On On August 31, 2022, ImmunityBio, Inc. (the "company" or "we") reported that entered into a series of transactions including, in part, a new debt financing resulting in $125.0 million of gross proceeds, along with the amendment and restatement of the company’s nearest term debt maturity to extend the maturity from December 17, 2022 to December 31, 2023 and an adjustment to the interest rate to match the new debt issuance, and the amendment and restatement of the company’s fixed-rate debt maturing September 30, 2025 to add an equity conversion feature, in each case as further described below (Filing, 8-K, ImmunityBio, AUG 31, 2022, View Source [SID1234618946]).
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New $125.0 million Variable-Rate Promissory Note
On August 31, 2022, we executed a $125.0 million promissory note with Nant Capital, LLC ("Nant Capital"), an entity affiliated with Dr. Patrick Soon-Shiong, our Executive Chairman and Global Chief Scientific and Medical Officer. This note bears interest at Term Secured Overnight Financing Rate ("Term SOFR") plus 8.0% per annum. The accrued interest shall be payable quarterly on the last business day of March, June, September and December, commencing on September 30, 2022. The outstanding principal amount and any accrued and unpaid interest are due on December 31, 2023. We may prepay the outstanding principal amount, together with any accrued interest at any time, in whole or in part, without premium or penalty.
We received net proceeds of $124.4 million from this financing, net of a $0.6 million origination fee paid to the lender, which we intend to use for commercialization efforts, clinical trials, working capital and general corporate purposes.
Amendment and Restatement of Variable-Rate Promissory Note due December 17, 2022
As of June 30, 2022, we had a $300.0 million variable-rate promissory note with Nant Capital. This note bore interest at Term SOFR plus 5.4% per annum, which was paid quarterly. We may prepay the outstanding principal amount, together with any accrued interest at any time, in whole or in part, without premium or penalty. In the event of a default on the loan (as defined in the promissory note), including if we do not repay the loan at maturity, the company has the right, at its sole option, to convert the outstanding principal amount and accrued and unpaid interest due under this note into shares of the company’s common stock at price of $5.67 per share.
On August 31, 2022, the terms of the variable-rate promissory note were amended and restated to extend the maturity date of the loan from December 17, 2022 to December 31, 2023, increase the spread on the loan from 5.4% to 8.0% per annum, and reset the quarterly interest payment date from the 17th to the last business day of March, June, September and December, commencing on September 30, 2022. No other material terms or conditions of this variable-rate promissory note were modified as part of this amendment and restatement.
Amendment and Restatement of Fixed-Rate Promissory Notes due September 30, 2025
We had six outstanding fixed-rate promissory notes with Nant Capital, NantWorks, LLC, NantCancerStemCell, LLC, and NantMobile, LLC (all entities affiliated with Dr. Soon-Shiong) in an aggregate amount of $312.5 million, including accrued interest, as of June 30, 2022. These notes bear interest at a rate ranging from 3.0% to 6.0% per annum, provide that the outstanding principal is due and payable on September 30, 2025, and accrued and unpaid interest is payable either upon maturity or, with respect to one of the notes, on a quarterly basis. We may prepay the outstanding principal amount of any advance under such notes, together with accrued and unpaid interest, at any time, in whole or in part, without premium or penalty, subject to an advance notice period of at least five business days, during which the lender can convert the amount requested to be prepaid by the company into shares of company common stock, as part of the amendment and restatement described below.
On August 31, 2022, the terms of each fixed-rate promissory note were amended and restated to include a conversion feature that gives each lender the right at any time, at its sole option, to convert the entire outstanding principal amount and accrued and unpaid interest due under each note at the time of conversion into shares of the company’s common stock at a price of $5.67 per share. No other material terms or conditions of these fixed-rate promissory notes were modified as part of these amendments.
The foregoing description of the related-party promissory notes does not purport to be complete and is qualified in its entirety by reference to the full text of the notes, copies of which will be filed with the company’s Quarterly Report on Form 10-Q for the period ended September 30, 2022 and are incorporated herein by reference.