8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 8, 2020

ChemoCentryx, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-35420	94-3254365
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
850 Maude Avenue, Mountain View, CA		94043
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (650) 210-2900

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CCXI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1034 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 1.01 Entry into a Material Definitive Agreement

Effective as of January 8, 2020 (the “Closing Date”), ChemoCentryx, Inc. (the “Company”) entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”) with Hercules Capital, Inc. (“Hercules”), which amended and restated a loan and security agreement dated December 28, 2017, as amended, between the parties (the “Original Credit Facility”). As of the Closing Date, $20 million was outstanding under the Original Credit Facility. Pursuant to the Amended Loan Agreement, an additional term loan in an aggregate principal amount of up to $100.0 million (the “New Credit Facility”) is available to the Company at its discretion in three tranches, subject to certain terms and conditions.

The first tranche of the New Credit Facility of up to $40.0 million is available to the Company through December 15, 2020, of which $20 million would be available upon submission of the avacopan New Drug Application (“NDA”) for the treatment of ANCA vasculitis. Under the first tranche, $5.0 million will be advanced to the Company on or before March 15, 2020. The second tranche of up to an additional $30.0 million is available to the Company through December 15, 2021 upon NDA approval of avacopan for the treatment of ANCA vasculitis (“NDA Approval”). The third tranche of up to an additional $30 million is available through December 15, 2022, subject to certain conditions

For advances under the New Credit Facility, the Company will make interest only payments through September 1, 2022, extendable to March 1, 2023 upon satisfaction of certain milestones and further extendable to March 1, 2024 upon satisfaction of certain financial covenants. The principal balance and interest of the advances will be repaid in equal monthly installments after the interest only period and continuing through February 1, 2024, extendable to February 1, 2025, upon satisfaction of certain milestones.

Advances under the New Credit Facility will initially bear an interest rate (the “New Credit Facility Interest Rate”) equal to the greater of either (i) 8.50% plus the Prime Rate (as reported in The Wall Street Journal) minus 5.25%, and (ii) 8.50%. Upon the Company achieving cumulative net avacopan revenues of at least $100 million, the interest rate will decrease by 0.25% per annum. The interest rate will further decrease by 0.25% and 0.5% upon the Company achieving cumulative net avacopan revenues of $250 million and $400 million, respectively.

The Company may prepay advances under the New Credit Facility, in whole or in part, at any time subject to a prepayment charge equal to: (a) 2.0 % of amounts so prepaid, if such prepayment occurs during the first year following the Closing Date; (b) 1.5% of the amount so prepaid, if such prepayment occurs during the second year following the Closing Date, and (c) 1.0% of the amount so prepaid, if such prepayment occurs after the second year following the Closing Date.

The Company will pay an end of term charge of 7.15% of the aggregate amount of the advances under the New Credit Facility, which will occur on the earliest of (i) the loan maturity date; (ii) the date that the Company prepays all of the outstanding principal in full, or (iii) the date the loan payments are accelerated due to an event of default. The New Credit Facility is secured by substantially all of the Company’s assets, excluding intellectual property.

In connection with the Amended Loan Agreement, the Company also entered into a Right to Invest Agreement with Hercules, pursuant to which Hercules shall have the right to participate, in an amount up to $3,000,000 in any subsequent equity financing broadly marketed to multiple investors in an amount greater than $30,000,000.

The Amended Loan Agreement also includes customary affirmative and negative covenants and events of default, the occurrence and continuance of which provide Hercules with the right to demand immediate repayment of all principal and unpaid interest under Amended Loan Agreement, and to exercise remedies against the Company and the collateral securing the Amended Loan Agreement. These events of default include, among other things: (i) insolvency, liquidation, bankruptcy or similar events; (ii) failure to pay any debts due under the Amended Loan Agreement or other loan documents on a timely basis; (iii) failure to observe any covenant or secured obligation under the Amended Loan Agreement, which failure, in most cases, is not cured within 15 days; (iv) occurrence of an event that could reasonably be expected to have a material adverse effect; (v) material misrepresentations; (vi) occurrence of any default under any other agreement involving indebtedness in excess of $1,000,000 or the occurrence of a default under any agreement that could reasonably be expected to have a material adverse effect; and (vii) certain money judgments being entered against the Company or any portion of the Company’s assets being attached or seized.

The foregoing description of the Amended Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended Loan Agreement and the Right to Invest Agreement, which will be filed with the Company’s Quarterly Report on Form 10-Q for the period ending on March 31, 2020.

On January 9, 2020, the Company issued a press release regarding the above transactions, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03.

Item 9.01 Financial Statements and Exhibits.

(d) The following exhibit is included in of this Current Report on Form 8-K by reference.

99.1
Press release issued by the Registrant on January 9, 2020

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CHEMOCENTRYX, INC.
Date: January 10, 2020
	By:	/s/ Susan M. Kanaya
	Name:		Susan M. Kanaya
	Title:		Executive Vice President   Chief Financial and Administrative Officer and Secretary

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release issued by the Registrant on January 9, 2020

EX-99.1

EXHIBIT 99.1

ChemoCentryx Announces Credit Facility of Up to $100 Million with Hercules Capital

— Non-dilutive funding vehicle strengthens balance sheet for registration filing of avacopan in ANCA vasculitis and anticipated approval and commercial launch —

MOUNTAIN VIEW, Calif., January 9, 2020- ChemoCentryx, Inc., (NASDAQ: CCXI) today announced that the Company has secured a credit facility of up to $100 million provided by Hercules Capital, Inc. (NYSE: HTGC), a leader in customized financing for companies in life sciences and technology-related markets.

“Through this non-dilutive credit mechanism, we have options to strengthen our robust balance sheet as we advance avacopan towards commercialization in ANCA vasculitis,” said Thomas J. Schall, Ph.D., President and Chief Executive Officer of ChemoCentryx. “With the secured capital on hand and anticipated milestone payments, we are financially well-positioned to successfully commercialize avacopan in this important and underserved disease.”

The $100 million credit facility from Hercules Capital comprises three tranches over the next two years to be drawn at ChemoCentryx’s discretion as follows: the first tranche of $40 million is available through December 2020, $20 million of which would be available upon the submission of the avacopan New Drug Application (NDA) for the treatment of ANCA vasculitis; the second tranche of $30 million is available through December 2021 upon NDA approval of avacopan for the treatment of ANCA vasculitis (NDA Approval); the remaining $30 million is available through December 2022, subject to certain conditions. The term loan has a 30-month interest-only period from initial funding, which is extendable up to 36 months upon the achievement of certain milestones and further extendable up to 48 months upon the achievement of additional milestones and matures in 48 months, further extendable to 60 months upon NDA Approval. Intended use of the capital is for the advancement of avacopan through its registration filings and commercial launch in ANCA vasculitis, if approved. Further information with respect to the growth capital financing agreement with Hercules will be contained on a Form 8-K to be filed by ChemoCentryx with the Securities and Exchange Commission. This financing agreement is in addition to the $20 million in financing that is currently outstanding with Hercules Capital.

“This structured investment represents yet another significant commitment from Hercules and provides an example of the breadth of our platform and our ability to finance life sciences companies through development and into commercialization. We are excited to continue our partnership with the ChemoCentryx management team,” said Scott Bluestein, Chief Executive Officer of Hercules. “Given the positive clinical evidence from avacopan, Hercules is pleased to further expand its financing partnership with ChemoCentryx as it continues to advance avacopan through regulatory submissions and commercialization subsequent to approval, and to develop additional product candidates,” added Himani Bhalla, Principal at the Life Sciences lending group at Hercules.                

About ChemoCentryx

ChemoCentryx is a biopharmaceutical company developing new medications targeted at inflammatory and autoimmune diseases and cancer. ChemoCentryx targets the chemokine and chemoattractant systems to discover, develop and commercialize orally-administered therapies. ChemoCentryx is currently focusing on its late stage drug candidates for patients with rare diseases, avacopan (CCX168) and CCX140.

Avacopan is an orally-administered small molecule that is a selective inhibitor of the complement C5a receptor, or C5aR. In the pivotal Phase III ADVOCATE trial, avacopan demonstrated the ability to induce vasculitis remission at 26 weeks and statistical superiority in sustaining vasculitis remission at 52 weeks. The topline safety results revealed an acceptable safety profile in this serious and life-threatening disease with fewer subjects having serious after events in the avacopan group than in the glucocorticoid-containing standard of care. ChemoCentryx is also developing avacopan for the treatment of patients with C3 glomerulopathy (C3G) and hidradenitis suppurativa (HS). The U.S. Food and Drug Administration has granted avacopan orphan-drug designation for ANCA-associated Vasculitis, C3G and atypical hemolytic uremic syndrome (aHUS). The European Commission has granted orphan medicinal product designation for avacopan for the treatment of two forms of ANCA-associated Vasculitis: microscopic polyangiitis and granulomatosis with polyangiitis (formerly known as Wegener’s granulomatosis), as well as for C3G.

The Company’s other late stage drug candidate is CCX140, an inhibitor of the chemokine receptor known as CCR2, which is currently being developed for patients with focal segmental glomerulosclerosis (FSGS), a debilitating kidney disease. The U.S. Food and Drug Administration has granted CCX140 orphan-drug designation for the treatment of FSGS.

ChemoCentryx’s Kidney Health Alliance with Vifor Pharma provides Vifor Pharma with exclusive rights to commercialize avacopan and CCX140 in markets outside of the U.S.

ChemoCentryx also has early stage drug candidates that target chemoattractant receptors in other Inflammatory and autoimmune diseases and in cancer.

About Hercules Capital, Inc.

Hercules Capital, Inc. (NYSE: HTGC) is the leading and largest specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a broad variety of technology, life sciences and sustainable and renewable technology industries. Since inception (December 2003), Hercules has committed more than $9.7 billion to over 480 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing.

Forward-Looking Statements

ChemoCentryx cautions that statements included in this press release that are not a description of historical facts are forward-looking statements. Words such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “potential,” “continue” or “project” or the negative of these terms or other comparable terminology are intended to identify forward-looking statements. These statements include the Company’s statements regarding the achievement of anticipated goals and milestones, when avacopan ANCA vasculitis NDA regulatory filing with the FDA will be submitted, whether such filing will be validated by the FDA, whether avacopan will receive marketing authorization by the FDA for the treatment of ANCA vasculitis and whether avacopan will be commercialized for the treatment of ANCA vasculitis. The inclusion of forward-looking statements should not be regarded as a representation by ChemoCentryx that any of its plans will be achieved. Actual results may differ from those set forth in this release due to the risks and uncertainties inherent in the ChemoCentryx business and other risks described in the Company’s filings with the Securities and Exchange Commission (“SEC”). Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and ChemoCentryx undertakes no obligation to revise or update this news release to reflect events or circumstances after the date hereof. Further information regarding these and other risks is included under the heading “Risk Factors” in ChemoCentryx’s periodic reports filed with the SEC, including ChemoCentryx’s Annual Report on Form 10-K filed with the SEC on March 11, 2019

and its other reports which are available from the SEC’s website (www.sec.gov) and on ChemoCentryx’s website (www.chemocentryx.com) under the heading “Investors.” All forward-looking statements are qualified in their entirety by this cautionary statement. This caution is made under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995.

ChemoCentryx Contacts:

Susan M. Kanaya

Executive Vice President,

Chief Financial and Administrative Officer

investor@chemocentryx.com

Media:

Stephanie Tomei

408.234.1279

media@chemocentryx.com

Investors:

William Slattery, Jr., Burns McClellan

212.213.0006                

bslattery@burnsmc.com