By Mary-Katherine Stinson
Lexington, Ky., Dec. 6 – Summit Therapeutics Inc. entered a note purchase agreement under which the company was loaned $520 million in exchange for the issuance of $520 million of promissory notes, according to a company news release.
The company has issued to Mr. Duggan and Dr. Zanganeh, who together hold 87.4% of the company’s common stock, unsecured promissory notes in the amount of $400 million and $20 million, respectively, which will mature on Feb. 15, 2023 and an unsecured promissory note to Mr. Duggan in the amount of $100 million which will mature on Sept. 15, 2023.
The maturity dates may be extended at the company’s option but may not be extended beyond Sept. 6, 2024.
The notes accrue interest at 7.5%
Interest will be prepaid on the notes for the period through Feb. 15, 2023 in the form of common stock shares.
If the company exercises its right to extend the term of the notes, interest will accrue on the outstanding principal balance at the interest rate equal to Prime plus 50 basis points as adjusted monthly. After the three months immediately following the maturity dates, interest will accrue at Prime plus 300 bps, adjusted monthly.
If the company consummates a public offering, then the February notes will be prepaid by an amount equal to the lesser of the net proceeds raised in the public offering or the outstanding principal of the notes. The prepayment would not be required prior to May 15, 2023.
There is no prepayment penalty.
Proceeds generated from the promissory note offering will be used to pay the upfront fees of the partnership agreement with Akeso Inc., to fund activities supporting the clinical development and regulatory approval of ivonescimab (known as SMT112 in the United States), for business development opportunities to expand the pipeline of drug candidates and for general corporate purposes.
The promissory notes were issued as a part of a definitive agreement establishing the company’s partnership with Akeso to in-license its breakthrough bispecific antibody, ivonescimab, where Summit will receive the rights to develop and commercialize the antibody in the United States, Canada, Europe, and Japan. In exchange for these rights, Summit will make an upfront payment of $500 million.
The company also announced a potential rights offering has been approved by the board which is anticipated to generate $500 million if fully subscribed. It is anticipated that the February notes will be repaid in connection with the consummation of the company’s anticipated rights offering.
Summit is a biopharmaceutical company headquartered in Menlo Park, Calif.
| Issuer: | Summit Therapeutics Inc.
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| Amount: | $520 million
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| Issue: | Promissory notes
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| Coupon: | 7.5% initially; if notes are extended at Prime plus 50 bps and three months immediately following maturity dates at Prime plus 300 bps
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| Distribution: | Private placement
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| February notes
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| Amount: | $420 million
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| Maturity: | Feb. 15, 2023
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| September notes
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| Amount: | $100 million
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| Maturity: | Sept. 15, 2023
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