JAGUAR ANIMAL HEALTH,INC. (NASDAQ:JAGX) Files An 8-K Entry into a Material Definitive Agreement

JAGUAR ANIMAL HEALTH,INC. (NASDAQ:JAGX) Files An 8-K Entry into a Material Definitive Agreement

Item1.01Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

On March31, 2017, Jaguar Animal Health,Inc., a Delaware
corporation (the “Jaguar”), entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with Napo
Pharmaceuticals,Inc., a Delaware corporation (“Napo”), Napo
Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Jaguar (“Merger Sub”), and Gregory Stock, the
Napo representative, to which, among other things, subject to the
satisfaction or waiver of the conditions set forth in the Merger
Agreement, Merger Sub will merge with and into Napo, with Napo
becoming a wholly-owned subsidiary of Jaguar and the surviving
corporation of the merger (the “Merger”).

Subject to the terms and conditions of the Merger Agreement, at
the closing of the Merger, (i)each issued and outstanding share
of Napo common stock (other than dissenting shares and shares
held by Jaguar or Napo) will be converted into a contingent right
to receive up to a whole number of shares of Jaguar common stock
compromising in the aggregate no more than approximately 21.5% of
the fully diluted shares of Jaguar common stock immediately
following the consummation of the merger (“Contingent Right
Holders”), which contingent right will vest if the subsequent
resale of certain shares of Jaguar common stock (“the TrancheA
Shares”) issued by Jaguar to Nantucket Investments Limited
(“Nantucket”) in the Napo litigation debt settlement described
further below provides Nantucket with specified cash returns upon
the subsequent sale of their TrancheA Shares to third parties
over a specified period of time (the “Hurdle Amounts”),
(ii)existing creditors of Napo (inclusive of Nantucket) will be
issued in the aggregate approximately 43,102,595 shares of Jaguar
non-voting common stock and 2,005,245 shares of Jaguar voting
common stock in full satisfaction of all existing indebtedness
then owed by Napo to such creditors and (iii)an existing Napo
stockholder will be issued an aggregate of approximately
3,243,243 shares of Jaguar common stock in return for $3million
of new funds invested into Jaguar by such investor, which will be
immediately loaned to Napo to partially facilitate the
extinguishment of the Nantucket debt in Napo. At closing, it is
contemplated that unless consented to or waived by Jaguar, Napo
will have no more than (x)$11.3million in secured and unsecured
debt for monies borrowed (a portion of such debt proceeds which
will be used to pay off Napo’s secured debt owed to Nantucket),
(y)$6.2million of trade payables and certain other debt,
excluding transaction expenses and (z)Napo’s cash at closing
shall be no less than $500,000.

Shares of Jaguar non-voting common stock have the same rights to
dividends and other distributions and are convertible into shares
of common stock on a one-for-one basis upon (x)transfers to
non-affiliates of Nantucket at the option of the respective
holders thereof and (y)the release from escrow of certain
non-voting shares held by Nantucket to the legacy stockholders of
Napo under specified conditions.

Jaguar will also assume (i)each outstanding and unexercised
option to purchase Napo common stock, which will be converted
into options to purchase Jaguar common stock, (ii)each
outstanding warrant to purchase Napo capital stock, which will be
converted into warrants to purchase Jaguar common stock, and
(iii)each outstanding restricted stock unit to acquire Napo
capital stock, which will be converted into restricted stock
units to acquire Jaguar common stock.

The stockholders of Jaguar will continue to own their existing
shares and the rights and privileges of their existing shares
will not be affected by the merger. However, because Jaguar will
be issuing new shares of Jaguar common stock and non-voting
common stock to Napo creditors, and options, warrants and
restricted stock units exercisable for Jaguar common stock to
holders of Napo options, warrants and restricted stock units in
the merger, the stockholders of Jaguar will experience dilution
as a result of the issuance of shares in the merger and each
outstanding share of Jaguar common stock immediately prior to the
merger will represent a smaller percentage of the total number of
shares of Jaguar common stock and non-voting common stock issued
and outstanding after the merger. It is expected that Jaguar
stockholders and option and warrant holders before the merger
will hold approximately 25% of the total Jaguar common stock and
non-voting common stock issued and outstanding on a fully diluted
basis (“Jaguar Equity Holders”) immediately following
completion of the

merger. Thus, Jaguar Equity Holders before the merger will
experience dilution in the amount of approximately 75% as a
result of the merger.

Consummation of the Merger is subject to certain closing
conditions, including, among other things, approval by the
stockholders of Jaguar and Napo. The Merger Agreement contains
specified termination rights for both Jaguar and Napo, and
further provides that, if the merger fails to close for any
reason on, or prior to, July31, 2017, other than as a result
directly or indirectly of (x)lack of stockholder approval by
either Jaguar or Napo or (y)Napo (i)fails to perform in
accordance with the terms and conditions of the Binding Agreement
of Terms for Jaguar Animal Health,Inc. Acquisition of Napo
Pharmaceuticals,Inc., dated February8, 2017, between Jaguar and
Napo (the “Binding Agreement of Terms”) or the merger documents
or (ii)fails to abide by or breaches the provisions or
representations, warranties and covenants of the Binding
Agreement of Terms or the merger documents, then on, or before,
the close of business on August7, 2017, Jaguar will issue
2,000,000 shares of its restricted common stock to Napo.

The Board of Directors and executive management of Jaguar is
expected to remain unchanged following the effective time of the
Merger.

In connection with the Merger, Jaguar will seek stockholder
approval to (1)issue shares of Jaguar common stock and non-voting
stock as contemplated in the Merger Agreement, (2)adopt an
amended and restated certificate of incorporation to:
(a)authorize a class of non-voting common stock and (b)change the
name of Jaguar to Jaguar Health,Inc., each subject to the
consummation of the Merger, and (3)increase the number of shares
authorized to be issued under the Jaguar 2014 Stock Incentive
Plan.

The preceding summary does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement,
which is filed as Exhibit2.1 to this Current Report on Form8-K
and incorporated herein by reference.

Settlement of Outstanding Napo Debt

In order to induce Jaguar to enter into the Merger Agreement, on
March31, 2017, Napo entered into a Settlement and Discounted
Payoff Agreement with Nantucket and the lenders named therein
(the “Settlement Agreement”) to which Napo agreed,
simultaneously with the consummation of the merger, (a)to make a
cash payment to Nantucket of no less than $8million, which will
reduce the outstanding principal obligations under the Litigation
Financing Agreement, dated October10, 2014, by and between Napo
and Nantucket (the “Financing Agreement”), and (b)in
satisfaction as a compromise for the outstanding obligations
under the Financing Agreement and the release of any lien or
security interest in respect of such outstanding obligations,
(x)to transfer to Nantucket 2,666,666 shares of Jaguar common
stock owned by Napo and (y) to the merger agreement, to cause
Jaguar to issue to Nantucket 1,940,382 newly issued shares of
Jaguar voting common stock and 38,380,028 newly issued shares of
Jaguar non-voting common stock, which shares are subject to the
terms of the Investor Rights Agreement described below.

In connection with the execution of the Merger Agreement and the
Settlement Agreement, Jaguar and Nantucket entered into an
Investor Rights Agreement, dated March31, 2017 (the “Investor
Rights Agreement”) to which, among other things, Jaguar has
agreed to register the resale of those shares on one or more
registration statements. A portion of these shares will be held
in escrow and released to either Nantucket or the former Napo
stockholders, depending on whether Nantucket receives sufficient
proceeds from the resale of the TrancheA Shares to third parties
to satisfy the Hurdle Amounts. The Investor Rights Agreement also
provides that Jaguar cannot pay any dividends on any shares of
its capital stock or redeem any shares, except in limited
circumstances, without the prior written consent of Nantucket.

The preceding summary does not purport to be complete and is
qualified in its entirety by reference to the Investor Rights
Agreement, which is filed as Exhibit10.1 to this Current Report
on Form8-K and incorporated herein by reference.

Item3.02Unregistered Sales of Equity Securities.

To the extent required by Item3.02 of Form8-K, the information
contained in Item1.01 of this Current Report on Form8-K is
incorporated by reference herein.

Item5.02Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers

(b)

Resignation of Chief Scientific Officer

On March30, 2017, Roger Waltzman submitted his resignation,
effective April3, 2017, as Chief Scientific Officer of Jaguar.

Item8.01Other Events.

On March31, 2017, Jaguar issued a press release in connection
with the announcement of the Merger, which is attached as
Exhibit99.1 to this Form8-K.

Disclaimer on Forward-looking Statements

This Current Report on Form8-K contains “forward-looking
statements” within the meaning of section27A of the Securities
Act of 1933 and section21E of the Securities Exchange Act of
1934. These include statements regarding the benefits of the
acquisition of Napo, including future financial and operating
results, Jaguar’s or Napo’s plans, objectives, expectations and
intentions and the expected timing of completion of the
transaction. In some cases, you can identify forward-looking
statements by terms such as “may,” “will,” “should,”
“expect,” “plan,” “aim,” “anticipate,” “could,”
“intend,” “target,” “project,” “contemplate,”
“believe,” “estimate,” “predict,” “potential” or
“continue” or the negative of these terms or other similar
expressions. The forward-looking statements in this release are
only predictions. Jaguar has based these forward-looking
statements largely on its current expectations and projections
about future events. These forward-looking statements speak only
as of the date of this release and are subject to a number of
risks, uncertainties and assumptions, some of which cannot be
predicted or quantified and some of which are beyond Jaguar’s
control. Except as required by applicable law, Jaguar does not
plan to publicly update or revise any forward-looking statements
contained herein, whether as a result of any new information,
future events, changed circumstances or otherwise.

Important Information for Investors and Stockholders

This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation
of any vote or approval, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. In connection
with the proposed merger between Jaguar and Napo, Jaguar will
file with the Securities and Exchange Commission (the “SEC”) a
registration statement on FormS-4 that will include a joint proxy
statement of Jaguar and Napo that also constitutes a prospectus
of Jaguar. The definitive joint proxy statement/prospectus will
be delivered to Jaguar’s and Napo’s stockholders. INVESTORS AND
SECURITY HOLDERS OF JAGUAR AND NAPO ARE URGED TO READ THE
DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS
THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Investors and security holders will be able to
obtain free copies of the registration statement and the
definitive joint proxy statement/prospectus (when available) and
other documents filed with the SEC by Jaguar through the website
maintained by the SEC at http://www.sec.gov. Copies of the
documents filed with the SEC by Jaguar will be available free of
charge on Jaguar’s internet website at
www.jaguaranimalhealth.com or by contacting Jaguar at: Investor
Relations, Jaguar Animal Health,Inc., 201 Mission Street,
Suite2375, San Francisco, California, 94105; (415)-371-8300.

Participants in the Merger Solicitation

Jaguar, Napo, their respective directors and certain of their
executive officers and employees may be considered participants
in the solicitation of proxies in connection with the proposed
transaction. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of
Jaguar’s and Napo’s stockholders in connection with the
proposed merger will be set forth in the joint proxy
statement/prospectus when it is filed with the SEC. Information
about the directors and executive officers of Jaguar is set forth
in its proxy statement for its 2016 annual meeting of
stockholders, which was filed with the SEC on April29, 2016.
Information about the executive officers of Napo is set forth at
www.napopharma.com. Additional information regarding the
participants in the proxy solicitations and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy
statement/prospectus filed with the above-referenced registration
statement on FormS-4 and other relevant materials to be filed
with the SEC when they become available.

Item9.01Financial Statements and Exhibits

(d)

Exhibits

to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.

Date: March31, 2017

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About JAGUAR ANIMAL HEALTH, INC. (NASDAQ:JAGX)
Jaguar Animal Health, Inc. is an animal health company. It is focused on developing and commercializing gastrointestinal products for companion and production animals, foals, and horses. Canalevia is its prescription drug product candidate, intended for treatment of various forms of diarrhea in dogs. Canalevia is a canine-specific formulation of crofelemer, an active pharmaceutical ingredient (API) isolated and purified from the Croton lechleri tree. It is developing a pipeline of prescription drug product candidates and non-prescription (non-drug) products to address needs in animal health. As of December 31, 2016, its pipeline includes prescription drug product candidates for nine indications across multiple species, and non-prescription products targeting seven species. Its product candidates include Canalevia, Species-specific formulations of crofelemer, Equilevia, Virend (topical), Species-specific formulations of NP-500, Neonorm Calf and Species-specific formulations of Neonorm. JAGUAR ANIMAL HEALTH, INC. (NASDAQ:JAGX) Recent Trading Information
JAGUAR ANIMAL HEALTH, INC. (NASDAQ:JAGX) closed its last trading session up +0.20 at 1.15 with 145,077 shares trading hands.