reference to the full text of the loan agreement, of which the Company will file a copy as an attachment to its annual report on Form 10- K for the year ending December 31, 2021.

Article 2.02. Operating results and financial condition.

At November 9, 2021, the Company issued a press release announcing its financial results for the fiscal quarter ended September 30, 2021. A copy of the press release is provided as Exhibit 99.1 of this current report on Form 8-K and is incorporated herein by reference.

Information provided under Item 2.02 of this Form 8-K, including Exhibit 99.1 attached, will not be considered “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”), or otherwise subject to the responsibilities of this section, nor will it be deemed to be incorporated by reference in any of the documents filed by the Company under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly indicated by specific reference in such filing.

Article 2.03. Creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant.

The information in Item 1.01 relating to the Loan Agreement is incorporated by reference in this Item 2.03.

Article 9.01. Financial statements and supporting documents.

(d) Exhibits.



Exhibit No.   Description

99.1            Press release of the Company, dated November 9, 2021
104           Cover Page Interactive Data File (embedded within the Inline XBRL document)





————————————————– ——————————

© Edgar online, source Previews

Source link

About Pamela Boon

Check Also

Boatzon Announces Strategic Partnership with Trident Funding for Advanced Marine Financial Services

HALLANDALE BEACH, Florida – (COMMERCIAL THREAD) –Boatzon, the leading 100% online retailer of boats and …

Leave a Reply

Your email address will not be published. Required fields are marked *