DISCLOSURE SCHEDULES TO NOTE PURCHASE AGREEMENT
Genome Dx Therapeutics Inc. a Delaware corporation
Dated as of April 9, 2024
These Disclosure Schedules (the "Schedules") are delivered by Genome Dx Therapeutics Inc., a Delaware corporation (the "Company"), pursuant to, and form a part of, that certain Note Purchase Agreement, dated as of April 9, 2024 (the "Agreement"), by and among the Company and the Purchasers identified therein.
The Agreement provides for the issuance by the Company to the Purchasers of an aggregate principal amount of $40,000,000 in senior unsecured convertible promissory notes (the "Notes").
Purchasers:
1. Pinnacle BioVentures Fund III, L.P.
2. Cormorant Health Capital Partners, L.P.
3. Alder Creek Life Sciences Fund II, L.P.
These Schedules have been prepared by Calderwood & Harkness LLP, counsel to the Company, with input from Company management, including Priya Raghunathan, J.D., General Counsel & Corporate Secretary, and Diane Kowalski, CPA, Chief Financial Officer.
Calderwood & Harkness LLP — Client Matter No. 1013-00002
GENERAL DISCLAIMER AND INTRODUCTORY NOTES
The following general disclaimers and introductory notes apply to all of the Schedules set forth herein and should be read in conjunction with each Schedule:
1. Defined Terms. Capitalized terms used but not otherwise defined in these Schedules shall have the meanings ascribed to such terms in the Agreement. All references to "Sections" or "Articles" herein refer to Sections or Articles of the Agreement, unless the context otherwise requires.
2. Arrangement and Cross-References. These Schedules are arranged in sections corresponding to the numbered sections of Article II (Representations and Warranties of the Company) of the Agreement. The disclosures set forth in any particular Schedule shall be deemed to qualify (a) the corresponding representation and warranty set forth in the corresponding Section of Article II of the Agreement and (b) any other representation or warranty set forth in the Agreement to which the applicability of such disclosure is reasonably apparent on its face, notwithstanding the absence of a specific cross-reference in such other Schedule. The Company has endeavored to include cross-references where applicable, but the absence of a cross-reference shall not be deemed to limit the applicability of any disclosure to any other representation, warranty, covenant, or agreement in the Agreement.
3. No Admission of Materiality. The inclusion of any item, matter, or information in these Schedules does not constitute an admission by the Company that such item, matter, or information is material, that such item, matter, or information would reasonably be expected to result in a Material Adverse Effect, or that such item, matter, or information is required to be disclosed under the terms of the Agreement. Items and information may be included in these Schedules solely for informational purposes or out of an abundance of caution, and such inclusion shall not be deemed to set a standard of materiality or to broaden or otherwise affect the scope of any representation or warranty contained in the Agreement.
4. Headings. The headings and section references contained in these Schedules are inserted for convenience of reference only and shall not affect the meaning or interpretation of these Schedules or the Agreement.
5. Currency and Timing. Unless otherwise expressly stated herein, all dollar amounts set forth in these Schedules are denominated in United States Dollars and are stated as of the date of the Agreement (April 9, 2024). Where financial data references a specific date other than the date of the Agreement, such date is expressly indicated.
6. Qualification by Agreement. These Schedules are qualified in their entirety by reference to the specific provisions of the Agreement, including all definitions, limitations, and other terms and conditions set forth therein. In the event of any inconsistency between these Schedules and the Agreement, the terms and conditions of the Agreement shall control.
7. Summaries of Documents. Certain items disclosed herein include brief summaries or descriptions of contracts, agreements, or other documents. Such summaries and descriptions do not purport to be complete and are qualified in their entirety by reference to the full text of the applicable contract, agreement, or document, copies of which have been made available to the Purchasers and their counsel in the virtual data room maintained by the Company in connection with the transactions contemplated by the Agreement.
SCHEDULE 2.1
Organization and Qualification
The following information is disclosed with respect to Section 2.1 of the Agreement:
Jurisdiction of Incorporation and Formation Details:
The Company was incorporated in the State of Delaware on March 14, 2017. The Company's Delaware file number is 6347821. The Company is a corporation organized and existing under the General Corporation Law of the State of Delaware.
Registered Agent in Delaware:
The Company's registered agent in the State of Delaware is:
Capitol Registered Agents, Inc. 1209 Orange Street, Suite 200 Wilmington, DE 19801
Entity Type:
Corporation.
Federal Employer Identification Number:
82-3194507.
Foreign Qualifications:
The Company is qualified to do business as a foreign corporation in the following jurisdictions:
State of California: Foreign corporation qualification filed April 3, 2017. California entity number: C4085629.
The Company is not qualified, and is not required to be qualified, to do business as a foreign corporation in any jurisdiction other than the State of California.
Principal Office / Headquarters:
450 Pinnacle Drive, Suite 300 South San Francisco, CA 94080
Good Standing:
The Company is in good standing in the State of Delaware and the State of California as of the date hereof. Certificates of good standing from the Delaware Secretary of State and the California Secretary of State have been obtained and are available for review in the virtual data room.
SCHEDULE 2.2
Authorization. The following information is disclosed with respect to Section 2.2 of the Agreement:
No exceptions. The execution, delivery, and performance by the Company of the Agreement, the Notes, and each of the other transaction documents contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company. Such corporate action includes approval by the Board of Directors of the Company (the "Board") by unanimous written consent dated April 5, 2024 (the "Board Consent").
Recusal of Interested Director. Jonathan Merriweather, who serves as Board Chair of the Company and is a Managing Director of Pinnacle BioVentures, recused himself from the Board's deliberation and vote on the transactions contemplated by the Agreement due to his affiliation with Pinnacle BioVentures Fund III, L.P., the lead Purchaser in the offering. Mr. Merriweather did not participate in the discussion, deliberation, or vote reflected in the Board Consent. The remaining members of the Board, constituting a quorum of disinterested directors, unanimously approved the Agreement, the Notes, and the transactions contemplated thereby. The foregoing recusal and the procedures followed in connection therewith were consistent with the Company's conflict of interest policies and applicable provisions of the Delaware General Corporation Law, including Section 144 thereof.
No stockholder approval is required in connection with the execution, delivery, and performance of the Agreement and the issuance of the Notes.
SCHEDULE 2.3
Capitalization. The following information is disclosed with respect to Section 2.3 of the Agreement:
Part A — Authorized Capital Stock. As set forth in the Company's Restated Certificate of Incorporation, as most recently amended and restated in connection with the Series C Preferred Stock financing in September 2022 (the "Restated Certificate"), the total number of shares of capital stock that the Company is authorized to issue is as follows:
• Common Stock: 75,000,000 shares of Common Stock, par value $0.0001 per share.
• Preferred Stock: 45,000,000 shares of Preferred Stock, par value $0.0001 per share, of which the following series have been designated:
(a) Series A Preferred Stock: 10,000,000 shares designated as Series A Preferred Stock.
(b) Series B Preferred Stock: 15,000,000 shares designated as Series B Preferred Stock.
(c) Series C Preferred Stock: 20,000,000 shares designated as Series C Preferred Stock.
The rights, preferences, privileges, and restrictions of each series of Preferred Stock are as set forth in the Restated Certificate, a copy of which has been made available to the Purchasers.
Part B — Issued and Outstanding Capital Stock. As of the date hereof, the issued and outstanding shares of the Company's capital stock are as follows:
All of the outstanding shares of capital stock of the Company have been duly authorized, are validly issued, fully paid, and nonassessable, and were issued in compliance with applicable federal and state securities laws.
Part C — Outstanding Options, Warrants, and Other Rights. The following securities convertible into or exercisable for shares of the Company's capital stock are outstanding as of the date hereof:
2018 Equity Incentive Plan (the "Plan"):
• Total shares of Common Stock reserved for issuance under the Plan: 5,000,000 shares.
• Stock options outstanding under the Plan: 3,500,000 shares of Common Stock.
• Weighted average exercise price of outstanding options: $1.87 per share.
• Shares remaining available for future grant under the Plan: 1,500,000 shares.
Other than (a) the outstanding options described above and (b) the Notes to be issued pursuant to the Agreement (which, upon conversion, would be convertible into shares of the Company's capital stock on the terms and conditions set forth therein), there are no outstanding warrants, convertible securities, rights of subscription, preemptive rights, anti-dilution rights, rights of first refusal (other than as set forth in the Right of First Refusal and Co-Sale Agreement described in Schedule 2.10), or other agreements or commitments obligating the Company to issue, sell, or otherwise transfer any shares of its capital stock or any securities convertible into or exchangeable for shares of its capital stock.
Part D — Fully Diluted Share Count Summary. The following table sets forth the Company's capitalization on a fully diluted basis immediately prior to the closing of the transactions contemplated by the Agreement (and without giving effect to the conversion of the Notes):
The foregoing fully diluted share count does not include (i) 1,500,000 shares of Common Stock remaining available for future grant under the Plan or (ii) any shares issuable upon conversion of the Notes.
Part E — 409A Valuation. The most recent independent valuation of the Company's Common Stock for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), was performed by Clearview Valuation Group, LLC, an independent third-party valuation firm. The fair market value of the Company's Common Stock as determined in such valuation was $4.15 per share as of January 15, 2024. The Board reviewed and accepted such valuation at its meeting held on February 8, 2024. All stock option grants made since the date of such valuation have been made at exercise prices equal to or greater than $4.15 per share.
Part F — Prior Financings. The following is a summary of the Company's prior equity financing rounds:
• Series A Preferred Stock Financing: Completed in 2018; specific terms and documentation are on file with the Company and available for review.
• Series B Preferred Stock Financing: Completed in 2020; specific terms and documentation are on file with the Company and available for review.
• Series C Preferred Stock Financing: Closed in September 2022; aggregate gross proceeds of $95,000,000; led by Pinnacle BioVentures Fund III, L.P.; governed by the Series C Preferred Stock Purchase Agreement, the Investors' Rights Agreement, the Right of First Refusal and Co-Sale Agreement, and the Voting Agreement, each as described in Schedule 2.10.
Part G — Significant Stockholders (>5% Fully Diluted Ownership). The following stockholders hold greater than 5% of the Company's outstanding capital stock on a fully diluted basis as of the date hereof:
The percentages set forth above are calculated on a fully diluted basis, taking into account all outstanding shares of Common Stock, Preferred Stock (on an as-converted basis), and outstanding options under the Plan, and do not give effect to the conversion of the Notes.
SCHEDULE 2.4
Subsidiaries. The following information is disclosed with respect to Section 2.4 of the Agreement:
The Company has no subsidiaries. The Company does not own, directly or indirectly, any equity interest, membership interest, partnership interest, joint venture interest, or other ownership interest in any corporation, partnership, limited liability company, joint venture, or other entity, whether domestic or foreign. The Company has not entered into any agreements or arrangements to acquire any such interest.
SCHEDULE 2.5
Financial Statements. The following information is disclosed with respect to Section 2.5 of the Agreement:
Audited Financial Statements. The Company has delivered to the Purchasers true and complete copies of the audited financial statements of the Company for the fiscal year ended December 31, 2023, consisting of a balance sheet as of December 31, 2023, and the related statements of operations, stockholders' equity (deficit), and cash flows for the fiscal year then ended, together with the notes thereto and the report of the Company's independent registered public accounting firm thereon (collectively, the "Financial Statements").
Independent Auditor. The Financial Statements were audited by Baxter & Calloway, CPAs, the Company's independent registered public accounting firm. Baxter & Calloway has served as the Company's auditor since 2019. The engagement partner for the Company's audit is Nadia Sorensen, CPA. Baxter & Calloway maintains offices at the following address:
Baxter & Calloway, CPAs 2900 Stevens Creek Boulevard, Suite 400 San Jose, CA 95128
The Financial Statements were prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), applied on a consistent basis, and present fairly, in all material respects, the financial position and results of operations of the Company as of and for the periods indicated.
Key Financial Data. The following key financial data is derived from the Financial Statements as of and for the fiscal year ended December 31, 2023:
Clinical-Stage Status; No Revenue. The Company is a clinical-stage biopharmaceutical company. The Company has not generated any revenue from product sales or other commercial activities since its inception and does not expect to generate revenue for the foreseeable future. The Company's losses have resulted principally from costs incurred in connection with research and development activities, including the conduct of clinical trials, and from general and administrative costs associated with its operations.
Cash Burn Rate and Runway. As of the date hereof, the Company's approximate monthly cash burn rate is approximately $5,800,000 (approximately $69,600,000 on an annualized basis). This burn rate is consistent with the Company's historical operating expenditures and reflects primarily costs associated with the ongoing Phase 2b clinical trial for GDT-4187, personnel costs, and general and administrative expenses. Based on the Company's current cash and cash equivalents (as reflected in the Financial Statements, adjusted for operating expenditures incurred between December 31, 2023, and the date hereof) and inclusive of the proceeds from the sale of the Notes contemplated by the Agreement, the Company estimates that it will have sufficient cash to fund its planned operations for approximately 18 months from the date hereof. This estimate is subject to significant uncertainty and is based on the Company's current operating plan and projected expenditures, which are subject to change.
SCHEDULE 2.6
Absence of Changes
The following information is disclosed with respect to Section 2.6 of the Agreement:
Since December 31, 2023 (the date of the Company's most recent audited financial statements), there has been no event, occurrence, development, or circumstance that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company, other than the following:
1. Continued Operating Losses. The Company has continued to incur operating losses consistent with its status as a clinical-stage biopharmaceutical company and consistent with its historical burn rate as described in Schedule 2.5. Such losses are in the ordinary course of the Company's business and are attributable primarily to ongoing research and development expenditures, including costs associated with the Phase 2b clinical trial for GDT-4187, as well as general and administrative expenses.
2. Negotiation and Execution of the Agreement. The Company has engaged in the negotiation, documentation, and execution of the Agreement and the related transaction documents, and has incurred legal fees and other transaction-related costs in connection therewith. Such costs are consistent with the nature and scope of the transactions contemplated by the Agreement.
Other than as described above, the Company has (a) conducted its business in the ordinary course consistent with past practice, (b) not declared or paid any dividends or made any distributions on or with respect to its capital stock, (c) not issued any shares of capital stock or other securities (other than upon the exercise of outstanding options under the Plan), (d) not incurred any indebtedness for borrowed money, (e) not sold, transferred, or otherwise disposed of any material assets, (f) not made any material change in its accounting methods or practices, and (g) not entered into any material agreement or commitment outside of the ordinary course of business.
SCHEDULE 2.7
No Undisclosed Liabilities
The following information is disclosed with respect to Section 2.7 of the Agreement:
No exceptions, other than:
1. Liabilities reflected or reserved against in the Company's audited financial statements for the fiscal year ended December 31, 2023, as described in Schedule 2.5; and
2. Liabilities incurred in the ordinary course of business since December 31, 2023, consistent with past practice, including without limitation:
(a) Trade payables to vendors, contractors, and service providers;
(b) Accrued clinical trial expenses related to the Company's ongoing Phase 2b clinical trial for GDT-4187, including amounts due to clinical trial sites, contract research organizations, and related service providers;
(c) Employee-related obligations, including accrued compensation, benefits, payroll taxes, and contributions to the Company's 401(k) plan; and
(d) Professional fees and transaction costs incurred in connection with the negotiation and execution of the Agreement and the related transaction documents.
All such liabilities are of the type and in amounts consistent with the Company's historical operations and do not, individually or in the aggregate, represent a material departure from the Company's ordinary course of business.
SCHEDULE 2.8
Litigation. The following information is disclosed with respect to Section 2.8 of the Agreement:
There is no action, suit, claim, proceeding, investigation, arbitration, or governmental proceeding pending or, to the Company's knowledge, threatened against or affecting the Company or any of its officers, directors, or employees in their capacities as such, whether at law or in equity, before or by any federal, state, local, or foreign court, tribunal, governmental authority, regulatory body, or arbitration panel.
There are no judgments, decrees, injunctions, rulings, awards, or orders of any court, governmental authority, regulatory body, or arbitration panel outstanding against the Company or any of its officers, directors, or employees in their capacities as such.
The Company is not a party to, and none of its assets is subject to, any consent decree, settlement agreement, compliance order, or administrative order.
To the Company's knowledge, no facts or circumstances exist that would reasonably be expected to give rise to the initiation of any action, suit, claim, proceeding, investigation, or governmental proceeding against the Company.
SCHEDULE 2.9
Compliance with Laws; Permits
The following information is disclosed with respect to Section 2.9 of the Agreement:
Compliance with Laws. The Company is, and at all times since its inception has been, in compliance in all material respects with all applicable federal, state, and local laws, rules, regulations, orders, and directives, including without limitation:
(a) The Federal Food, Drug, and Cosmetic Act and the regulations promulgated thereunder by the U.S. Food and Drug Administration (the "FDA"), including all regulations relating to the conduct of clinical trials (21 C.F.R. Parts 11, 50, 54, 56, 312, and related provisions);
(b) Applicable state and federal securities laws, including the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;
(c) The Delaware General Corporation Law;
(d) Applicable federal and state tax laws;
(e) Applicable employment and labor laws, including the Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, and the California Fair Employment and Housing Act; and
(f) Applicable environmental, health, and safety laws and regulations.
Permits and Licenses. The Company holds all permits, licenses, authorizations, approvals, registrations, and certificates of governmental authorities necessary for the lawful conduct of its business as currently conducted. All such permits, licenses, and approvals are valid and in full force and effect, and no proceeding is pending or, to the Company's knowledge, threatened to revoke, suspend, limit, or modify any such permit, license, or approval.
Clinical Trial Compliance. The Company's Phase 2b clinical trial for GDT-4187, its lead clinical compound (a selective CDK9/FLT3 dual kinase inhibitor being evaluated for the second-line treatment of refractory non-small cell lung cancer), is being conducted under an effective Investigational New Drug ("IND") application filed with and accepted by the FDA. The clinical trial is being conducted in accordance with the applicable requirements of the FDA, including Good Clinical Practice ("GCP") guidelines, and in compliance with the protocols approved by the relevant Institutional Review Boards ("IRBs") at the clinical trial sites.
No Violations or Deficiencies. The Company has not received any written or, to its knowledge, oral notice of any violation, non-compliance, deficiency, warning, or enforcement action from any governmental authority, including the FDA or any state regulatory authority, with respect to any aspect of the Company's business, operations, or clinical trial activities. No governmental authority has commenced, or to the Company's knowledge threatened to commence, any proceeding against the Company alleging any violation of applicable law.
SCHEDULE 2.10
Material Contracts. The following information is disclosed with respect to Section 2.10 of the Agreement. Set forth below is a list of each material contract, agreement, or arrangement to which the Company is a party or by which it or any of its assets are bound as of the date hereof:
1. Series C Preferred Stock Purchase Agreement, dated as of September 2022, by and among the Company and the investors named therein (led by Pinnacle BioVentures Fund III, L.P.), pursuant to which the Company issued and sold an aggregate of 14,000,000 shares of Series C Preferred Stock for aggregate gross proceeds of $95,000,000. The Series C Preferred Stock Purchase Agreement contains customary representations and warranties, covenants, closing conditions, and indemnification provisions. A copy of the Series C Preferred Stock Purchase Agreement has been made available to the Purchasers in the virtual data room.
2. Investors' Rights Agreement, dated as of September 2022 (as amended and restated in connection with the Series C financing), by and among the Company and certain holders of Preferred Stock (the "Investors' Rights Agreement"). The Investors' Rights Agreement provides for, among other things, (a) registration rights (demand registration rights and piggyback registration rights) in favor of the holders of registrable securities, (b) information rights, including rights to receive annual audited financial statements and quarterly unaudited financial statements, (c) inspection rights, and (d) certain protective covenants, including limitations on the incurrence of indebtedness, changes to the Company's business, and other significant corporate actions without the consent of the holders of a majority of the outstanding Preferred Stock.
3. Right of First Refusal and Co-Sale Agreement, dated as of September 2022 (as amended and restated in connection with the Series C financing), by and among the Company, certain holders of Preferred Stock, and certain holders of Common Stock (the "ROFR Agreement"). The ROFR Agreement provides holders of Preferred Stock with a right of first refusal with respect to proposed transfers of shares by holders of Common Stock who are parties thereto and co-sale (tag-along) rights in the event such holders of Common Stock propose to sell shares to third parties.
4. Voting Agreement, dated as of September 2022 (as amended and restated in connection with the Series C financing), by and among the Company and certain holders of Preferred Stock and Common Stock (the "Voting Agreement"). The Voting Agreement provides for the composition of the Board and establishes drag-along rights and certain voting obligations with respect to significant corporate transactions.
5. 2018 Equity Incentive Plan, as adopted by the Board and approved by the stockholders of the Company. The Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, and other equity-based awards to employees, directors, and consultants of the Company. As of the date hereof, options to purchase 3,500,000 shares of Common Stock are outstanding under the Plan, and 1,500,000 shares remain available for future grant. Further details regarding the Plan are set forth in Schedule 2.3.
6. Clinical Trial Agreement(s) with clinical trial sites and contract research organizations for the Phase 2b clinical trial of GDT-4187. The Company has entered into clinical trial agreements with sites across 22 clinical centers located in 8 states in the United States. These agreements govern the conduct of the Phase 2b trial, including site responsibilities, patient enrollment, data collection, regulatory compliance, compensation to clinical sites, indemnification obligations, and confidentiality provisions. The specific clinical trial agreements are on file with the Company and available for review in the virtual data room.
7. Lease Agreement for the Company's principal office, dated as of 2017 (as subsequently amended), between the Company and the landlord of the premises located at 450 Pinnacle Drive, Suite 300, South San Francisco, CA 94080. The lease covers approximately 12,000 square feet of office space and has a current term expiring in 2027, with one renewal option. The Company's obligations under the lease are current, and no events of default exist thereunder.
8. Engagement Letter with Baxter & Calloway, CPAs, dated 2019, for independent audit services. The engagement letter governs the terms and conditions under which Baxter & Calloway serves as the Company's independent registered public accounting firm, including the scope of audit and review engagements, fees, and indemnification provisions. Further details regarding the Company's engagement of Baxter & Calloway are set forth in Schedule 2.5.
9. Registered Agent Agreement with Capitol Registered Agents, Inc. for registered agent services in the State of Delaware. Capitol Registered Agents maintains its principal office at 1209 Orange Street, Suite 200, Wilmington, DE 19801, and serves as the Company's registered agent for service of process in Delaware.
10. Depository/Banking Agreement with Meridian Pacific Bank, N.A., the Company's primary depository bank. Meridian Pacific Bank maintains offices at:
350 Sansome Street, 12th Floor San Francisco, CA 94104
The Company maintains its primary operating accounts, including its cash and cash equivalents, with Meridian Pacific Bank. The banking relationship is governed by Meridian Pacific Bank's standard commercial banking agreements, including deposit account agreements and related documentation.
Each of the foregoing material contracts is in full force and effect, and the Company is not in default (and no event has occurred which, with notice or lapse of time or both, would constitute a default by the Company) under any such material contract. To the Company's knowledge, no other party to any such material contract is in default thereunder.
SCHEDULE 2.11
Intellectual Property. The following information is disclosed with respect to Section 2.11 of the Agreement:
Proprietary Compounds:
The Company's proprietary compound portfolio consists of the following programs:
1. GDT-4187 — A selective CDK9/FLT3 dual kinase inhibitor. GDT-4187 is the Company's lead clinical-stage asset and is currently being evaluated in a Phase 2b clinical trial for the second-line treatment of refractory non-small cell lung cancer ("NSCLC"). The trial is a multicenter, randomized, double-blind, placebo-controlled study with a total enrollment of n=280 patients across 22 clinical centers in 8 states. Topline data from the Phase 2b trial is expected in Q1 2025. GDT-4187 is the subject of multiple patent applications and issued patents, as described below.
2. GDT-5201 — A next-generation PROTAC (proteolysis-targeting chimera) degrader. GDT-5201 is currently in preclinical development. The Company has completed initial in vitro and in vivo studies and is conducting IND-enabling studies. No IND application has been filed with the FDA for GDT-5201 as of the date hereof. GDT-5201 is the subject of patent applications, as described below.
Patents:
The Company owns or has exclusive rights to the following categories of patent applications and issued patents, all of which relate to GDT-4187 and GDT-5201 and cover compositions of matter, methods of use, pharmaceutical formulations, and related subject matter:
(a) Issued U.S. patents and pending U.S. patent applications covering the composition of matter of GDT-4187 and its analogs, pharmaceutical formulations thereof, and methods of use for the treatment of NSCLC and other oncology indications;
(b) Pending U.S. patent applications covering the composition of matter of GDT-5201 and related PROTAC degrader compounds, as well as methods of use thereof;
(c) Corresponding international (PCT) applications and foreign national-phase patent applications in major commercial jurisdictions, including the European Union, Japan, China, and Canada, covering the subject matter described in clauses (a) and (b) above; and
(d) Additional patent applications directed to manufacturing processes, synthetic routes, and polymorphic forms of GDT-4187 and GDT-5201.
A detailed schedule of issued patents and pending patent applications, including application and patent numbers, filing dates, issue dates (where applicable), titles, and jurisdictions, is maintained by the Company and has been made available to the Purchasers and their counsel in the virtual data room. All required maintenance fees and annuities have been timely paid with respect to all issued patents and pending applications.
Trade Secrets and Know-How:
The Company maintains proprietary know-how, trade secrets, and confidential information related to its drug discovery platform, compound synthesis and optimization processes, formulation and manufacturing techniques, and clinical trial data (including patient-level data, pharmacokinetic and pharmacodynamic data, and safety and efficacy data from its clinical programs). The Company has implemented and maintains reasonable measures to protect the confidentiality of such trade secrets and know-how, including the use of confidentiality and invention assignment agreements with employees, consultants, and collaborators, restricted access controls on proprietary data, and nondisclosure agreements with third-party vendors and service providers.
Trademarks:
The Company has filed trademark applications for "GenomeDx" and "Genome Dx Therapeutics" with the United States Patent and Trademark Office. Such applications are pending as of the date hereof. Specific application numbers, filing dates, and status information are maintained by the Company and are available for review in the virtual data room.
No intellectual Property Disputes:
There are no material intellectual property disputes, claims, actions, proceedings, or investigations pending or, to the Company's knowledge, threatened against or affecting the Company or any of its intellectual property assets. The Company has not received any notice, demand, or claim from any third party alleging that the Company's products, compounds, processes, or operations infringe, misappropriate, or otherwise violate any patent, trademark, copyright, trade secret, or other intellectual property right of any third party.
No Liens or Encumbrances:
No liens, pledges, security interests, charges, encumbrances, or other restrictions exist on any material intellectual property of the Company, other than licenses granted to clinical trial sites and contract research organizations in the ordinary course of the Company's clinical trial activities, which licenses are non-exclusive and limited in scope.
SCHEDULE 2.12
Tax Matters. The following information is disclosed with respect to Section 2.12 of the Agreement:
Tax Returns and Payments. The Company has timely filed (or has obtained valid extensions for) all material federal, state, and local income, franchise, and other tax returns required to be filed by the Company, and all such returns are true, correct, and complete in all material respects. The Company has paid all taxes shown as due on such returns and all taxes otherwise due and owing, and has withheld and remitted all amounts required to be withheld and remitted with respect to employees and other payees.
Federal Employer Identification Number. The Company's Federal Employer Identification Number is 82-3194507.
No Audits or Assessments. The Company has not received any notice of audit, examination, assessment, deficiency, or proposed adjustment from the Internal Revenue Service (the "IRS") or any state, local, or foreign taxing authority. There are no pending or, to the Company's knowledge, threatened audits, examinations, investigations, or proceedings by or before any taxing authority with respect to the Company's tax liabilities. The Company has not entered into any closing agreement, settlement, or compromise with any taxing authority. No statute of limitations with respect to any federal, state, or local tax return of the Company has been extended or waived, and no request for any such extension or waiver is pending.
Net Operating Loss Carryforwards. The Company has incurred net operating losses since its inception and has not generated any revenue to date. The Company has accumulated federal and state net operating loss carryforwards, the specific amounts of which are reflected in the Company's tax returns. Such net operating loss carryforwards are subject to limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), in the event of one or more "ownership changes" (as defined in Section 382 of the Code). The transactions contemplated by the Agreement, including the issuance and potential conversion of the Notes, may result in, or contribute to, an ownership change for purposes of Section 382 of the Code, which could limit the Company's ability to utilize its net operating loss carryforwards in future taxable years. The Company has not completed a formal Section 382 study as of the date hereof.
No Tax Sharing Agreements. The Company is not a party to any tax sharing, tax indemnification, or tax allocation agreement with any other person or entity, other than customary tax provisions contained in commercial agreements entered into in the ordinary course of business.
SCHEDULE 2.13
Employee and Benefit Matters
The following information is disclosed with respect to Section 2.13 of the Agreement:
Equity Incentive Plan. The Company maintains the 2018 Equity Incentive Plan, as described in Schedule 2.3. The Plan has been duly adopted by the Board and approved by the Company's stockholders. All grants of options and other awards under the Plan have been made in compliance with the terms of the Plan, applicable securities laws, and Section 409A of the Code.
Employee Benefits. The Company provides standard employee benefits to its employees, including without limitation:
(a) Group health insurance (medical, dental, and vision coverage);
(b) A 401(k) retirement savings plan, including an employer matching contribution;
(c) Paid time off, including vacation, sick leave, and holidays;
(d) Life insurance and short-term and long-term disability insurance; and
(e) Other benefits customary for companies of similar size and stage in the biopharmaceutical industry.
All employee benefit plans and programs maintained by the Company are in compliance in all material respects with their terms and with all applicable laws, including the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Code, the Affordable Care Act, and applicable state laws. The Company does not maintain or contribute to any defined benefit pension plan, multiemployer plan, or other plan subject to Title IV of ERISA.
Labor Matters. The Company is not a party to any collective bargaining agreement with any labor union or labor organization. No employees of the Company are represented by any labor union. There are no pending or, to the Company's knowledge, threatened labor disputes, work stoppages, strikes, slowdowns, picketing, or unfair labor practice proceedings involving the Company. The Company is in compliance in all material respects with all applicable labor and employment laws, including wage and hour laws, anti-discrimination laws, and immigration laws.
Key Executive Officers. The following individuals serve as the key executive officers of the Company as of the date hereof:
Each of the foregoing officers is employed on an at-will basis and is party to the Company's standard form of Confidential Information and Invention Assignment Agreement. The Company has entered into offer letters or employment agreements with each of the foregoing officers setting forth compensation terms, equity grants, and other terms and conditions of employment, copies of which have been made available in the virtual data room.
SCHEDULE 2.14
Environmental Matters. The following information is disclosed with respect to Section 2.14 of the Agreement:
No exceptions. The Company's operations consist primarily of office-based activities conducted at its principal office in South San Francisco, California, and clinical-site activities conducted at third-party clinical trial centers. The Company does not own, operate, or lease any manufacturing, production, laboratory, or industrial facilities. The Company does not directly handle, store, transport, release, or dispose of hazardous materials, hazardous wastes, or other regulated substances, other than de minimis quantities of standard office and cleaning supplies used in the ordinary course of its office operations.
The Company is in compliance in all material respects with all applicable environmental laws, rules, and regulations, including the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), the Clean Air Act, the Clean Water Act, and applicable state environmental laws. The Company has not received any notice of violation, request for information, complaint, order, or other communication from any governmental authority or third party regarding any environmental matter. There are no pending or, to the Company's knowledge, threatened claims, actions, suits, proceedings, or investigations against the Company relating to any environmental matter.
SCHEDULE 2.15
Insurance. The following information is disclosed with respect to Section 2.15 of the Agreement:
The Company maintains the following types of insurance coverage, all in amounts and with coverage terms that the Company believes are customary and appropriate for companies of similar size, stage, and operations in the biopharmaceutical industry:
1. Directors' and Officers' Liability Insurance ("D&O Insurance"). The Company maintains directors' and officers' liability insurance providing coverage for claims against directors and officers of the Company arising from their service in such capacities, including coverage for securities claims, regulatory investigations, and related defense costs.
2. General Commercial Liability Insurance. The Company maintains commercial general liability insurance providing coverage for third-party bodily injury, property damage, personal injury, and advertising injury claims arising from the Company's operations.
3. Clinical Trial Insurance. The Company maintains clinical trial liability insurance providing coverage for claims arising from the conduct of the Company's clinical trials, including coverage for patient injury and adverse events.
4. Property Insurance. The Company maintains property insurance covering the Company's tangible personal property, equipment, and leasehold improvements at its principal office location.
All of the foregoing insurance policies are in full force and effect, and all premiums due thereon have been timely paid. The Company has not received any notice of cancellation, non-renewal, or material premium increase with respect to any such policy. No claims are pending under any of the foregoing policies, and the Company has not been denied coverage under any such policy.
Specific insurance carrier names, policy numbers, policy limits, deductibles, and coverage terms are maintained by the Company and are available for review in the virtual data room.
SCHEDULE 2.16
Related Party Transactions
The following information is disclosed with respect to Section 2.16 of the Agreement:
1. Jonathan Merriweather — Board Chair / Pinnacle BioVentures. Jonathan Merriweather, a Managing Director of Pinnacle BioVentures, serves as Board Chair of the Company. Pinnacle BioVentures Fund III, L.P. holds approximately 22.4% of the Company's outstanding equity on a fully diluted basis and is the lead Purchaser in the convertible note offering contemplated by the Agreement, with a commitment to purchase Notes in the aggregate principal amount of $22,000,000. Mr. Merriweather was appointed to the Board in connection with the Series C Preferred Stock financing in September 2022, pursuant to the Voting Agreement described in Schedule 2.10.
2. Recusal of Jonathan Merriweather from Board Vote. As described in Schedule 2.2, Mr. Merriweather recused himself from the Board's deliberation and vote on the transactions contemplated by the Agreement on April 5, 2024, due to his affiliation with Pinnacle BioVentures Fund III, L.P. The Board Consent reflecting the approval of the Agreement was executed solely by the disinterested members of the Board.
3. Purchasers as Existing Stockholders. Each of Pinnacle BioVentures Fund III, L.P., Cormorant Health Capital Partners, L.P., and Alder Creek Life Sciences Fund II, L.P. is an existing stockholder of the Company and a party to the Investors' Rights Agreement, the Right of First Refusal and Co-Sale Agreement, and the Voting Agreement described in Schedule 2.10.
Other than as set forth above, there are no transactions, agreements, arrangements, or understandings between the Company, on the one hand, and any officer, director, stockholder owning more than 5% of the Company's outstanding capital stock (on a fully diluted basis), or any affiliate or immediate family member of any of the foregoing, on the other hand, that are required to be disclosed pursuant to Section 2.16 of the Agreement.
SCHEDULE 2.17
Regulatory Matters. The following information is disclosed with respect to Section 2.17 of the Agreement: