As filed with the Securities and Exchange
Commission on August 15, 2017
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Biostage, Inc.
(Exact name of registrant as specified in
its Charter)
Delaware
|
|
3841
|
|
45-5210462
|
(State or other jurisdiction of
incorporation or organization)
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
(I.R.S. Employer
Identification No.)
|
84 October Hill Road, Suite 11, Holliston,
Massachusetts 01746
(774) 233-7300
(Address, including zip code, and telephone
number, including area code, of registrant’s principal executive office)
James McGorry
Chief Executive Officer
Biostage, Inc.
84 October Hill Road, Suite 11, Holliston, Massachusetts 01746
(774) 233-7300
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With copies to:
Josef B. Volman, Esq.
Chad J. Porter, Esq.
Burns & Levinson LLP
125 Summer Street
Boston, MA 02110
(617) 345-3000
Approximate date of commencement of proposed sale to the public
:
As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.
x
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act. (check one)
Large Accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|
|
|
Non-accelerated filer
|
|
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
x
|
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 7(a)(2)(B) of the Securities Act .
¨
Calculation of Registration Fee
Title of Each Class of Securities to be
Registered
|
|
Proposed Maximum Aggregate
Offering Price
|
|
|
Amount of Registration
Fee
|
|
Common stock, par value $0.01 per share
|
|
$
|
10,000,000
|
(1)(2)
|
|
$
|
1,159
|
|
Subscription rights
|
|
|
—
|
(3)
|
|
|
N/A
|
|
(1) The shares are being offered and sold pursuant to subscription
rights distributed without consideration to the holders of the Company’s common stock as of the effective date.
(2) Includes an indeterminate number of shares per Rule 416.
(3) The over-subscription privileges described herein may be deemed
not to be exempt from registration under Section 3(a)(9).
SUBJECT TO COMPLETION, DATED
AUGUST 15, 2017
The information in this preliminary
prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer
to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBSCRIPTION RIGHTS TO PURCHASE SHARES OF
COMMON STOCK
We are conducting a rights offering in which we are distributing
at no charge to the holders of our common stock and holders of warrants to purchase our common stock rights to purchase up to shares
of our common stock, par value $0.01 per share. Holders of our common stock and warrants to purchase our common stock will receive
one right for each share of our common stock owned (and each share of common stock underlying such holder’s warrant) at the
effective date of the close of business on , 2017, or the basic subscription
privilege.
The cash exercise price of each basic subscription privilege is
$ , which we refer to as the subscription price. Rights holders who fully exercise their
basic subscription privilege will be entitled to subscribe for additional shares of our common stock that remain unsubscribed as
a result of any unexercised basic subscription privileges on a pro rata basis, which we refer to as the over-subscription privilege.
We refer to the basic subscription privilege and over-subscription privilege collectively as rights. A rights holder may only exercise
rights in the aggregate for book-entry of whole numbers of shares of our common stock; no fractional shares of our common stock
will be issued in this offering.
The rights are exercisable beginning on the date of this prospectus
and will expire if they are not exercised by , Eastern time, on ,
2017, the expiration date, unless we extend the offering period. You should carefully consider whether to exercise your rights
before the expiration date. Rights that are not exercised by the expiration date will expire and will have no value. All exercises
of basic subscription privileges and over-subscription privileges are irrevocable.
We have also entered into a
backstop agreement, or the Backstop Agreement, with First Pecos, LLC. Pursuant to the Backstop Agreement, First Pecos, LLC
and its affiliates, whom we sometimes collectively refer to as the backstop provider, has agreed to purchase, an aggregate
number of shares of our common stock equal to (i) 10.0 million, minus
(ii) the aggregate proceeds of this offering, at the subscription price, subject to the terms and conditions of the
Backstop Agreement.
Our common stock is listed on the NASDAQ Capital
Market under the symbol “BSTG.” On August 14, 2017, the closing price for our common stock, as reported on the NASDAQ
Capital Market, was $0.42 per share.
The exercise of your rights and investment in our shares involves
a high degree of risk. You should carefully read the Risk Factors beginning on page 7, as well as the risk factors in any
document we incorporate by reference into this prospectus before you make a decision as to the exercise of your rights.
|
|
Per Unit
|
|
|
Total (1)
|
|
Subscription price
|
|
$
|
|
|
|
$
|
|
|
Estimated expenses
|
|
$
|
|
|
|
$
|
|
|
Proceeds to us
|
|
$
|
|
|
|
$
|
|
|
|
(1)
|
Assumes the rights offering
is fully subscribed.
|
None of our board of directors or officers is making any recommendation
regarding whether you should exercise your rights.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE,
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
It is anticipated that delivery of the common stock purchased in
this offering will be made on or about , 2017.
The date of this prospectus is ,
2017.
TABLE OF CONTENTS
We have not authorized anyone to provide any
information or to make any representations other than those contained in this prospectus or in any prospectus supplement or free
writing prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only
the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained
in this prospectus or in any applicable prospectus supplement or free writing prospectus is current only as of its date, regardless
of its time of delivery or any sale of our securities. Our business, financial condition, results of operations and prospects may
have changed since that date.
For investors outside the United States: We
have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where
action for that purpose is required, other than in the United States. Persons outside the United States who come into possession
of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and the
distribution of this prospectus outside the United States.
ABOUT THIS PROSPECTUS
You should rely only on the information contained
in this prospectus and any prospectus supplement or free writing prospectus authorized by us. We have not authorized any other
person to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. The information in this prospectus is accurate only as of the date it is presented. You should read this prospectus
and any prospectus supplement or free writing prospectus that we have authorized for use in connection with this offering, in their
entirety before investing in our securities.
We are offering to sell, and seeking offers to buy, the securities
offered by this prospectus only in jurisdictions where offers and sales are permitted. The distribution of this prospectus and
the offering of the securities offered by this prospectus in certain jurisdictions may be restricted by law. This prospectus does
not constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities
offered by this prospectus in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.
QUESTIONS AND ANSWERS RELATING TO THE RIGHTS
OFFERING
The following are examples of what we anticipate
will be common questions about this offering. The following questions and answers do not contain all of the information that may
be important to you and may not address all of the questions that you may have about this offering. This prospectus and the documents
we incorporate by reference contain more detailed descriptions of the terms and conditions of this offering and provide additional
information about us and our business, including potential risks related to our business, this offering and our common stock.
What are we offering you?
We are issuing to the holders of our common
stock and holders of warrants to purchase our common stock as of the close of business on ,
2017, which we refer to as the
effective date
, rights to subscribe for an aggregate of up to shares
of our common stock. Each holder, who we refer to as a
rights holder
or you, is being issued one right for each share of
our common stock owned (and each share of common stock underlying such holder’s warrant) on the effective date (1 for 1),
which we refer to as the
basic subscription privilege
. Each basic subscription privilege entitles you to purchase shares
of our common stock at a cash price of $ per whole share, which we refer to as the
subscription
price
. Your basic subscription privilege may only be exercised in the aggregate for whole numbers of shares of our common stock;
no fractional shares of our common stock will be issued in this offering. Any fractional shares will be rounded down to the nearest
whole share of common stock and any excess subscription payments will be returned by the subscription agent.
What is the over-subscription privilege?
If you purchase
all
of the shares of
our common stock available to you pursuant to your basic subscription privilege, you may also choose to purchase your pro-rata
share of any shares of our common stock that our other stockholders and warrant holders do not purchase through the full exercise
of their basic subscription privileges, which we refer to as the
over-subscription privilege
. You should indicate on your
rights certificate, or the form provided by your nominee if your shares are held in the name of a nominee, how many additional
shares of our common stock you would like to purchase pursuant to your over-subscription privilege.
The over-subscription privilege allows you
to subscribe for additional shares of our common stock. If sufficient shares of our common stock are available, we will seek to
honor your over-subscription request in full, so long as it does not exceed your pro rata share and the other ownership thresholds
described in this prospectus are not exceeded.
To properly exercise your over-subscription
privilege, you must deliver the subscription payment related to your over-subscription privilege before this offering expires.
Because we will not know the total number of unsubscribed shares of our common stock before this offering expires, if you wish
to maximize the number of shares you purchase pursuant to your over-subscription privilege, you will need to deliver payment in
an amount equal to the aggregate subscription price for the maximum number of shares that may be available to you (i.e., the
aggregate payment for both your basic subscription privilege and for any additional shares you desire to purchase pursuant to your
over-subscription request). Any excess subscription payments received by the subscription agent will be returned, without interest
or penalty, as soon as practicable.
We refer to the basic subscription privilege
and the over-subscription privilege collectively as the
rights
.
Why are we conducting this offering?
We are conducting this offering in order to
raise additional capital and to improve and strengthen our balance sheet and liquidity position. We intend to use the net proceeds
of this offering and the commitment of one of our investors to purchase up to $10.0 million of our common stock, or the
Backstop
Commitment
, for research and development, including funding pre-clinical and clinical trials relating to the Cellframe™
technology, business development, sales and marketing, capital expenditures, working capital and other general corporate purposes.
Our board of directors considered and evaluated
a number of factors relating to this offering, including:
|
§
|
our current capital resources and our future need for additional liquidity and capital;
|
|
§
|
our need for increased financial flexibility in order to enable us to achieve our business plan;
|
|
§
|
the size and timing of this offering;
|
|
§
|
the potential dilution to our current stockholders if they choose not to participate in this offering;
|
|
§
|
alternatives available for raising capital, including debt and other forms of equity raises;
|
|
§
|
the potential impact of this offering on the public float for our common stock; and
|
|
§
|
the fact that existing stockholders and warrant holders would have the opportunity to participate on a pro rata basis to purchase additional shares of our common stock, subject to certain restriction.
|
How was the subscription price determined?
The $ subscription
price was set by our board of directors as a result of negotiations with First Pecos, LLC as the participant in the backstop. The
subscription price represents a % discount to the volume weighted average price of our common
stock on Nasdaq over the
trading days ending on and including the effective date. The factors considered by our board of directors and the process our board
of directors undertook to review, consider and approve the subscription price are discussed in “The Rights Offering—Reasons
for the Rights Offering” and “Determination of the Offering Price.”
Am I required to exercise the rights I receive
in this offering?
No. You may exercise any number of your rights
or you may choose not to exercise any of your rights. However, if you choose not to exercise your rights or you exercise less than
your full amount of rights and other stockholders and warrant holders fully exercise their rights, the percentage of our common
stock owned by other stockholders and warrant holders will increase relative to your ownership percentage, and your voting and
other rights in Biostage will likewise be diluted.
What are the rights?
The rights give holders of our common stock
and holders of warrants to purchase our common stock as of the effective date the opportunity to purchase shares
of our common stock for every right held at a subscription price of $ per
whole share, however (a) rights may be exercised in aggregate only to purchase whole book-entry shares of our common stock
and (b) the total subscription price payable upon any exercise of rights will be rounded to the nearest whole cent.
You will receive one right for each one of
our shares of common stock you owned (and each share of common stock underlying warrants you owned) as of the effective date. For
example, if you owned 100 shares of our common stock as of the effective date and no warrants to purchase common stock, your rights
would entitle you to purchase a total of shares of our common stock for a total
subscription price of $ (after rounding to the nearest whole cent and
not including any over-subscription privileges). Subject to the limitations described in this prospectus, you may exercise some
or all of your rights, or you may choose not to exercise any rights at all.
May I transfer my rights if I do not want
to purchase any shares?
No. You may not sell, transfer, or assign your
rights to anyone. Rights will not be listed on NASDAQ or any other stock exchange or market. Rights certificates may be completed
only by the stockholder or warrant holder who receives the certificate. The shares of our common stock issuable upon exercise of
the rights will be listed on NASDAQ.
How do I exercise my rights if my shares
of common stock are held in the name of a broker, dealer, custodian bank or other nominee?
If you hold your shares of our common stock
in the name of a broker, dealer, custodian bank or other nominee who uses the services of The Depository Trust Company, or
DTC
,
DTC will credit one right to your nominee record holder for each share of our common stock that you beneficially owned as of the
effective date. If you are not contacted by your nominee, you should contact your nominee as soon as possible.
If I hold my shares in the name of a broker,
dealer, custodian bank or other nominee, how do I pay the subscription price for my rights?
You must have sufficient funds in your account,
and your broker, dealer, custodian bank or other nominee will charge your account for your subscription price. Your
broker will then pay money on your account to DTC. After the offering, DTC will credit funds to our transfer agent who
will ultimately wire the proceeds of this offering to us.
How do I exercise my rights if my shares
of common stock and/or warrants are held in my name?
If you hold your shares of our common stock
and/or warrants in your name and you wish to participate in this offering, you must deliver a properly completed and duly executed
rights certificate to the subscription agent and deliver all other required subscription documents, together with payment of the
full subscription price, to the subscription agent before Eastern time on ,
2017, which we refer to as the
expiration date
.
If you send an uncertified check, payment will
not be deemed to have been delivered to the subscription agent until the check has cleared. In certain cases, you may be required
to provide signature guarantees.
Please follow the delivery instructions on
the rights certificate. Do not deliver documents to us. You are solely responsible for completing delivery to the subscription
agent of your rights certificate, all other required subscription documents and subscription payment. You should allow sufficient
time for delivery of your subscription materials to the subscription agent so that the subscription agent receives them by the
expiration date. See “To whom should I send my forms and payment?” below.
If you send a payment that is insufficient
to purchase the number of shares of our common stock you requested, or if the number of shares of our common stock you requested
is not specified in the forms, the payment received will be applied to exercise your rights to the fullest extent possible based
on the amount of the payment received pursuant to your rights. Any payment that is received but not so applied will be refunded
to you without interest (subject to the rounding of the amount so applied to the nearest whole cent).
If I hold my shares and/or warrants in my
own name and not through a broker, dealer, custodian bank or other nominee, what form of payment is required to purchase shares
of common stock?
As described in the instructions accompanying
the rights certificate, payments submitted to the subscription agent must be made in U.S. currency. Checks or bank drafts drawn
on U.S. banks should be payable to
.
Payments will be deemed to have been received
upon clearance of any uncertified check. Please note that funds paid by uncertified check may take five or more business days to
clear. Accordingly, rights holders who wish to pay the subscription price by means of uncertified check are urged to make payment
sufficiently in advance of the expiration time to ensure that such payment is received and clears by such date.
How soon must I act to exercise my rights?
If your shares of our common stock are registered
in your name and you elect to exercise any or all of your rights, the subscription agent must receive your properly completed and
duly executed rights certificate or the transfer of your rights by DTC, as applicable, all other required subscription documents
and full subscription payment, including final clearance of any uncertified check, before the expiration date. If you hold your
shares in the name of a broker, dealer, custodian bank or other nominee, your nominee may establish an earlier deadline before
the expiration date by which time you must provide the nominee with your instructions and payment to exercise your rights. Although
our board of directors, or a committee thereof, may extend the expiration date, it currently does not intend to do so.
Although we will make reasonable attempts to
provide this prospectus to our stockholders and warrant holders to whom rights are distributed, this offering and all rights will
expire at the expiration date, whether or not we have been able to locate and deliver this prospectus to all such stockholders
and warrant holders.
After I exercise my rights, can I change
my mind?
No. Once you have exercised your rights, you
may not revoke such exercise in whole or in part. Accordingly, any exercise of rights will constitute a binding commitment to purchase
and pay for the shares of our common stock issuable upon such exercise, regardless of any changes in the value of such shares,
in our business, financial condition, results of operations or future prospects or in your individual circumstances.
Can this offering be cancelled or extended?
Yes. We reserve the right to withdraw or terminate
this offering at any time prior to the expiration date and for any reason. If we withdraw or terminate this offering, neither we
nor the subscription agent will have any obligation with respect to rights that have been exercised except to return, without interest
or deduction, any subscription payments the subscription agent received from you. If we were to cancel this offering, any money
received from subscribing stockholders and warrant holders would be returned promptly, without interest or penalty, and we would
not be obligated to issue shares of our common stock to holders who have exercised their rights prior to termination. In addition,
we may extend the period for exercising the rights.
Has our board of directors made a recommendation
to our stockholders and warrant holders regarding the exercise of rights under this offering?
No. Our board of directors has not made, nor
will they make, any recommendation to you regarding the exercise of rights in this offering. We cannot predict the price at which
our shares of common stock will trade after this offering. You should make an independent investment decision about whether or
not to exercise your rights. Stockholders and warrant holders who exercise rights risk losing the new money invested. We cannot
assure you that the market price for our common stock will remain above the subscription price or that anyone purchasing shares
at the subscription price will be able to sell those shares in the future at the same price or a higher price. If you do not exercise
or sell your rights, you will lose any value represented by your rights, and if you do not exercise your rights in full, your percentage
ownership interest and related rights in Biostage will be diluted.
Are there any risks associated with this
offering?
Stockholders and warrant holders who exercise
their rights will incur investment risk on new money invested. The stock market and, in particular, our common stock price, has
experienced significant volatility recently. As a result, the market price for our common stock may be volatile. This offering
will increase the number of outstanding shares of our common stock (assuming the exercise of the rights in full) by approximately %
and the trading volume in our common stock may fluctuate more than usual and cause significant price variations to occur. The market
price of our common stock will depend on many factors, which may change from time to time, including our financial condition, performance,
creditworthiness and prospects, future sales of our securities and other factors. Volatility in the market price of our common
stock may prevent you from being able to sell our common stock when you want or at prices you find attractive. You should make
your decision based on your assessment of our business and financial condition, our prospects for the future, the terms of this
offering and the information contained in, or incorporated by reference into, this prospectus or any free writing prospectus.
You
should carefully consider the risks, among other things, described under the heading “Risk Factors” and in the documents
incorporated by reference into this prospectus before exercising your rights and investing in shares of our common stock.
When will I receive my shares of common
stock purchased in this offering?
Stockholders whose shares are held of record
by Cede & Co., or
Cede
, the nominee of DTC, or by any other depository or nominee on their behalf or their
broker-dealers’ behalf will have any shares that they acquire credited to the account of Cede or such other depository or
nominee. With respect to all other stockholders and warrant holders, you must provide a brokerage account for your shares acquired
in this offering, as we will not issue physical certificates for shares purchased in this offering, unless required to do so by
law. Whether your shares are held through DTC or directly with our transfer agent Computershare, shares of common stock acquired
in this offering will be issued as soon as possible following the conclusion of the offering.
Is there a backstop purchaser?
Yes.
On , 2017, we entered into a Backstop Agreement with
First Pecos, LLC and certain of its affiliates, whom we collectively refer to as the
backstop provider
, pursuant to
which we have agreed to issue and sell to the backstop provider, and the backstop provider agreed to purchase, an aggregate
number of shares of our common stock equal to (i) $10.0 million, minus (ii) the aggregate proceeds of this offering,
subject to the terms and conditions of the Backstop Agreement. See “Backstop Agreement” for additional details on
the Backstop Commitment, including the fees to be paid by us and our expense reimbursement obligation.
Why is there a backstop provider?
We obtained the commitment of the
backstop provider to act as the backstop purchaser under the Backstop Agreement to increase the likelihood that we would
receive $10.0 million of gross proceeds, less fees and expenses of this offering and the Backstop Commitment.
Is the backstop provider receiving any compensation
for its participation in the Backstop Commitment?
No. The backstop provider is not receiving compensation for its
participation in the Backstop Commitment.
What effects will this offering have on
our outstanding common stock?
After giving effect to this offering, assuming
that it is fully subscribed, we will have approximately shares
of common stock outstanding, representing an increase of approximately % in our outstanding shares
as of the effective date. If you fully exercise the rights that we distribute to you, your proportional interest in us (assuming
the exercise of all outstanding warrants) will remain the same. If you do not exercise any rights, or you exercise less than all
of your rights, your interest in us will be diluted, as you will own a smaller proportional interest in us compared to your interest
prior to this offering.
If all of our stockholders and warrant holders
exercise the rights issued to them, and this offering is therefore fully subscribed, the beneficial ownership percentage of our
stockholders will not change. Assuming that no holders exercise their rights in this offering, the backstop providers would acquire
approximately shares of our common
stock, following which (1) the backstop providers would beneficially own approximately % of our outstanding
common stock and (2) all other holders would beneficially own approximately % of our outstanding common
stock. All ownership percentages described in this paragraph are based upon our outstanding common stock and the beneficial ownership
of our holders as of the effective date.
The number of shares of our common stock outstanding
listed in each case above assumes that (1) all of the other shares of our common stock issued and outstanding on the effective
date will remain issued and outstanding and owned by the same persons as of the closing of this offering and (2) we will not
issue any shares of common stock in the period between the effective date and the closing of this offering.
Are there any conditions to the backstop
providers’ obligations under the Backstop Agreement?
Yes. The obligations of the backstop providers
to consummate the transactions under the Backstop Agreement are subject to the satisfaction or waiver of specified conditions,
including, but not limited to, compliance with covenants and the accuracy of representations and warranties provided in the Backstop
Agreement, consummation of this offering, the receipt of all required regulatory approvals, and no material adverse effect with
respect to our financial condition, business, properties, assets, liabilities or results of operations.
When do the backstop providers’ obligations
under the Backstop Agreement expire?
The Backstop Agreement may be terminated by
us, on the one hand, or the backstop providers, on the other hand, if the transactions contemplated by the Backstop Agreement have
not been consummated by ,
2017.
How much will we receive from this offering
and how will such proceeds be used?
We estimate that the net proceeds from this
offering and the Backstop Commitment will be approximately $ million,
after deducting expenses related to this offering.
We intend to use the net proceeds for research
and development, including funding pre-clinical and clinical trials relating to the Cellframe™ technology, business development,
sales and marketing, capital expenditures, working capital and other general corporate purposes.
If my exercise of rights is not valid or
if this offering is not completed, will my subscription payment be refunded to me?
Yes. The subscription agent will hold all funds
it receives in a segregated bank account until the completion of this offering. If your exercise of rights is deemed not to be
valid or this offering is not completed, all subscription payments received by the subscription agent will be returned as soon
as practicable following the expiration of this offering, without interest or penalty. If you own shares through a nominee, it
may take longer for you to receive your subscription payments because the subscription agent will return payments through the record
holder of your shares.
What fees or charges apply if I purchase
shares in this offering?
We are not charging any fee or sales commission
to issue rights to you or to issue shares of our common stock to you if you exercise your rights. If you exercise your rights through
a broker, dealer, custodian bank or other nominee, you are responsible for paying any fees your nominee may charge you.
What are the U.S. federal income tax considerations
of exercising my rights?
U.S. Holders (as defined herein) generally
will not recognize gain or loss on the receipt, exercise or expiration of rights. See “U.S. Federal Income Tax Considerations”
for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own tax
advisor as to the tax consequences to you of the receipt, exercise and expiration of the rights in light of your particular circumstances.
To whom should I send my forms and payment?
If your shares of our common stock and/or warrants
are held in the name of a broker, dealer, custodian bank or other nominee, then you should deliver all required subscription documents
and subscription payments pursuant to the instructions provided by your nominee.
If your shares of our common stock and/or warrants
are held in your name, then you should send your rights certificate to the subscription agent, and send all other required subscription
documents and subscription payments by mail or overnight courier to the appropriate address listed below:
If delivering by first class mail:
|
|
|
|
|
|
|
|
If delivering by overnight courier:
|
|
|
|
|
|
|
|
You and, if applicable, your nominee are solely
responsible for instructing DTC to transfer your rights to the subscription agent or completing delivery to the subscription agent
of your rights certificate, as applicable, as well as completing delivery of all other required subscription documents and subscription
payments. You should allow sufficient time for delivery of your subscription materials to the subscription agent and clearance
of payments before the expiration of this offering. If you hold your shares of our common stock and/or warrants through a broker,
dealer, custodian bank or other nominee, your nominee may establish an earlier deadline before the expiration date.
Whom should I contact if I have other questions?
If you have any questions regarding this offering,
completion of the rights certificate or any other subscription documents or submitting payment in this offering, please contact
at .
PROSPECTUS SUMMARY
The following summary highlights information
contained elsewhere in this prospectus. It may not contain all of the information that is important to you. You should read the
entire prospectus carefully, especially the discussion regarding the risks of investing in our common stock under the heading “Risk
Factors,” before investing in our common stock. All references to “Company” “we,” “our”
or “us” refer solely to Biostage, Inc. and its subsidiaries and not to the persons who manage us or constitute our
Board of Directors.
About Biostage, Inc.
We are a biotechnology company developing bioengineered
organ implants based on our novel Cellframe technology. Our Cellframe technology is comprised of a biocompatible scaffold that
is seeded with the recipient’s own stem cells. This technology is being developed to treat life-threatening conditions of
the esophagus, trachea or bronchus with the objective of dramatically improving the treatment paradigm for those patients.
We believe that our Cellframe technology will
provide surgeons with new ways to address damage to the esophagus, bronchus, and trachea due to congenital abnormalities, cancer,
infection or trauma. Products being developed based on our Cellframe technology for those indications are called Cellspan products.
We announced favorable preliminary pre-clinical
results of large-animal studies for the esophagus, trachea and bronchus in November 2015. Since then, the Cellspan esophageal implant
product candidates have been our lead development product candidates. We are pursuing two development programs that address conditions
of the esophagus: esophageal atresia in pediatric patients and esophageal cancer in adult patients. Our Cellspan esophageal product
candidates are each intended to provide a surgical solution to stimulate regeneration of a segment of the esophagus missing due
to a congenital abnormality or following surgical removal to establish or reestablish the organ’s continuity and integrity.
Approximately one in 2,500 babies in the U.S.
is born with esophageal atresia, a congenital condition where the child’s esophagus is underdeveloped and does not extend
completely from the mouth to the stomach. When a long segment of the esophagus is lacking, the current standard of care is a series
of surgical procedures where surgical sutures are applied to both ends of the esophagus in an attempt to stretch them together
so they can be connected at a later date. This process can take weeks and the procedure is plagued by serious complications and
may carry high rates of failure. Such approach also requires, in time, at least two separate surgical interventions. Other options
include the use of the child’s stomach that would be pulled up, or a piece of the patient’s intestine that would be
moved to the gap, to allow a connection to the mouth. We are working to develop a Cellspan esophageal implant product candidate
to address newborns’ esophageal atresia, to provide a simpler, more effective and potentially organ-sparing solution.
A portion of all patients diagnosed with esophageal
cancer are treated via a surgical procedure known as an esophagectomy. The current standard of care for an esophagectomy requires
a complex surgical procedure that involves moving the patient’s stomach or a portion of their colon into the chest to replace
the portion of esophagus resected by the removal of the tumor. These current procedures have high rates of complications, and can
lead to a severely diminished quality of life and require costly ongoing care. Our Cellspan esophageal implants aim to simplify
the procedure, reduce complications, result in a better quality of life and reduce the overall cost of these patients to the healthcare
system.
In May 2016, we reported an update of recent
results from pre-clinical large-animal studies. We disclosed that the study had demonstrated in a predictive large-animal model
the ability of Biostage Cellspan organ implants to successfully stimulate the regeneration of sections of esophagus that had been
surgically removed for the study. Cellspan esophageal implants, consisting of a proprietary biocompatible synthetic scaffold seeded
with the recipient animal’s own stem cells, were surgically implanted in place of the esophagus section that had been removed.
Study animals were returned to a solid diet
two weeks after implantation surgery. The scaffolds, which are intended to be in place only temporarily, were later retrieved via
the animal’s mouth in a non-surgical endoscopic procedure. After two and a half months post-surgery, a complete epithelium
and other specialized esophagus tissue layers were regenerated. Animals in the study demonstrated weight gain and appear healthy
and free of any significant side effects, including two that are now more than one year post implantation, and are receiving no
specialized care.
In November 2016, we were granted Orphan Drug
Designation for our Cellspan esophageal implant by the FDA to restore the structure and function of the esophagus subsequent to
esophageal damage due to cancer, injury or congenital abnormalities. Orphan drug status provides market exclusivity in the U.S.
for seven years from the date of the product’s approval for marketing. This exclusivity is in addition to any exclusivity
we may obtain due to our patents. Additionally, orphan designation provides certain incentives, including tax credits and a waiver
of the Biologics License Application or BLA fee. We also intend to apply for orphan drug designation for our Cellspan esophageal
implant in Europe in the near term. Orphan drug status in Europe provides market exclusivity there for ten years from the date
of the product’s approval for marketing.
We are conducting Good Laboratory Practice
or GLP studies to demonstrate that our technology, personnel, systems and practices are sufficient for advancing into clinical
trials. GLP safety studies are required to advance to an Investigational New Drug or IND application with the FDA, which would
seek approval to initiate clinical trials for Biostage Cellspan esophageal implants in humans.
In October 2016, we announced a regulatory
update following our planned pre-Investigational New Drug, or pre-IND, meeting with the FDA, for the advancement of our lead product
candidate, a Cellspan Esophageal Implant to be used to stimulate esophageal regeneration following surgery to address esophageal
cancer in adults, into human clinical studies. We subsequently announced our expectation to file an IND application with the FDA
in the third quarter of 2017 based on our election to extend the duration of our ongoing GLP animal studies following the feedback
provided by the FDA.
On August 7, 2017, we announced the use of
our Cellspan Esophageal Implant product candidate in a patient at a major U.S. hospital via an FDA-approved single-use expanded
access application. The implant was surgically implanted in May 2017 into a 75-year old male patient with a life-threatening cancerous
mass in his chest. The portion of the esophagus affected by the cancer was removed and the Cellspan Esophageal Implant was utilized
to reconstruct the esophagus. The patient remains alive three months after the surgery.
In August 2017, we announced that we are
reprioritizing our product development program based on greatest unmet medical need, analysis of existing surgical options,
physician validation and investor preference. We believe that, of our two current programs, the Cellspan Esophageal Implant
program to treat pediatric esophageal atresia provides a shorter time to a commercial product and the greater overall
potential value. We also believe that the pediatric esophageal atresia program needs to advance in the first position with
the FDA to ensure eligibility for the pediatric rare disease accelerated review voucher program. Receipt of such a voucher,
if achieved, could potentially provide significant value to the company in the future. As a result, we are elevating the
pediatric program to our lead program. We will continue to advance the Cellspan Esophageal Implant adult program, but will
not file an IND for that product candidate at this time.
Our products are currently in development and
have not yet received regulatory approval for sale anywhere in the world.
We have incurred substantial
operating losses since inception, and as of June 30, 2017 have an accumulated deficit of approximately $43.8 million. We
expect to continue to incur operating losses and negative cash flows from operations for the remainder of 2017 and in future
years. We believe that our cash at June 30, 2017 will be sufficient to meet the Company’s obligations through the third
quarter of 2017. Therefore, these conditions raise substantial doubt about the Company’s ability to continue as a
going concern. However, upon the expected closing of the financing arrangement with First Pecos, as described below,
approximately $3.1 million of gross proceeds will be received at closing, and First Pecos is committed to providing a
backstop in up to two subsequent rights offerings to generate additional proceeds of up to $14 million. Additionally, at June
30, 2017 there were approximately 22.6 million warrants outstanding. If in the future these warrants are exercised they would
potentially provide up to an additional $11.2 million of proceeds to the Company.
We will need to raise additional funds in future
periods to fund our operations. In the event that we do not raise additional capital from outside sources in the near future, we
may be forced to curtail or cease our operations. Cash requirements and cash resource needs will vary significantly depending upon
the timing of clinical and animal studies and other resource needs that will be required to complete ongoing development and pre-clinical
and clinical testing of products as well as regulatory efforts and collaborative arrangements necessary for our products that are
currently under development. We will seek to raise necessary funds through a combination of public or private equity offerings,
debt financings, other financing mechanisms, or strategic collaborations and licensing arrangements. We may not be able to obtain
additional financing on terms favorable to us, if at all.
February 2017 Public Offering
On February 10, 2017, we completed a public offering of 20,000,000
shares of common stock at a purchase price of $0.40 per share and the issuance of warrants to purchase 20,000,000 shares of common
stock at an exercise price of $0.40 per warrant for gross proceeds of $8.0 million. Additionally, we issued to the placement agent
warrants to purchase 1,000,000 shares of common stock to the placement agent for the offering at an exercise price of $0.50 per
warrant.
August 2017 Private Placement
On August 11, 2017, we entered into a Securities Purchase
Agreement with the backstop party for the sale by us of 8,061,905 shares of our common stock at
a purchase price of $0.315 per share and 516 shares of our Series C Convertible Preferred Stock at a purchase price of $1,000 per
share for aggregate gross proceeds of approximately $3.05 million. The shares of Series C Convertible Preferred Stock are subject
to conversion limitations so that the holders thereof may not effect any conversion to the extent that following the conversion,
the holders, together with their affiliates, would own more than 19.99% of our outstanding shares of common stock. We will enter
into the Backstop Agreement with the backstop party, as described below under “The Backstop Agreement.”
Corporate Information
We were incorporated under the laws of the
State of Delaware on May 3, 2012 by Harvard Bioscience, Inc., or
Harvard Bioscience
, to provide a means for separating its
regenerative medicine business from its other businesses. On March 31, 2016, we changed our name from Harvard Apparatus Regenerative
Technology, Inc. to Biostage, Inc. Our principal executive offices are located at 84 October Hill Road, Suite 11, Holliston, Massachusetts.
Our telephone number is (774) 233-7300. We maintain a web site at
http://www.biostage.com
. The reference to our web site
is intended to be an inactive textual reference only. The information contained on, or that can be accessed through, our web site
is not a part of this prospectus.
THE RIGHTS OFFERING
The Rights Offering
|
|
We are distributing at no charge to the holders of shares of our common stock and holders of warrants to purchase our common stock as of the close of business on , 2017, the
effective date
, one right for each share of our common stock owned of record (and each share of common stock underlying such holder’s warrant) on the effective date.
|
|
|
|
|
|
The basic subscription privilege (as described below) and the over-subscription privilege (as described below) are collectively referred to as the
rights
.
|
|
|
|
Subscription Price
|
|
If you validly exercise any of your rights, you will receive shares of our common stock upon cash payment of $ per whole share, the
subscription price
, to our rights agent. The subscription price represents a % discount to the volume weighted average price of our common stock on Nasdaq over the consecutive trading days ending on and including the effective date.
|
|
|
|
Basic Subscription Privilege
|
|
Each basic subscription privilege entitles you to purchase new shares of our common stock for every share of common stock you owned of record (and each share of common stock underlying your warrants) on the effective date. You may exercise all or a portion of your basic subscription privilege or you may choose not to exercise any basic subscription privilege at all.
|
|
|
|
Over-Subscription Privilege
|
|
If any rights holders do not exercise their basic subscription privilege in full, then rights holders who have exercised their basic subscription privilege in full (including subscription privileges acquired as a result of acquiring shares of our common stock between the effective date and expiration date) will be entitled to purchase a portion of the number of shares, if any, that are not purchased by other rights holders through the exercise of their basic subscription privilege at the subscription price, or the
over-subscription privilege
, subject to certain limitations. The maximum number of shares that a rights holder may purchase through the over-subscription privilege is the rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their basic subscription privileges. See also “Certain Purchase Limitations.”
|
|
|
|
|
|
If sufficient shares are available, we will seek to honor your over-subscription request in full, so long as it does not exceed your pro rata share or other ownership thresholds described in this prospectus.
|
|
|
|
Use of Proceeds
|
|
Net proceeds of this offering (and the Backstop Commitment, to the extent exercised) will be used for research and development, including funding pre-clinical and clinical trials relating to the Cellframe™ technology, business development, sales and marketing, capital expenditures, working capital and other general corporate purposes.
|
|
|
|
Expiration Date
|
|
The rights expire worthless if they are not validly exercised on or before Eastern time on , 2017, or the
expiration date
, unless we extend the subscription period.
|
|
|
|
Transferability of Rights
|
|
The rights granted to you are non-transferable and, therefore, you may not sell, transfer, or assign your rights to anyone.
|
|
|
|
No Board Recommendation
|
|
Our board of directors is not making any recommendation to you with respect to this offering.
|
|
|
|
Backstop Commitment
|
|
First Pecos, LLC and its affiliates has
committed to purchase up to $10.0 million of shares of common stock, at the subscription price, to the extent that the
exercise of rights result in gross proceeds to us of less than $10.0 million. We
will not pay any fee to the backstop provider.
|
U.S. Federal Income Tax Considerations
|
|
We intend to take the position that the distribution of rights generally is a non-taxable distribution to holders of our common stock and that holders of shares of our common stock generally will not recognize any gain or loss upon the exercise of rights received in this offering. This position, however, is not binding on the Internal Revenue Service, or
IRS
, or the courts, and if this position is finally determined by the IRS or a court to be incorrect, the distribution of the rights, or the exercise thereof, could be taxable to holders of our common stock. You should refer to “U.S. Federal Income Tax Considerations” for a more complete discussion, including qualifications and limitations. In addition, you should consult your own tax advisor as to the tax consequences to you of the receipt, exercise and expiration of the rights in light of your particular circumstances.
|
|
|
|
Amendment and Extension; Cancellation
|
|
We may amend the terms of this offering. Our board of directors may decide to extend this offering for additional periods, although it does not currently intend to do so. We also reserve the right to withdraw this offering at any time prior to the expiration date and for any reason. If this offering is cancelled, all subscription payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable to those persons who subscribed for shares in this offering.
|
|
|
|
No Revocation
|
|
All exercises of rights are irrevocable.
|
|
|
|
Procedures for Exercising Rights
|
|
To exercise your rights, you must take the following steps:
If you hold your common stock and/or warrants through a broker,
dealer, custodian bank or other nominee, then your nominee is the record holder of the rights you own. The record holder must exercise
the rights on your behalf. If you wish to exercise your rights in this offering, you should contact your broker, dealer, custodian
bank or nominee as soon as possible. You will not receive a subscription certificate from us. Please follow the instructions of
your nominee. Your nominee may establish a submission deadline that may be before the expiration date
|
|
|
|
|
|
If you hold a subscription certificate and you wish to participate in this offering, you must properly complete and sign Form 1 of the subscription certificate for the subscription privilege, and if you wish to exercise a portion or all of your entitlement under the over-subscription privilege, Form 2 of the subscription certificate, and deliver the signed subscription certificate, together with payment of the subscription price, to the subscription agent before the expiration date or use the guaranteed delivery procedures described under “The Rights Offering—Guaranteed Delivery Procedures.” You may be required to provide signature guarantees.
|
|
|
|
|
|
Please follow the delivery instructions on the subscription certificate. Do not deliver documents to us. You are solely responsible for completing delivery to the subscription agent of your subscription documents, subscription certificate and payment. You should allow sufficient time for delivery of your subscription materials to the subscription agent so that the subscription agent receives them by the expiration date. If you cannot deliver your subscription certificate to the subscription agent prior to the expiration of this offering period, you may follow the guaranteed delivery procedures described under “The Rights Offering—Guaranteed Delivery Procedures.”
|
|
|
|
|
|
If you send a payment that is insufficient to exercise the number of rights you requested to exercise, or if such number is not specified in the forms, the payment received will be applied to exercise your rights to the fullest extent possible based on the amount of the payment received, subject to the availability of shares under the over-subscription privilege and the elimination of fractional shares. If your payment for the number of rights you requested to exercise is greater than the amount you owe for your subscription, you will be deemed to have exercised your over-subscription privilege to purchase the maximum number of shares with your over-payment. Any excess subscription payments will be returned by the subscription agent, without interest or penalty, as soon as practicable following the expiration of this offering period.
|
Outstanding Shares of Common Stock
|
|
39,033,865 shares outstanding as of August 9, 2017.
|
|
|
|
|
|
shares outstanding as of August 9, 2017, assuming all of the rights were exercised.
|
|
|
|
NASDAQ Capital Market symbol for common stock
|
|
BSTG.
|
|
|
|
Subscription Agent
|
|
|
|
|
|
Questions
|
|
If you have any questions about the rights offering, please contact at .
|
|
|
|
Risk Factors
|
|
Investing in our common stock involves a high degree of risk.
You should consider carefully the information discussed in “Risk Factors.”
|
RISK FACTORS
Investing in our common stock involves a high
degree of risk. You should carefully consider the risks described herein and in the documents incorporated by reference in this
prospectus, as well as other information we include or incorporate by reference into this prospectus, before making an investment
decision. In particular, you should consider the risk factors under the heading “Risk Factors” included in our most
recent Annual Report on Form 10-K, as may be revised or supplemented by our subsequent Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K, each of which are on file with the SEC and are incorporated herein by reference, and which may be amended,
supplemented or superseded from time to time by other reports we file with the SEC in the future. Our business, financial condition
or results of operations could be materially adversely affected by the materialization of any of these risks. The trading price
of our common stock could decline due to the materialization of any of these risks, and you may lose all or part of your investment.
This prospectus and the documents incorporated herein by reference also contain forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of
certain factors, including the risks described herein and in the documents incorporated herein by reference.
Risks Related to this Offering
This offering may cause the price of our common stock to decline
and it may not recover for a substantial period of time or at all.
The subscription price represents a % discount
to the closing price of our common stock on , the effective date. The subscription price, together with the number of shares
of our common stock we propose to issue and ultimately will issue if this offering and the Backstop Commitment are completed, may
result in an immediate decrease in the market value of our common stock. If the market price of our common stock falls below the
subscription price, participants in this offering will have committed to buy shares of our common stock in this offering at a price
greater than the prevailing market price. Further, if a substantial number of rights are exercised and the holders of the shares
received upon exercise of those rights choose to sell some or all of those shares, the resulting sales could depress the market
price of our common stock. We cannot assure you that the market price of our shares of common stock will not decline prior to the
expiration of this offering or that, after shares of our common stock are issued upon exercise of rights, a subscribing rights
holder will be able to sell shares of our common stock purchased in this offering at a price greater than or equal to the subscription
price.
The subscription price determined for this offering and the
purchase price under the Backstop Agreement may not be indicative of the fair value of our common stock.
The subscription price was set by our board of directors and you
should not consider the subscription price as an indication of the value of our common stock. The subscription price does not necessarily
bear any relationship to the book value of our assets, net worth, expected cash flows, losses, financial condition or any other
established criteria for fair value. The market price of our common stock could decline during or after this offering, and you
may not be able to sell shares of our common stock purchased in this offering at a price equal to or greater than the subscription
price, or at all.
Our common stock price may be volatile.
The trading price of our common stock may fluctuate substantially.
The price of our common stock that will prevail in the market after this offering may be higher or lower than the subscription
price, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance.
These factors include, but are not limited to, the following:
|
§
|
price and volume fluctuations in the overall stock market from time to time;
|
|
§
|
significant volatility in the market price and trading volume of securities of our competitors;
|
|
§
|
changes in the expectations or recommendations of securities analysts;
|
|
§
|
material announcements by us regarding our product candidates ;
|
|
§
|
general economic conditions and trends;
|
|
§
|
legislative or regulatory changes affecting our business; or
|
|
§
|
departures of key personnel.
|
Your interest in us may be diluted as a result of this offering.
Stockholders who do not fully exercise their rights should expect
that they will, at the completion of this offering and the Backstop Commitment, own a smaller proportional interest in us than
would otherwise be the case had they fully exercised their rights. After giving effect to this offering, assuming that it is fully
subscribed, we would have approximately shares of common stock
outstanding, representing an increase in outstanding shares of approximately .
There can be no guarantee that the stock purchase contemplated
by the Backstop Agreement will be consummated if this offering is not fully subscribed.
The closing of the transactions contemplated by the Backstop Agreement
is subject to satisfaction or waiver of conditions, including compliance with covenants and the accuracy of representations and
warranties provided in the Backstop Agreement and consummation of this offering. As a result, we cannot guarantee that the transactions
contemplated by the Backstop Agreement will be consummated if this offering is not fully subscribed. Failure to consummate the
transactions contemplated by the Backstop Agreement could have adverse effects on our business and results of operations and financial
condition.
You may not revoke your exercise of rights.
Once you have exercised your rights, you may not revoke such exercise
in whole or in part. Accordingly, any exercise of rights will constitute a binding commitment to purchase and pay for the shares
of our common stock issuable upon such exercise, regardless of any changes in the value of such shares, in our business, financial
condition, results of operations or future prospects or in your individual circumstances.
You may not be able to resell any shares of our common stock
that you purchase upon the exercise of rights immediately upon expiration of this offering.
If you exercise your rights, you may not be able to resell the common
stock purchased by exercising your rights until you (or your broker or other nominee) have received a stock certificate or book-entry
representing those shares. Although we will endeavor to issue the appropriate certificates and book-entries as soon as practicable
after completion of this offering, there may be some delay between the expiration date and the time that we issue the new stock
certificates and book-entries.
We have broad discretion in the use of the net proceeds from
this offering and may not use them effectively.
We will have broad discretion in determining how the net proceeds
of this offering will be used. While our board of directors believes the flexibility in application of the net proceeds is prudent,
the broad discretion it affords entails increased risks to the investors in this offering. You may not agree with the manner in
which we choose to allocate and spend the net proceeds.
If we cancel this offering, neither we nor the subscription
agent will have any obligation to you except to return your subscription payments.
We may withdraw or terminate this offering at any time and for any
reason. If we withdraw or terminate this offering, neither we nor the subscription agent will have any obligation with respect
to rights that have been exercised except to return, without interest or deduction, any subscription payments the subscription
agent received from you.
If you do not act on a timely basis and follow subscription
instructions, your exercise of rights may be rejected.
Holders of shares of our common stock and holders of warrants to
purchase our common stock who desire to purchase shares of our common stock in this offering must act on a timely basis to ensure
that all required forms and payments are actually received by the subscription agent prior to the expiration date, unless extended.
If you are a beneficial owner of shares of our common stock and/or warrants to purchase our common stock and you wish to exercise
your rights, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all required
forms and payments are actually received by your broker, custodian bank or other nominee in sufficient time to deliver such forms
and payments to the subscription agent to exercise the rights granted in this offering that you beneficially own prior to the expiration
date, unless extended. We will not be responsible if your broker, custodian or nominee fails to ensure that all required forms
and payments are actually received by the subscription agent prior to the expiration date, unless extended.
If you fail to complete and sign the required subscription forms,
send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in this offering,
the subscription agent may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment
received. Neither we nor the subscription agent undertakes to contact you concerning an incomplete or incorrect subscription form
or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether
a subscription exercise properly follows the subscription procedures.
If you make payment of the subscription price by uncertified
check, your check may not clear in sufficient time to enable you to purchase shares in this offering.
Any uncertified check used to pay for shares to be issued in this
offering must clear before the expiration date, and the clearing process may require five or more business days. If you choose
to exercise your rights, in whole or in part, and to pay for shares by uncertified check and your check has not cleared prior to
the expiration date, you will not have satisfied the conditions to exercise your right and will not receive the shares you wish
to purchase.
This offering may limit our ability to use some or all of
our net operating loss carryforwards in the future.
Under Section 382 of the Code, a corporation
that undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change net operating
loss carryforwards to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of
certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50%
over such stockholders’ lowest percentage ownership during the testing period (generally three years). This offering and
the issuance of shares pursuant to exercised rights may cause an ownership change. Also, even if this offering and the issuance
of shares pursuant to exercised rights do not cause an ownership change, they could increase the likelihood that we may undergo
an ownership change for purposes of Section 382 of the Code in the future. Limitations imposed on our ability to utilize
net operating loss carryforwards could cause U.S. federal income taxes to be paid earlier than would be paid if such limitations
were not in effect and could cause such net operating loss carryforwards to expire unused, in each case reducing or eliminating
the benefit of such net operating loss carryforwards.
If the rights offering is not fully subscribed, the backstop
provider will increase its ownership percentage and may become a majority owner of Biostage.
On August 14, 2017, the last practicable date before the filing
of this prospectus, the backstop provider and its affiliates owned approximately 19.99% of our outstanding shares of common stock
(excluding 1,638,095 shares of common stock underlying shares of our Series C Convertible Preferred Stock held by the backstop
provider and its affiliates and warrants to purchase 9,700,000 shares of our common stock or common stock equivalents, which are
subject to certain conversion and exercise limitations). As a stockholder and warrant holder as of the record date, the backstop
provider will have the right to subscribe for and purchase shares of our common stock under the rights offering. To the extent
the backstop provider participates in the rights offering and other stockholders and warrant holders do not, the backstop provider
will increase its percentage of ownership and may become the owner of a majority of our shares of common stock.
We have received notices from NASDAQ
of non-compliance with its continuing listing rules, and have not regained compliance.
On July 16, 2015, we received a notice from
NASDAQ of non-compliance with its continuing listing rules, namely that the audit committee of our Board of Directors had two members
following James McGorry’s appointment as our President and Chief Executive Officer instead of the required minimum of three
members. In accordance with NASDAQ continued listing rules, we were given until the earlier of our next annual shareholders’
meeting or July 6, 2016 to add a third audit committee member. On March 10, 2016, Blaine McKee, Ph.D. was appointed as a member
of the Board of Directors and its audit committee, and we regained compliance with that requirement.
On November 10, 2015, we received a notice
from NASDAQ of non-compliance with its listing rules regarding the requirement that the listed securities maintain a minimum bid
price of $1 per share. Based upon the closing bid price for the 30 consecutive business days preceding the notice, the Company
no longer met this requirement. However, the NASDAQ rules also provide the Company a period of 180 calendar days in which to regain
compliance and, in some circumstances, a second 180-day compliance period. On November 25, 2015, we regained compliance with the
minimum bid price requirement when the closing price of our common stock was at least $1 per share for ten consecutive business
days.
On November 18, 2016, we received a notice
from NASDAQ of non-compliance with its listing rules regarding the minimum bid price requirement. On May 18, 2017, NASDAQ notified
us that, based upon our continued non-compliance with the minimum bid price requirement as of May 17, 2017, as well as our non-compliance
with the minimum $2.5 million stockholders’ equity requirement for continued listing on The Nasdaq Capital Market as of March
31, 2017, our common stock would be subject to delisting from Nasdaq unless we timely requested a hearing before the Nasdaq Hearings
Panel, which we refer to as the Panel. We timely requested such a hearing.
On July 6, 2017, the Panel granted our request
for continued listing on NASDAQ and accepted our plan to regain compliance with the continued listing requirements. Our continued
listing is subject to a number of conditions, with the Panel’s decision ultimately requiring that we evidence full compliance
with all requirements for continued listing on The Nasdaq Capital Market, including the minimum bid price and million stockholders’
equity requirements, by no later than November 13, 2017.
While we believe that the consummation of this
offering will result in the Company regaining compliance with the stockholders’ equity requirement, there can be no assurances
that we will be able to evidence compliance with all applicable requirements for continued listing on The Nasdaq Capital Market
within the extension of time that was granted by the Panel. The failure to meet continuing compliance standards subjects our common
stock to a possible delisting. A delisting of our common stock would have an adverse effect on the market liquidity of our common
stock and, as a result, the market price for our common stock could become more volatile. Further, a delisting also could make
it more difficult for us to raise additional capital.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
1
This prospectus (including any related prospectus
supplement or free writing prospectus and documents incorporated by reference herein and therein) contains statements with respect
to us which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the
“safe harbor” created by those sections. These statements relate to future events or to our future financial performance
and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements
to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.
Forward-looking statements may include, but are not limited to, statements relating to the regulatory approval of our Cellspan
TM
product candidates for the esophagus and airways or any other product candidates, by the FDA, EMA, MHRA or otherwise, which such
approvals may not be obtained on a timely basis or at all; anticipated future earnings or other financial measures; success with
respect to any clinical trials and other regulatory approval efforts and the number of patients who can be treated with our products
or product candidates; commercialization efforts and marketing approvals of our products as well as the success thereof, including
our Cellspan product candidates for the esophagus and airways; the continued availability of a market for our securities; our ability
to raise sufficient capital to finance our planned operations, and our estimates concerning capital requirements and need for additional
financing; our ability to continue as a going concern; the amount and timing of costs associated with our development of bioreactors,
scaffolds and other devices and products; our failure to comply with regulations and any changes in regulations; our ability to
access debt and equity markets; unpredictable difficulties or delays in the development of new technology; our collaborators not
devoting sufficient time and resources to successfully carry out their duties or meet expected deadlines; our ability to attract
and retain qualified personnel and key employees and retain senior management; the availability and price of acceptable raw materials
and components from third-party suppliers; difficulties in obtaining or retaining the management and other human resource competencies
that we need to achieve our business objectives; increased competition in the field of regenerative medicine and the financial
resources of our competitors; our ability to obtain and maintain intellectual property protection for our device and product candidates;
our inability to implement our growth strategy; and our liquidity.
In some cases, you can identify forward-looking
statements by terms such as “believe,” “may,” “estimate,” “continue,” “anticipate,”
“intend,” “should,” “could,” “would,” “target,” “seek,”
“aim,” “believe,” “predicts,” “think,” “objectives,” “optimistic,”
“new,” “goal,” “strategy,” “potential,” “is likely,” “will,”
“expect,” “plan” “project,” “permit” and similar expressions intended to identify
forward-looking statements. These statements reflect our current views with respect to future events, are based on assumptions
and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking
statements. We discuss many of these risks in greater detail under the heading “Risk Factors” in our SEC filings, and
under the caption “Risk Factors” in this prospectus.
You should read this prospectus and any
related prospectus supplement and free writing prospectus and the documents that we incorporate by reference herein and therein
and have filed as exhibits to the registration statement, of which this prospectus is part, completely and with the understanding
that our actual future results may be materially different from what we expect. You should assume that the information appearing
in this prospectus is accurate as of the date on the cover of this prospectus or prospectus supplement only. Our business, financial
condition, results of operations and prospects may change. We may not update these forward-looking statements, even though our
situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material
developments related to previously disclosed information. We qualify all of the information presented in this prospectus and any
related prospectus supplement or free writing prospectus, and particularly our forward-looking statements, by these cautionary
statements.
1
NTD: To update following update of business section
USE OF PROCEEDS
We estimate that the net proceeds from this
offering and the Backstop Commitment will be approximately $ million, after deducting
expenses related to this offering.
We intend to use the net proceeds from this
offering, together with other available funds, for research and development, including funding pre-clinical and clinical trials
relating to the Cellframe™ technology, business development, sales and marketing, capital expenditures, working capital and
other general corporate purposes.
Pending these uses, we intend to invest the
net proceeds to us from this offering in a variety of capital preservation investments, including short-term, investment-grade
and interest-bearing instruments. The precise amounts and timing of the application of proceeds will depend upon our funding requirements
and the availability of other funds. We may find it necessary or advisable to use the net proceeds for other purposes, and we will
have broad discretion in the application of the net proceeds and investors will be relying on the judgment of our management regarding
the application of the net proceeds from this offering.
Based upon our historical and anticipated future
growth and our financial needs, we may engage in additional financings of a character and amount that we determine as the need
arises. We may raise additional capital through additional public or private financings, the incurrence of debt and other available
sources.
PRICE RANGE OF OUR COMMON EQUITY
Our common stock trades on The NASDAQ Capital
Market under the symbol “BSTG.” Prior to April 1, 2016, in connection with our name change, our common stock traded
on The NASDAQ Capital Market under the symbol “HART” since October 21, 2013. The following table sets forth, for the
quarters shown, the range of high and low sales prices of our common stock on the NASDAQ Capital Market.
|
|
High
|
|
|
Low
|
|
Fiscal Year ending December 31, 2017
|
|
|
|
|
|
|
|
|
Third Quarter (through August 14, 2017)
|
|
$
|
0.65
|
|
|
$
|
0.40
|
|
Second Quarter
|
|
$
|
0.49
|
|
|
$
|
0.22
|
|
First Quarter
|
|
$
|
0.95
|
|
|
$
|
0.29
|
|
Fiscal Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
2.60
|
|
|
$
|
1.08
|
|
Second Quarter
|
|
$
|
2.86
|
|
|
$
|
0.92
|
|
Third Quarter
|
|
$
|
1.22
|
|
|
$
|
0.90
|
|
Fourth Quarter
|
|
$
|
1.42
|
|
|
$
|
0.73
|
|
Fiscal Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
4.43
|
|
|
$
|
1.85
|
|
Second Quarter
|
|
$
|
3.83
|
|
|
$
|
1.36
|
|
Third Quarter
|
|
$
|
1.73
|
|
|
$
|
0.56
|
|
Fourth Quarter
|
|
$
|
3.47
|
|
|
$
|
0.53
|
|
The closing price of our common stock on the
NASDAQ Capital Market on August 14, 2017 was $0.42 per share. Immediately prior to this offering, we had 39,033,865 shares of common
stock outstanding, which were held by approximately 181 stockholders of record as of August 14, 2017.
DIVIDEND POLICY
We have never declared or paid cash dividends
on our common stock in the past and do not intend to pay cash dividends on our common stock in the foreseeable future. Any future
determination to pay cash dividends will be at the discretion of our board of directors and will depend on our financial condition,
results of operations, capital requirements and other factors our board of directors deems relevant.
THE RIGHTS OFFERING
Before deciding whether to exercise your subscription rights,
you should carefully read this prospectus, including the information set forth under the heading “Risk Factors” and
the information that is incorporated by reference into this prospectus.
Reasons for the Rights Offering
We believe that our existing
cash resources will be sufficient to fund our planned operations into the fourth quarter of 2017, and consequently we require
additional funding to continue our anticipated operations and support our capital needs. This offering would allow us to
raise equity capital in a cost-effective manner that allows all of our stockholders and warrant holders the opportunity to
participate in the transaction on a pro-rata basis, and if all stockholders exercise their rights, our stockholders may avoid
dilution of their ownership interest in us, subject to the treatment of fractional shares.
Our board of directors considered various factors
in evaluating this offering and related transactions, including:
|
§
|
our current capital resources and our future need for additional liquidity and capital;
|
|
§
|
our need for increased financial flexibility in order to enable us to achieve our business plan;
|
|
§
|
the size and timing of this offering;
|
|
§
|
the potential dilution to our current stockholders if they choose not to participate in this offering;
|
|
§
|
alternatives available for raising capital, including debt and other forms of equity raises;
|
|
§
|
the potential impact of this offering on the public float for our common stock; and
|
|
§
|
the fact that existing stockholders and warrant holders would have the opportunity to participate on a pro rata basis to purchase additional shares of our common stock, subject to certain restriction.
|
The terms of the Backstop Commitment were reviewed,
negotiated and approved by our board of directors, with advice from legal counsel.
The Backstop Agreement (and this offering)
may be terminated by us at any time prior to the expiration date and for any reason.
Terms of the Offer
We are issuing to our stockholders and warrant
holders as of the effective date rights to subscribe for an aggregate of up to shares
of our common stock. Each rights holder is being issued one basic subscription privilege for each share of our common stock owned
(and each share of common stock underlying such holder’s warrant) as of the close of business, on
, 2017, the effective date (1 for 1).
Each basic subscription privilege entitles
the rights holder to purchase shares of our common stock, at a
cash price of $ per whole share, which represents a %
discount to the closing price of our common stock on the effective date. Rights may only be exercised in the aggregate for whole
numbers of shares of our common stock; no fractional shares of our common stock will be issued in this offering. Any fractional
shares will be rounded down to the nearest whole share of common stock and any excess subscription payments will be returned by
the subscription agent.
Rights holders who fully exercise their basic
subscription privilege will be entitled to the over-subscription privilege which enables such rights holders to subscribe for additional
shares of our common stock that remain unsubscribed as a result of any unexercised basic subscription privileges. If sufficient
remaining shares are available, all over-subscription requests will be honored so long as no rights holder receives more than the
rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their basic subscription
privileges and other ownership thresholds described herein are not exceeded.
Rights may be exercised at any time during
the subscription period, which commences on
, 2017, and ends at , Eastern time, on ,
2017, or the expiration date, unless extended by us.
The rights will be evidenced by subscription
certificates which will be mailed to stockholders and warrant holders, except as discussed below under “Foreign Stockholders.”
For purposes of determining the number of shares
a rights holder may acquire in this offering, broker-dealers, trust companies, banks or others whose shares are held of record
by Cede or by any other depository or nominee will be deemed to be the holders of the rights that are issued to Cede or the other
depository or nominee on their behalf.
There is no minimum number of rights which
must be exercised in order for this offering to close.
Over-Subscription Privilege
The over-subscription privilege allows rights
holders that fully exercise their basic subscription privilege to purchase additional shares of our common stock that remain unsubscribed
as a result of any unexercised basic subscription privileges. You should indicate on your subscription certificate that you submit
with respect to the exercise of your rights how many additional shares of our common stock you are willing to acquire pursuant
to the over-subscription privilege. If sufficient remaining shares are available, we will seek to honor over-subscription requests
in full so long as no rights holder receives more than the rights holder’s pro rata share of the shares not purchased by
other rights holders through exercises of their basic subscription privileges and other ownership thresholds described herein are
not exceeded.
Banks, brokers, trustees and other nominee
holders of rights will be required to certify to the subscription agent, before any over-subscription privileges may be exercised
with respect to any particular beneficial owner, as to the aggregate number of rights exercised pursuant to the subscription right
and the number of shares subscribed for pursuant to the over-subscription privileges by such beneficial owner.
We will not offer or sell in connection with
this offering any shares of common stock that are not subscribed for pursuant to the basic subscription privileges or the over-subscription
privileges. The backstop provider, however, has agreed to backstop this offering pursuant to the Backstop Commitment.
Expiration of this Offer
This offering will expire at
, Eastern time, on , 2017, unless extended
by us, and rights may not be exercised thereafter.
Subject to the terms of the Backstop Agreement,
our board of directors may determine to extend the subscription period, and thereby postpone the expiration date, to the extent
our board of directors determines that doing so is in the best interest of our stockholders.
Any extension of this offering will be followed
as promptly as practicable by announcement thereof, and in no event later than 9:00 a.m., New York City time, on the next
business day following the previously scheduled expiration date. Without limiting the manner in which we may choose to make such
announcement, we will not, unless otherwise required by law, have any obligation to publish, advertise or otherwise communicate
any such announcement other than by issuing a press release or such other means of announcement as we deem appropriate.
Transferability
The rights granted to you are non-transferable
and, therefore, you may not sell, transfer, or assign your rights to anyone. The rights will not be listed on NASDAQ or any other
stock exchange or market. The shares of our common stock issuable upon exercise of the rights will be listed on NASDAQ.
Determination of the Subscription Price
The $ subscription
price was set by our board of directors using the formula negotiated with the backstop provider in the Backstop Agreement. In approving
the subscription price, our board of directors considered, among other things, the following factors:
|
§
|
the historical and current market price of our common stock;
|
|
§
|
the % discount to the as compared to comparable precedent transactions, including the range of discounts to the market value (on an actual basis and a pro forma basis taking into account the Subscription Price and size of this offering) represented by the subscription prices in other rights offerings;
|
|
§
|
the subscription price represents a % discount to the closing price of our common stock on the effective date;
|
|
§
|
the backstop subscription price at which the backstop provider was willing to provide the Backstop Commitment;
|
|
§
|
the fact that rights holders will have an over-subscription privilege;
|
|
§
|
the low level of execution risk of raising capital in this offering with the Backstop Commitment;
|
|
§
|
the terms and expenses of this offering relative to other alternatives for raising capital, including fees payable and our ability to access capital through such alternatives;
|
|
§
|
the size of this offering; and
|
|
§
|
the general condition of the securities market.
|
Subscription Agent
will
act as the subscription agent in connection with this offering. will
receive for their administrative, processing, invoicing and other services fees estimated to be approximately $
, plus reimbursement for all out-of-pocket expenses related to this offering.
Completed subscription certificates must be
sent together with full payment of the subscription price for all whole shares subscribed for through the exercise of the subscription
privilege and the over-subscription privilege to the subscription agent by one of the methods described below. We will accept only
properly completed and duly executed subscription certificates actually received at any of the addresses listed below, at or prior
to the expiration date or by the close of business on the third business day after the expiration date following timely receipt
of a notice of guaranteed delivery. See “Payment for Shares” below. In this prospectus, close of business means 5:00 p.m.,
New York City time, on the relevant date.
Subscription Certificate Delivery Method
|
|
Address/Number
|
By Notice of Guaranteed Delivery:
|
|
You may deliver the notice of guaranteed delivery to the subscription agent in the same manner as the rights certificate at the addresses set forth below. Eligible institutions only may also deliver the notice of guaranteed delivery to the subscription agent by facsimile at , confirmation of faxes only: .
This number is ONLY for confirmation of a fax.
|
By Overnight Courier:
|
|
|
|
|
|
|
|
|
By First Class Mail:
|
|
|
|
|
|
Delivery to an address other than one of the
addresses listed above may not constitute valid delivery and, accordingly, may be rejected by us.
Any questions or requests for assistance concerning
the method of subscribing for shares or for additional copies of this prospectus or subscription certificates or notices of guaranteed
delivery may be directed to at
.
You may also contact your broker or nominees
for information with respect to this offering.
Methods for Exercising Rights
Exercise of the Basic Subscription Privilege
Basic subscription privileges are evidenced
by subscription certificates that, except as described below under “Foreign Stockholders,” will be mailed to rights
holders or, if a rights holder’s shares are held by a depository or nominee on his, her or its behalf, to such depository
or nominee. Basic subscription privileges may be exercised by completing and signing the subscription certificate that accompanies
this prospectus and mailing it in the envelope provided, or otherwise delivering the completed and duly executed subscription certificate
to the subscription agent, together with payment in full for the shares at the estimated subscription price by the expiration date.
Basic subscription privileges may also be exercised by contacting your broker, trustee or other nominee, who can arrange, on your
behalf, to guarantee delivery of payment and delivery of a properly completed and duly executed subscription certificate pursuant
to a notice of guaranteed delivery by the close of business on the third business day after the expiration date. A fee may be charged
by your broker, trustee or other nominee for this service. Completed subscription certificates and related payments must be received
by the subscription agent on or before the expiration date (unless payment is effected by means of a notice of guaranteed delivery
as described below under “Payment for Shares”) at the offices of the subscription agent at the address set forth above.
All exercises of basic subscription privileges are irrevocable.
Exercise of the Over-Subscription Privilege
Rights holders who fully exercise all basic
subscription privileges issued to them may participate in the over-subscription privilege by indicating on their subscription certificate
the number of shares of our common stock they are willing to acquire. If sufficient remaining shares of our common stock are available
after the primary subscription, we will seek to honor over-subscriptions requests in full so long as no rights holder receives
more than the rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their
basic subscription privileges and other ownership thresholds described herein are not exceeded. All exercises of over-subscription
privileges are irrevocable.
Rights Holders Whose Shares are Held
by a Nominee
Rights holders whose shares are held by a nominee,
such as a bank, broker-dealer or trustee, must contact that nominee to exercise their rights. In that case, the nominee will complete
the subscription certificate on behalf of the rights holder and arrange for proper payment by one of the methods set forth under
“Payment for Shares” below.
Nominees
Nominees, such as brokers, trustees or depositories
for securities, who hold shares for the account of others, should notify the respective beneficial owners of the shares as soon
as possible to ascertain the beneficial owners’ intentions and to obtain instructions with respect to the rights. If the
beneficial owner so instructs, the nominee should complete the subscription certificate and submit it to the subscription agent
with the proper payment as described under “Payment for Shares” below.
General
All questions as to the validity, form, eligibility
(including times of receipt and matters pertaining to beneficial ownership) and the acceptance of subscription forms and the subscription
price will be determined by us, which determinations will be final and binding. No alternative, conditional or contingent subscriptions
will be accepted. We reserve the right to reject any or all subscriptions not properly submitted or the acceptance of which would,
in the opinion of our counsel, be unlawful.
We reserve the right to reject any exercise
of subscription rights if such exercise is not in accordance with the terms of this offering or not in proper form or if the acceptance
thereof or the issuance of shares of our common stock thereto could be deemed unlawful. We reserve the right to waive any deficiency
or irregularity with respect to any subscription certificate. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as we determine in our sole discretion. We will not be under
any duty to give notification of any defect or irregularity in connection with the submission of subscription certificates or incur
any liability for failure to give such notification.
Foreign Stockholders
Subscription certificates will not be mailed
to foreign stockholders. Foreign stockholders will receive written notice of this offering. The subscription agent will hold the
rights to which those subscription certificates relate for these stockholders’ accounts until instructions are received to
exercise the rights, subject to applicable law.
Payment for Shares
Participating rights holders may choose between
the following methods of payment:
|
(1)
|
A participating rights holder
may send the subscription certificate together with payment for the shares acquired pursuant to the subscription privilege and
any additional shares subscribed for pursuant to the over-subscription privilege to the subscription agent based on the subscription
price in the executed subscription certificate, must be received by the subscription agent at one of the subscription agent’s
offices set forth above (see “—Subscription Agent”), at or prior to the expiration date.
|
|
(2)
|
A participating rights holder
may request an Eligible Guarantor Institution as that term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended, or the
Exchange Act
, to send a notice of guaranteed delivery or otherwise guaranteeing delivery of (a) payment
of the full subscription price for the whole shares subscribed for pursuant to the subscription privilege and any additional shares
subscribed for pursuant to the over-subscription privilege and (b) a properly completed and duly executed subscription certificate.
The subscription agent will not honor a notice of guaranteed delivery unless a properly completed and duly executed subscription
certificate and full payment for the shares is received by the subscription agent at or prior to 5:00 p.m., Eastern time,
on , 2017, unless this offering is extended
by us.
|
Payments by a participating rights holder must
be in U.S. dollars by personal check or bank draft drawn on a bank or branch located in the United States and payable to
. The subscription agent will deposit all funds received by it prior to the final payment date into a segregated account pending
pro-ration and distribution of the shares.
The method of delivery of subscription certificates
and payment of the subscription price to us will be at the election and risk of the participating rights holders, but, if sent
by mail it is recommended that such certificates and payments be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to the subscription agent and clearance of payment
prior to the expiration date or the date guaranteed payments are due under a notice of guaranteed delivery (as applicable). Because
uncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment,
by means of certified or cashier’s check or money order.
Whichever of the two methods described above
is used, issuance of the shares purchased is subject to collection of checks and actual payment.
If a participating rights
holder who subscribes for shares pursuant to the subscription privilege or over-subscription privilege does not make payment of
any amounts due by the expiration date, the date guaranteed payments are due under a notice of guaranteed delivery or within ten
business days of the confirmation date, as applicable, the subscription agent reserves the right to take any or all of the following
actions:
|
§
|
reallocate the shares to other participating rights holders in accordance with the Over-Subscription Privilege;
|
|
§
|
apply any payment actually received by it from the participating rights holder toward the purchase of the greatest whole number of shares which could be acquired by such participating rights holder upon exercise of the subscription and/or the over-subscription privilege; and/or
|
|
§
|
exercise any and all other rights or remedies to which it may be entitled, including the right to set off against payments actually received by it with respect to such subscribed for shares.
|
All questions concerning the timeliness, validity,
form and eligibility of any exercise of rights will be determined by us, whose determinations will be final and binding. We may
waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject
the purported exercise of any right. Subscriptions will not be deemed to have been received or accepted until all irregularities
have been waived or cured within such time as we determine. The subscription agent will not be under any duty to give notification
of any defect or irregularity in connection with the submission of subscription certificates or incur any liability for failure
to give such notification.
Participating rights holders will have no right
to rescind their subscription after receipt of their payment for shares.
Delivery of Shares
Stockholders whose shares are held of record
by Cede or by any other depository or nominee on their behalf or their broker-dealers’ behalf will have any shares that they
acquire credited to the account of Cede or the other depository or nominee. With respect to all other stockholders, we will credit
your shares by book entry and only issue stock certificates if required by law. We will not credit the shares you purchase until
you provide the subscription agent with information for your bank, broker or other nominee. If we are required to deliver
a physical certificate for shares you acquire, the certificate will be mailed after payment for all the shares subscribed for has
cleared, which may take up to 15 business days from the expiration date.
Termination
We may terminate this offering in the discretion
of our board of directors. If this offering is terminated, all rights will expire without value and we will promptly arrange for
the refund, without interest or penalty, of all funds received from rights holders. All monies received by the subscription agent
in connection with this offering will be held by the subscription agent, on our behalf, in a segregated interest-bearing account
at a negotiated rate. All such interest shall be payable to us even if we determine to terminate this offering and return your
subscription payment.
No Recommendation to Stockholders
Our Board of Directors has not made, nor will
it make, any recommendation to stockholders and warrant holders regarding the exercise of rights under this offering. We cannot
predict the price at which our shares of common stock will trade after this offering. You should consult with your legal, tax and
financial advisors prior to making your independent investment decision about whether or not to exercise your rights.
As of the effective date, the backstop provider
and its affiliates beneficially owned approximately 19.99% of our common stock (excluding 1,638,095 shares of common stock underlying
shares of our Series C Convertible Preferred Stock held by the backstop provider and its affiliates and warrants to purchase 9,700,000
shares of our common stock or common stock equivalents, which are subject to certain conversion and exercise limitations), and
Leon Greenblatt III, a member of our board of directors, is a manager of the backstop provider. You should not view the intentions
of the backstop provider as a recommendation or other indication by it regarding whether the exercise of the subscription rights
is or is not in your best interests.
Stockholders and warrant holders who exercise
rights risk investment loss on new money invested. We cannot assure you that the market price for our common stock will remain
above the subscription price or that anyone purchasing shares at the subscription price will be able to sell those shares in the
future at the same price or a higher price. If you do not exercise or sell your rights, you will lose any value represented by
your rights, and if you do not exercise your rights in full, your percentage ownership interest in Biostage will be diluted. For
more information on the risks of participating in this offering, see the section of this prospectus entitled “Risk Factors.”
Effect of This Offering on Existing Stockholders;
Interests of Certain Stockholders, Directors and Officers
After giving effect to this offering, assuming
that it is fully subscribed, we would have approximately shares
of common stock outstanding, representing an increase of approximately % in our outstanding
shares as compared to the effective date. If you fully exercise the rights that we distribute to you, your proportional interest
in us (assuming the exercise of all outstanding warrants) will remain the same. If you do not exercise any rights, or you exercise
less than all of your rights, your interest in us will be diluted, as you will own a smaller proportional interest in Biostage
compared to your interest prior to this offering.
By virtue of the backstop provider’s
ownership, it is able to exert substantial influence over us, including our business strategy and policies, mergers or other business
combinations, acquisition or disposition of assets, future issuances of our common stock, debt or other securities, the incurrence
of debt or obtaining other sources of financing, and other matters relating to our business and operations. The backstop provider’s
interests may not always be consistent with our interests or with the interests of our other stockholders. To the extent that conflicts
of interest may arise between us and the backstop provider and its affiliates, those conflicts may be resolved in a manner adverse
to us or our other stockholders.
If the Backstop Commitment were fully exercised,
the backstop provider would acquire shares of our common
stock, for an aggregate purchase price of $10.0 million. In addition, the backstop provider will be entitled
to registration rights with respect to any shares of our common stock it acquires under the Backstop Commitment. See “The
Backstop Agreement—Registration Rights” for more information.
U.S. Federal Income Tax Considerations of
the Rights Offering
U.S. Holders (as defined herein) generally
will not recognize gain or loss on the receipt, exercise or expiration of the rights. See “U.S. Federal Income Tax Considerations”
for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own tax
advisors as to the tax consequences to you of the receipt, exercise and expiration of the rights in light of their particular circumstances.
Shares of Our Common Stock Outstanding After
this Offering
As of the effective date, shares
of our common stock were issued and outstanding. Assuming no additional shares of common stock have been or will be issued by us
after the effective date and prior to consummation of this offering and assuming it is fully subscribed, we expect approximately shares
of our common stock will be outstanding immediately after completion of this offering.
Other Matters
The rights certificates are governed by Delaware
law. We are not making this offering in any state or other jurisdiction in which it is unlawful to do so, nor are we distributing
or accepting any offers to purchase any shares of our common stock from rights holders who are residents of those states or other
jurisdictions or who are otherwise prohibited by federal or state laws or regulations to accept or exercise the rights. We may
delay the commencement of this offering in those states or other jurisdictions, or change the terms of this offering, in whole
or in part, in order to comply with the securities laws or other legal requirements of those states or other jurisdictions. Subject
to state securities laws and regulations, we also have the discretion to delay allocation and distribution of any shares you may
elect to purchase by exercise of your rights in order to comply with state securities laws. We may decline to make modifications
to the terms of this offering requested by those states or other jurisdictions, in which case, if you are a resident in those states
or jurisdictions or if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the rights,
you will not be eligible to participate in this offering. However, we are not currently aware of any states or jurisdictions that
would preclude participation in this offering.
THE BACKSTOP AGREEMENT
The Backstop Commitment
On
, 2017, we entered into a backstop agreement with the backstop provider. The backstop provider agreed to purchase from us, an aggregate
number of shares of our common stock equal to (x) $10.0 million, minus (y) the aggregate proceeds of this offering, at
a price per share equal to the subscription price, subject to the terms and conditions of the Backstop Agreement. The Backstop
Commitment is scheduled to close not later than the third trading day following the expiration date.
Expense Reimbursement
Regardless of whether the transactions contemplated
by the Backstop Agreement are consummated, we have agreed to reimburse the backstop provider for all reasonable out-of-pocket fees
and expenses (including attorneys’ fees and expenses) incurred by it in connection with the Backstop Agreement and the transactions
contemplated thereby, other than if the Backstop Agreement is terminated due to a breach by the backstop provider.
Closing Conditions
The closing of the transactions contemplated
by the Backstop Agreement is subject to the satisfaction or waiver of customary conditions, including:
|
§
|
receipt of all applicable regulatory approvals;
|
|
§
|
compliance with covenants;
|
|
§
|
the accuracy of representations and warranties set forth in the Backstop Agreement;
|
|
§
|
the absence of a material adverse effect on us or on the ability of the backstop provider to perform its obligations under the Backstop Agreement;
|
|
§
|
the effectiveness of the registration statement related to this offering;
|
|
§
|
consummation of this offering; and
|
|
§
|
approval for listing on the Nasdaq of shares of our common stock to be issued in this offering.
|
Termination
The Backstop Agreement may be terminated at
any time prior to the closing of the transactions contemplated by the Backstop Agreement as follows:
|
§
|
by mutual written agreement of the backstop provider and us;
|
|
§
|
by any party, if the closing of the transactions contemplated by the Backstop Agreement does not occur by , 2017;
|
|
§
|
by any party, if any governmental entity shall have taken action prohibiting any of the contemplated transactions; and
|
|
§
|
by the backstop provider, if we breach any of our representations, warranties, covenants or agreements set forth in the Backstop Agreement that would result in the applicable condition to closing not being satisfied, and such breach is not cured within 10 days of receipt of written notice by the backstop provider;
|
|
§
|
by us, if there is a breach of any of the backstop provider’s representations, warranties, covenants or agreements set forth in the Backstop Agreement that would result in the applicable condition to closing not being satisfied, and such breach is not cured within 10 days of receipt of written notice by us; or
|
|
§
|
by us, if we decide to withdraw or terminate the offering for any reason and at any time prior to the expiration date.
|
Indemnification
We agreed to indemnify the backstop provider
and its affiliates and each of their respective officers, directors, partners, employees, agents and representatives for losses
arising out of this offering and the related registration statement and prospectus (other than with respect to statements made
in reliance on information provided to us in writing by the backstop provider for use herein) and claims, suits or proceedings
challenging the authorization, execution, delivery, performance or termination of a rights offering, the Backstop Agreement and
certain ancillary agreements and/or any of the transactions contemplated thereby, other than losses arising out of or related to
any breach by the backstop provider of the Backstop Agreement.
The backstop providers agreed to indemnify
us and our affiliates and each of our respective officers, directors, partners, employees, agents and representatives for losses
arising out of or relating to statements or omissions in the registration statement or prospectus for this offering (or any amendment
or supplement thereto) made in reliance on or in conformity with written information relating to the backstop provider furnished
to us by or on behalf of the backstop provider expressly for use therein.
Registration Rights
The purchase of shares of our common stock
by the backstop provider pursuant to the Backstop Agreement would be effected in a transaction exempt from the registration requirements
of the Securities Act and would not be registered pursuant to the registration statement of which this prospectus forms a
part. Under the Backstop Agreement, with respect to the shares of our common stock acquired by the backstop provider in this offering
or in the Backstop Commitment, we agreed to file a resale registration statement, at our own expense, promptly following the sale
of shares to the backstop provider pursuant to the Backstop Agreement (but in any event within ninety days thereafter), to register
the resale of those shares by the backstop provider. In the event the number of shares available under the resale registration
statement is insufficient, we will, to the extent necessary and permissible, amend the registration statement or file a new registration
statement, so as to cover all registrable securities as soon as is practicable and permissible. We will use reasonable best efforts
to keep the resale registration statement or a replacement registration statement effective pursuant to Rule 415 under the Securities
Act and available for sales of all of the shares subject thereto at all times until the earlier of (i) the date as of which the
backstop party may sell all of the registrable securities without restriction or limitation pursuant to Rule 144 under the Securities
Act (or successor thereto) and (ii) the date on which the backstop party has sold all the registrable securities.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes United States
federal income tax considerations to U.S. Holders (defined below) relating to the receipt, exercise and expiration of the rights
received by such U.S. Holders in this offering. It addresses only U.S. Holders that hold our common stock as capital assets within
the meaning of Section 1221 of the Code. The following summary does not purport to be a complete analysis of all of the potential
U.S. federal income tax considerations that may be relevant to particular holders of rights in light of their particular circumstances
nor does it deal with persons that are subject to special tax rules, such as brokers, dealers in securities or currencies, financial
institutions, insurance companies, tax-exempt entities or qualified retirement plans, holders of 4.99% or more of a class of our
stock by vote or value (whether such stock is actually or constructively owned), regulated investment companies, common trust funds,
holders subject to the alternative minimum tax, persons holding rights or shares of our common stock as part of a straddle, hedge
or conversion transaction or as part of a synthetic security or other integrated transaction, traders in securities that elect
to use a mark-to-market method of accounting for their securities holdings, holders that have a “functional currency”
other than the United States dollar, U.S. expatriates, and persons that are not U.S. Holders. In addition, the discussion below
does not address persons who hold an interest in a partnership or other entity that holds rights, tax consequences arising under
the laws of any state, local or non-U.S. jurisdiction or other U.S. federal tax consequences (e.g., estate or gift tax) other
than those pertaining to the income tax, or the consequences of the Medicare tax on net investment income.
The following is based on the Code, the Treasury
regulations promulgated thereunder (the
Treasury Regulations
) and administrative rulings and court decisions, in each case
as in effect on the date hereof, all of which are subject to change, possibly with retroactive effect.
As used herein, the term “U.S. Holder”
means a beneficial holder of rights that is:
|
§
|
a citizen or individual resident of the United States;
|
|
§
|
a corporation (or an entity treated as a corporation for U.S. federal tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof;
|
|
§
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|
§
|
a trust if (1) a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons, within the meaning of Section 7701(a)(30) of the Code, have authority to control all of its substantial decisions, or (2) it was in existence on August 20, 1996, was treated as a U.S. person under the Code on the previous day and has properly elected under applicable Treasury Regulations to continue to be treated as a United States person.
|
The tax treatment of a partner in a partnership,
or other entity treated as a partnership for U.S. federal tax purposes, may depend on both the partnership’s and the partner’s
status. Partnerships that are beneficial owners of rights, and partners in such partnerships, are urged to consult their own tax
advisors regarding the U.S. federal, state, local and non-U.S. tax consequences to them of the receipt, exercise and expiration
of the rights.
This summary is of a general nature only.
It is not intended to constitute, and should not be construed to constitute, legal or tax advice to any particular holder. Holders
should consult their own tax advisors as to the tax consequences in their particular circumstances.
U.S. Federal Income Tax Characterization
of the Rights Offering
We believe that the receipt of rights in this
offering will be treated as a non-taxable transaction and not as a taxable distribution of property for U.S. federal income tax
purposes. However, holders of our common stock should be aware that we can provide no assurance that the IRS will take a similar
view or would agree with the tax consequences described in this summary.
Receipt of the Rights
A U.S. Holder generally will not recognize
income, gain, deduction or loss on the receipt of rights in this offering. A U.S. Holder’s tax basis in its rights will depend
on the relative fair market value of the rights received by such U.S. Holder and such U.S. Holder’s shares of our common
stock at the time the rights are distributed. If the rights received by a U.S. Holder have a fair market value equal to at least
15% of the fair market value of such U.S. Holder’s shares of our common stock on the date of the distribution, the U.S. Holder
must allocate its adjusted tax basis in its shares of our common stock between its common stock and the rights in proportion to
their then relative fair market values. If the rights received by a U.S. Holder have a fair market value that is less than 15%
of the fair market value of such U.S. Holder’s shares of our common stock on the date of distribution, the U.S. Holder’s
tax basis in its rights will be zero unless the U.S. Holder elects to allocate its adjusted tax basis in its shares of our common
stock in the manner described in the previous sentence. A U.S. Holder makes this election by attaching a statement to its U.S.
federal income tax return for the year in which rights are received. The election, once made, is irrevocable. A U.S. Holder making
this election must retain a copy of the election and the tax return with which it was filed to substantiate the gain or loss, if
any, recognized on any later disposition of shares of our common stock received upon exercise of its rights. The holding period
for the rights received by a U.S. Holder in this offering will include the U.S. Holder’s holding period for its shares of
our common stock with respect to which the rights are received.
Exercise of the Rights
A U.S. Holder will not recognize gain or loss
on the exercise of a right. The U.S. Holder’s tax basis in the shares of our common stock received as a result of the exercise
of a right will equal the sum of the exercise price paid for the shares of our common stock and the U.S. Holder’s tax basis
in the right determined as described under “Receipt of the Rights” above. The holding period for the shares of our
common stock received as a result of the exercise of the right will begin on the exercise date.
A U.S. Holder that exercises rights should
be aware that the exercise of such rights could result in a loss that would otherwise be recognized with respect to such U.S. Holder’s
other shares of our common stock to be disallowed under the “wash sale” rules. If the “wash sale” rules
apply to a U.S. Holder’s loss with respect to its other shares of our common stock, the U.S. Holder’s tax basis in
any shares of our common stock received as a result of the exercise of rights would be increased to reflect the amount of the disallowed
loss. U.S. Holders are urged to consult their tax advisors regarding how the “wash sale” rules apply to them in light
of their particular circumstances.
Expiration of the Rights
A U.S. Holder that allows a right to expire
will not recognize gain or loss and will not allocate any tax basis to the right as described under “Receipt of the Rights”
above.
The above summary is not intended to constitute
a complete analysis of all tax consequences relating to the receipt, exercise and expiration of the rights. You should consult
your own tax advisor concerning the tax consequences of your particular situation.
DESCRIPTION OF OUR CAPITAL STOCK
The following description of our common stock
summarizes the material terms and provisions of the common stock we may offer under this prospectus. The following description
of our capital stock does not purport to be complete and is subject to, and qualified in its entirety by, our amended and restated
certificate of incorporation, or our Charter, and our second amended and restated bylaws, or our Bylaws, which are exhibits to
the registration statement of which this prospectus forms a part, and by applicable law. The terms of our common stock and warrants
to purchase our common stock may also be affected by Delaware law.
Authorized Capital Stock
Our authorized capital stock consists of 120,000,000
shares of common stock, par value $0.01 per share, and 2,000,000 shares of undesignated preferred stock, par value $0.01 per share,
of which 1,000,000 shares were designated as Series B Convertible Preferred Stock and 4,000 shares were designated as Series C
Convertible Preferred Stock. As of August 14, 2017, there were 39,033,865 shares of common stock outstanding and 516 shares
of preferred stock outstanding, all of which were shares of Series Convertible Preferred Stock.
Common Stock
Holders of our common stock are entitled to
one vote for each share held of record on all matters submitted to a vote of shareholders; provided, that, except as otherwise
required by law, holders of common stock are not entitled to vote on any amendment to the Charter that changes the powers, preferences,
rights or other terms of one or more series of undesignated preferred stock if the holders of the affected series are entitled
to vote, separately or together, with the holders of one or more other such series, on such amendment pursuant to our Charter or
Delaware General Corporation Law. Our Charter provides that our Board of Directors shall be divided into three classes, each consisting
as nearly as reasonably may be possible of one-third of the total number of directors constituting the entire Board of Directors,
with each class’s term expiring on a staggered basis. Newly-created directorships and vacancies on our Board of Directors
may only be filled by a majority of the members of the incumbent board then in office, though less than a quorum, and not by our
stockholders. Directors may be removed from office only for cause by the affirmative vote of the holders of at least seventy-five
percent (75%) of the outstanding shares entitled to be cast on the election of directors by the then-outstanding shares of all
classes and series of capital stock, voting together as a single class. Holders of common stock have no preemptive, redemption
or conversion rights and are not subject to future calls or assessments. No sinking fund provisions apply to our common stock.
All outstanding shares are fully-paid and non-assessable. In the event of our liquidation, dissolution or winding up, after the
satisfaction in full of the liquidation preferences of holders of any preferred stock, holders of common stock are entitled to
ratable distribution of the remaining assets available for distribution to stockholders. Holders of common stock are entitled to
receive proportionately any such dividends declared by our Board of Directors, out of legally available funds for dividends, subject
to any preferences that may be applicable to any shares of preferred stock that may be outstanding at that time. The rights, preferences
and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares
of any series of preferred stock that we may designate and issue in the future. To the extent our Shareholder Rights Agreement
remains in effect at the time we sell any shares of common stock under this prospectus, such shares of common stock would also
be accompanied by certain preferred stock purchase rights. See “Description of Capital Stock – Provisions of our Certificate
of Incorporation and Bylaws and Delaware Anti-Takeover Law” for additional details regarding our Shareholder Rights Agreement.
Listing
Our common stock is listed on the
NASDAQ Capital Market under the symbol “BSTG.” On August 14, 2017, the closing price for our common stock, as
reported on the NASDAQ Capital Market, was $0.42 per share. As of the close of business on August 14, 2017, there were
approximately 181 stockholders of record of our common stock. Prior to our name change on March 31, 2016 from Harvard
Apparatus Regenerative Technology, Inc. to Biostage, Inc., our common stock was listed on the NASDAQ Capital Market under the
symbol “HART.”
On July 16, 2015, we received a notice from
NASDAQ of non-compliance with its continuing listing rules, namely that the audit committee of our Board of Directors had two members
following James McGorry’s appointment as our President and Chief Executive Officer, instead of the required minimum of three
members. In accordance with NASDAQ continued listing rules, we were given until the earlier of our next annual shareholders’
meeting or July 6, 2016 to add a third audit committee member. On March 10, 2016, Blaine McKee, Ph.D. was appointed as a member
of the Board of Directors and its audit committee, and we regained compliance with that requirement.
On November 10, 2015, we received a notice
from NASDAQ of non-compliance with its listing rules regarding the requirement that the listed securities maintain a minimum bid
price of $1 per share. Based upon the closing bid price for the 30 consecutive business days preceding the notice, the Company
no longer met this requirement. However, the NASDAQ rules also provide the Company a period of 180 calendar days in which to regain
compliance and, in some circumstances, a second 180-day compliance period. On November 25, 2015, we regained compliance with the
minimum bid price requirement when the closing price of our common stock was at least $1 per share for ten consecutive business
days.
On November 18, 2016, we received a notice
from NASDAQ of non-compliance with its listing rules regarding the minimum bid price requirement. We subsequently obtained stockholder
approval to effect a reverse stock split at the discretion of our board of directors. On May 18, 2017, we received a letter from
NASDAQ stating that that based upon our continued non-compliance with the minimum bid price requirement as of May 17, 2017, as
well as our non-compliance with the minimum $2.5 million stockholders equity requirement for continued listing on The Nasdaq Capital
Market as of March 31, 2017, our common stock would be subject to delisting from NASDAQ unless the we timely requested a hearing
before the Nasdaq Hearings Panel (the “Panel”).
We timely requested a hearing before the Panel,
and as a result of that hearing, NASDAQ granted our request for continued listing. Our continued listing is subject to a number
of conditions, with the Panel’s decision ultimately requiring that we evidence full compliance with all requirements for
continued listing on The Nasdaq Capital Market, including the $1.00 bid price and $2.5 million stockholders’ equity requirements,
by no later than November 13, 2017. We must also complete this rights offering prior to that date, and must submit updated financial
projections to NASDAQ. There can be no assurances that the Company will be able to evidence compliance with all applicable requirements
for continued listing on The Nasdaq Capital Market within the extension of time granted by the Panel.
Transfer Agent and Registrar
The transfer agent and registrar for our common
stock is Computershare.
2013 Equity Incentive Plan
Under our 2013 Equity Incentive Plan, we can
grant stock options to employees, directors and consultants. The 2013 Equity Incentive Plan also permits us to make grants of incentive
stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, unrestricted
stock awards, performance shares and dividend equivalent rights. We currently have reserved 9,960,000 shares of common stock for
the issuance of awards under the 2013 Equity Incentive Plan.
Employee Stock Purchase Plan
Under our employee stock purchase plan, participating
employees can authorize us to withhold a portion of their base pay during consecutive six-month payment periods for the purchase
of shares of our common stock. At the conclusion of the period, participating employees can purchase shares of our common stock
at eight-five percent (85%) of the lower of the fair market value of our common stock at the beginning or end of the period. Shares
are issued under the plan for the six-month periods ending June 30 and December 31. Under this plan, 150,000 shares
of common stock are authorized for issuance of which 89,947 were issued as of August 14, 2017.
Provisions of our Certificate of Incorporation
and Bylaws and Delaware Anti-Takeover Law
Certain provisions of the Delaware General
Corporation Law and of our Charter and Bylaws could have the effect of delaying, deferring or discouraging another party from acquiring
control of us. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices
and inadequate takeover bids and, as a consequence, they might also inhibit temporary fluctuations in the market price of our common
stock that often result from actual or rumored hostile takeover attempts. These provisions are also designed in part to encourage
anyone seeking to acquire control of us to first negotiate with our Board of Directors. These provisions might also have the effect
of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactions
that stockholders might otherwise deem to be in their best interests. However, we believe that the advantages gained by protecting
our ability to negotiate with any unsolicited and potentially unfriendly acquirer outweigh the disadvantages of discouraging such
proposals, including those priced above the then-current market value of our common stock, because, among other reasons, the negotiation
of such proposals could improve their terms.
Provisions of our Certificate of Incorporation
and Bylaws
Our Charter, our Bylaws and Delaware law contain
provisions that could discourage, delay or prevent a third party from acquiring us, even if doing so may be beneficial to our stockholders.
In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our common stock.
The following are examples of such provisions in our Charter and Bylaws:
|
•
|
only our Board of Directors,
pursuant to a resolution adopted by a majority of our directors, may call special meetings of our stockholders;
|
|
•
|
stockholders may not
act by written consent and stockholder action must take place at the annual or special meeting of our stockholders;
|
|
•
|
stockholder proposals
and nominations of candidates for election as directors other than nominations made by or at the direction of our Board of Directors
or a committee of our Board of Directors to be brought before any meeting of our stockholders must comply with advance notice
procedures;
|
|
•
|
our Board of Directors
is classified into three classes, each consisting as nearly as reasonably may be possible of one-third of the total number of
directors constituting the entire Board of Directors;
|
|
•
|
our Board will fix the
exact number of directors to comprise our Board of Directors;
|
|
•
|
subject to any rights
that holders of any series of our undesignated preferred stock may have to elect directors and to fill vacancies on our Board
of Directors, newly-created directorships and vacancies on our Board of Directors may only be filled by a majority of the members
of the incumbent board then in office, even if less than a quorum is present, and not by our stockholders;
|
|
•
|
a director may be removed
from office only for cause by the affirmative vote of holders of shares representing at least seventy-five percent (75%) of the
votes entitled to be cast on such matter by the then-outstanding shares of all classes and series of our capital stock, voting
together as a single class;
|
|
•
|
our Charter and Bylaws
do not provide for cumulative voting in the election of directors;
|
|
•
|
our Bylaws may be further
amended by either (i) the affirmative vote of at least a majority of our entire Board of Directors or (ii) the affirmative vote
of the holders of at least seventy-five percent (75%) of the combined voting power of the outstanding shares of all classes and
series of our capital stock entitled to vote on such amendment, voting together as a single class; and
|
|
•
|
our Board of Directors
is authorized to issue, without further action by our stockholders, up to 2,000,000 shares of undesignated preferred stock with
rights and preferences, including voting rights, designated from time to time by our Board of Directors.
|
We implemented a Stockholder Rights Plan (the
“Rights Plan”) on October 31, 2013. In general terms, the Rights Plan worked by imposing a significant penalty
upon any person or group that acquires twenty percent (20%) or more of our outstanding common stock, without the approval of our
Board of Directors. In connection with the August 2017 Private Placement, our Board of Directors voted to terminate the Rights
Plan.
Additionally, as required by the Delaware General
Corporation Law, any amendment of our Charter must first be approved by a majority of our Board of Directors and, as required by
our Charter, thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment, and a majority of
the outstanding shares of each class entitled to vote thereon, voting together as a single class, except that the amendment of
the provisions relating to stockholder action, directors, limitation of liability, the amendment of our Bylaws and Charter, forum
and transactions with Harvard Bioscience must be approved by not less than seventy-five percent (75%) of the outstanding shares
entitled to vote on the amendment, and not less than seventy-five percent (75%) of the outstanding shares of each class entitled
to vote thereon as a class. Our Bylaws may be amended by either (i) a vote of at least a majority of our entire Board of Directors
or (ii) a vote of the holders of at least seventy-five percent (75%) of the combined voting power of the outstanding shares of
all classes and series of our capital stock entitled to vote on such amendment, voting together as a single class.
Delaware Anti-Takeover Law
We are subject to the provisions of Section 203
of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging
in a “business combination” with an “interested stockholder” for a three-year period following the time
that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A
“business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in
a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates
and associates, owns, or did own within three years prior to the determination of interested stockholder status, fifteen percent
(15%) or more of the corporation’s voting stock. Under Section 203, a business combination between a corporation and
an interested stockholder is prohibited unless it satisfies one of the following conditions:
|
•
|
before the stockholder
became interested, the Board of Directors approved either the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder;
|
|
•
|
upon consummation of
the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least
eight-five percent (85%) of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee
stock plans, in some instances; or
|
|
•
|
at or after the time
the stockholder became interested, the business combination was approved by the Board of Directors of the corporation and authorized
at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock
which is not owned by the interested stockholder.
|
Disclosure of SEC Position on Indemnification
for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted for directors, officers and persons controlling our company, we have been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
PLAN OF DISTRIBUTION
We are making this offering directly to the holders of our common
stock and holders of warrants to purchase our common stock on the effective date. We have not employed any brokers, dealers or
underwriters in connection with this offering and will not pay any underwriting commissions, fees or discounts in connection with
this offering. Some of our directors or officers may assist in this offering. These individuals will not receive any commissions
or compensation other than their normal directors’ fees or employment compensation.
We will bear all costs, expenses and fees in connection with this
offering. We will pay the subscription agent a fee of $ and reimburse the
subscription agent for certain expenses incurred in connection with this offering. We estimate that our total expenses in connection
with this offering, including fees to the subscription agent, will be approximately $
.
LEGAL MATTERS
Certain legal matters with respect to the validity
of the securities offered by this prospectus will be passed upon for us by Burns & Levinson LLP, Boston, MA.
EXPERTS
The consolidated financial statements of Biostage,
Inc. as of December 31, 2016 and 2015, and for each of the years in the two-year period ended December 31, 2016, have been incorporated
by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
The audit report covering the December 31,
2016 consolidated financial statements contains an explanatory paragraph that states that the Company has suffered recurring losses
from operations and will require additional financing to fund future operations which raise substantial doubt about its ability
to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements
of the Exchange Act and, in accordance therewith, file annual, quarterly and special reports, proxy statements and other information
with the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, Washington,
D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. These
documents also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR, via
electronic means, including the SEC’s home page on the Internet (
www.sec.gov
).
We post on our public website (
http://www.biostage.com
)
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC. Our website and the information contained on that site,
or connected to that site, are not incorporated into and are not a part of this prospectus.
We have the authority to designate and issue
more than one class or series of stock having various preferences, conversion and other rights, voting powers, restrictions, limitations
as to dividends, qualifications, and terms and conditions of redemption. See “Description of Capital Stock.” We will
furnish a full statement of the relative rights and preferences of each class or series of our stock which has been so designated
and any restrictions on the ownership or transfer of our stock to any shareholder upon request and without charge. Written requests
for such copies should be directed to Biostage, Inc., 84 October Hill Road, Suite 11, Holliston, Massachusetts 01746-1371, or by
telephone request to (774) 233-7300.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference
the information and reports we file with them under File No. 001-35853, which means that we can disclose important information
to you by referring you to those publicly available documents. The information incorporated by reference is an important part of
this prospectus, and information that we file later with the SEC will automatically update and supersede the information already
incorporated by reference. We are incorporating by reference the documents listed below, which we have already filed with the SEC,
and all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any
portion of any future report or document that is not deemed filed under such provisions, prior to the termination of the offering:
|
•
|
Our Annual Report on Form 10-K for the year ended December 31, 2016;
|
|
|
|
|
•
|
Our Current Reports on Form 8-K filed with the SEC on March 16,
2017, April 27, 2017, May 22, 2017 and June 27, 2017;
|
|
|
|
|
•
|
Our Definitive Proxy Statement on Schedule 14A filed with the SEC on March 24, 2017; and
|
|
|
|
|
•
|
The description of our common stock contained in our registration statement on Form 10-12B filed with the SEC on July 31, 2013 and amended on September 20, 2013 and October 11, 2013.
|
Any statement contained in a document incorporated
or deemed to be incorporated by reference in this prospectus is modified or superseded for purposes of the prospectus to the extent
that a statement contained in this prospectus or in any other subsequently filed document that also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement.
Upon request, we will provide, without charge,
to each person, including any beneficial owner, to whom a copy of this prospectus is delivered a copy of the documents incorporated
by reference into this prospectus. You may request a copy of these filings, and any exhibits we have specifically incorporated
by reference as an exhibit in this prospectus, at no cost by writing or telephoning us at the following address:
Biostage, Inc.
84 October Hill Road, Suite 11
Holliston, Massachusetts 01746-1371
Telephone: (774) 233-7300.
This prospectus is part of a registration statement
we filed with the SEC. We have incorporated exhibits into this registration statement. You should read the exhibits carefully for
provisions that may be important to you.
We also incorporate by reference any future
filings, other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are
related to such items, made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in each case, other
than those documents or the portions of those documents deemed to be furnished and not filed in accordance with SEC rules, until
the offering of the securities under the registration statement of which this prospectus forms a part is terminated or completed.
Information in such future filings updates
and supplements the information provided in this prospectus. Any statements in any such future filings will be deemed to modify
and supersede any information in any document we previously filed with the SEC that is incorporated or deemed to be incorporated
herein by reference to the extent that statements in the later filed document modify or replace such earlier statements.
Because we are incorporating by reference future filings with the
SEC, this prospectus is continually updated and later information filed with the SEC may update and supersede some of the information
included or incorporated by reference in this prospectus. This means that you must look at all of the SEC filings that we incorporate
by reference to determine if any of the statements in this prospectus or in any document previously incorporated by reference
have been modified or superseded.
You should rely only on the information incorporated
by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or in the documents incorporated by reference is accurate as of any date other than the
date on the front of this prospectus or those documents.
Up to Shares
of Common Stock
Issuable Upon Exercise of
Rights to Subscribe for Such Shares at $ per Share
PROSPECTUS
,
2017
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.
|
Other Expenses of Issuance and Distribution.
|
The expenses payable by Biostage, Inc. (the
“Registrant” or the “Company”) in connection with the issuance and distribution of the securities being
registered are set forth below. Each item listed is estimated, except for the Securities and Exchange Commission (the “SEC”)
registration fee.
Securities and Exchange Commission registration fee
|
|
$
|
1,159
|
|
Legal fees and expenses
|
|
|
*
|
|
Accounting fees and expenses
|
|
|
*
|
|
Subscription agent fees and expenses
|
|
|
*
|
|
Printing and engraving expenses
|
|
|
*
|
|
Other
|
|
|
*
|
|
Total
|
|
$
|
*
|
|
|
*
|
To be provided by amendment.
|
Item 14.
|
Indemnification of Directors and Officers.
|
As permitted by Section 102 of the Delaware
General Corporation Law, we have adopted provisions in our Amended and Restated Certificate of Incorporation, or our Charter, and
Second Amended and Restated Bylaws, or our Bylaws, that limit or eliminate the personal liability of our directors for a breach
of their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of the corporation,
directors exercise an informed business judgment based on all material information reasonably available to them. Consequently,
a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director,
except for liability for:
|
•
|
any breach of the director’s
duty of loyalty to us or our stockholders;
|
|
•
|
any act or omission not
in good faith or that involves intentional misconduct or a knowing violation of law;
|
|
•
|
any act related to unlawful
stock repurchases, redemptions or other distributions or payments of dividends; or
|
|
•
|
any transaction from
which the director derived an improper personal benefit.
|
These limitations of liability do not affect
the availability of equitable remedies such as injunctive relief or rescission. Our Charter also authorizes us to indemnify our
officers, directors and other agents to the fullest extent permitted under Delaware law.
As permitted by Section 145 of the Delaware
General Corporation Law, our Charter and Bylaws provide that we will indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person, or
a person of whom he or she is the legal representative, is or was our director or officer, or by reason of the fact that our director
or officer is or was serving, at our request, as a director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by us.
We will indemnify such persons against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action if such person acted in good faith and in a manner reasonably believed
to be in our best interests and, with respect to any criminal proceeding, had no reason to believe such person’s conduct
was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses
(including attorneys’ fees) incurred in connection with the defense or settlement of such actions, and court approval is
required before there can be any indemnification where the person seeking indemnification has been found liable to us. Any amendment
of this provision will not reduce our indemnification obligations relating to actions taken before an amendment.
Our Charter, filed as an exhibit to our Registration
Statement on Form 10-12B filed with the SEC on July 31, 2013, and our Bylaws, filed as an exhibit to our Current Report on Form
8-K filed with the SEC on March 31, 2016, provide for the indemnification provisions described above and elsewhere herein. In addition,
we have entered into separate indemnification agreements, a form of which is attached as Exhibit 10.7 to our Registration Statement
on Form 10-12B, filed with the Securities and Exchange Commission on July 31, 2013, with our directors and officers which may be
broader than the specific indemnification provisions contained in the Delaware General Corporation Law.
These indemnification agreements generally
require us, among other things, to indemnify our officers and directors against liabilities that may arise by reason of their status
or service as directors or officers, subject to certain exceptions and limitations. These indemnification agreements also require
us to advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could
be indemnified. In addition, we have obtained policies that insure our directors and officers and those of our subsidiaries against
certain liabilities they may incur in their capacity as directors and officers. Under these policies, the insurer, on our behalf,
may also pay amounts for which we have granted indemnification to the directors or officers. These indemnification provisions and
the indemnification agreements may be sufficiently broad to permit indemnification of our officers and directors for liabilities,
including reimbursement of expenses incurred, arising under the Securities Act.
Item 15.
|
Recent Sales of Unregistered Securities.
|
Set forth below is information regarding the
shares of common stock and preferred stock and the warrants issued, and options granted, by us in the three years preceding the
filing of this registration statement that were not registered under the Securities Act. The offers, sales and issuances of the
securities described below were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities
Act.
Aspire Capital, LLC
Transaction
On December 15, 2015, we entered into a Common
Stock Purchase Agreement (the “Purchase Agreement”) with Aspire Capital Fund, LLC, an Illinois limited liability company
(“Aspire Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein,
Aspire Capital was committed to purchase up to an aggregate of $15.0 million of shares of our common stock (the “Purchase
Shares”) over the 30-month term set forth in the Purchase Agreement.
On December 15, 2015, we issued 150,000 shares
of our common stock to Aspire Capital in consideration for entering into the Purchase Agreement (the “Commitment Shares”)
and sold 500,000 shares to Aspire Capital for an aggregate purchase price of $1,000,000 (the “Initial Purchase Shares”).
Under the Purchase Agreement, the Purchase Shares could be sold by us to Aspire Capital on any business day in two ways: (1) through
a regular purchase of up to 150,000 shares at a known price based on the market price of our common stock prior to the time of
each sale, and (2) through a VWAP purchase of a number of shares up to 30% of the volume traded on the purchase date at a price
equal to the lessor of the closing sale price or 97% of the volume weighted average price for such purchase date.
On May 12, 2016, we issued 150,000 shares of
common stock under this arrangement in exchange for gross proceeds of approximately $371,000. We terminated the Aspire Purchase
Agreement effective as of May 17, 2016.
May 2016 Offering
On May 15, 2016, we entered into a Securities
Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”) for the sale by
us of 2,836,880 registered shares of our common stock at a purchase price of $1.7625 per share. Concurrently with the sale of the
shares of our common stock, pursuant to the Purchase Agreement we also sold unregistered warrants to purchase 1,418,440 shares
of our common stock. The aggregate gross proceeds for the sale of the shares of common stock and the warrants was approximately
$5.0 million. Subject to certain ownership limitations, the warrants will be initially exercisable commencing six months
from the issuance date at an exercise price equal to $1.7625 per share of common stock, subject to adjustments as provided under
the terms of the warrants. The warrants are exercisable for five years from the initial exercise date. The closing of the sales
of these securities under the Purchase Agreement occurred on May 19, 2016.
We entered into an engagement letter (the “Engagement
Letter”) H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which Wainwright agreed to serve as exclusive
placement agent for the issuance and sale of our shares of common stock and the warrants. Pursuant to the Engagement Letter, we
granted to Wainwright unregistered warrants to purchase up to 5% of the aggregate number of shares sold in the transactions (the
“Wainwright Warrants”). The Wainwright Warrants have substantially the same terms as the warrants.
August 2017 Private
Placement
On August 11, 2017, we entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with the backstop party for
the sale by us of 8,061,905 shares of our common stock at a purchase price of $0.315 per share and 516 shares of our Series C Convertible
Preferred Stock at a purchase price of $1,000 per share for aggregate gross proceeds of approximately $3.05 million. The shares
of Series C Convertible Preferred Stock are subject to conversion limitations so that so that the holders thereof may not effect
any conversion to the extent that following the conversion, the holders, together with their affiliates, would own more than 19.99%
of our outstanding shares of common stock.
Backstop Agreement
The offer and sale of securities issuable under
the Backstop Agreement was, and will be, made in a transaction exempt from the registration requirements of the Securities Act
by virtue of the exemption in Section 4(2) of the Securities Act.
Item 16.
|
Exhibits and Financial Statement Schedules.
|
A list of exhibits filed with this Registration
Statement on Form S-1 is set forth on the Exhibit Index and is incorporated herein by reference.
(a) The undersigned Registrant hereby undertakes:
|
(1)
|
To file, during any period
in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
(i)
|
To include any prospectus
required by Section 10(a)(3) of the Securities Act;
|
|
(ii)
|
To reflect in the prospectus
any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the “Commission”)
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement; and
|
|
(iii)
|
To include any material
information with respect to the plan of distribution not previously disclosed in this registration statement or any material change
to such information in this registration statement;
|
provided, however
, that paragraphs (1)(i),
(1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in the
registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration
statement.
|
(2)
|
That, for the purpose of
determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
|
|
(3)
|
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
(4)
|
That, for the purpose of
determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities,
in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting
method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of
the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
|
|
(i)
|
any preliminary prospectus
or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
(ii)
|
any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
(iii)
|
the portion of any other
free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities
provided by or on behalf of the undersigned registrant; and
|
|
(iv)
|
any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
|
(b) The undersigned registrant hereby
undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized,
in the Town of Holliston, Commonwealth of Massachusetts, on this 15th day of August, 2017.
|
BIOSTAGE, INC.
|
|
|
|
|
By:
|
/s/
James J. McGorry
|
|
|
James J. McGorry
|
|
|
Chief Executive
Officer
|
KNOW ALL BE THESE PRESENTS, that each person
whose signature appears below hereby constitutes and appoints James McGorry and Thomas McNaughton, and each of them singly (with
full power to each of them to act alone), as such person’s true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to
sign any or all amendments (including, without limitation, post-effective amendments) to this registration statement (or any registration
statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933),
and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or any substitute or substitutes of them, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
James J. McGorry
|
|
Chief Executive Officer and Director
|
|
August 15, 2017
|
James J. McGorry
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/
Thomas W. McNaughton
|
|
Chief Financial Officer
(Principal Financial Officer and
|
|
August 15, 2017
|
Thomas W. McNaughton
|
|
Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/
John F. Kennedy
|
|
Chairman
|
|
August 15, 2017
|
John F. Kennedy
|
|
|
|
|
|
|
|
|
|
/s/ John J. Canepa
|
|
Director
|
|
August 15, 2017
|
John J. Canepa
|
|
|
|
|
|
|
|
|
|
/s/ Blaine H. McKee
|
|
Director
|
|
August 15, 2017
|
Blaine H. McKee
|
|
|
|
|
|
|
|
|
|
/s/
Thomas Robinson
|
|
Director
|
|
August 15, 2017
|
Thomas Robinson
|
|
|
|
|
EXHIBIT INDEX
Exhibit
Number
|
|
Description of Exhibit
|
2.1§
(3)
|
|
Separation and Distribution Agreement between Biostage, Inc. and Harvard Bioscience, Inc. dated as of October 31, 2013.
|
3.1
(1)
|
|
Amended and Restated Certificate of Incorporation of Biostage, Inc.
|
3.2
(11)
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation of Biostage, Inc., dated as of March 30, 2016
|
3.3
(15)
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation of Biostage, Inc., dated as of May 26, 2016.
|
3.4
(16)
|
|
Certificate of Amendment to Amended and Restated Certificate of Incorporation of Biostage, Inc., dated as of April 26, 2017.
|
3.5
(11)
|
|
Second Amended and Restated By-laws of the Biostage, Inc.
|
3.6
(2)
|
|
Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Biostage, Inc. classifying and designating the Series A Junior Participating Cumulative Preferred Stock.
|
3.7
(5)
|
|
Certificate of Designation of Series B Convertible Preferred Stock of Biostage, Inc. classifying and designating the Series B Convertible Preferred Stock.
|
4.1
(14)
|
|
Form of Warrant.
|
4.2
(14)
|
|
Form of Placement Agent Warrant
|
4.3
(1)
|
|
Specimen Stock Certificate evidencing shares of common stock.
|
4.4
(6)
|
|
Specimen Series B Convertible Preferred Stock Certificate.
|
4.5
(9)
|
|
Registration Rights Agreement, dated December 15, 2015, between Biostage, Inc. and Aspire Capital Fund, LLC.
|
4.6
(12)
|
|
Form of Common Stock Purchase Warrant, dated as of May 2016.
|
4.7 **
|
|
Form of Rights Certificate
|
5.1 **
|
|
Opinion of Burns & Levinson LLP
|
10.1
(3)
|
|
Intellectual Property Matters Agreement between Biostage, Inc. and Harvard Bioscience, Inc. dated as of October 31, 2013.
|
10.2
(3)
|
|
Product Distribution Agreement between Biostage, Inc. and Harvard Bioscience, Inc. dated as of October 31, 2013.
|
10.3
(3)
|
|
Tax Sharing Agreement between Biostage, Inc. and Harvard Bioscience, Inc. dated as of October 31, 2013.
|
10.4
(3)
|
|
Transition Services Agreement between Biostage, Inc. and Harvard Bioscience, Inc. dated as of October 31, 2013.
|
10.5
(3)
|
|
Sublease by and between Biostage, Inc. and Harvard Bioscience, Inc. dated as of October 31, 2013.
|
10.6#
(3)
|
|
Employment Agreement between Biostage, Inc. and David Green dated as of October 31, 2013.
|
10.7#
(3)
|
|
Employment Agreement between Biostage, Inc. and Thomas McNaughton dated as of October 31, 2013.
|
10.8
(1)
|
|
Form of Indemnification Agreement for Officers and Directors.
|
10.9
(1)
|
|
2013 Equity Incentive Plan.
|
10.10
(1)
|
|
Employee Stock Purchase Plan.
|
10.11
(1)
|
|
Form of Incentive Stock Option Agreement.
|
10.12
(1)
|
|
Form of Non-Qualified Stock Option Agreement for executive officers.
|
10.13
(1)
|
|
Form of Non-Qualified Stock Option Agreement for directors.
|
10.14
(1)
|
|
Form of Deferred Stock Award Agreement.
|
10.15#
(1)
|
|
Director Compensation Arrangements.
|
10.16†
(4)
|
|
Sublicense Agreement dated as of December 7, 2012 between Biostage, Inc. and Harvard Bioscience, Inc., and related Trademark License Agreement, dated December 19, 2002, by and between Harvard Bioscience, Inc. and President and Fellows of Harvard College.
|
10.17
(1)
|
|
Patent Rights Assignment dated December 21, 2012 between Biostage, Inc. and Dr. Paolo Macchiarini.
|
10.18
(1)
|
|
Novel Surgery Agreement dated as of May 21, 2012 between Biostage, Inc. and State Budget Institution of Public Health Department Regional Clinical Hospital #1 and Vladimir Alekseevich Porhanov.
|
10.19
(1)
|
|
Novel Surgery Agreement dated as of May 24, 2012 between Biostage, Inc. and OSF Healthcare System, owner and operator of Saint Francis Medical Center and Children’s Hospital of Illinois, and Mark Holterman, M.D.
|
10.20
(1)
|
|
Amendment to Novel Surgery Agreement dated as of April 5, 2013 between Biostage, Inc. and OSF Healthcare System, owner and operator of Saint Francis Medical Center and Children’s Hospital of Illinois, and Mark Holterman, M.D.
|
10.21
(1)
|
|
Amendment to Novel Surgery Agreement dated as of June 26, 2013 between Biostage, Inc. and State Budget Institution of Public Health Department Regional Clinical Hospital #1 and Igor S. Polyakov.
|
10.22
(5)
|
|
Underwriting Agreement dated as of February 12, 2015, between Biostage, Inc. and National Securities Corporation as representative of the underwriters named therein.
|
10.23#
(7)
|
|
Employment Agreement between Biostage, Inc. and James McGorry dated as of June 23, 2015.
|
10.24#
(8)
|
|
Employment Agreement between Biostage, Inc. and Saverio LaFrancesca, M.D. dated as of April 8, 2014.
|
10.25
(9)
|
|
Common Stock Purchase Agreement, dated December 15, 2015 between Biostage, Inc. and Aspire Capital Fund, LLC.
|
10.26#
(10)
|
|
Amendment to Employment Agreement between Biostage, Inc. and Saverio LaFrancesca, M.D. dated as of March 24, 2016.
|
10.27
(12)
|
|
Form of Securities Purchase Agreement, dated May 15, 2016, between Biostage, Inc. and the Purchasers listed therein.
|
10.28
(12)
|
|
Form of Common Stock Purchase Warrant.
|
10.29
(12)
|
|
Engagement Letter, dated May 15, 2016, between Biostage, Inc. and Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC.
|
10.30
(13)
|
|
Amendment to Engagement Letter, dated May 18, 2016, between Biostage, Inc. and Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC.
|
10.31#
(15)
|
|
Letter Agreement, dated as of December 17, 2016, between Biostage, Inc. and Saverio LaFrancesca, M.D.
|
10.32
(14)
|
|
Form of Securities Purchase Agreement.
|
10.33
(14)
|
|
Form of Common Stock Purchase Warrant.
|
10.34
(15)
|
|
Form of Placement Agent Common Stock Purchase Warrant.
|
10.35
(14)
|
|
Engagement Agreement, dated January 3, 2017, between Biostage, Inc. and Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC.
|
10.36
(14)
|
|
Amendment to Engagement Letter, dated February 7, 2017, between Biostage, Inc. and Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC.
|
10.37
(17)
|
|
Memorandum of Understanding, dated June 26, 2017 by and between Biostage, Inc. and First Pecos, LLC.
|
10.38 **
|
|
Form of Backstop Investment Agreement.
|
21.1
(15)
|
|
Subsidiaries of the Biostage, Inc.
|
23.1 **
|
|
Consent of Burns & Levinson LLP (included in Exhibit 5.1)
|
23.2 *
|
|
Consent of KPMG LLP
|
24.1 *
|
|
Power of Attorney (included in signature page)
|
99.1 **
|
|
Form of Letter to Stockholders
|
99.2 **
|
|
Form of Letter to Brokers, Dealers, Banks and Other Nominees
|
99.3 **
|
|
Form of Beneficial Holder Election Form
|
99.4 **
|
|
Form of Nominee Holder Certification
|
99.5 **
|
|
Form of Notice to Guaranteed Delivery for Rights Certificates
|
|
(1)
|
Previously filed as an exhibit
to the Company’s Registration Statement on Form 10-12B (filed July 31, 2013) and incorporated by reference thereto.
|
|
(2)
|
Previously filed as an exhibit
to the Company’s Registration Statement on Form 8-A (filed October 31, 2013) and incorporated by reference thereto.
|
|
(3)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on November 6, 2013) and incorporated by reference thereto.
|
|
(4)
|
Previously filed as an exhibit
to the Company’s Amendment No. 2 to Form S-1 Registration Statement (filed on February 15, 2013) and incorporated by reference
thereto.
|
|
(5)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on February 12, 2015) and incorporated by reference thereto.
|
|
(6)
|
Previously filed as an exhibit
to the Company’s Annual Report on Form 10-K (filed on March 27, 2015) and incorporated by reference thereto.
|
|
(7)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on July 6, 2015) and incorporated by reference thereto.
|
|
(8)
|
Previously filed as an exhibit
to the Company’s Quarterly Report on Form 10-Q (filed on August 14, 2015) and incorporated by reference thereto.
|
|
(9)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on December 15, 2015) and incorporated by reference thereto.
|
|
(10)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on March 24, 2016) and incorporated by reference thereto.
|
|
(11)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on March 31, 2016) and incorporated by reference thereto.
|
|
(12)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on May 16, 2016) and incorporated by reference thereto.
|
|
(13)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on May 20, 2016) and incorporated by reference thereto.
|
|
(14)
|
Previously filed as an exhibit
to the Company’s Pre-Effective Amendment No. 2 to Registration Statement on Form S-1 (filed on February 7, 2017) and incorporated
by reference thereto.
|
|
(15)
|
Previously filed as an exhibit
to the Company’s Annual Report on Form 10-K (filed on March 17, 2017) and incorporated by reference thereto.
|
|
(16)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on April 27, 2017) and incorporated by reference thereto.
|
|
(17)
|
Previously filed as an exhibit
to the Company’s Current Report on Form 8-K (filed on June 27, 2017) and incorporated by reference thereto.
|
|
**
|
To be filed by amendment.
|
|
#
|
Management contract or compensatory
plan or arrangement.
|
|
§
|
The schedules and exhibits
to the Separation and Distribution Agreement have been omitted. A copy of any omitted schedule or exhibit will be furnished to
the SEC supplementally upon request. The Company will furnish to stockholders a copy of any exhibit without charge upon written
request.
|
|
†
|
Confidential portions of
this exhibit have been redacted and filed separately with the SEC pursuant to a confidential treatment request in accordance with
Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
|
Biostage (QB) (USOTC:BSTG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Biostage (QB) (USOTC:BSTG)
Historical Stock Chart
From Apr 2023 to Apr 2024