On April 9, 2020, SCYNEXIS, Inc. ("SCYNEXIS") reported that it has entered into a Senior Convertible Note Purchase Agreement (the "Note Purchase Agreement") with Puissance Life Science Opportunities Fund VI (the "Investor") (Filing, 8-K, Scynexis, APR 9, 2020, View Source [SID1234556229]). Pursuant to the Note Purchase Agreement, on April 9, 2020, SCYNEXIS issued and sold to the Investor $10.0 million aggregate principal amount of its 6.0% Senior Convertible Notes due 2026 (the "Notes"). The Notes were issued and sold for cash at a purchase price equal to 100% of their principal amount, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), due to the notes being issued to one financially sophisticated investor.
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The Notes will bear interest at a rate of 6.0% per annum, payable semiannually in arrears on April 15 and October 15 of each year, beginning October 15, 2020. The Notes will mature on April 15, 2026, unless earlier converted, redeemed or repurchased. The Notes constitute general, senior unsecured obligations of SCYNEXIS.
The holders of the Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding April 15, 2026 into shares of SCYNEXIS’s common stock. The initial conversion rate is 1,111.1111 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $0.90 per share, and is subject to adjustment in certain events described in the Note Purchase Agreement. Holders who convert may also be entitled to receive, under certain circumstances, an "interest make-whole payment" (as defined in the Note Purchase Agreement) payable in shares of common stock. In addition, following certain corporate events that occur prior to the maturity date, SCYNEXIS will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event. Unless SCYNEXIS seeks and receives stockholder approval, the number of shares that SCYNEXIS may deliver in connection with a conversion of the Notes, including those delivered in connection with an "interest make-whole payment" or a "make-whole fundamental change" (each as defined in the Note Purchase Agreement), will not exceed a cap of 19,386,000 shares of common stock, which is approximately 19.99% of the shares of common stock of SCYNEXIS outstanding on March 1, 2020.
On or after April 15, 2023, SCYNEXIS has the right, at its election, to redeem all or any portion of the Notes not previously converted if the last reported sale price per share of common stock exceeds 130% of the conversion price on each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date SCYNEXIS sends the related redemption notice. The redemption price will be 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If a "fundamental change" (as defined in the Note Purchase Agreement) occurs, then, subject to certain exceptions, SCYNEXIS must offer to repurchase the Notes for cash at a repurchase price of 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date. A "fundamental change" includes the failure of SCYNEXIS’s VANISH-306 clinical study of oral ibrexafungerp in vulvovaginal candidiasis to achieve its pre-specified primary endpoint with statistical significance (p ≤ 0.05) superiority over placebo.
If certain bankruptcy and insolvency-related events of default with respect to SCYNEXIS occur, the principal of, and accrued and unpaid interest on, all of the then outstanding Notes shall automatically become due and payable. If any other event of default occurs and is continuing, the holders of at least 25% in principal amount of the outstanding Notes, by notice to SCYNEXIS, may declare the principal of, and accrued and unpaid interest on, all of the then outstanding Notes to be due and payable. Notwithstanding the foregoing, the Note Purchase Agreement provides that, to the extent SCYNEXIS elects, the sole remedy for an event of default relating to certain failures by SCYNEXIS to comply with certain reporting covenants in the Note Purchase Agreement will, for the first 180 days after such event of default, consist exclusively of the right to receive additional interest on the Notes.