Item 1.01. Entry into a Material Definitive Agreement.
On February 23, 2023, ObsEva SA (the "Company") entered into a Payoff and
Termination Agreement (the "Payoff Agreement") with JGB (Cayman) Port Ellen Ltd.
("JGB"), pursuant to which JGB agreed to accept a reduced prepayment premium of
(i) $565,614 in cash and (ii) $250,000 in the form of 1,470,588 common shares of
the Company (the "Payoff Shares") as prepayment for that certain Senior Secured
Convertible Note issued by the Company to JGB due December 31, 2023, in the
aggregate original principal amount of $31,496,063 (the "First Tranche Note")
and that certain Senior Secured Convertible Note issued by the Company to JGB
due December 31, 2023, in the aggregate original principal amount of $10,500,000
(the "Second Tranche Note" and together with the First Tranche Note, the
"Outstanding Notes"). As of February 23, 2023, $4,681,398 aggregate principal
amount of the First Tranche Note and $1,852,988 aggregate principal amount of
the Second Tranche Note remained outstanding. The Company completed the
transactions contemplated by the Payoff Agreement on February 24, 2023, in full
satisfaction of its obligations under the Outstanding Notes and that certain
Amended and Restated Securities Purchase Agreement, deemed dated as of
October 12, 2021, among the Company and certain funds and accounts managed
by JGB Management, Inc. (including JGB).
Item 1.02 Termination of a Material Definitive Agreement.
The information contained in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 1.02.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On February 23, 2023, the Board of Directors (the "Board") of the Company
approved a reorganization plan, to, among other things, consolidate its
operations in Switzerland, where its headquarters are located. The
reorganization plan is intended to preserve cash, focus resources towards the
development of nolasiban, a novel, oral oxytocin receptor agonist to improve in
vitro fertilization success rates, and manage out-licensed programs. As part of
the reorganization, the Company reduced its overall workforce by approximately
57%, including downsizing its US-based executive management team. The Company
expects to similarly propose a reduced Board at its next Annual General Meeting
of Shareholders (the "AGM").
The Company is beginning the activities with respect to the reorganization plan
effective immediately. As a result, the Company expects to incur restructuring
charges of approximately $1.2 million attributable to cash payments primarily
for notice period payments, including healthcare coverage to employees with
respect to eliminated positions and to realize annual savings of approximately
$3.5 million. Such restructuring charges are expected to be incurred and
recorded in the first quarter of 2023.
The costs and charges described above and timing thereof are preliminary
estimates based on the Company's current expectations and are subject to a
number of assumptions and risks, and actual results may differ materially from
such estimates. The Company may also incur other charges, costs, future cash
expenditures or impairments not currently contemplated due to events that may
occur as a result of, or in connection with, the reorganization plan and
reduction in workforce.
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard; Transfer of Listing.
Following the Board's approval of the reorganization plan, on February 23, 2023,
the Company notified The Nasdaq Stock Market LLC ("Nasdaq") of its inability to
comply with Nasdaq Listing Rule 5450(a)(1) (the "Bid Price Rule") because the
bid price of the Company's common shares has not closed at or above $1.00 per
share for a minimum of ten consecutive business days. As previously reported, on
September 12, 2022, the Company received notice from the Listing Qualifications
Staff of Nasdaq indicating that the Company was not in compliance with the Bid
Price Rule and the Company's securities were subject to delisting unless, among
other things, the Company regained compliance by March 13, 2023.
In light of the reorganization plan, the Company expects that Nasdaq will file a
delisting application on Form 25 with the United States Securities and Exchange
Commission (the "SEC") to delist the Company's common shares from Nasdaq.
Following the effectiveness of such delisting, the Company intends to file with
the SEC a Form 15
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requesting the deregistration of its common shares under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the suspension of its
reporting obligations under Section 13 and Section 15(d) of the Exchange Act,
subject to meeting certain conditions to deregistration, including the Company
having fewer than 300 record holders of its common shares.
Item 3.02 Unregistered Sales of Equity Securities.
The information included in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02 to the extent required. The
Company relied upon the exemption from the registration requirements under the
Securities Act of 1933, as amended (the "Securities Act"), provided by
Section 3(a)(9) of the Securities Act with respect to the issuance of the Payoff
Shares.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Director Departures
On February 23, 2023, Annette Clancy, current chair of the Board, Brian
O'Callaghan, Stephanie Brown, Anne VanLent and Ed Mathers, each a current member
of the Board, notified the Company that they will not stand for re-election as
director nominees of the Company at the AGM which is expected to be held later
in 2023, and therefore, will no longer serve as directors of the Company or on
any committee of the Board, effective as of the AGM. The decisions of the
directors not to stand for re-election was in connection with the reorganization
and not due to any disagreement with the Company.
Officer Departure and Appointment
As part of the reorganization, on February 24, 2023, the Company announced that
Brian O'Callaghan, the Company's Chief Executive Officer, stepped down from his
position effective as of February 23, 2023. Mr. O'Callaghan is succeeded by Will
Brown as Interim Chief Executive Officer. In addition to Interim Chief Executive
Officer, Mr. Brown continues to serve as the Company's Chief Financial Officer.
Mr. Brown joined the Company in January 2022 as Chief Financial Officer with
extensive experience in capital markets, finance and accounting. From May 2018
to December 2021, Mr. Brown served as Chief Financial Officer of Altimmune, Inc.
(NASDAQ: ALT) where he was critical in the company's transformation and growth
through more than $300 million of new equity issuances and a strategic
acquisition. Mr. Brown has been a consultant to several private and public
companies in a variety of accounting and tax matters both independently and as
the managing partner of Redmont CPAs. Prior to his consulting role, he was an
audit manager at PricewaterhouseCoopers and a Division Controller at Rheem, a
multinational manufacturing company. Mr. Brown earned both his MBA and B.S. from
Auburn University at Montgomery.
The selection of Mr. Brown to serve as the Company's Interim Chief Executive
Officer was not pursuant to any arrangement or understanding with respect to any
other person. In addition, there are no family relationships between Mr. Brown
and any director or executive officer of the Company. Mr. Brown has not been a
party to any transaction with the Company or its subsidiaries of the type
required to be disclosed pursuant to Item 404(a) of Regulation S-K, and no such
transaction is currently contemplated.
On February 23, 2023, the Company entered into a letter agreement (the "Interim
CEO Letter") with Mr. Brown, governing the terms of his service as the Company's
Interim Chief Executive Officer. Pursuant to the Interim CEO Letter, Mr. Brown
is eligible to earn a retention bonus payment of $132,600, less applicable
withholdings, subject to continues employment in good standing with the Company
through the earlier of (i) the appointment of a successor Chief Executive
Officer or (ii) May 31, 2023 (such date, the "Retention Date"). Such retention
bonus, if earned, will be paid in a lump sum on the Company's next regular
payroll date following the Retention Date.
Pursuant to the Interim CEO Letter, on February 23, 2023, the Board granted to
Mr. Brown an option to purchase 250,000 common shares of the Company at an
exercise price equal to $0.169, the closing market price per share of the
Company's common shares on Nasdaq on the date of grant. The option became fully
vested and exercisable immediately.
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Item 7.01. Regulation FD Disclosure.
On February 24, 2023, the Company issued a press release regarding the
reorganization plan. A copy of the Company's press release is furnished herewith
as Exhibit 99. 1 to this Current Report on Form 8-K and incorporated herein by
reference.
The information in Item 7.01 of this Current Report on Form 8-K, including
Exhibit 99.1 attached hereto, shall not be deemed "filed" for purposes of
Section 18 of the Exchange Act, or incorporated by reference into any filing of
the Company under the Securities Act or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
Exhibit
No. Description
99.1 Press release dated February 24, 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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