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Item 1.01
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Entry into a Material Definitive
Agreement
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On March 8, 2021, Jaguar Health, Inc. (the “Company”)
entered into a royalty interest purchase agreement (the “Purchase Agreement”) with Streeterville Capital, LLC, a Utah
limited liability company affiliated with Chicago Venture Partners, L.P. (“Investor”), pursuant to which the Company
sold to Investor a royalty interest (the “Royalty Interest”) entitling Investor to receive $10,000,000 of future royalties
on sales of Mytesi® (crofelemer) for the COVID-related indication (as defined below) and certain up-front license fees and
milestone payments from licensees and/or distributors (subject to adjustment as provided below, the “Royalty Repayment Amount”)
for an aggregate purchase price of $5,000,000 (the “Royalty Financing”). The Company will use the proceeds to support
regulatory activities associated with the Company’s development pipeline, including supporting the development program for
crofelemer for the prophylaxis and/or symptomatic relief of inflammatory diarrhea, initially to be studied in a long-hauler COVID-19
recovery patient population (the “COVID-related indication”). Interest will accrue on the Royalty Repayment Amount
at a rate of 5% per annum from the closing of the Royalty Financing until the one-year anniversary of such closing and 10% per annum thereafter, compounding quarterly.
The Company will be obligated to make minimum royalty payments
on a monthly basis beginning on the earlier of (i) March 8, 2024 (i.e., 36 months following the closing of the Royalty Financing)
and (ii) 30 days following the full satisfaction of the Prior Royalty Interests (as defined below), but in no event less than 18
months from March 8, 2021 in an amount equal to the greater of (A) $250,000 (which increases to $400,000 beginning 6 months following
the closing of the Royalty Financing, $600,000 beginning 12 months following the closing of the Royalty Financing, and $750,000
beginning 18 months following the closing of the Royalty Financing) and (B) the royalty payments to which Investor is entitled,
consisting of (1) 10% of the Company’s net sales of crofelemer for the COVID-related indication (including any improvements,
modifications and follow-on products, collectively, the “Included Products”), (2) 10% of worldwide revenues related
to upfront licensing fees and milestone payments from licensees and/or distributors, but specifically excluding licensing fees
and/or milestone payments that are (A) reimbursements of clinical trial expenses or (B) associated with the license of Included
Products from the Company to Napo EU S.p.A. and (3) 50% of royalties collected from licenses of the Included Products to third
parties.
The Royalty Financing follows an earlier (i) $6 million royalty
financing consummated in October 2020 whereby Iliad Research and Trading, L.P. acquired a royalty interest from the Company (the
“Iliad Royalty Interest”) as disclosed in the Company’s Current Report on Form 8-K filed on October 9, 2020 and
(ii) $6 million royalty financing consummated in December 2020 whereby Uptown Capital, LLC (formerly Irving Park Capital, LLC)
acquired a royalty interest from the Company (the “UC Royalty Interest” and, together with the Iliad Royalty Interest,
the “Prior Royalty Interests”) as disclosed in the Company’s Current Report on Form 8-K filed on December 29,
2020.
Under the Purchase Agreement, the Company is subject to certain
covenants, including the obligations of the Company to: (i) timely file all reports required to be filed under Sections 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and not terminate its status as an issuer required
to file reports under the Exchange Act; (ii) maintain listing of the Company’s common stock on a securities exchange; (iii)
avoid trading in the Company’s common stock from being suspended, halted, chilled, frozen or otherwise ceased; (iv) not consummate
any sale or liquidation of all or substantially all of the Company’s business or any material asset outside the ordinary
course of business without Investor’s prior consent unless an acquiring party specifically agrees to assume all rights and
obligations associated with the Royalty Interest and, in Investor’s discretion, is capable of fulfilling such obligations,
(v) not grant a security or royalty interest in any of the Included Products for the primary purposes of raising capital without
Investor’s prior written consent, (vi) provide Included Products revenue and net sales information to Investor on a quarterly
basis and (vii) other customary covenants and obligations, for which the Company’s failure to comply may be subject to certain
liquidated damages, including a right for Investor to increase the Royalty Repayment Amount by 15%. Upon mutual agreement, the
parties may agree to consummate an additional royalty financing of approximately $5 million on or before June 2021.
The foregoing descriptions of the Royalty Interest and Purchase
Agreement are not complete and are qualified in their entirety by reference to the Royalty Interest and Purchase Agreement, respectively,
which are filed as Exhibit 4.1 and Exhibit 10.1, respectively, to this report and incorporated by reference herein.