Item 1.01 Entry into a Material Definitive Agreement.
On May 17, 2019 (the “Closing Date”), Cytokinetics, Incorporated (the “Company”)
entered into a Loan and Security Agreement (the “Loan Agreement”) with Oxford Finance LLC (“Oxford”), as
collateral agent, and Silicon Valley Bank (“SVB” and together with Oxford, the “Lenders”) for a loan of
$45.0 million (the “Term Loan”) and terminated the Loan and Security Agreement, dated as of October 19, 2015, as amended
(the “Original Loan Agreement”). The Term Loan was made available to the Company on the Closing Date, with the proceeds
used in part to repay in full all of the outstanding term loans under the Original Loan Agreement in an aggregate principal amount
of $42.0 million.
The Term Loan has interest-only payments through December 31, 2020. The interest only
period may be extended, for six months if either of the following milestones occur and for twelve months if both of the following
milestones occur: (i) specified events related to the development of (a) reldesemtiv, a novel fast skeletal muscle activator,
in spinal muscle atrophy or
amyotrophic lateral sclerosis,
or (b) CK-3773274,
a novel cardiac myosin inhibitor, in cardiomyopathy; and/or (ii) specified results from GALACTIC-HF, a Phase 3 trial of omecamtiv
mecarbil, a novel cardiac myosin activator. The ultimate interest-only period will be followed by equal monthly payments of principal
and interest to December 1, 2023.
Interest on the Term Loan will bear interest at a rate equal to the greater of (i) 8.05%
and (ii) the sum (a) the 30-day U.S. LIBOR rate on the last business day of the month that immediately precedes the month
in which interest will accrue, plus (b) 6.81%.
The Company will be required to make a final payment fee of 6.00% of the amounts of the
Term Loan drawn payable on the earlier of (i) the prepayment of the Term Loan or (ii) the maturity of the Term Loan.
The Company may prepay the Term Loans by paying a prepayment fee equal to (i) 3.00% of
the applicable Term Loan prepaid through and including the first anniversary of the funding date, (ii) 2.00% of the applicable
Term Loan prepaid after the first anniversary date and through and including the second anniversary of the funding date, and (iii)
1.00% of the applicable Term Loan prepaid after the second anniversary date and prior to the maturity date.
In addition, under the Loan Agreement, the Company agreed to issue the Lenders warrants
to purchase shares of the Company’s common stock (the “Warrants”). The exercise price per share for the Warrants
is determined as the lower of (i) the average closing price per share of the Company’s common stock for the 10 days prior
to the date of issuance or (ii) the closing price per share of the Company’s common stock on the day before the date of issuance
(the “Warrant Price”). On the Closing Date, Warrants to purchase 23,065 shares of the Company’s common stock
were issued with a Warrant Price equal to $9.755 per share. Additional Warrants exercisable for a number of shares of common stock
determined by dividing $225,000 by the Warrant Price will be issued, if at all, upon the achievement of one of the milestones that
extend the interest-only period by six months. Each of the Warrants will be exercisable for 10 years from the date of issuance.
The Loan Agreement contains customary representations and warranties and customary affirmative
and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on dispositions,
changes in business, management, ownership or business locations, mergers or acquisitions, indebtedness, encumbrances, distributions,
investments, transactions with affiliates and subordinated debt. The Loan Agreement also includes customary events of default,
including but not limited to the nonpayment of principal or interest, violations of covenants, material adverse changes, attachment,
levy, restraint on business, cross-defaults on material indebtedness, bankruptcy, material judgments, misrepresentations, subordinated
debt, governmental approvals, lien priority and delisting. Upon an event of default, the Lenders may, among other things, accelerate
the loans and foreclose on the collateral.
The foregoing is only a summary of the material
terms of the Loan Agreement and Warrants and does not purport to be complete and is qualified in its entirety by reference to the
full text of the Loan Agreement and Form of Warrant, which will be filed as exhibits to the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2019.