On March 31, 2020, Pieris Pharmaceuticals, Inc. (the "Company") and Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., and Biotechnology Value Trading Fund OS, L.P. (collectively, "BVF") reported that it has entered into an Exchange Agreement (the "Exchange Agreement") pursuant to which BVF agreed to exchange (the "Exchange") an aggregate of 3,000,000 shares of the Company’s common stock, par value $0.001 ("Common Stock"), owned by BVF for an aggregate of 3,000 shares of the Company’s newly-designated Series D Convertible Preferred Stock, a "toothless" preferred stock, par value $0.001 per share ("Series D Preferred Stock") (Filing, 8-K, Pieris Pharmaceuticals, APR 6, 2020, View Source [SID1234556145]). The Exchange closed on April 1, 2020.

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As described below, the Series D Preferred Stock has substantially the same terms as the Company’s Series C Convertible Preferred Stock, par value $0.001 per share ("Series C Preferred Stock"), issued in November 2019, Series B Convertible Preferred Stock, par value $0.001 per share ("Series B Preferred Stock"), issued in January 2019, and Series A Convertible Preferred Stock, par value $0.001 per share ("Series A Preferred Stock"), issued in June 2016, all currently held by entities affiliated with BVF. The shares of Series D Preferred Stock issued in the Exchange are convertible into an aggregate of 3,000,000 shares of Common Stock (subject to adjustment as provided in the Series D Certificate of Designation, as defined below), subject to a 9.99% beneficial ownership blocker provision described below.

As of the date of the Exchange Agreement, BVF represented to the Company that it beneficially owned 5,872,762 shares of Common Stock, representing approximately 10.64% of the shares of Common Stock outstanding as of such date. In addition, BVF holds (i) 2,907 shares of Series A Preferred Stock, which are convertible into 2,907,000 shares of Common Stock (subject to adjustment as provided in the Certificate of Designation of Series A Convertible Preferred Stock of Pieris Pharmaceuticals, Inc. (the "Series A Certificate of Designation")), subject to a 9.99% beneficial ownership blocker provision set forth in the Series A Certificate of Designation; (ii) 5,000 shares of Series B Preferred Stock, which are convertible into 5,000,000 shares of Common Stock (subject to adjustment as provided in the Certificate of Designation of Series B Convertible Preferred Stock of Pieris Pharmaceuticals, Inc. (the "Series B Certificate of Designation")), subject to a 9.99% beneficial ownership blocker provision set forth in the Series B Certificate of Designation; and (iii) 3,522 shares of Series C Preferred Stock, which are convertible into 3,522,000 shares of Common Stock (subject to adjustment as provided in the Certificate of Designation of Series C Convertible Preferred Stock of Pieris Pharmaceuticals, Inc. (the "Series C Certificate of Designation")), subject to a 9.99% beneficial ownership blocker provision set forth in the Series C Certificate of Designation.

A copy of the Exchange Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The foregoing is only a brief description of the material terms of the Exchange Agreement, does not purport to be complete and is qualified in its entirety by reference to the full text of the Exchange Agreement. The representations, warranties and covenants made by the Company in the Exchange Agreement were made solely for the benefit of the parties to the Exchange Agreement, including, in some cases, for the purpose of allocating risk among the parties thereto, and should not be deemed to be a representation, warranty or covenant to investors. Moreover, such representations, warranties or covenants were made as of March 31, 2020. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of the Company’s affairs.