Otonomy, Inc. (NASDAQ:OTIC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

On July 9, 2020, Otonomy, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Cowen and Company, LLC and Piper Sandler & Co., as representatives of the underwriters named therein (collectively, the “Underwriters”), relating to the public offering of 14,500,000 shares of the Company’s common stock, par value $0.001 per share (the “Underwritten Shares”), and pre-funded warrants (the “Pre-Funded Warrants”) to purchase 4,000,000 shares of the Company’s common stock. Under the terms of the Underwriting Agreement, the Company also granted the Underwriters an option exercisable for 30 days from the date of the Underwriting Agreement to purchase up to an additional 2,775,000 shares of common stock (together with the Underwritten Shares, the “Shares”), which the Underwriters fully exercised on July 9, 2020. All of the Shares and Pre-Funded Warrants are being sold by the Company. The offering price of the Shares to the public is $3.25 per share, and the offering price of the Pre-Funded Warrants to the public is $3.249 per share underlying each Pre-Funded Warrant. The Underwriters will purchase the Shares from the Company to the Underwriting Agreement at a price of $3.046875 per share and the Pre-Funded Warrants from the Company to the Underwriting Agreement at a price of $3.045875 per share underlying each Pre-Funded Warrant.

The gross proceeds to the Company from this offering are expected to be approximately $69.1 million before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The offering is expected to close on July 13, 2020, subject to the satisfaction of customary closing conditions.

The Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by such parties.

The public offering is being made to the Company’s effective registration statement on Form S-3 (File No. 333-227269) (the “Registration Statement”) and the related prospectus supplement and the accompanying prospectus, in each case filed with the Securities and Exchange Commission.

Each Pre-Funded Warrant will have an exercise price per share of common stock equal to $0.001 per share. The exercise price and the number of shares of common stock issuable upon exercise of each Pre-Funded Warrant is subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. Each Pre-Funded Warrant will be exercisable from the date of issuance until the date the Pre-Funded Warrant is exercised in full. Each Pre-Funded Warrant will be exercisable, in the holder’s discretion, by (i) payment in full in immediately available funds for the number of shares of common stock purchased upon such exercise or (ii) a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined according to the formula set forth in the Pre-Funded Warrant. Under the Pre-Funded Warrants, the Company may not effect the exercise of any Pre-Funded Warrant, and a holder will not be entitled to exercise any portion of any Pre-Funded Warrant that, upon giving effect to such exercise, would cause: (i) the aggregate number of shares of common stock beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the total number of shares of common stock outstanding immediately after giving effect to the exercise; or (ii) the combined voting power of the Company’s securities beneficially owned by such holder (together with its affiliates) to exceed 9.99% of the combined voting power of all of the Company’s securities immediately outstanding after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Pre-Funded Warrant, which percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 19.99% upon at least 61 days’ notice to the Company.

In the event of certain fundamental transactions, a holder of Pre-Funded Warrants will be entitled to receive, upon exercise of the Pre-Funded Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Pre-Funded Warrants immediately prior to the fundamental transaction without regard to any limitations on exercise contained in the Pre-Funded Warrants.