Item 1.01 Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On June 20, 2017, Madrigal Pharmaceuticals, Inc. (the Company) entered into a Securities Purchase Agreement (the Purchase Agreement) with a group of institutional accredited investors, which are existing, non-controlling stockholders of the Company and are named on the Schedule of Investors to the Purchase Agreement (the Investors), pursuant to which the Company will sell securities to the Investors in a private placement transaction (the Offering). Under the terms of the Offering, the Company will sell approximately 328,300 shares of its common stock, $0.0001 par value per share (the Common Stock), at a price of $15.23 per share, and 1.97 million shares of its Series A Convertible Preferred Stock, par value $0.0001 per share (the Series A Preferred Stock), at a price of $15.23 per share. The Series A Preferred Stock is convertible into shares of the Common Stock (the Conversion Shares) at a one-to-one ratio, subject to adjustment as provided in the Purchase Agreement. The Company expects the Offering to result in gross proceeds to the Company of approximately $35,000,000, before deducting estimated offering expenses payable by the Company. The Offering is expected to close on or about June 23, 2017, subject to customary closing conditions.
The powers, preferences, rights, qualifications, limitations and restrictions applicable to the Series A Preferred Stock are set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, that the Company filed with the Secretary of State of the State of Delaware on June 21, 2017. Additional information regarding the Series A Preferred Stock is included under Item 5.03 of this Current Report on Form 8-K and is incorporated into this item by reference.
Pursuant to the Purchase Agreement, the Company agreed to file a registration statement on Form S-3 (the Registration Statement) with the Securities and Exchange Commission within 30 days after the closing of the Offering to register the resale of the shares of the Common Stock issued and sold in the Offering. The Company also agreed to use its best efforts to have the Registration Statement declared effective within 90 days after the closing of the Offering.
The securities issued in the Offering have not been registered under the Securities Act of 1933, as amended (the Securities Act), and until so registered the securities may not be offered or sold absent registration or availability of an applicable exemption from registration.
This announcement is not an offer to sell securities of the Company, and any opportunity to participate in the Offering was available to a limited group of institutional accredited investors.
Registration Rights Agreement
In connection with the Offering, the Company will be obligated to enter into that certain Affiliate Registration Rights Agreement in the form attached to the Purchase Agreement as
Exhibit B
(the Registration Rights Agreement), in the event that certain of the Investors determine they may be deemed to be affiliates of the Company within the meaning of Rule 144 of the Securities Act. Pursuant to the Registration Rights Agreement, following the demand by any investor signatory thereto, the Company will be required to file a registration statement on Form S-3 covering the resale of the shares of the Common Stock and the Conversion Shares purchased in the Offering by such investor within 60 days of such demand.
A copy of the Purchase Agreement, including the form of the Registration Rights Agreement attached as an exhibit thereto, is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Offering and the documentation related thereto does not purport to be complete and is qualified in its entirety by reference to such Exhibit to this Current Report on Form 8-K. The Purchase Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties. The representations and warranties have been made for the purposes of allocating contractual risk between the
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