CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following is a description of transactions since January 1, 2018 to which we have been a party, in which the amount involved exceeds $120,000 and in
which any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest.
Convertible Notes Offering
In February 2016, we issued
and sold in a private placement $100.0 million aggregate principal amount of our 8.2% Convertible Senior Notes due 2022 (the Convertible Notes). Healthcare Royalty Partners III, L.P., purchased $75.0 million in aggregate
principal amount of the Convertible Notes, and the remaining $25 million in aggregate principal amount was purchased by three related party investors, KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC. Ali J. Satvat,
who is a member of our Board of Directors, is an executive of Kohlberg Kravis Roberts & Co. L.P. (KKR) and KKR Biosimilar L.P. is an entity affiliated with KKR. August J. Troendle, M.D., who was a member of our Board of
Directors until March 2018, when he voluntarily resigned from the Board of Directors, is the Managing Member of MX II Associates, LLC. Mats Wahlström, who is a member of our Board of Directors, is the Chief Executive Officer and Chairman
of KMG Capital Partners, LLC.
The Convertible Notes bear interest at a fixed coupon rate of 8.2% per annum payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, which commenced on March 31, 2016, and mature on March 31, 2022, unless earlier converted, redeemed or repurchased. If we fail to satisfy certain registration or reporting
requirements, then additional interest will accrue on the Convertible Notes at a rate of up to 0.50% per annum in the aggregate. The Convertible Notes also bear a premium of 9.0% of their principal amount, which is payable when the Convertible Notes
mature or are repurchased or redeemed by us.
During fiscal year 2018, the largest balance of the aggregate principal amounts outstanding of the
Convertible Notes were $20.0 million, $4.0 million, and $1.0 million for KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC, respectively. As of March 29, 2019, the aggregate principal amounts outstanding of
the Convertible Notes were $20.0 million, $4.0 million, and $1.0 million for KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC, respectively. During fiscal year 2018, we paid interest expense on the Convertible
Notes to KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC in the amounts of $1.6 million, $0.3 millions and $0.1 million, respectively. Since March 31, 2016, we paid interest expense on the Convertible Notes to
KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC in the amounts of $4.7 million, $0.9 million and $0.2 million, respectively.
Medpace, Inc. Master Services Agreement
In January 2012,
we entered into a Master Services Agreement with Medpace, Inc., or Medpace, a contract research organization, or CRO, under which we engage Medpace to perform certain CRO services related to the design and execution of clinical development programs.
August J. Troendle, M.D., who was a member of our Board of Directors until March 2018, when he voluntarily resigned from the Board of Directors, is Chief Executive Officer, President and Chairman of Medpace, Inc. and is the Managing Member of MX II
Associates, LLC.
Prior to the consummation of our initial public offering, MX II Associates, LLC was a beneficial owner of more than 5% of our
common stock. In August 2014, we executed a task order with Medpace to cover the
in-life
management of the Phase 3 rheumatoid arthritis study (a Phase 3, double-blind, randomized, parallel-group,
active-control study to compare the efficacy and safety of
CHS-0214
versus Enbrel
®
in subjects with rheumatoid arthritis and inadequate response to
treatment with methotrexate). In September 2014, we executed a task order with Medpace to cover the
in-life
management of the Phase 3 chronic plaque psoriasis study (a Phase 3,
double-
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