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Item 1.01.
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Entry into a Material Definitive Agreement.
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Securities Purchase Agreement
On May 3, 2021, Entasis Therapeutics Holdings Inc., a Delaware corporation
(the “Company”), entered into a securities purchase agreement (the “Securities Purchase Agreement”) with a wholly
owned subsidiary of Innoviva, Inc. (together with such subsidiary, “Innoviva”), pursuant to which the Company agreed to issue
and sell to Innoviva, in a private placement, up to 10,000,000 newly issued shares of the Company’s common stock, par value $0.001
per share (the “Common Stock”), and warrants (the “Warrants”) to purchase up to 10,000,000 shares of Common Stock,
with an exercise price per share of $2.00 (the “Private Placement”). The Warrants will be exercisable immediately at an exercise
price of $2.00 per share and will have a five-year term. Each share of Common Stock and each Warrant will be issued and sold together
at price per unit of $2.00.
The Private Placement will occur in two
tranches. At the first closing, which occurred on May 3, 2021 (the “First Closing”), Innoviva purchased 3,731,025 shares of
Common Stock and Warrants to purchase 3,731,025 shares of Common Stock for an aggregate purchase price of approximately $7.5 million.
At the closing of the second tranche (the “Second Closing”), subject to satisfaction of certain closing conditions, including
the Company’s stockholders’ voting in favor of the transaction as required by applicable Nasdaq listing standards, Innoviva
will purchase the remaining 6,268,975 shares of Common Stock and 6,268,975 Warrants for an aggregate purchase price of approximately $12.5
million.
The Company expects to receive aggregate gross
proceeds from the Private Placement of approximately $20 million, before deducting transaction expenses, and excluding proceeds (if any)
received in connection with the exercise of any Warrants. At the effective time of the Second Closing, assuming the exercise of all of
the Warrants, Innoviva will hold approximately 75.5 % of the Company’s outstanding Common Stock.
The
Securities Purchase Agreement contains customary representations and warranties as well as certain operating covenants applicable to the
Company until the Second Closing. The Second Closing is expected to close in the second quarter of 2021, subject to the satisfaction
of certain closing conditions referenced above.
Registration Rights Agreements
On May 3, 2021, the Company
and Innoviva entered into a registration rights agreement (the “Registration Rights Agreement”), pursuant to which, among
other things, the Company must prepare and file with the Securities and Exchange Commission (the “SEC”), a registration statement
with respect to resales of the shares of Common Stock and shares of Common Stock underlying the Warrants purchased by Innoviva under the
Securities Purchase Agreement.
The foregoing descriptions
of the Warrants, Securities Purchase Agreement and Registration Rights Agreement do not purport to be complete and are qualified in their
entirety by reference to the full text of such agreements, copies of which are filed as Exhibits 4.1, 10.1 and 10.2, respectively, to
this Current Report on Form 8-K and are incorporated by reference herein.