UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 17,
2020
Edesa Biotech, Inc.
(Exact Name of Registrant as Specified in its Charter)
British
Columbia, Canada
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001-37619
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N/A
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(State or Other
Jurisdiction of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer Identification
No.)
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100 Spy Court
Markham, Ontario, Canada L3R 5H6
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(Address
of Principal Executive Offices)
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(289) 800-9600
Registrant’s
telephone number, including area code
N/A
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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☐
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading Symbol(s)
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Name of exchange on which registered
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Common
Shares
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EDSA
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The
Nasdaq Stock Market LLC
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging
growth company ☒
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☒
Item 1.01
Entry into a Material Definitive Agreement.
On April 17, 2020, Edesa Biotech, Inc.
(“Edesa”), through its wholly-owned subsidiary Edesa
Biotech Research, Inc., entered into an exclusive license agreement
with NovImmune SA,
which operates under the brand Light Chain Bioscience (“Light
Chain”). Pursuant to the license agreement, Edesa
obtained exclusive rights throughout
the world to certain know-how, patents and data relating to
the monoclonal antibodies targeting TLR4 and CXCL10 (the
“Constructs”). Edesa will
use the exclusive rights to develop products containing the
Constructs (the “Licensed Products”) for therapeutic,
prophylactic and diagnostic applications in humans and
animals.
Unless earlier terminated, the term of the license
agreement will remain in effect for twenty-five years from the date
of first commercial sale of Licensed Products. Subsequently,
the license agreement will automatically renew for five (5) year
periods unless either party terminates the agreement in accordance
with its terms.
Pursuant
to the license agreement, Edesa is exclusively responsible, at its
expense, for the research, development manufacture, marketing,
distribution and commercialization of the Constructs and Licensed
Products and to obtain all necessary licenses and rights. Edesa is
required to use commercially reasonable efforts to develop and
commercialize the Constructs in accordance with the terms of a
development plan established by the parties. Subject to certain
conditions, Edesa is permitted to engage third parties to perform
its activities or obligations under the agreement.
In
exchange for the exclusive rights to develop and commercialize the
Constructs, Edesa issued to Light Chain $2.5 million of its newly
designated Series A-1 Convertible Preferred Shares (the
“Series A-1 Shares”) pursuant to the terms of a
securities purchase agreement entered into between the parties
concurrently with the license agreement. In addition, Edesa is
committed to payments of various amounts to Light Chain upon
meeting certain development, approval and commercialization
milestones as outlined in the license agreement up to an aggregate
amount of $363.5 million. Edesa also has a commitment to pay Light
Chain a royalty based on net sales of Licensed Products in
countries where Edesa directly commercializes Licensed Products and
a percentage of sublicensing revenue received by Edesa in the
countries where Edesa does not directly commercialize Licensed
Products.
The license agreement provides that Light Chain
will remain the exclusive owner of existing intellectual property
in the Constructs and that Edesa will be the exclusive owner of all
intellectual property resulting from the exploitation of the
Constructs pursuant to the license. Subject to certain limitations,
Edesa is responsible for prosecuting, maintaining and enforcing all
intellectual property relating to the Constructs. During the
term of the agreement, Edesa also has the option to purchase the
licensed patents and know-how at a price to be negotiated by the
parties.
If
Edesa defaults or fails to perform any of the terms, covenants,
provisions or its obligations under the license agreement, Light
Chain has the option to terminate the license agreement, subject to
providing Edesa an opportunity to cure such default. The license
agreement is also terminable by Light Chain upon the occurrence of
certain bankruptcy related events pertaining to Edesa.
In
connection with the license agreement and pursuant to a purchase
agreement entered into by the parties on April 17, 2020, Edesa will
purchase from Light Chain its inventory of the TLR4 antibody for an
aggregate purchase price of $5.0 million, payable in two
installments.
The foregoing summaries of the license agreement, securities
purchase agreement and purchase agreement do not purport to be
complete and are qualified in their entirety by reference to the
definitive transaction documents, copies of which are filed as
exhibits to this Current Report. Each of the license
agreement, securities purchase agreement and purchase agreement
contain representations and warranties that the respective parties
made to, and solely for the benefit of, the other party thereto in
the context of all of the terms and conditions of that agreement
and in the context of the specific relationship between the
parties. The provisions of the license agreement, securities
purchase agreement and purchase agreement, including the
representations and warranties contained therein, are not for the
benefit of any party other than the parties to such agreements or
as stated therein and are not intended as documents for investors
and the public to obtain factual information about the current
state of affairs of the parties to those documents and agreements.
Rather, investors and the public should look to other disclosures
contained in the company’s filings with the SEC.
Item
2.01
Completion
of Acquisition or Disposition of Assets.
The
information set forth in Item 1.01 with respect to the
acquisition of the TLR4
antibody inventory is incorporated by reference into this
Item 2.01.
Item 3.02
Unregistered Sales of Equity
Securities.
Pursuant to the license
agreement and securities purchase agreement, Edesa issued 250 of
its Series A-1 Shares to Light Chain. Information regarding the
Series A-1 Shares is contained in Item 5.03 of this Current Report
on Form 8-K, and is incorporated by reference into this Item
3.02.
The
Series A-1 Shares issued to Light Chain were issued in a
transaction exempt from registration under Regulation S promulgated
under the Securities Act of 1933, as amended (the
“Act”), because the offer and sale of such securities
was made to a non-U.S. person (as that term is defined in
Regulation S under the Act) in an offshore
transaction.
Item
3.03
Material
Modification to Rights of Security Holders.
The
information set forth in Item 5.03 with respect to the rights,
preferences, restrictions and other matters pertaining to the
Series A-1 Shares is incorporated by reference into this
Item 3.03.
Item
5.03
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
In
connection with the execution of the license agreement, Edesa filed
Amended and Restated Articles to establish the rights, preferences,
restrictions and other matters pertaining to the Series A-1 Shares.
The Series A-1 Shares have no par value and a stated value of
$10,000 per share and rank, with respect to redemption payments,
rights upon liquidation, dissolution or winding-up of Edesa, or
otherwise, senior in preference and priority to Edesa’s
common shares. A holder of Series A-1 Shares shall not be entitled
to receive dividends unless declared by Edesa’s Board of
Directors. Subject to certain exceptions and adjustments for share
splits, each Series A-1 Share is convertible six months after its
date of issuance into a number of Edesa’s common shares
calculated by dividing (i) the sum of the stated value of such
Series A-1 Share plus a return equal to 3% of the stated value of
such Series A-1 Share per annum (collectively, the “Preferred
Amount”) by (ii) a fixed conversion price of $2.26.
A holder of
Series A-1 Shares will not have the right to convert any portion of
its Series A-1 Shares if the holder, together with its affiliates,
would beneficially own in excess of 4.99% of the number of common
shares outstanding immediately after giving effect to such
conversion (the “Beneficial Ownership Limitation”);
provided, however, that upon notice to Edesa, the holder may
increase the Beneficial Ownership Limitation to a maximum of
9.99%. The Series A-1 Shares do not have the right to vote
on any matters except as required by law and do not contain any
variable pricing features, or any price-based anti-dilutive
features.
In the
event of any liquidation, dissolution or winding-up of Edesa, a
holder of Series A-1 Shares shall be entitled to receive, before
any distribution or payment may be made with respect to
Edesa’s common shares, an amount in cash equal to the
Preferred Amount per share, plus all unpaid accrued dividends on
all such shares.
At any
time, Edesa may redeem some or all outstanding Series A-1 Shares
for a cash payment per share equal to the Preferred Amount. Subject
to certain restrictions, a holder of Series A-1 Shares may require
Edesa to redeem the Series A-1 Shares for cash beginning 18 months
after issuance. In the event of a required redemption, at the
election of Edesa, the redemption amount (which is equal to the
Preferred Amount) may be paid in full or in up to twelve equal
monthly payments with any unpaid redemption amounts accruing
interest at a rate of 3% annually, compounded monthly. On the third
anniversary of the date of issuance of the Series A-1 Shares, Edesa
has the right to convert any outstanding Series A-1 Shares into
common shares.
The
foregoing summary of the rights, preferences, restrictions and
other matters pertaining to the Series A-1 Shares does not purport
to be complete and is qualified in its entirety by reference to
Part 27 of the Amended and Restated Articles of Edesa –
Special Rights and Restriction Attaching to the Series A-1
Convertible Preferred Shares, a copy of which is attached
hereto as Exhibit 3.1 and incorporated herein by
reference.
On
April 20, 2020, Edesa issued a press release regarding the
transactions described in Item 1.01, a copy of which is attached
hereto as Exhibit 99.1 and incorporated herein by
reference.
Item
9.01
Financial
Statements and Exhibits.
(d) Exhibits
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ExhibitNo.
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Description of Exhibit
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Amended
and Restated Articles of Edesa Biotech, Inc.
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License
Agreement by and between Edesa Biotech Research, Inc. and NovImmune
SA dated April 17, 2020.
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Purchase
Agreement by and between Edesa Biotech Research, Inc. and NovImmune
SA dated April 17, 2020.
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Securities
Purchase Agreement by and between Edesa Biotech, Inc. and NovImmune
SA dated April 17, 2020
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Press
Release issued by Edesa Biotech, Inc. dated April 20,
2020.
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+ Portions
of this exhibit have been omitted pursuant to Rule 601(b)(10)(iv)
of Regulation S-K.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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Edesa
Biotech, Inc.
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Date:
April 23, 2020
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By:
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/s/
Michael Brooks
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Name:
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Michael
Brooks, PhD
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Title:
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President
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