|
Item 3.02.
|
Unregistered Sales of Equity Securities.
|
As previously disclosed, on April 12, 2020, Entasis Therapeutics
Holdings Inc., a Delaware corporation (the “Company”), entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Innoviva, Inc. (“Innoviva”), pursuant to which the Company agreed to issue and
sell to Innoviva, in a private placement under the applicable Nasdaq Stock Market, LLC rules (“Nasdaq”), up to
14,000,000 newly issued shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”) and
warrants (the “Common Warrants”) to purchase up to 14,000,000 shares of Common Stock, with an exercise price per share
of $2.50 (the “Private Placement”). The Common Warrants, at an exercise price per share of $2.50, are exercisable immediately
and have a five year term. Each share of Common Stock and Common Warrant (together, a “Common Unit”) have been issued
and sold together at price per Common Unit of $2.50.
First Closing
The Private Placement occurred in two tranches. The first closing
(the “First Closing”) occurred on April 22, 2020, at which time Innoviva purchased 1,322,510 shares of Common
Stock and 1,322,510 Common Warrants in exchange for an aggregate gross purchase price of approximately $3.3 million.
At the First Closing, the Company entered into a registration
rights agreement (the “Registration Rights Agreement”) with Innoviva, 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 Common Warrants purchased by Innoviva under the Securities Purchase Agreement.
In addition, at the First Closing, the
Company entered into an investor rights agreement (the “Investor Rights Agreement”) with Innoviva. The Investor Rights
Agreement provides that for so long as Innoviva and its affiliates hold at least 15% of the outstanding shares of Common Stock
on a fully-diluted basis, Innoviva will have the right to designate two directors to the board of directors of the Company
(the “Board”), and for so long as Innoviva and its affiliates hold at least 8% of the outstanding shares of Common
Stock on a fully-diluted basis, Innoviva will have the right to designate one director to the Board, subject to certain qualifications
and conditions in the Investor Rights Agreement. The Investor Rights Agreement also provides for participation rights for Innoviva
to participate pro rata in future offerings of securities by the Company.
Second Closing
As described below, at a special meeting of stockholders held
on June 10, 2020 (the “Special Meeting”), the Company's stockholders approved the issuance of the shares of Common
Stock and Common Warrants to Innoviva in the second tranche of the Private Placement (the “Second Closing”). On June 11,
2020, the Company completed the Second Closing and issued 12,677,490 shares of Common Stock and 12,677,490 Common Warrants to Innoviva
for an aggregate gross purchase price of approximately $31.7 million. As a result of the Second Closing, Innoviva acquired
control of the Company, owning approximately 51.3% of the Company’s Common Stock without the exercise of the Common Warrants.
If Innoviva exercises the Common Warrants in their entirety, it will own approximately 67.8% of the Company’s Common Stock.
Funds used by Innoviva to acquire the Common Stock and Common Warrants issued in the Private Placement were from Innoviva’s
working capital.
The Company’s offering and sale of shares of Common Stock
and Common Warrants in the Private Placement were made in reliance on an exemption from registration under Section 4(a)(2) of
the Securities Act of 1933, as amended.
The foregoing descriptions of the Registration
Rights Agreement, the Investor Rights Agreement and the Securities Purchase Agreement, as well as the transactions contemplated
therein, do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements. Copies
of the Registration Rights Agreement and the Investor Rights Agreement were filed as Exhibits 4.1 and 10.1, respectively, to the
Current Report on Form 8-K, filed by the Company on April 22, 2020, and a copy of the Securities Purchase Agreement was
filed as Exhibit 10.1 to the Current Report on Form 8-K, filed by the Company on April 13, 2020, and are all incorporated
by reference herein.