Quarterly report pursuant to Section 13 or 15(d)

Subsequent Event

v3.21.2
Subsequent Event
6 Months Ended
Jun. 30, 2021
Subsequent Events [Abstract]  
Subsequent Event
7. Subsequent Event
On July 30, 2021 (the Effective Date), the Company entered into a Development Financing Agreement (the Financing Agreement) with ABW Cyclops SPV LP, an affiliate of Abingworth LLP (Abingworth), pursuant to which Abingworth will provide funding to CymaBay to support its development of seladelpar for the treatment of primary biliary cholangitis (PBC). Pursuant to the Financing Agreement, Abingworth has committed to provide the Company up to $100.0 million in funding, of which $25.0 million
is to be
provided in August 2021, $25.0 million is to be provided approximately three months after the Effective Date and $25.0 million is to be provided approximately six months after the Effective Date. The Company has an option to receive an additional $25 million (the Optional Funding) within approximately two months of the completion of enrollment of the Company’s Phase 3 RESPONSE clinical trial. The Optional Funding is subject to certain customary funding conditions. Use of proceeds from the funding is limited to costs incurred or paid related to the development program as defined in the agreement. The Company
will receive
 the first $25.0 million funding payment in August 2021. In return, the Company will pay to Abingworth (1) upon the first to occur of regulatory approval of seladelpar for the treatment of PBC in the U.S., U.K., Germany, Spain, Italy or France (Regulatory Approval), fixed success payments equal to 2.0x of the funding provided, consisting of $10 million after Regulatory Approval and thereafter anniversary payments for the following six years of $15.0 million, $22.5 million, $22.5 million, $25.0 million, $27.5 million and $27.5 million, respectively (or if the Optional Funding is provided, 133% of such payments) and (2) variable success payments equal to 1.1x of the funding provided, consisting of sales milestone payments of (x) $17.5 million and $27.5 million, respectively (or if the Optional Funding is provided, 133% of such payments) upon first reaching certain cumulative U.S. product sales thresholds, and (y) $37.5 million (or if the Optional Funding is provided, 133% of such payment) upon first reaching a specified U.S. product sales run rate. On receiving the regulatory approval, the Company will execute a note agreement with Abingworth within two business days to convert the fixed and variable success payments into a note payable. At the time that Abingworth receives, collectively, an aggregate of 3.1x of the funding provided (approximately $232.5 million (or $310.0 million if the Optional Funding is provided)), the Company’s payment obligations under the Agreement will be fully satisfied. The Company has the option to satisfy its payment obligations to Abingworth upon Regulatory Approval, or a change of control of the Company, by paying an amount equal to the remaining payments payable to Abingworth subject to a
mid-single-digit
discount rate. Upon a change of control of the Company, an acceleration payment of 1.35x of the funding provided is payable, net of payments already made to Abingworth and creditable against future payments to Abingworth.
Pursuant to the Financing Agreement, the Company granted Abingworth a security interest in all of our assets (other than intellectual property not related to seladelpar), provided that the Company is permitted to incur certain indebtedness. The security interest will terminate when the Company has paid Abingworth 2.0x of the funding provided or upon certain terminations of the Financing Agreement.
As part of the arrangement, an executive review committee was established between the Company and Abingworth to oversee the Company’s development of seladelpar.