Item 1.01.
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Entry into a Material Definitive Agreement.
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On July 7, 2016, Galena Biopharma, Inc. (the
Company) entered into a Securities Purchase Agreement (the Purchase Agreement) with certain investors (the Investors) providing for the issuance and sale by the Company to the Investors of an aggregate of
approximately $12,600,000 of registered and unregistered securities of the Company (the Offering). Pursuant to the Purchase Agreement, the Company agreed, among other things, to issue and sell to the Investors an aggregate of 28,000,000
shares (the Shares) of the Companys common stock , par value $0.0001 per share (the Common Stock) at a purchase price per share of $0.45 in a registered direct offering and warrants to purchase up to 14,000,000 shares
of common stock with an exercise price of $0.65 per share (the Warrants) in a concurrent private placement. The warrants are initially exercisable six months and one day following issuance and have a term of five years from the date of
issuance. The closing of the sale of securities is expected to take place on or about July 13, 2016, subject to certain customary closing conditions.
The
Shares will be issued pursuant to the Companys shelf registration statement on Form S-3 (File No.333-208330), which was initially filed with the Securities and Exchange Commission (the SEC) on December 4, 2015 and declared
effective by the SEC on December 22, 2015. A prospectus supplement relating to the Offering was filed with the SEC on July 7, 2016. The closing of the Offering is expected to take place on or about July 13, 2016, subject to certain customary closing
conditions. The Company intends to use the net proceeds from this offering to fund its clinical trials of its product candidates, to augment its working capital, and for general corporate purposes.
The Warrants will be issued and sold without registration under the Securities Act of 1933, as amended (the Securities Act), in reliance on the
exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, the Investors may only sell the shares of Common Stock issuable
upon exercise of the Warrants (the Warrant Shares) pursuant to an effective registration statement under the Securities Act covering the resale of those shares, an exemption under Rule 144 under the Securities Act or another applicable
exemption under the Securities Act.
The Company currently does not have enough authorized shares to fulfill the obligations created by the Warrants. If
the Companys stockholders do not vote to approve an increase in the Companys authorized shares within 6 months, the holder(s) of the Warrants will have the right to require the Company to repurchase their Warrants at their then
Black-Scholes value up to a maximum value of $3,500,000 for all Warrants in the aggregate.
Raymond James & Associates, Inc. (the Placement
Agent) has served as the Companys placement agent for the Offering pursuant to a Placement Agency Agreement (the Placement Agreement). Under the Placement Agreement, in consideration for services rendered as the Placement
Agent in the Offering, the Company will pay to the Placement Agent a cash fee equal to approximately $693,000, or 5.5% of the gross proceeds of the Shares sold to certain Investors identified by the Placement Agent. The Company also agreed to
reimburse the Placement Agent for its reasonable out-of-pocket expenses incurred in connection with its engagement and to pay the legal fees of the Placement Agents counsel and the Investors counsel up to an aggregate amount of $100,000.
The foregoing descriptions of the Purchase Agreement, the Warrants and the Placement Agreement do not purport to be complete and are qualified in their
entirety by reference to the copy of each of the Form of Purchase Agreement, the Form of Warrant and the Placement Agreement, which are attached hereto as Exhibits 10.2, 4.1 and 10.1 respectively and which are incorporated herein by reference.
The representations, warranties and covenants contained in the Purchase Agreement and the Warrants were made solely for the benefit of the parties to the
Purchase Agreement and the Warrants and may be subject to limitations agreed upon by the contracting parties. Accordingly, the Purchase Agreement and the Form of Warrant are incorporated herein by reference only to provide investors with information
regarding the terms of the Purchase Agreement and the Warrants and not to provide investors with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Companys
periodic reports and other filings with the SEC.
Adjustment to Certain Outstanding Warrants
Upon consummation of the Offering, it is anticipated that the exercise price of the Companys outstanding December 2012 warrants to purchase a total of
3,031,311 shares of common stock as of March 31, 2016 and the Companys outstanding March 2010 warrants to purchase a total of 25,000 shares of common stock as of March 31, 2016 will be adjusted downward from $1.75 to $1.58 per share and from
$1.92 to $1.72 per share, respectively. In addition, the exercise price of the Companys outstanding March 2011 warrants to purchase a total of 615,398 shares of common stock as of March 31, 2016 will be adjusted downward from $0.65 to $0.45
per share.