Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement of a Registrant.
On December 7, 2018, Puma Biotechnology, Inc.
(the Company) borrowed an aggregate amount of $30.0 million (the Term B Loan) under the Loan and Security Agreement dated as of October 31, 2017 by and among the Company, Silicon Valley Bank, as administrative agent
and collateral agent (SVB), and the lenders party thereto from time to time (the Lenders), including Oxford Finance LLC (Oxford) and SVB, as amended by the First Amendment to Loan and Security Agreement dated as
of May 8, 2018 and the Second Amendment to Loan and Security Agreement dated as of September 27, 2018 (as amended, the Loan Agreement). As previously disclosed, the Company borrowed an aggregate amount of $125.0 million
under the Loan Agreement on the date of the First Amendment to the Loan Agreement (the Term A Loan, and together with the Term B Loan, the Term Loans).
Each of the Term Loans has a maturity date of May 1, 2023 and bears interest at an annual rate equal to the greater of (i) 8.25% and
(ii) the sum of (a) the prime rate, as reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, plus (b) 3.5%. No commitments to make
additional Term Loans currently remain available to the Company under the Loan Agreement.
The Company is required to make monthly
interest-only payments on each of the Term Loans commencing on the first calendar day of the calendar month following the funding date of such Term Loan, and continuing on the first calendar day of each calendar month thereafter through July 1,
2020. Commencing on July 1, 2020, and continuing on the first calendar day of each calendar month thereafter, the Company will make consecutive equal monthly payments of principal, together with applicable interest, in arrears to each Lender,
calculated pursuant to the Loan Agreement. All unpaid principal and accrued and unpaid interest with respect to each Term Loan is due and payable in full on May 1, 2023. Upon repayment of the Term Loans, the Company is also required to make a
final payment to the Lenders equal to 7.5% of the original principal amount of the Term Loans.
At its option, the Company may prepay the
balance of any Term Loan in whole but not in part, subject to a prepayment fee of 3.0% of the principal amount prepaid if the prepayment occurs through and including the first anniversary of the funding date of such Term Loan, 2.0% of the principal
amount prepaid if the prepayment occurs after the first anniversary of the funding date of such Term Loan through and including the second anniversary of such funding date, and 1.0% of the principal amount prepaid if the prepayment occurs after the
second anniversary of the funding date of such Term Loan and prior to May 1, 2023. The Loan Agreement contains customary representations, warranties and covenants.
The Loan Agreement includes affirmative and negative covenants applicable to the Company, its current subsidiary and any subsidiaries the
Company creates in the future. The affirmative covenants include, among others, covenants requiring the Company to maintain its legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy
certain requirements regarding deposit accounts. The Company must also achieve product revenue, measured as of the last day of each fiscal quarter on a trailing
3-month
basis, that is (i) greater than or
equal to 70% of the Companys revenue target set forth in its board-approved projections for the 2018 fiscal year and (ii) greater than or equal to 50% of the Companys revenue target set forth in its board-approved projections for
the 2019 fiscal year. New minimum revenue levels will be established for each subsequent fiscal year by mutual agreement of the Company, SVB as administrative agent, and the Lenders. The negative covenants include, among others, restrictions on the
Company transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets and suffering a change in control, in each
case subject to certain exceptions.
The Loan Agreement also includes events of default, the occurrence and continuation of which could
cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against the Company and the collateral securing the Loan Agreement, including foreclosure
against the property securing the Term Loans, including its cash. These events of default include, among other things, the Companys failure to pay principal or interest due under the Loan Agreement, a breach of certain covenants under the Loan
Agreement, the Companys insolvency, a material adverse change, the occurrence of any default under certain other indebtedness in an amount greater than $500,000 and one or more judgments against the Company in an amount greater than $500,000
individually or in the aggregate.
On the funding date for the Term B Loan, the Company issued to SVB and Oxford, as the sole Lenders of
the Term B Loan, secured promissory notes in an aggregate principal amount of $30,000,000 evidencing the Term B Loan.
The foregoing
description of the Term B Loan and the secured promissory notes is only a summary of the material terms thereof, does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement and the form of secured promissory
note, which are incorporated herein by reference.