Sec Form 13D Filing - Sumitomo Chemical Co. Ltd. filing for Urovant Sciences Ltd. (UROV) - 2020-01-06

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934

Urovant Sciences Ltd.

(Name of Issuer)

Common Shares, par value $$0.000037453 per share

(Title of Class of Securities)

G9381B 108

(CUSIP Number)

Yumi Sato

Senior Director, Global Corporate Strategy

Sumitomo Dainippon Pharma Co., Ltd.

6-8, Doshomachi 2-chome,

Chuo-ku, Osaka 541-0045, Japan

Copies to:

Benjamin O. Lang

Jones Day

The Okura Prestige Tower

2-10-4 Toranomon, Minato-ku

Tokyo 105-001, Japan

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 27, 2019

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of section 18 of the Securities Exchange Act of 1934 (the “Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

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The Statement on Schedule 13D (this “Statement”) relates to the Common Shares, par value $0.000037453 per share (“Common Shares”), issued by Urovant Sciences Ltd. (the “Issuer”). The address of the principal executive offices of the Issuer is Suite 1, 3rd Floor, 11-12 St. James’s Square, London, SW1Y 4LB, United Kingdom.

Pharma Co., Ltd., a Japanese corporation (“Sumitomo Dainippon”), and Sumitovant Biopharma Ltd. (formerly known as Vant Alliance Ltd.), a Bermuda exempted company limited by shares (“Sumitovant”) (collectively, the “Reporting Persons”). The Common Shares are owned directly by Sumitovant, which is a wholly-owned subsidiary of Sumitomo Dainippon, which is a 51% owned subsidiary of Sumitomo Chemical. Sumitomo Dainippon and Sumitomo Chemical are indirect beneficial owners of the Common Shares.

principal office address is 6-8, Doshomachi 2-chome, Chuo-ku, Osaka 541-0045, Japan. Sumitovant’s principal office address is 11-12 St. James’s Square Suite 1, 3rd Floor London, United Kingdom SW1Y 4LB.

functional materials, IT-related chemicals, health and crop sciences, and pharmaceuticals. Sumitomo Dainippon’s principal business is the research, development, manufacture, purchase, sale, importation and exportation of pharmaceutical products. Sumitovant’s principal business is to act as a holding company and directly own the Common Shares.

misdemeanors).

competent jurisdiction as a result of which it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

shares.

On December 27, 2019, Sumitomo Dainippon paid Roivant Sciences Ltd. (“Roivant”) $2.0 billion to acquire its interest in Sumitovant and, indirectly, the Common Shares of the Issuer as part of the Transactions (defined below), which purchase price was funded by a 270.0 billion yen loan facility (the “Loan Facility”). The Loan Facility was entered into between Sumitomo Dainippon and Sumitomo Mitsui Banking Corporation (the “Bank”).

Before Sumitomo Dainippon acquired its interest in Sumitovant, the Common Shares of the Issuer were transferred from Roivant to Sumitovant.

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Transaction Agreement

On September 6, 2019, Sumitomo Dainippon and Roivant entered into a non-binding memorandum of understanding (the “MOU”) related to the creation of a strategic alliance between the companies (the “Strategic Alliance”).

As contemplated by the MOU, on October 31, 2019, Sumitomo Dainippon, Roivant and certain of Roivant’s subsidiaries entered into a definitive agreement (the “Transaction Agreement”) related to the creation of the Strategic Alliance. Among other things, pursuant to the Transaction Agreement: (i) Sumitomo Dainippon indirectly acquired all of the Common Shares that were beneficially owned by Roivant, along with the equity interests owned by Roivant in four of its other subsidiaries (collectively, the “Strategic Alliance Entities”), (ii) Roivant granted Sumitomo Dainippon options to purchase, subject to certain exceptions set forth in the Transaction Agreement, Roivant’s existing equity interests in six other privately-held Roivant subsidiaries or affiliates and (iii) Roivant issued to Sumitomo Dainippon common shares of Roivant. In exchange, the Transaction Agreement provided that Sumitomo Dainippon would make a $3.0 billion upfront cash payment to Roivant upon the closing (the “Closing”) of the transactions contemplated by the Transaction Agreement (collectively, the “Transactions”), subject to certain adjustments as set forth therein.

Letter Agreement

On October 31, 2019, Sumitomo Dainippon entered into a letter agreement (the “Letter Agreement”) with the Issuer in connection with the execution of the Transaction Agreement. Pursuant to the Letter Agreement, among other things, (i) Sumitomo Dainippon committed to provide the Issuer with a low-interest, interest-only, five-year term loan facility, with no principal repayments required to be made by the Issuer until the end of the term; and (ii) the parties agreed to enter into an investor rights agreement that would provide Sumitomo Dainippon with customary registration and information rights and provide the Issuer’s minority shareholders certain protections outlined therein.

Loan Agreement

Concurrently with the Closing, Sumitomo Dainippon and the Issuer entered into a $300 million unsecured revolving debt financing agreement (the “Loan Agreement”) with Sumitomo Dainippon as lender. Sumitomo Dainippon has agreed to fund $87.5 million within five business days after the closing of the Loan Agreement. The Issuer may draw down additional funds no more than once per calendar quarter, subject to certain terms and conditions. Interest on the outstanding loans is payable quarterly, and the principal is due and payable in full on the five-year anniversary of the closing date of the Loan Agreement.

Loans under the Loan Agreement (the “Loans”) bear a rate per annum equal to LIBOR plus a margin of 3.0% payable on the last day of each calendar quarter. The Issuer’s obligations under the Loan Agreement are fully and unconditionally guaranteed by each of the Issuer’s direct and indirect subsidiaries (Urovant Holdings Limited, Urovant Sciences GmbH, Urovant Sciences, Inc., Urovant Treasury Holdings, Inc., and Urovant Sciences Treasury, Inc.). The proceeds of the Loans were used, among other things, to repay in full on January 2, 2020, all outstanding obligations under the Issuer’s Loan and Security Agreement, dated February 20, 2019, by and among Hercules Capital, Inc., the Issuer, Urovant Holdings Limited and Urovant Sciences GmbH (the “Hercules Loan Agreement”), and for working capital or other general corporate purposes incurred during any calendar quarter in accordance with the Issuer’s annual budget.

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The Loan Agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings, including financial reporting obligations, and certain limitations on indebtedness, liens, investments, distributions (including dividends), collateral, investments, distributions, transfers, mergers or acquisitions, corporate changes and transactions with affiliates. The Loan Agreement further requires that, within 10 business days of closing, a portion of the proceeds of the Loans shall be used to repay in full all outstanding obligations under the Hercules Loan Agreement. The Loan Agreement also contains customary events of default (subject, in certain instances, to specified grace periods) including, but not limited to: (i) the failure to make payments of interest on, or principal under, the Loans; (ii) the failure to comply with certain covenants and agreements specified in the Loan Agreement; (iii) the occurrence of certain events that could reasonably be expected to have a “material adverse effect” as set forth in the Loan Agreement; (iv) defaults in respect of certain other indebtedness; and (v) certain events relating to bankruptcy or insolvency. If any event of default occurs, the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Loans may become due and payable immediately. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% may be applied to the outstanding principal balance, and Sumitomo Dainippon may declare all outstanding obligations immediately due and payable (subject, in certain instances, to specified grace periods) and take such other actions as set forth in the Loan Agreement. Upon the occurrence of certain bankruptcy and insolvency events, the obligations under the Loan Agreement would automatically become due and payable.

Investor Rights Agreement

In connection with the Closing, the Issuer, Sumitovant and Sumitomo Dainippon entered into an investor rights agreement (the “Investor Rights Agreement”), dated as of December 27, 2019. Pursuant to the Investor Rights Agreement and subject to the terms and conditions therein, the Issuer agreed to comply with any demands by Sumitovant to register for sale, under the Securities Act of 1933, any Common Shares of the Issuer beneficially owned by Sumitovant that has an anticipated aggregate net offering price of at least $5 million, subject to certain customary exceptions and the right of the Issuer to refuse any demand for registration if it already effected two registrations for Sumitovant in the year preceding such demand. In addition, the Issuer agreed to periodically provide Sumitovant (i) certain financial statements, projections, business plans, capitalization summaries and other information customarily provided to significant investors in publicly-traded companies and (ii) access to the Issuer’s books, records, facilities, and employees during normal business hours as Sumitovant may reasonably request.

Moreover, the Investor Rights Agreement also contains certain protections for minority shareholders for so long as Sumitomo Dainippon or its affiliates beneficially own between 50% and 90% of the Issuer’s then outstanding voting power. These protections include, among other things: (i) a requirement for a minimum of three independent directors on the Issuer’s board of directors (the “Board”) (each of whom cannot be removed by Sumitomo Dainippon or its affiliates without the approval of a majority of the minority shareholders); (ii) a requirement that the audit committee of the Board (the “Audit Committee”) is comprised solely of independent directors; (iii) the appointment of Mr. Pierre Legault as the Issuer’s lead independent director; (iv) a requirement that any change to the charter of the Audit Committee must be approved by the Board and the Audit Committee; (v) a requirement that any transaction proposed by Sumitomo Dainippon or its affiliates that would increase Sumitomo Dainippon’s beneficial ownership to over 76% of the Issuer’s outstanding voting power must be approved by the Audit Committee (if occurring prior to December 27, 2021) and, if such transaction would increase Sumitomo Dainippon’s beneficial ownership to over 80% of the Issuer’s outstanding voting power, a majority of the Issuer’s minority shareholders voting on such matter; and (vi) a requirement that any related-person transactions between Sumitomo Dainippon and the Issuer must be approved by the Audit Committee, consistent with the Issuer’s Related Person Transactions Policy.

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Pursuant to the Investor Rights Agreement, the Issuer also agreed that so long as Sumitomo Dainippon or its affiliates beneficially own between 50% and 90% of the Issuer’s then outstanding voting power, the Issuer would inform Sumitovant before issuing any new Common Shares and allow Sumitovant to (i) participate in such issuance up to its pro rata share (unless such issuance is in connection with the acquisition of a business or its assets) or (ii) make sufficient open market purchases of the Issuer’s securities to ensure that Sumitomo Dainippon’s beneficial ownership percentage does not decline as a result of such issuance.

Amendments to the Bye-Laws

On December 22, 2019, the Board approved the Second Amended and Restated Bye-Laws (the “Bye-Laws”), which included, amongst others, the following effects:

The foregoing description of the Bye-Laws and summaries of the material terms of the Transaction Agreement, Investor Rights Agreement and Loan Agreement (the “Agreements”) do not purport to be complete and are each qualified in its entirety by reference to the full text of the Bye-Laws and Agreements, attached hereto as exhibits and incorporated herein by reference.

The aggregate 22,860,013 Common Shares beneficially owned by the Reporting Persons represent 75.2% of the issued and outstanding Common Shares based on 30,381,433 Common Shares, $0.000037453 par value per share, of the Issuer, issued and outstanding as of November 6, 2019, as disclosed by the Issuer on its quarterly report on Form 10-Q, as filed with the Securities and Exchange Commission on November 7, 2019.

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Sumitovant has sole voting power and sole dispositive power with regard to 22,860,013 Common Shares. Each of Sumitomo Chemical and Sumitomo Dainippon and has shared voting power and shared dispositive power with regard to such Common Shares. Each of Sumitomo Chemical and Sumitomo Dainippon, by virtue of their relationships to Sumitovant (as disclosed in Item 2), may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 under the Act) the Common Shares which Sumitovant directly beneficially owns. Each of Sumitomo Chemical and Sumitomo Dainippon disclaims beneficial ownership of such Common Shares for all other purposes.

reported in this Statement.

proceeds from the sale of, Common Shares that may be deemed to be beneficially owned by the Reporting Persons.

The description of the contracts and arrangements with respect to the securities of the Issuer set forth in Item 4 is incorporated by reference herein.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.