| Item 1.01 |
Entry into a Material Definitive Agreement.
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Supply and Collaboration Agreement
On June 19, 2023, Nuwellis, Inc. (the “Company”) entered into a Supply and Collaboration Agreement (the “Supply Agreement”) with DaVita Inc., a Delaware
corporation (“DaVita”), pursuant to
which DaVita will pilot the Aquadex ultrafiltration therapy system to treat adult patients with congestive heart failure and related conditions within select U.S. markets. The pilot program is expected to launch by the end of the third quarter 2023 and extend through May 31, 2024 (the “Pilot”).
Through the Pilot, ultrafiltration therapy using Aquadex will be offered at a combination of DaVita’s customer hospital and outpatient center locations, with both companies collaborating on the roll-out of the therapy, clinician training, and
patient support. At the conclusion of the pilot, DaVita has the option, in its sole discretion, to extend the Supply Agreement with the Company for continued provision of both inpatient and outpatient ultrafiltration services for up to 10 years
(“Ultrafiltration Services Approval”).
If, at any time during the term of the Supply Agreement, the Company makes available any new products for the treatment of congestive heart failure
that offer technological advancements or improved clinical outcomes, patient care, or streamlined work processes, as compared to existing products of the Company (“New
Products”), the Company shall notify DaVita at least sixty days prior to the release of such New Products and, within such sixty-day period, the Company shall (a) provide DaVita with the first opportunity to purchase or rent the New
Product(s) at discounts comparable to those that are applicable to the New Products offered pursuant to the Supply Agreement, (b) provide any information about the New Product(s) as reasonably requested by DaVita, and (c) meet with DaVita and its
clinical committees to discuss the clinical, technological, and operational benefits of the New Product(s).
The Supply Agreement contains standard representations and warranties of the Company for a transaction of this nature as well as customary
indemnification and confidentiality provisions.
Common Stock Warrant Agreement
In conjunction with the Supply Agreement, the Company issued DaVita a warrant to purchase up to an aggregate of 1,289,081 shares of common stock of
the Company, par value $0.0001 per share, at an exercise price of $3.2996 per share, provided that at no time can it be exercised for an amount of shares that would represent greater than 19.9% ownership in the Company (the “Warrant”) subject to certain vesting milestones. The Warrant is expected to vest in four tranches as follows: (i) 25% upon receipt of notice to extend the
Supply Agreement past the initial pilot-term; (ii) 25% upon the attainment by the Company of a net revenue achievement from DaVita’s efforts pursuant to the Supply Agreement within twelve months of Ultrafiltration Services Approval; (iii) 25% upon
the attainment by the Company of a net revenue achievement from DaVita’s efforts pursuant to the Supply Agreement within twenty-four months of Ultrafiltration Services Approval; and (iv) 25% upon the attainment by the Company of a net revenue
achievement from DaVita’s efforts pursuant to the Supply Agreement within thirty-six months of Ultrafiltration Services Approval.
Additionally, upon its delivery of the Ultrafiltration Services Approval, DaVita will be awarded for two years, the right to participate in any
future offering pursuant to an effective registration statement or private placement (“Subsequent Financing”) of the Company, subject to the terms and
conditions as set forth in the Warrant, on the same terms, conditions and price provided in such future financing. DaVita shall have the right to purchase up to 19.9% of the securities being offered in such Subsequent Financing.
Registration Rights Agreement
Concurrent with the signing of the Supply Agreement and Warrant, the Company entered into a Registration Rights Agreement (“Registration Rights Agreement”) with DaVita, whereby the Company agreed, subject to DaVita’s delivery of the Ultrafiltration Services Approval, to register the
resale of the shares of Common Stock issuable upon exercise of the Warrant (“Underlying Shares”) on a Form S-1 or Form S-3, if eligible, upon DaVita’s
demand. DaVita has “piggyback” registration rights allowing it to include its Underlying Shares in a registration effected by the Company for stockholders other than DaVita. The Company is responsible for all fees and expenses incident to the
performance of or compliance with the Registration Rights Agreement borne by the Company whether or not any registrable securities are sold pursuant to a registration statement. The Registration Rights Agreement also contains customary
indemnification provisions.
The foregoing description of the Supply Agreement, Warrant, and Registration Rights Agreement are not complete and are qualified in
their entirety by reference to the Supply Agreement, Warrant and Registration Rights Agreement, which are each attached hereto as Exhibits 10.1, 4.1 and 10.2, respectively, and incorporated herein by reference.
On June 20, 2023, the Company issued a press release announcing the signing of the Supply Agreement. A copy of the press release is
filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
