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Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events  
Subsequent Events

15. Subsequent Events

The Company completed an evaluation of the impact of subsequent events through the date these financial statements were issued.

Royalty Interest Transaction

 

On March 4, 2020, the Company entered into a royalty interest purchase agreement (the “Purchase Agreement”) with Iliad Research and Trading, L.P., a Utah limited partnership affiliated with Chicago Venture Partners, L.P. (“Purchaser”), pursuant to which the Company sold to Purchaser a royalty interest entitling Purchaser to receive $500,000 of future royalties on sales of Mytesi (crofelemer) and certain up-front license fees and milestone payments from licensees and/or distributors (the “Royalty Repayment Amount”) for an aggregate purchase price of $350,000. The Company will use the proceeds to support advancement of regulatory activities associated with its pipeline, including the Company’s lead product candidate, crofelemer for cancer therapy-related diarrhea, and general corporate purposes. The Company will be obligated to make minimum royalty payments on a monthly basis beginning on September 4, 2020 in an amount equal to the greater of (i) $25,000 (which increases to $43,750 beginning on March 4, 2021) and (ii) 10% of the Company’s net sales of Mytesi and 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 reimbursements of clinical trial expenses.

 

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 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 the prior consent Purchaser unless an acquiring party specifically agrees to assume all rights and obligations associated with the Royalty Interest and, in Purchaser’s discretion, is capable of fulfilling such obligations, (v) not grant a security or royalty interest in Mytesi for the primary purposes of raising capital without Purchaser’s prior written consent, (vi) provide Mytesi revenue and net sales information to Purchaser 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 the Purchaser to increase the Royalty Repayment Amount by 15%.

 

The foregoing descriptions of the Royalty Interest and Purchase Agreement are not complete and are qualified in their entirety by reference to the full text of the Royalty Interest and Purchase Agreement, respectively.

 

Warrant Repricing

 

On March 5, 2020, the Company entered into a warrant exercise agreement (the “Exercise Agreement”) with a holder (the “Holder”) of its Series 2 warrants (the “Warrants”) previously issued in the Company’s registered public offering on July 23, 2019, pursuant to which the Holder agreed to exercise in cash its Warrants to purchase an aggregate of 90,940 shares of the Company’s common stock at a reduced exercise price of $0.605 per share, which is the Minimum Price (as defined under Nasdaq Listing Rule 5635(d)) as of the date of such Exercise Agreement, for gross proceeds to the Company of approximately $55,000.

 

The issuance of the Warrants and the offer and sale of shares of common stock underlying the Warrants have been registered on the Company’s registration statement on Form S-1 and an additional registration statement of the Securities Act of 1933, as amended of which were previously filed with and declared effective by the Securities and Exchange Commission (the “SEC”).

 

On February 24, 2020, the Company entered into warrant exercise agreements (collectively, the “Exercise Agreements”) with a holder (the “Holder”) of its Series 1 warrants previously issued in the Company’s registered public offering in July 2019 and its warrants previously issued in a PIPE in March through June of 2019 pursuant to which the Holder agreed to exercise in cash its Warrants to purchase an aggregate of 458,022 shares of the Company’s common stock at a reduced exercise price of $0.692 per share for gross proceeds to the Company of approximately $317,000.

 

The PIPE Purchase Agreement includes representations, warranties, and covenants customary for a transaction of this type. In addition, the Company agreed to file a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (the “SEC”) no later than 15 business days following the date of the PIPE Purchase Agreement to register the resale of the PIPE Shares. The PIPE Shares were offered and sold in reliance upon exemptions from registration.

 

The foregoing summary of the PIPE Purchase Agreement is not complete and is subject to, and qualified in its entirety by the PIPE Purchase Agreement.

 

Private Placement

 

On March 23, 2020, Jaguar Health, Inc. (the “Company”) entered into a securities purchase agreement (the “PIPE Purchase Agreement”) with certain investors named therein (collectively, “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement an aggregate of 1,714,283 unregistered shares (the “PIPE Shares”) of the Company’s common stock for an aggregate purchase price of approximately $720,000 (the “Private Placement”). The Company intends to use the proceeds from the private placement for working capital and general corporate purposes, including the additional purchase of API and drug product to address potential impact of coronavirus pandemic.

 

Warrant Exercise and Preferred Convertible Stock Agreement

 

On March 24, 2020, the Company entered into a warrant exercise agreement (the “Exercise Agreement”) with a holder (the “Holder”) of its Series 2 warrants, pursuant to which the Holder agreed to exercise in cash its Warrants to purchase an aggregate of 1,250,000 shares of the Company’s common stock at a reduced exercise price of $0.5227 per share, for gross proceeds to the Company of approximately $653,400. In consideration for the holder’s exercise of the Series 2 warrants, the Company agreed to reduce the conversion price of the Series B Preferred Stock from $2.00 to $0.4456.

 

Landlord Letter of Credit

 

On March 24, 2020, the Company entered into a Landlord Letter of Credit Agreement with Charles Conte (the “LC Facilitator”), the brother of Lisa A. Conte, the Company’s President, Chief Executive Officer and member of the Company’s board of directors (the “Landlord LC Agreement”), pursuant to which the Company will, subject to Landlord’s consent, replace the existing letter of credit in the amount of $475,000 entered into on August 28, 2018 by the Company with Pacific Capital Management, LLC to satisfy the letter of credit requirement in the Lease (the “Original LC”) with a new letter of credit in the amount of $475,000 (the “New LC”). Pursuant to the Landlord LC Agreement, the Company will pay the LC Facilitator an amount equal to $10,000 per month as consideration for the New LC and reimburse LC Facilitator up to $7,500 for reasonable out-of-pocket expenses incurred in establishing the New LC. The New LC will expire no earlier than December 31, 2020, provided, however that the Company, at no additional cost, may replace the New LC on an earlier date, at the Company’s sole discretion upon 30 days’ written notice to LC Facilitator.

 

Equity Line of Credit

 

On March 24, 2020, the Company entered into an equity purchase agreement (the “ELOC Purchase Agreement”) with Oasis Capital, LLC, a Puerto Rico limited liability company (“Oasis Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Oasis Capital is committed to purchase up to an aggregate of $2.0 million of shares of Common Stock over the 36-month term of the ELOC Purchase Agreement. Concurrently with entering into the ELOC Purchase Agreement, the Company also entered into a registration rights agreement with Oasis Capital (the “Registration Rights Agreement”), in which the Company agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act, registering the sale of the shares of common stock that may be issued to Oasis Capital under the ELOC Purchase Agreement.

 

The purpose of the equity line of credit is to provide the Company with proceeds as may be necessary for working capital and general corporate purposes, including the additional purchase of API and drug product to address potential impact of coronavirus pandemic.

 

Under the ELOC Purchase Agreement, after the SEC has declared effective the registration statement referred to above, on any trading day selected by the Company (such date, the “Put Date), the Company has the right, in its sole discretion, to present Oasis Capital with a purchase notice (each, a “Put Notice”), directing Oasis Capital (as principal) to purchase up to the lesser of (i) 200,000 shares of Common Stock or (ii) 20% of the average trading volume of common stock in the 10 trading days immediately preceding the date of such Put Notice, at a per share price (the “Purchase Price”) equal to $0.436 (each, an “Option 1 Put”), provided that the aggregate amount of all Option 1 Puts and Option 2 Puts (as defined below) does not exceed $2.0 million.

 

In addition, on any date on which Oasis Capital receives shares of Common Stock in connection with a Put Notice (the “Clearing Date”), the Company also has the right, in its sole discretion, to present Oasis Capital with a Put Notice (each, an “Option 2 Put”) directing Oasis Capital to purchase an amount of Common Stock equal to the lesser of (i) such amount that equals 10% of the daily trading volume of the Common Stock on the date of such Put Notice and (ii) $200,000, provided that the aggregate amount of the Option 1 Put and Option 2 Put on any Put Date or Clearing Date does not exceed $500,000 and the aggregate amount of all Option 1 Puts and Option 2 Puts does not exceed $2.0 million. The purchase price per share pursuant to such Option 2 Put is equal to the Purchase Price. The Threshold Price and the Purchase Price will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the period(s) used to compute the Threshold Price or the Purchase Price.

 

The ELOC Purchase Agreement provides that the Company and Oasis Capital shall not effect any sales under the ELOC Purchase Agreement on any purchase date where the lowest traded price of the Common Stock on both such date and on the immediately preceding trading day is less than $0.5014 (the “Threshold Price”). The Company will control the timing and amount of sales of Common Stock to Oasis Capital. Oasis Capital has no right to require any sales by the Company, but is obligated to make purchases from the Company as directed by the Company in accordance with the ELOC Purchase Agreement. There are no limitations on use of proceeds, financial or business covenants, rights of first refusal, or participation rights in the ELOC Purchase Agreement. In consideration for entering into the ELOC Purchase Agreement, the Company agreed to issue Oasis Capital 68,807 shares of Common Stock, subject to the Company’s receipt of approval by the Company’s stockholders (the “Commitment Shares”). The Purchase Agreement may be terminated by the Company at any time, at its discretion, without any cost to the Company. Oasis Capital has agreed that neither it nor any of its agents, representatives and affiliates shall engage in any direct or indirect short-selling or hedging of Common Stock during any time prior to the termination of the ELOC Purchase Agreement.

 

The foregoing descriptions of the ELOC Purchase Agreement and the Registration Rights Agreement are not complete and are qualified in their entirety by reference to the full text of the ELOC Purchase Agreement and the Registration Rigths Agreement.

 

The issuance of the Commitment Shares and all other shares of common stock that may be issued from time to time to Oasis Capital under the ELOC Purchase Agreement is exempt from registration under the Securities Act.