Note; (3) the Company’s failure to deliver, when required by the Indenture, a fundamental change notice or certain other required notices; (4) a default in the Company’s obligation to convert a Note in accordance with the Indenture upon the exercise of the conversion right with respect thereto and such failure continues for five business days; (5) a default in the Company’s obligations related to a consolidation, merger or asset sale of the Company; (6) a default in the Company’s obligations or agreements under the Indenture or the Notes (other than a default set forth in (1), (2), (3), (4), or (5) above) where such default is not cured or waived within 60 days after notice to the Company by the Trustee, or to the Company and the Trustee by holders of at least 25% of the aggregate principal amount of Notes then outstanding; (7) a default by the Company or any of the Company’s significant subsidiaries (as defined in the Indenture) with respect to any one or more mortgages, agreements, or other instruments under which there is outstanding, or by which there is secured or evidenced, any indebtedness for money borrowed of at least $12,500,000 (or its foreign currency equivalent) in the aggregate of the Company or any of the Company’s significant subsidiaries, whether such indebtedness exists as of the date the Company first issues the Notes or is thereafter created, where such default: (i) constitutes a failure to pay the principal of any of such indebtedness when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise; or (ii) results in such indebtedness becoming or being declared due and payable before its stated maturity (an “acceleration”), and, in either case, such acceleration has not been rescinded or annulled or such failure to pay or default is not cured or waived, or such indebtedness is not paid or discharged in full, within 60 days after written notice to the Company by the Trustee or to the Company and the Trustee by holders of at least 25% of the aggregate principal amount of Notes then outstanding; (8) one or more final judgments being rendered against the Company or any of the Company’s significant subsidiaries for the payment of at least $12,500,000 (or its foreign currency equivalent) in the aggregate (excluding any amounts covered by insurance), where such judgment is not discharged or stayed within 60 days after (i) the date on which the right to appeal the same has expired, if no such appeal has commenced; or (ii) the date on which all rights to appeal have been extinguished; and (9) certain events of bankruptcy, insolvency and reorganization with respect to the Company or any of the Company’s significant subsidiaries.

If certain bankruptcy and insolvency-related Events of Defaults (as defined in the Indenture) occur, the principal of, and accrued and unpaid interest on, all of the then outstanding Notes shall automatically become due and payable. If an Event of Default other than certain bankruptcy, reorganization and insolvency-related Events of Defaults occurs and is continuing, the Trustee by notice to the Company, or the holders of the Notes of at least 25% in aggregate principal amount of the outstanding Notes, by notice to the Company and the Trustee, may declare the principal of, and accrued and unpaid interest on, all of the then outstanding Notes to be due and payable immediately. Notwithstanding the foregoing, the Indenture provides that, to the extent the Company elects, the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will, for the first 360 days after such Event of Default, consist exclusively of the right to receive additional interest on the Notes.

The Indenture provides that the Company may not consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person (other than any such merger, sale, lease or transfer to one or more of the Company’s wholly owned subsidiaries not effected by means of a consolidation or merger), unless: (1) the resulting, surviving or transferee person is the Company or, if not the Company, is a corporation duly organized and existing under the laws of the United States of America, any State thereof or the District of Columbia that expressly assumes (by executing and delivering to the Trustee, at or before the effective time of such business combination event, a supplemental indenture) all of the Company obligations under the Indenture and the Notes and (2) immediately after giving effect to such business combination event, no default or Event of Default will have occurred and be continuing.

A copy of the Base Indenture is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference. A copy of the Supplemental Indenture, including the form of Note, is filed as Exhibit 4.2 to this Current Report on Form 8-K and is incorporated herein by reference. The description of the Notes and the Indenture in this Current Report on Form 8-K is a summary and is qualified in its entirety by the terms of the Indenture and the form of Note included therein.

Capped Call Transactions

In connection with the Offering, on November 7, 2019 and November 8, 2019, the Company entered into privately negotiated capped call transactions with one of the underwriters in the Offering or its affiliate (the “Option Counterparty”). The Company used approximately $13.4 million of the net proceeds from the Offering of the Notes to pay the cost of the capped call transactions. The capped call transactions are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, in the event that the market value per share of the Company’s common stock, as measured under the terms of the capped call transactions at the time of exercise, is greater than the strike price of the capped call transactions (which initially corresponds to the initial conversion price of the Notes, and is subject to certain adjustments), with such reduction and/or offset subject to a cap initially equal to approximately $14.07 (which represents a premium of approximately 70% over the last reported sale price of the Company’s common stock on November 7, 2019), subject to certain adjustments. The capped call transactions are separate transactions, entered into by the Company with the Option Counterparty and are not part of the terms of the Notes.

A copy of the form of confirmation for the capped call transactions is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the terms of the capped call transactions is a summary and is qualified in its entirety by reference to such exhibit.

Amendments to Loan and Security Agreement

In connection with the Offering, on November 6, 2019 and November 7, 2019, the Company entered into a First Amendment and a Second Amendment (together, the “Amendments”) to that certain Loan and Security Agreement (the “Original Loan Agreement”), dated as of May 17, 2019, with Oxford Finance LLC (“Oxford”), as collateral agent, and Silicon Valley Bank (“SVB”) and Oxford as lenders party thereto. The Original Loan Agreement, as amended by the Amendments (the “Amended Loan Agreement”), permits the issuance of the Notes in the Offering and the capped call transactions described above and adds a financial covenant that the Company will maintain either (i) a minimum market capitalization of $550 million or (ii) minimum unrestricted cash and/or cash equivalents (including short-term investments) of $56.3 million in accounts at SVB, prior to the achievement of certain milestone in trial development.

The foregoing is only a summary of the material terms of the Amendments and does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendments, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K and are incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.

Item 8.01. Other Events.

On November 7, 2019, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Morgan Stanley & Co. LLC on behalf of itself and as representative of the several other underwriters named in Schedule I thereto (the “Underwriters”), to which the Company agreed to sell $120 million aggregate principal amount of Notes and, at the option of the Underwriters, up to an additional $18 million aggregate principal amount of Notes, solely to cover over-allotments.

The Underwriting Agreement includes customary representations, warranties and covenants. Under the terms of the Underwriting Agreement, the Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or contribute to payments that the Underwriters may be required to make in respect of those liabilities.

The foregoing description of the Underwriting Agreement is qualified in its entirety by the copy thereof which is attached as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The Company estimates that net proceeds from the Offering will be approximately $133.4 million, after deducting the Underwriters’ discounts and estimated transaction expenses associated with the Offering payable by the Company. The Company intends to use the net proceeds from the Offering to fund (i) the continued development of and commercial readiness activities associated with omecamtiv mecarbil, (ii) the continued clinical development of CK-274 and related compounds in indications associated with hypertrophic cardiomyopathies and related diseases associated with diastolic dysfunction and cardiac fibrosis, including heart failure with preserved ejection fraction, (iii) the continued clinical development of reldesemtiv in patients with amyotrophic lateral sclerosis and spinal muscular atrophy, including potential Phase 3 clinical trials and other commercial readiness activities, and (iv) working capital and other general corporate purposes, including tenant improvement of the new facility the Company plans to move into in 2021, capital expenditures, debt service or retirement of debt, including existing debt outstanding under the Amended Loan Agreement. Cytokinetics also used a portion of the net proceeds from the Offering to pay the cost of the capped call transactions described above.

In connection with the Offering, the Company is filing the opinion and consent of its counsel, Cooley LLP, regarding the validity of the securities being registered as Exhibits 5.1 and 23.1 to this Current Report on Form 8-K and are incorporated herein by reference.

Forward-Looking Statements

This Current Report on Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements about the Offering and the Company’s expectations regarding the expected net proceeds from the Offering and use of those net proceeds. These statements relate to future events and involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may”, “will”, “should”, “could”, “would”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “projects”, “predicts”, “potential” and similar expressions intended to identify forward-looking statements. These statements reflect the Company’s current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent the Company’s estimates and assumptions only as of the date of this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

CYTOKINETICS INC Exhibit
EX-1.1 2 d771605dex11.htm EX-1.1 EX-1.1 Exhibit 1.1 4.00% Convertible Senior Notes due 2026 CYTOKINETICS,…
To view the full exhibit click here

About Cytokinetics, Incorporated (NASDAQ:CYTK)

Cytokinetics, Incorporated is a late-stage biopharmaceutical company. The Company is focused on discovering, developing and commercializing first-in-class muscle activators as potential treatments for debilitating diseases in which muscle performance is compromised and/or declining. It is focused on the discovery and development of small molecule therapeutics that modulate muscle function for the treatment of serious diseases and medical conditions. Its drug candidates, which are in clinical development include tirasemtiv, CK-2127107 and omecamtiv mecarbil. Its tirasemtiv and CK-2127107 are skeletal muscle troponin activators. It is developing tirasemtiv drug candidate for the treatment of Amyotrophic lateral sclerosis (ALS). The Company is developing CK-2127107 for the potential treatment of spinal muscular atrophy, chronic obstructive pulmonary disease and ALS. The Omecamtiv mecarbil is a cardiac muscle myosin activator, which is being evaluated for the treatment of heart failure.