Filed Pursuant to Rule 424(b)(5)
Registration
No. 333-233567
PROSPECTUS SUPPLEMENT
(to Prospectus dated September 12,
2019)
EDESA
BIOTECH, INC.
Up to
$9,200,000
Common
Shares
We have entered into an Equity Distribution Agreement, or the sales
agreement, with RBC Capital Markets, LLC, or RBCCM, relating to our
Common Shares offered by this prospectus supplement and the
accompanying prospectus. In accordance with the terms of the Sales
Agreement, we may offer and sell our Common Shares, having an
aggregate offering price of up to $9.2 million from time to time on
or after the date of this prospectus supplement through RBCCM as
our sales agent .
Our
Common Shares trade on the Nasdaq Capital Market under the symbol
“EDSA.” The last reported sale price on September 24,
2020 was $7.45 per Common Share.
Sales of our Common Shares, if any, under this prospectus
supplement and the accompanying prospectus may be made in sales
deemed to be an “at the market offering” as defined in
Rule 415(a)(4) promulgated under the Securities Act of 1933, as
amended, or the Securities Act. RBCCM is not required to sell any
specific number or dollar amount of securities, but will act as a
sales agent using commercially reasonable efforts consistent with
its normal trading and sales practices on mutually agreed terms
between RBCCM and us. There is no arrangement for funds to be
received in any escrow, trust or similar arrangement.
The compensation to RBCCM for sales of our Common Shares sold
pursuant to the Sales Agreement will be an amount equal to 3.5% of
the gross sales price per Common Share sold under the Sales
Agreement. See “Plan of Distribution” beginning on page
S-16 for additional information regarding the compensation to be
paid to RBCCM. In connection with the sale of Common Shares on our
behalf, RBCCM may be deemed to be an “underwriter”
within the meaning of the Securities Act and the compensation of
RBCCM will be deemed to be underwriting commissions or discounts.
We have also agreed to provide indemnification and contribution to
RBCCM with respect to certain liabilities, including liabilities
under the Securities Act or the Securities Exchange Act of 1934, as
amended, or the Exchange Act.
As of the date of this prospectus supplement, the aggregate market
value of our outstanding Common Shares held
by non-affiliates was $40,714,861, based on 9,608,869
outstanding Common Shares, of which 4,308,451 shares were held
by non-affiliates, and a price of $9.45 per share, which
was the last reported sale price of our Common Shares on the Nasdaq
Capital Market on July 30, 2020.
Under
the registration statement to which this prospectus supplement
forms a part, we may not sell our securities in a primary offering
with a value exceeding one-third of our public float in any
12-month period (unless our public float rises to $75.0 million or
more). During
the 12-calendar month period that ends on, and includes,
the date of this prospectus supplement, we sold securities with an
aggregate market value of $4,360,500 pursuant to General
Instruction I.B.6. of Form S-3 (excluding the value of
the Common Shares sold in this offering). Accordingly, we
may sell up to $9,211,121 of Common Shares hereunder.
We are an “emerging growth company” as defined under
U.S. federal securities laws and will be subject to reduced public
company reporting requirements. See “Implications of Being
and Emerging Growth Company.”
Investing in our Common Shares involves risks, including those
described in the "Risk Factors" section beginning on page S-6
of this prospectus supplement and in the documents
incorporated by reference in this prospectus, and under similar
headings in the other documents that we have filed or that are
filed after the date hereof and incorporated by reference into this
prospectus supplement and the accompanying prospectus for a
discussion of the factors you should carefully consider before
deciding to purchase our Common Shares.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
RBC CAPITAL MARKETS
The date of this prospectus supplement is September 28,
2020.
TABLE OF CONTENTS
Prospectus Supplement
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S-2
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S-4
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S-6
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S-7
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S-7
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S-8
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S-8
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S-8
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S-9
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S-16
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S-16
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S-16
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S-17
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S-17
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Prospectus
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ABOUT THIS PROSPECTUS
SUPPLEMENT
This prospectus supplement is a supplement to the accompanying
prospectus that is also a part of this document. This prospectus
supplement and the accompanying prospectus are part of a
registration statement on Form S-3 (File No. 333-233567)
that we filed with the Securities and Exchange Commission, or the
SEC, using a “shelf” registration process. Under this
“shelf” registration process, we may from time to time
sell any combination of securities described in the accompanying
prospectus in one or more offerings up to a total of
$50.0 million.
This prospectus supplement and the accompanying prospectus do not
constitute an offer to sell or a solicitation of an offer to buy
the shares offered hereby in any jurisdiction where, or to any
person to whom, it is unlawful to make such offer or solicitation.
Persons outside the United States who come into possession of this
prospectus supplement must inform themselves about, and observe any
restrictions relating to, the offering of the Common Shares and the
distribution of this prospectus supplement outside the United
States.
This document is in two parts. The first part is this prospectus
supplement, which describes the terms of the offering of Common
Shares and also adds to and updates information contained in the
accompanying prospectus and the documents incorporated by reference
into the accompanying prospectus. The second part is the
accompanying prospectus, which provides more general information,
some of which may not apply to the Common Shares. To the extent
there is a conflict between the information contained in this
prospectus supplement, on the one hand, and the information
contained in the accompanying prospectus or any document
incorporated by reference therein, on the other hand, you should
rely on the information in this prospectus supplement.
You should rely only on the information contained in or
incorporated by reference into this prospectus supplement and the
accompanying prospectus or any free writing prospectus. We have
not, and RBCCM has 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 contained in or incorporated by reference into this
prospectus supplement and the accompanying prospectus is current as
of the date such information is presented, regardless of the time
of delivery of this prospectus supplement or of any sale of the
shares. Our business, financial condition, results of operations
and prospects may have changed since those dates. It is important
for you to read and consider all information contained in this
prospectus supplement and the accompanying prospectus, including
the documents incorporated by reference herein and therein, in
making your investment decision. You should also read and consider
the information in the documents we have referred you to in the
sections entitled “Where You Can Find More Information”
and “Incorporation of Certain Information By Reference”
below.
This prospectus supplement, the accompanying prospectus and the
information incorporated herein and therein by reference include
trademarks, services marks and trade names owned by us or other
companies. All trademarks, service marks and trade names included
or incorporated by reference into this prospectus supplement, the
accompanying prospectus or any related free writing prospectuses
are the property of their respective owners.
Unless the context otherwise requires, the terms “we,”
“our,” “us,” “our company,” and
“Edesa” refer to Edesa Biotech, Inc., a company
incorporated pursuant to the laws of the Province of British
Columbia, Canada, and its subsidiaries.
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PROSPECTUS SUPPLEMENT
SUMMARY
This summary highlights selected
information contained elsewhere in this prospectus supplement and
the accompanying prospectus and in the documents we incorporate by
reference. This summary does not contain all of the information you
should consider before making an investment decision. You should
read this entire prospectus supplement and the accompanying
prospectus carefully, especially the risks of investing in our
common stock discussed under "Risk Factors" beginning on page S-6
of this prospectus supplement and the "Risk Factors" section of our
Annual Report on Form 10-KT for the transition period from
January 1, 2019 to September 30, 2019,
along with our consolidated financial statements and notes to those
consolidated financial statements and the other information
incorporated by reference in this prospectus supplement and the
accompanying prospectus and in our filings with the
SEC.
Edesa Biotech, Inc.
We are a biopharmaceutical company focused on acquiring, developing
and commercializing clinical-stage drugs for inflammatory and
immune-related diseases with clear unmet medical needs. Our lead
product candidate, EB01, is an sPLA2 inhibitor for the topical
treatment of chronic allergic contact dermatitis (ACD), a common,
potentially debilitating condition and occupational illness. EB01
employs a novel, non-steroidal mechanism of action and in two
clinical studies has demonstrated statistically significant
improvement of multiple symptoms in ACD patients. We
initiated a Phase 2B clinical study evaluating EB01 for chronic ACD
in the fourth calendar quarter of 2019 and are currently enrolling subjects under an
Investigational New Drug Application (IND) with the U.S. Food and
Drug Administration (FDA).
We also hold exclusive rights to two late-stage monoclonal
antibodies, designated as EB05 and EB06, which block certain immune
signaling proteins, known as TLR4 and CXCL10. These molecules are
associated with a broad range of diseases, including the
inflammation associated with infectious diseases. Due to the
COVID-19 global health emergency, we have prioritized the
development of EB05 as a potential treatment for acute respiratory
distress syndrome (ARDS) resulting from COVID-19 and other
conditions. EB05 has previously demonstrated efficacy in blocking
TLR4 signaling in two previous clinical studies. We have filed
provisional patents for use of our monoclonal drug candidates in
ARDS and have sought government grants to expedite clinical
studies. In June 2020, we received approval from Health Canada to
initiate a Phase 2/Phase 3 clinical study of EB05 as a potential
treatment for hospitalized COVID-19 patients. As of September 28,
2020, our IND for EB05 is under review by the FDA. Unless we
receive comments from the FDA, we expect to be in a position to
commence the U.S. portion of our EB05 study by the end of October,
2020.
In addition to our current programs, we intend to expand the
utility of our sPLA2 inhibitor technology, which forms the basis
for EB01, across other indications, such as hemorrhoids disease
(HD). We also believe that based on their mechanism of action and
role in key immune signaling pathways, our monoclonal antibody drug
candidates have potential therapeutic benefits in other disease
indications.
Competitive Strengths
We believe that we possess a number of competitive strengths that
position us to become a leading biopharmaceutical company focused
on inflammatory and immune-related diseases,
including:
●
Novel pipeline addressing
large underserved markets. Our
product candidates include novel clinical-stage compounds and
antibodies that have significant scientific rationale for
effectiveness. By initially targeting large markets that have
significant unmet medical needs, we believe that we can drive
adoption of new products and improve our competitive position. For
example, we believe that the novel, non-steroidal mode of action of
EB01 and EB02 will be appealing alternatives for managing the
symptoms of ACD and HD. These diseases impact millions of people in
the United States and Canada, and can have significant effects on
patients’ quality of life and, in the case of many chronic
ACD patients and their employers, significant workplace-related
costs and limitations.
●
Intellectual property
protection and market exclusivity. We have opportunities to develop our competitive
position through patents, trade secrets, technical know-how and
continuing technological innovation. We have exclusive license
rights in our target indications to multiple patents and pending
patent applications in the United States and in various foreign
jurisdictions. In addition to patent protection, we intend to
utilize trade secrets and market exclusivity afforded to a New
Chemical Entity, where applicable, to enhance or maintain our
competitive position.
●
Experienced management and
drug development capabilities. Our leadership team possesses core capabilities in
dermatology, infectious diseases, gastrointestinal medicine, drug
development and commercialization, chemistry, manufacturing and
controls, and finance. Our founder, Chief Executive Officer,
Pardeep Nijhawan, MD, FRCPC, AGAF, is a board-certified
gastroenterologist and hepatologist with a successful track record
of building life science businesses, including Medical Futures,
Inc., which was sold to Tribute Pharmaceuticals in 2015. In
addition to our internal capabilities, we have also established a
network of key opinion leaders, contract research organizations,
contract manufacturing organizations and consultants. As a result,
we believe we are well positioned to efficiently develop novel
treatments for inflammatory and immune-related
diseases.
Our business strategy is to develop and commercialize innovative
drug products that address unmet medical needs for large,
underserved markets where there is limited competition. Key
elements of our strategy include:
●
Establish EB01 as the leading
treatment for chronic ACD. Our
primary goal is to obtain regulatory approval for EB01 and
commercialize EB01 for use in the treatment of ACD. Based on
promising early clinical trial results in which patients treated
with EB01 experienced statistically significant improvements of
their symptoms with minimal side effects, we initiated a Phase 2B
clinical study evaluating EB01 under an IND in the United
States.
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Rapidly develop novel
therapies for hospitalized COVID-19 patients. We intend to apply our expertise in immune
modulation and inflammation therapies and clinical trial management
to rapidly develop a treatment for ARDS, subject to funding and
regulatory approval. With a favorable safety profile in two
clinical studies (>120 subjects), drug product available, our
Clinical Trial Application approved in Canada and an IND filed in
the U.S, we believe can rapidly implement these activities amid the
global health crisis. Subject to funding and regulatory approval,
we plan to conduct Phase 2/Phase 3 clinical trials of EB05 in
hospitalized COVID-19 patients.
●
Selectively targeting
additional indications within the areas of dermatology and
gastroenterology. In addition
to our ACD program, we plan to efficiently generate
proof-of-concept data for other programs where the inhibition of
sPLA2 activity may have a therapeutic benefit. For example, in
August 2019, we received a No Objection Letter from Health Canada
enabling us to begin a proof-of-concept clinical study of EB02, an
sPLA2 inhibitor, as a potential treatment for patients with HD. In
light of our recent focus on the development of EB05 as a potential
treatment for ARDS resulting from COVID-19 and other conditions, we
have deprioritized the initiation of this
study.
●
In-license promising product
candidates. We are applying our
cost-effective development approach to advance and expand our
pipeline. Our current product candidates are in-licensed from
academic institutions or other biopharmaceutical companies, and,
from time to time, we plan to identify, evaluate and potentially
obtain rights to and develop additional assets. Our objective is to
maintain a well-balanced portfolio with product candidates across
various stages of development. In general, we seek to identify
product candidates and technology that represent a novel
therapeutic approach, are supported by compelling science, target
an unmet medical need, and provide a meaningful commercial
opportunity. We do not currently intend to invest significant
capital in basic research, which can be expensive and
time-consuming.
●
Capture the full commercial
potential of our product candidates. If our product candidates are successfully
developed and approved, we may build commercial infrastructure
capable of directly marketing the products in North America and
potentially other major geographies of strategic interest. We also
plan to evaluate strategic licensing arrangements with
pharmaceutical companies for the commercialization of our drugs,
where applicable, such as in territories where a partner may
contribute additional resources, infrastructure and
expertise.
Corporate
Information
We were incorporated in Canada in 2007 and we operate through our
wholly-owned subsidiaries, Edesa Biotech Research, Inc., an Ontario
corporation incorporated in 2015, formerly known as Edesa Biotech
Inc., which we acquired on
June 7, 2019, and Stellar Biotechnologies, Inc., a California
corporation organized September 9, 1999, and acquired on April 12,
2010. Our Common Shares are traded on the Nasdaq Capital Market
under the symbol “EDSA”. Our executive offices are
located at 100 Spy Court, Markham, Ontario L3R 5H6 Canada and our
telephone number at this location is (289) 800-9600. Our website address
is www.edesabiotech.com. The information contained on, or that can
be accessed through, our website is not a part of this prospectus.
Our trademarks and trade names include, but may not be limited to,
“Edesa Biotech,” and the Edesa
logo.
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Common Shares offered by
us
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Common Shares having an aggregate offering price of up to $9.2
million.
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Common Shares to be outstanding after this
offering
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Up to 10,843,768 shares,
assuming sales at a price of $7.45 per share, which was the closing
price on the Nasdaq Capital Market on September 24, 2020. The
actual number of shares issued will vary depending on the sales
price under this offering. In addition, as there is no minimum
offering amount required as a condition to close this offering, the
actual number of shares that may be sold is not determinable at
this time. See "Dilution" beginning on page
S-8.
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Manner of offering
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“At-the-market”
offering that may be made from time to time, if at all, through our
sales agent, RBCCM. See “Plan of Distribution” on page
S-16.
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Use of Proceeds
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We currently anticipate that the net proceeds from
the sale of our Common Shares will be used for general
corporate purposes, which may include working capital, capital
expenditures and research and development expenses. See “Use of Proceeds” on
page S-7.
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Dividend
Policy
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We
have never declared or paid any cash dividends to our shareholders,
and we currently do not expect to declare or pay any cash dividends
in the foreseeable future. See
“Dividends”.
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Risk Factors
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See “Risk Factors” beginning on page S-6 of this
prospectus supplement, as well as those risk factors that are
incorporated by reference in this prospectus supplement and the
accompanying prospectus, for a discussion of factors you should
carefully consider before deciding to purchase Common
Shares.
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Nasdaq Capital Market symbol
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EDSA
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The number of our Common Shares to be outstanding
after the offering is based on 9,608,869 of our Common Shares
outstanding as of September 24, 2020 and excludes:
●
661,437
of our Common Shares issuable upon exercise of outstanding options
granted under our equity incentive plans at a weighted average
exercise price of $3.20 per share; and
●
487,260 of our Common Shares available
for issuance or future grant pursuant to our equity incentive plan;
and
●
998,971
of our Common Shares issuable upon exercise of outstanding warrants
at a weighted average exercise price of $4.92 per share; and
●
Common
Shares issuable upon conversion of 250 outstanding Series A-1
Convertible Preferred Shares valued at $2.5 million (the
“Series A-1 Shares). 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 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.
Except as otherwise indicated, the information in this prospectus
supplement is as of September 28, 2020, and assumes no exercise of
options or exercise of warrants or the conversion of other
securities described above.
Implications of Being an Emerging Growth Company
As a company with less than $1.07 billion in revenue during
our last fiscal year, we qualify as an “emerging growth
company” as defined in the Jumpstart Our Business Startups
Act, or JOBS Act, enacted in April 2012. An “emerging
growth company” may take advantage of reduced reporting
requirements that are otherwise applicable to public companies.
These provisions include, but are not limited to:
●
not
being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act;
●
reduced
disclosure obligations regarding executive compensation in our
periodic reports, proxy statements and registration statements;
and
●
exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and shareholder approval of any
golden parachute payments not previously
approved.
We may take advantage of these provisions until September 30, 2021.
However, if certain events occur prior to September 30, 2021,
including if we become a “large accelerated filer,” our
annual gross revenues exceed $1.07 billion or we issue more
than $1.0 billion of non-convertible debt in any three-year
period, we will cease to be an emerging growth company before such
date.
We have elected to take advantage of certain of the reduced
disclosure obligations and may elect to take advantage of other
reduced reporting requirements in future filings. As a result, the
information that we provide to our shareholders may be different
than the information you might receive from other public reporting
companies in which you hold equity interests.
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Investing in our Common Shares
involves a high degree of risk. Investors should carefully
consider the risks described in the filings incorporated by
reference in this prospectus supplement and accompanying
prospectus, including our Annual Report on Form 10-KT for the
transition period from January 1, 2019 to September 30, 2019, and
our Current Report on Form 8-K filed with the SEC on September 28,
2020, before deciding whether to invest in our securities. We
expect to update the risk factors from time to time in the periodic
and current reports that we file with the SEC after the date of
this prospectus supplement. These updated risk factors will be
incorporated by reference in this prospectus supplement. The risks
described in our filings incorporated by reference are not the only
ones we face. Our business, financial
condition and results of operations could be materially and
adversely affected by any or all of these risks or by additional
risks and uncertainties not presently known to us or that we
currently deem immaterial that may adversely affect us in the
future. In such case, the trading price of our Common Shares
could decline and you could lose all or part of your investment.
Our actual results could differ materially from those anticipated
in the forward-looking statements made throughout this prospectus
supplement, accompanying prospectus and in the documents
incorporated by reference as a result of different factors,
including the risks we face described in the filings incorporated
by reference.
Risks Related to this Offering
Resales of our Common Shares in the public market during this
offering by our shareholders may cause the market price of our
Common Shares to fall.
We may
issue Common Shares from time to time in connection with this
offering. This issuance from time to time of these new Common
Shares, or our ability to issue these Common Shares in this
offering, could result in resales of our Common Shares by our
current shareholders concerned about the potential dilution of
their holdings. In turn, these resales could have the effect of
depressing the market price for our Common Shares.
Purchasers will experience immediate dilution in the book value per
Common Share purchased in the offering.
The
expected offering price of our Common Shares will be substantially
higher than the net tangible book value per share of our
outstanding Common Shares. As a result, based on our capitalization
as of June 30, 2020, investors purchasing shares in this offering
would incur immediate dilution of $6.06 per Common Share purchased,
based on an assumed public offering price of our Common Shares of
$7.45 per share, the last reported sale price of our Common Shares
on September 24, 2020. See “Dilution” in this
prospectus supplement for a more detailed discussion of the
dilution you will incur if you purchase shares in this
offering.
Because we will have broad discretion and flexibility in how the
net proceeds from this offering are used, we may use the net
proceeds in ways in which you disagree.
We intend to use the net proceeds from this offering for working
capital and other general corporate purposes. See “Use of
Proceeds” on page S-7. We have not allocated
specific amounts of the net proceeds from this offering for any of
the foregoing purposes. Accordingly, our management will have
significant discretion and flexibility in applying the net proceeds
of this offering. You will be relying on the judgment of our
management with regard to the use of these net proceeds, and you
will not have the opportunity, as part of your investment decision,
to assess whether the net proceeds are being used appropriately. It
is possible that the net proceeds will be invested in a way that
does not yield a favorable, or any, return for us. The failure of
our management to use such funds effectively could have a material
adverse effect on our business, financial condition, operating
results and cash flow.
If we raise additional capital in the future, your ownership in us
could be diluted.
Any issuance of equity we may undertake in the future to raise
additional capital could cause the price of our Common
Shares to decline, or require us to
issue shares at a price that is lower than that paid by holders of
our Common Shares in the past,
which would result in those newly issued shares being dilutive. In
addition, the price per share at which we sell additional
Common Shares, or securities
convertible or exchangeable into Common Shares, in future transactions may be higher or lower
than the price per share paid by investors in this offering.
If we obtain funds through a credit facility or through the
issuance of debt or preferred securities, these securities would
likely have rights senior to your rights as a common shareholder,
which could impair the value of our Common
Shares.
The exercise of our outstanding options and warrants will dilute
stockholders and could decrease our share price.
The exercise of our outstanding options and warrants may adversely
affect our share price due to sales of a large number of shares or
the perception that such sales could occur. These factors also
could make it more difficult to raise funds through future
offerings of our securities, and could adversely impact the terms
under which we could obtain additional equity capital. The exercise
of outstanding options and warrants, or any future issuance of
additional Common Shares or other equity securities, including but
not limited to options, warrants, restricted stock units or other
derivative securities convertible into our Common Shares, may
result in significant dilution to our shareholders and may decrease
our share price.
Because we do not currently intend to declare cash dividends on our
Common Shares in the foreseeable future, shareholders must rely on
appreciation of the value of our Common Shares for any return on
their investment.
We have never declared or paid cash dividends on our capital stock.
We currently intend to retain all of our future earnings, if any,
to finance the operation, development and growth of our business.
Furthermore, any future debt agreements may also preclude us from
paying or place restrictions on our ability to pay dividends. As a
result, capital appreciation, if any, of our Common Shares will be
your sole source of gain with respect to your investment for the
foreseeable future.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the
documents incorporated by reference in this prospectus supplement
and the accompanying prospectus contain certain statements that
constitute forward-looking statements within the meaning of Section
27A of the Securities Act, and Section 21E of the Exchange Act.
These statements involve known and unknown risks, uncertainties and
other important factors that 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. These forward looking statements
include, but are not limited to, those concerning the
following:
●
our ability to fund
our planned operations and implement our business
plan;
●
the scope, number,
progress, duration, cost, results and timing of clinical trials and
nonclinical studies of our current or future product
candidates;
●
our ability to
raise sufficient funds to support the development and potential
commercialization of our product candidates;
●
the impact of the
coronavirus, or COVID-19, pandemic on our worldwide operations and
those of our business partners;
●
the impact of new
and modified regulatory policies by federal regulatory authorities
during the COVID-19 public health emergency;
●
delays in our
clinical development programs and limited communications with
regulatory authorities during the COVID-19 public health
emergency;
●
the outcomes and
timing of regulatory reviews, approvals or other
actions;
●
our ability to
obtain marketing approval for our product candidates and otherwise
execute our business plan;
●
our ability to
establish and maintain licensing, collaboration or similar
arrangements on favorable terms and whether and to what extent we
retain development or commercialization responsibilities under any
new licensing, collaboration or similar arrangement;
●
the success of any
other business, product or technology that we acquire or in which
we invest;
●
our ability to
maintain, expand and defend the scope of our intellectual property
portfolio;
●
our ability to
manufacture any approved products on commercially reasonable
terms;
●
our ability to
establish a sales and marketing organization or suitable
third-party alternatives for any approved product;
●
the number and
characteristics of product candidates and programs that we
pursue;
●
the attraction and
retention of qualified employees and personnel;
●
future acquisitions
or investments in complementary companies or technologies;
and
●
our ability to
comply with evolving legal standards and regulations pertaining to
our industry.
In some cases, you can identify forward-looking statements by terms
such as “anticipates,” “believes”,
“could”, “estimates”,
“expects”, “intends”, “may”,
“plans”, “potential”,
“predicts”, “projects”,
“should”, “will”, “would” as
well as similar expressions. Forward-looking statements reflect our
current views with respect to future events, are based on
assumptions and are subject to risks, uncertainties and other
important factors. We discuss many of these risks, uncertainties
and other important factors in greater detail under the heading
“Risk Factors” contained in this prospectus supplement,
the accompanying prospectus and any related free writing
prospectus, and in our most recent annual report on Form 10-KT, as
well as any amendments thereto reflected in subsequent filings with
the SEC. Given these risks, uncertainties and other important
factors, you should not place undue reliance on these
forward-looking statements. Also, these forward-looking statements
represent our estimates and assumptions only as of the date such
forward-looking statements are made. Except as required by law, we
assume no obligation to update any forward-looking statements
publicly, or to reflect facts and circumstances after the date of
this prospectus supplement. Before deciding to purchase our
securities, you should carefully read both this prospectus
supplement, the accompanying prospectus and any related free
writing prospectus, together with the information incorporated
herein by reference as described under the heading
“Incorporation of Certain Information by Reference,”
completely and with the understanding that our actual future
results may be materially different from what we
expect.
This prospectus supplement and the accompanying prospectus and the
documents incorporated by reference in this prospectus supplement
and the accompanying prospectus also refer to estimates and other
statistical data made by independent parties and by us relating to
market size and growth and other data about our industry. This data
involves a number of assumptions and limitations, and you are
cautioned not to give undue weight to such estimates. In addition,
projections, assumptions and estimates of our future performance
and the future performance of the markets in which we operate are
necessarily subject to a high degree of uncertainty and
risk.
We may issue and sell our Common Shares having aggregate sales
proceeds of up to $9.2 million from time to time. Because there is
no minimum offering amount required as a condition to close this
offering, the actual total public offering amount, commissions and
proceeds to us, if any, are not determinable at this time. There
can be no assurance that we will sell any shares under or fully
utilize the sales agreement with RBCCM as a source of
financing.
We intend to use the net proceeds, if any, from the sale of Common
Shares offered hereby for working capital and other general
corporate purposes. General corporate purposes may include research
and development, clinical development of our product
candidates, milestone payments related to our licensed
technology or product candidates, capital
expenditures and further strategic transactions to expand and
diversify our product pipeline.
We have not determined the amounts we plan to spend on the areas
listed above or the timing of these expenditures. As a result, our
management will have broad discretion to allocate the net proceeds
of this offering. Pending the application of the net proceeds for
these purposes, we intend to invest the net proceeds in short-term,
investment-grade securities.
We have never declared or paid cash dividends on our Common Shares.
We currently intend to retain all available funds and any future
earnings for use in the operation of our business and do not
anticipate paying any dividends on our Common Shares in the
foreseeable future, if at all. Any future determination to declare
dividends will be made at the discretion of our board of directors
and will depend on our financial condition, results of operations,
capital requirements, general business conditions and other factors
that our board of directors may deem relevant.
DESCRIPTION OF SECURITIES
We are
offering up to $9.2 million of Common Shares pursuant to this
prospectus supplement and the accompanying prospectus. The material
terms and provisions of our Common Shares are described under the
caption “Description of Capital Stock -Common Shares”
beginning on page 8 of the accompanying prospectus.
The
net tangible book value of our Common Shares as of June 30, 2020
was approximately $5.3 million, or approximately $0.60 per share.
Net tangible book value per share is equal to the amount of our
total tangible assets, less total liabilities, divided by the
number of Common Shares outstanding. Dilution in net tangible book
value per share represents the difference between the amount per
share paid by purchasers of Common Shares in this offering and the
net tangible book value per share of our Common Shares immediately
afterwards.
After
giving effect to the sale by us of Common Shares in the aggregate
amount of $9.2 million at an assumed offering price of $7.45 per
share, the last reported sale price of our Common Shares on
September 24, 2020 on the Nasdaq Capital Market, and after
deducting underwriting commissions and estimated offering expenses,
our net tangible book value as of June 30, 2020 would have been
approximately $14.0 million, or $1.39 per share. This represents an
immediate increase in net tangible book value of $0.79 per share to
existing shareholders and an immediate dilution of $6.06 per share
to new investors purchasing Common Shares in this offering. The
following table illustrates this dilution:
Assumed
offering price per share
|
|
$7.45
|
Net
tangible book value per share as of June 30, 2020
|
$0.60
|
|
Increase
per share attributable to new investors after giving effect to the
offering
|
0.79
|
|
As
adjusted net tangible book value per share after this
offering
|
|
1.39
|
Dilution
in net tangible book value per share to new investors
|
|
$6.06
|
The
table above assumes for illustrative purposes only an aggregate of
1,234,899 of our Common Shares are sold at a price of $7.45 per
share, for aggregate gross proceeds of $9.2 million. The shares, if
any, sold in this offering will be sold from time to time at
various prices. An increase of $1.00 per share in the price at
which the shares are sold from the assumed offering price per share
shown in the table above, or $8.45 per share, assuming all of our
Common Shares in the aggregate amount of $9.2 million is sold at
that price, would increase our adjusted net tangible book value per
share after the offering to $1.41 per share and would increase the
dilution in net tangible book value per share to new investors in
this offering to $7.04 per share, after deducting commissions and
estimated aggregate offering expenses payable by us. A decrease of
$1.00 per share in the price at which the shares are sold from the
assumed offering price per share shown in the table above, or $6.45
per share, assuming all of our Common Shares in the aggregate
amount of $9.2 million is sold at that price, would increase our
adjusted net tangible book value per share after the offering to
$1.36 per share and would decrease the dilution in net tangible
book value per share to new investors in this offering to $5.09 per
share, after deducting commissions and estimated aggregate offering
expenses payable by us. This information is supplied for
illustrative purposes only.
The
foregoing table is based on 8,861,895 of our Common Shares
outstanding as of June 30, 2020, and excludes the
following:
●
671,677
of our Common Shares issuable upon exercise of outstanding options
granted under our equity incentive plans at a weighted average
exercise price of $3.17 per share; and
●
481,470 of our Common Shares available
for issuance or future grant pursuant to our equity incentive plan;
and
●
1,741,574
of our Common Shares issuable upon exercise of outstanding warrants
at a weighted average exercise price of $4.66 per share;
and
●
Common
Shares issuable upon conversion of 250 outstanding Series A-1
Convertible Preferred Shares valued at $2.5 million (the
“Series A-1 Shares). 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 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.
Certain U.S. Federal Income Tax Considerations
The
following discussion is a summary of certain U.S. federal income
tax issues that may be relevant to a U.S. Holder (as defined
herein) and non-U.S. Holder (as defined herein), holding and
disposing of the Common Shares. Additional tax issues may exist
that are not addressed in this discussion and that could affect the
U.S. federal income tax treatment of the acquisition, holding and
disposition of the Common Shares.
This
section is based on the U.S. Tax Code, its legislative history,
existing and proposed regulations, published rulings by the United
States Internal Revenue Service (IRS) and court decisions, all as
currently in effect. These authorities are subject to change,
possibly on a retroactive basis. The discussion applies, unless
indicated otherwise, only to U.S. Holders and certain non-U.S.
Holders who hold Common Shares as capital assets within the meaning
of Section 1221 of the U.S. Tax Code (generally, as property held
for investment) and use the U.S. dollar as their functional
currency. It does not address special classes of holders that may
be subject to different treatment under the U.S. Tax Code, such
as:
●
financial institutions, insurance
companies, underwriters, real estate
investment trusts, or regulated investment
companies;
●
controlled
foreign corporations or passive foreign investment companies under
the U.S. Tax Code;
●
dealers
and traders in securities;
●
persons
holding Common Shares as part of a hedge, straddle, conversion or
other integrated transaction;
●
persons
that acquired Common Shares as compensation for
services;
●
partnerships
or other entities classified as partnerships for U.S. federal
income tax purposes;
●
persons
liable for the alternative minimum tax;
●
tax-exempt
organizations, qualified retirement plans, individual retirement
accounts, or other tax-deferred accounts;
●
certain
U.S. expatriates or former long-term residents of the United
States;
●
persons
that are required to accelerate the recognition of any item of
gross income with respect to the Common Shares as a result of such
income being recognized on an applicable financial statement;
or
●
persons
holding Common Shares that own or are deemed to own 10 per cent or
more (by vote or value) of the company’s shares.
United States Federal Income Taxation
As used
below, a “U.S. Holder” is a beneficial owner of Common
Shares that is, for U.S. federal income tax purposes, (i) a citizen
or resident alien individual of the United States, (ii) a
corporation (or an entity treated as a corporation) created or
organized under the law of the United States, any State thereof or
the District of Columbia, (iii) an estate the income of which is
subject to U.S. federal income tax without regard to its source or
(iv) a trust if (1) a court within the United States is able to
exercise primary supervision over the administration of the trust,
and one or more United States persons have the authority to control
all substantial decisions of the trust, or (2) the trust has a
valid election in effect under applicable U.S. Treasury Regulations
to be treated as a United States person. For purposes of this
discussion, a “non-U.S. Holder” is a beneficial owner
of Common Shares that is (i) a nonresident alien individual, (ii) a
corporation (or an entity treated as a corporation) created or
organized in or under the law of a country other than the United
States or a political subdivision thereof or (iii) an estate or
trust that is not a U.S. Holder. If a partnership (including for
this purpose any entity treated as a partnership for U.S. federal
tax purposes) is a beneficial owner of Common Shares, the U.S.
federal tax treatment of a partner in the partnership generally
will depend on the status of the partner and the activities of the
partnership. A holder of Common Shares that is a partnership and
partners in that partnership should consult their own tax advisers
regarding the U.S. federal income tax consequences of holding and
disposing of Common Shares. We have not sought a ruling from the
IRS or an opinion of counsel as to any U.S. federal income tax
consequence described herein. The IRS may disagree with the
description herein, and its determination may be upheld by a court.
This discussion does not address U.S. federal tax laws other than
those pertaining to U.S. federal income taxation (such as estate or
gift tax laws), nor does it address any aspects of U.S. state or
local or non-U.S. taxation.
This
summary is based upon certain understandings and assumptions with
respect to the business, assets and holders, including that the
company is not, does not expect to become, nor at any time has been
a controlled foreign corporation as defined in Section 957 of the
U.S. Tax Code (“CFC”). The company believes that it is
not and has never been a CFC, and does not expect to become a CFC.
In the event that one or more of such understandings and
assumptions proves to be inaccurate, the following summary may not
apply and material adverse U.S. federal income tax consequences may
result to U.S. Holders.
GIVEN
THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO
ANY PARTICULAR SHAREHOLDER MAY BE AFFECTED BY MATTERS NOT DISCUSSED
HEREIN, SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION,
OWNERSHIP AND DISPOSITION OF COMMON SHARES, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS
WELL AS U.S. FEDERAL TAX LAWS.
Taxation of Dividends
U.S. Holders
In
general, subject to the passive foreign investment company (PFIC)
rules discussed below, a distribution on the Common Shares will
constitute a dividend for U.S. federal income tax purposes to the
extent that it is made from the company’s current or
accumulated earnings and profits as determined under U.S. federal
income tax principles. If a distribution exceeds the current and
accumulated earnings and profits of the company, it will generally
be treated as a non-taxable reduction of basis to the extent of the
U.S. Holder’s tax basis in the Common Shares on which it is
paid, and to the extent it exceeds that basis it will be treated as
capital gain. The company has not and does not plan to maintain
calculations of earnings and profits under U.S. federal income tax
principles. Accordingly, it is unlikely that U.S. Holders will be
able to establish that a distribution by the company is in excess
of its current and accumulated earnings and profits (as computed
under U.S. federal income tax principles). Therefore, a U.S. Holder
should expect that a distribution by the company will generally be
taxable in its entirety as a dividend to U.S. Holders for U.S.
federal income tax purposes even though the distribution may be
treated in whole or in part as a non-taxable distribution for
Canadian tax purposes.
The
gross amount of any dividend on the Common Shares (which will
include the amount of any Canadian taxes withheld with respect to
such dividend) generally will be subject to U.S. federal income tax
as foreign source dividend income, and will not be eligible for the
corporate dividends received deduction. The amount of a dividend
paid in Canadian dollars will be its value in U.S. dollars based on
the prevailing spot market exchange rate in effect on the day the
U.S. Holder receives the dividend. A U.S. Holder will have a tax
basis in any distributed Canadian dollars equal to their U.S.
dollar value on the date of receipt, and any gain or loss realized
on a subsequent conversion or other disposition of such Canadian
dollars generally will be treated as U.S. source ordinary income or
loss. If dividends paid in Canadian dollars are converted into U.S.
dollars on the date they are received by a U.S. Holder, the U.S.
Holder generally should not be required to recognize foreign
currency gain or loss in respect of the dividend
income.
Subject
to certain exceptions for short-term and hedged positions, as well
as the PFIC rules, a dividend that a non-corporate U.S. Holder
receives on the Common Shares will generally be subject to a
maximum federal income tax rate of 20% if the dividend is a
“qualified dividend.” A dividend on the Common Shares
will be a qualified dividend if (i) either (a) the Common Shares
are readily tradable on an established market in the United States
or (b) we are eligible for the benefits of a comprehensive income
tax treaty with the United States that the Secretary of the
Treasury determines is satisfactory for purposes of these rules and
that includes an exchange of information program, and (ii) we were
not, in the year prior to the year the dividend was paid, and are
not, in the year the dividend is paid, a PFIC. The Common Shares
are listed on the Nasdaq Capital Market, which should be treated as
an established securities market in the United States. In any
event, the U.S.-Canada Income Convention (the Treaty) satisfies the
requirements of clause (i)(b), we are incorporated in and tax
resident of Canada and should be entitled to the benefits of the
Treaty. Based on our audited financial statements, income tax
returns and relevant market and shareholder data, we believe that
we likely will not be classified as a PFIC in the September 30,
2019 taxable year. There can be no assurance, however, that the
company has not been classified as a PFIC in any prior taxable year
or that the company will not be considered to be a PFIC for any
particular year in the future because PFIC status is factual in
nature, depends upon factors not wholly within the company’s
control, generally cannot be determined until the close of the
taxable year in question, and is determined annually. Accordingly,
no assurance can be made that a dividend paid, if any, would be a
“qualified dividend.” In addition, as described in the
section below entitled “Passive Foreign Investment Company
Rules,” if we were a PFIC in a year while a U.S. Holder held
Common Shares, and if the U.S. Holder has not made a qualified
electing fund election effective for the first year the U.S. Holder
held the Common Shares, such Common Shares remain an interest in a
PFIC for all future years or until such an election is made. The
IRS takes the position that such rule will apply for purposes of
determining whether the Common Shares are an interest in a PFIC in
the year a dividend is paid or in the prior year, even if we do not
satisfy the tests to be a PFIC in either of those years. Even if
dividends on the Common Shares would otherwise be eligible for
qualified dividend treatment, in order to qualify for the reduced
qualified dividend tax rates, a non-corporate U.S. Holder must hold
the Common Shares on which a dividend is paid for more than 60 days
during the 120-day period beginning 60 days before the ex-dividend
date, disregarding for this purpose any period during which the
non-corporate U.S. Holder has an option to sell, is under a
contractual obligation to sell or has made (and not closed) a short
sale of substantially identical stock or securities, is the grantor
of an option to buy substantially identical stock or securities or,
pursuant to U.S. Treasury regulations, has diminished such
holder’s risk of loss by holding one or more other positions
with respect to substantially similar or related property. In
addition, to qualify for the reduced qualified dividend tax rates,
the non-corporate U.S. Holder must not be obligated to make related
payments with respect to positions in substantially similar or
related property. Payments in lieu of dividends from short sales or
other similar transactions will not qualify for the reduced
qualified dividend tax rates.
A
non-corporate U.S. Holder that receives an extraordinary dividend
(generally, any dividend that is in excess of 10% of the holder's
adjusted basis in the Common Shares on which the dividend is paid)
that is eligible for the reduced qualified dividend rates must
treat any loss on the sale of the Common Shares as a long-term
capital loss to the extent of the dividend. For purposes of
determining the amount of a non-corporate U.S Holder’s
deductible investment interest expense, a dividend is treated as
investment income only if the non-corporate U.S. Holder elects to
treat the dividend as not eligible for the reduced qualified
dividend tax rates. Special limitations on foreign tax credits with
respect to dividends subject to the reduced qualified dividend tax
rates apply to reflect the reduced rates of tax.
The
U.S. Treasury has announced its intention to promulgate rules
pursuant to which non-corporate U.S. Holders of stock of non-U.S.
corporations, and intermediaries through which the stock is held,
will be permitted to rely on certifications from issuers to
establish that dividends are treated as qualified dividends.
Because those procedures have not yet been issued, it is not clear
whether we will be able to comply with them.
Non-corporate
U.S. Holders of Common Shares are urged to consult their own tax
advisers regarding the availability of the reduced qualified
dividend tax rates with respect to dividends, if any, received on
the Common Shares in the light of their own particular
circumstances.
Any
Canadian withholding tax imposed on dividends received with respect
to the Common Shares will be treated as a foreign income tax
eligible for credit against a U.S. Holder’s U.S. federal
income tax liability, subject to generally applicable limitations
under U.S. federal income tax law. For purposes of computing those
limitations under current law, which must be calculated separately
for specific categories of income, a dividend generally will
constitute foreign source “passive category income” or,
in the case of certain holders, “general category
income.” A U.S. Holder will be denied a foreign tax credit
with respect to Canadian income tax withheld from dividends
received with respect to the Common Shares to the extent the U.S.
Holder has not held the Common Shares for at least 16 days of the
30-day period beginning on the date which is 15 days before the
ex-dividend date or to the extent the U.S. Holder is under an
obligation to make related payments with respect to substantially
similar or related property. Any days during which a U.S. Holder
has substantially diminished its risk of loss on the Common Shares
are not counted toward meeting the 16-day holding period required
by the statute. The rules relating to the determination of the
foreign tax credit are complex, and U.S. Holders are urged to
consult with their own tax advisers to determine whether and to
what extent they will be entitled to foreign tax credits as well as
with respect to the determination of the foreign tax credit
limitation. Alternatively, any Canadian withholding tax may be
taken as a deduction against taxable income, provided the U.S.
Holder takes a deduction and not a credit for all foreign income
taxes paid or accrued in the same taxable year. In general, special
rules will apply to the calculation of foreign tax credits in
respect of dividend income that is subject to preferential rates of
U.S. federal income tax.
Non-U.S. Holders
A
dividend paid to a non-U.S. Holder of the Common Shares will
generally not be subject to U.S. federal income tax unless the
dividend is effectively connected with the conduct of trade or
business by the non-U.S. Holder within the United States (and is
attributable to a permanent establishment or fixed base the
non-U.S. Holder maintains in the United States if an applicable
income tax treaty so requires as a condition for the non-U.S.
Holder to be subject to U.S. taxation on a net income basis on
income from the Common Shares). A non-U.S. Holder generally will be
subject to tax on an effectively connected dividend in the same
manner as a U.S. Holder. A corporate non-U.S. Holder under certain
circumstances may also be subject to an additional “branch
profits tax,” the rate of which may be reduced pursuant to an
applicable income tax treaty.
Taxation of Capital Gains
U.S. Holders
Subject
to the PFIC rules discussed below, on a sale or other taxable
disposition of the Common Shares, a U.S. Holder will recognize
capital gain or loss in an amount equal to the difference between
the U.S. Holder’s adjusted basis in the Common Shares and the
amount realized on the sale or other disposition, each determined
in U.S. dollars. Such capital gain or loss will be long-term
capital gain or loss if at the time of the sale or other taxable
disposition the Common Shares have been held for more than one
year. In general, any adjusted net capital gain of an individual is
subject to a maximum federal income tax rate of 20%, and, if
applicable, the tax on net investment income of 3.8% (see Medicare
Surtax on Net Investment Income, below). Capital gains recognized
by corporate U.S. Holders generally are subject to U.S. federal
income tax at the same rate as ordinary income. The deductibility
of capital losses is subject to limitations.
Any
gain a U.S. Holder recognizes generally will be U.S. source income
for U.S. foreign tax credit purposes, and, subject to certain
exceptions, any loss will generally be a U.S. source loss. The
U.S.—Canada Income Tax Treaty generally allows the taxation
on the sale of stock by a US citizen and resident of Canadian stock
only in the US. However, Article XIII of that treaty provides
several exceptions to that general rule. If a Canadian tax is paid
on a sale or other disposition of the Common Shares, the amount
realized will include the gross amount of the proceeds of that sale
or disposition before deduction of the Canadian tax. The generally
applicable limitations under U.S. federal income tax law on
crediting foreign income taxes may preclude a U.S. Holder from
obtaining a foreign tax credit for any Canadian tax paid on a sale
or other disposition of the Common Shares. The rules relating to
the determination of the foreign tax credit are complex, and U.S.
Holders are urged to consult with their own tax advisers regarding
the application of such rules. Alternatively, any Canadian tax paid
on the sale or other disposition of the Common Shares may be taken
as a deduction against taxable income, provided the U.S. Holder
takes a deduction and not a credit for all foreign income taxes
paid or accrued in the same taxable year.
Non-U.S. Holders
A
non-U.S. Holder will not be subject to U.S. federal income tax on
gain recognized on a sale or other disposition of Common Shares
unless (i) the gain is effectively connected with the conduct of
trade or business by the non-U.S. Holder within the United States
(and is attributable to a permanent establishment or fixed base the
non-U.S. Holder maintains in the United States if an applicable
income tax treaty so requires as a condition for the non-U.S.
Holder to be subject to U.S. taxation on a net income basis on
income from the Common Shares), or (ii) in the case of a non-U.S.
Holder who is an individual, the holder is deemed present in the
United States for 183 or more days in the taxable year of the sale
or other disposition and certain other conditions apply. Any
effectively connected gain of a corporate non-U.S. Holder may also
be subject under certain circumstances to an additional
“branch profits tax,” the rate of which may be reduced
pursuant to an applicable income tax treaty.
Passive Foreign Investment Company Rules
A
special set of U.S. federal income tax rules applies to a foreign
corporation that is a PFIC for U.S. federal income tax purposes. As
noted above, based on our audited financial statements, income tax
returns, and relevant market data, we believe that we likely will
not be classified as a PFIC in the September 30, 2019 taxable year.
There can be no assurance, however, that the company has not been
classified as a PFIC in any prior taxable year or that the company
will not be considered to be a PFIC for any particular year in the
future because PFIC status is factual in nature, depends upon
factors not wholly within the company’s control, generally
cannot be determined until the close of the taxable year in
question, and is determined annually.
In
general, a non-US corporation is a PFIC if in any taxable year
either (i) at least 75% of its gross income is “passive
income” or (ii) at least 50% of the quarterly average value
of its assets is attributable to assets that produce or are held to
produce “passive income.” In applying these tests, the
company generally is treated as holding its proportionate share of
the assets and receiving its proportionate share of the income of
any other corporation in which the company owns at least 25% by
value of the shares. Passive income for this purpose generally
includes dividends, interest, royalties, rent and capital gains,
but generally does not include certain rents and royalties derived
in an active business. Passive assets are those assets that are
held for production of passive income or do not produce income at
all. Thus, cash will be a passive asset. Interest, including
interest on working capital, is treated as passive income for
purposes of the income test. Without taking into account the value
of its goodwill, more than 50% of the company’s assets by
value would be passive so that the company would be a PFIC under
the asset test. Based upon its current operations, its goodwill
(the value of which is based on our belief of the estimated fair
market value of the company in excess of book value) will likely be
attributable to its activities that will generate active income
and, to such extent, should be treated as an active asset. The
determination of whether a foreign corporation is a PFIC is a
factual determination made annually and is therefore subject to
change. Subject to exceptions pursuant to certain elections that
generally require the payment of tax, once stock in a foreign
corporation is stock in a PFIC in the hands of a particular
shareholder that is a United States person, it remains stock in a
PFIC in the hands of that shareholder.
If we
are treated as a PFIC, contrary to the tax consequences described
in “Taxation of Dividends” and “Taxation of
Capital Gains” above, a U.S. Holder that does not make an
election described in the succeeding two paragraphs would be
subject to special rules with respect to (i) any gain realized on a
sale or other disposition of Common Shares (for purposes of these
rules, a disposition of Common Shares includes many transactions on
which gain or loss is not realized under general U.S. federal
income tax rules) and (ii) any “excess distribution” by
the company to the U.S. Holder (generally, any distribution during
a taxable year in which distributions to the U.S. Holder on the
Common Shares exceed 125% of the average annual taxable
distributions (whether actual or constructive and whether or not
out of earnings and profits) the U.S. Holder received on the Common
Shares during the preceding three taxable years or, if shorter, the
U.S. Holder’s holding period for the Common Shares). Under
those rules, (i) the gain or excess distribution would be allocated
ratably over the U.S. Holder’s holding period for the Common
Shares, (ii) the amount allocated to the taxable year in which the
gain or excess distribution is realized would be taxable as
ordinary income in its entirety and not as capital gain, would be
ineligible for the reduced qualified dividend rates, and could not
be offset by any deductions or losses, and (iii) the amount
allocated to each prior year, with certain exceptions, would be
subject to tax at the highest tax rate in effect for that year, and
the interest charge generally applicable to underpayments of tax
would be imposed in respect of the tax attributable to each of
those years.
The
special PFIC rules described above will not apply to a U.S. Holder
if the U.S. Holder makes a timely election, which remains in
effect, to treat the company as a “qualified electing
fund” (QEF) in the first taxable year in which the U.S.
Holder owns Common Shares and the company is a PFIC and if the
company complies with certain requirements. Instead, a shareholder
of a QEF generally is currently taxable on a pro rata share of the
company’s ordinary earnings and net capital gain as ordinary
income and long-term capital gain, respectively. Neither that
ordinary income nor any actual dividend from the company would
qualify for the 20% maximum federal income tax rate on dividends
described above if the company is a PFIC in the taxable year the
ordinary income is realized or the dividend is paid or in the
preceding taxable year. A QEF election cannot be made unless the
company provides U.S. Holders the information and computations
needed to report income and gains pursuant to a QEF election. The
company expects that it will not provide this information. It is,
therefore, likely that U.S. Holders would not be able to make a QEF
election in any year the company is a PFIC.
In lieu
of a QEF election, a U.S. Holder of stock in a PFIC that is
considered marketable stock could elect to mark the stock to market
annually, recognizing as ordinary income or loss each year an
amount equal to the difference as of the close of the taxable year
between the fair market value of the stock and the U.S.
Holder’s adjusted basis in the stock. Losses would be allowed
only to the extent of net mark-to-market gain previously included
in income by the U.S. Holder under the election for prior taxable
years. A U.S. Holder’s adjusted basis in Common Shares will
be adjusted to reflect the amounts included or deducted with
respect to the mark-to-market election. If the mark-to-market
election were made, the rules set forth in the second preceding
paragraph would not apply for periods covered by the election. A
mark-to-market election will not apply during any later taxable
year in which the company does not satisfy the tests to be a PFIC.
In general, the Common Shares will be marketable stock if the
Common Shares are traded, other than in de minimis quantities, on
at least 15 days during each calendar quarter on a national
securities exchange that is registered with the SEC or on a
designated national market system or on any exchange or market that
the Treasury Department determines to have rules sufficient to
ensure that the market price accurately represents the fair market
value of the stock. Under current law, the mark-to-market election
may be available to U.S. Holders of Common Shares because the
Common Shares are listed on the Nasdaq Capital Market, which should
constitute a qualified exchange for this purpose, although there
can be no assurance that the Common Shares will be “regularly
traded” for purposes of the mark-to-market
election.
If we
are treated as a PFIC, each U.S. Holder generally will be required
to file a separate annual information return with the IRS with
respect to the company (and any lower-tier PFICs). A failure to
file this return will suspend the statute of limitations with
respect to any tax return, event, or period to which such report
relates (potentially including with respect to items that do not
relate to a U.S. Holder’s investment in the Common Shares).
Given the complexities of the PFIC rules and their potentially
adverse tax consequences, U.S. Holders of Common Shares are urged
to consult their tax advisers about the PFIC rules.
Medicare Surtax on Net Investment Income
Non-corporate
U.S. Holders whose income exceeds certain thresholds generally will
be subject to 3.8% surtax on their “net investment
income” (which generally includes, among other things,
dividends on, and capital gain from the sale or other taxable
disposition of, the Common Shares). Absent an election to the
contrary, if a QEF election is available and made, QEF inclusions
will not be included in net investment income at the time a U.S.
Holder includes such amounts in income, but rather will be included
at the time distributions are received or gains are recognized.
Non-corporate U.S. Holders should consult their own tax advisors
regarding the possible effect of such tax on their ownership and
disposition of the Common Shares, in particular the applicability
of this surtax with respect to a non-corporate U.S. Holder that
makes a QEF or mark-to-market election in respect of their Common
Shares.
Information Reporting and Backup Withholding
Dividends
paid on, and proceeds from the sale or other disposition of, Common
Shares to a U.S. Holder generally will be subject to information
reporting requirements and may be subject to backup withholding
unless the U.S. Holder provides an accurate taxpayer identification
number or otherwise establishes an exemption. The amount of any
backup withholding collected from a payment to a U.S. Holder will
be allowed as a credit against the U.S. Holder’s U.S. federal
income tax liability and may entitle the U.S. Holder to a refund,
provided certain required information is furnished to the Internal
Revenue Service on a timely basis. A non-U.S. Holder generally will
be exempt from these information reporting requirements and backup
withholding tax but may be required to comply with certain
certification and identification procedures in order to establish
its eligibility for exemption.
Under
U.S. federal income tax law and U.S. Treasury Regulations, certain
categories of U.S. Holders must file information returns with
respect to their investment in, or involvement in, a foreign
corporation. U.S. Holders are urged to consult with their own tax
advisors concerning such reporting requirements.
Reporting Obligations of Individual Owners of Foreign Financial
Assets
Section
6038D of the U.S. Internal Revenue Code generally requires U.S.
individuals (and possibly certain entities that have U.S.
individual owners) to file IRS Form 8938 if they hold certain
“specified foreign financial assets,” the aggregate
value of which exceeds $50,000 on the last day of the year or
$75,000 at any time during the year. The definition of specified
foreign financial assets includes not only financial accounts
maintained in foreign financial institutions, but also, unless held
in accounts maintained by a financial institution, any stock or
security issued by a non-US. person, any financial instrument or
contract held for investment that has an issuer or counterparty
other than a U.S. person and any interest in a foreign entity.
Persons who are required to report foreign financial assets and
fail to do so may be subject to substantial penalties.
Foreign Account Tax Compliance Act
Under
certain circumstances, the company or its paying agent may be
required, pursuant to the Foreign Account Tax Compliance Act and
the regulations promulgated thereunder (“FATCA”), to
withhold U.S. tax at a rate of 30% on all or a portion of payments
of dividends or other corporate distributions to U.S. Holders which
are treated as “foreign pass-thru payments” made on or
after the date that is two years after the issuance of final
treasury regulations providing a definition of foreign pass-thru
payments are published, if such payments are not in compliance with
FATCA. Such regulations have not yet been issued. The rules
regarding FATCA and “foreign pass-thru payments,
“including the treatment of proceeds from the disposition of
the Ordinary Shares, are not completely clear, and further guidance
is expected from the IRS that would clarify how FATCA might apply
to dividends or other amounts paid on or with respect to the Common
Shares.
Canadian Federal Income Tax Consequences
The
following summary of the material Canadian federal income tax
consequences is stated in general terms and is not intended to be
legal or tax advice to any particular shareholder. Each shareholder
or prospective shareholder is urged to consult his or her own tax
advisor regarding the tax consequences of his or her purchase,
ownership and disposition of Common Shares. The tax consequences to
any particular holder of Common Shares will vary according to the
status of that holder as an individual, trust, corporation or
member of a partnership, the jurisdiction in which that holder is
subject to taxation, the place where that holder is resident and,
generally, according to that holder’s particular
circumstances.
This
summary is applicable only to holders who are resident in the
United States for income tax purposes, have never been resident in
Canada for income tax purposes, deal at arm’s length with the
company, hold their Common Shares as capital property and who will
not use or hold the Common Shares in carrying on business in
Canada. Special rules, which are not discussed in this summary, may
apply to a holder that is an insurer carrying on an insurance
business in Canada and elsewhere. Such holders should consult their
own tax advisors.
This
summary is based upon the provisions of the Income Tax Act (Canada) and the
regulations thereunder (collectively, the Tax Act or ITA) and the
Canada-United States Tax
Convention (1980) as amended (the Tax Convention) at the
date of this prospectus and the current administrative practices of
the Canada Revenue Agency. This summary does not take into account
provincial income tax consequences. The comments in this summary
that are based on the Tax Convention are applicable to U.S. Holders
only if they qualify for benefits under the Tax Convention.
Management urges holders to consult their own tax advisor with
respect to the income tax consequences applicable to them based on
their own particular circumstances.
Non-Resident Holders
The
summary below is restricted to the case of a holder (a Holder) of
one or more Common Shares who for the purposes of the Tax Act is a
non- resident of Canada, holds the Common Shares as capital
property and deals at arm’s length with the
company.
Dividends
A
Holder will be subject to Canadian withholding tax (Part XIII Tax)
equal to 25%, or such lower rates as may be available under an
applicable tax treaty, of the gross amount of any dividend paid or
credited or deemed to be paid or credited to the Holder on the
Common Shares. For example, under the Tax Convention, where
dividends on the Common Shares are considered to be paid to a
Holder that is the beneficial owner of the dividends and is a
resident of the United States for the purposes of, and is entitled
to all the benefits of, the Tax Convention, the applicable rate of
Canadian withholding tax is generally reduced to 15%. The company
will be required to withhold the applicable amount of Part XIII Tax
from each dividend so paid and remit the withheld amount directly
to the Receiver General for Canada for the account of the
Holder.
Disposition of Common Shares
A
Holder who disposes of Common Shares will not be subject to
Canadian tax on any capital gain thereby realized unless the Common
Share constituted “taxable Canadian property” as
defined by the Tax Act and the Holder is not entitled to relief
under an applicable income tax convention between Canada and the
country in which the Holder is resident.
Provided
the Common Shares are listed on a “designated stock
exchange” (as defined in the Tax Act) (which currently
includes the NASDAQ) at the time of disposition, the Common Shares
will generally not constitute taxable Canadian property of a Holder
at that time, unless at any time during the 60-month period
immediately preceding the disposition the following two conditions
are met concurrently: (a) the Holder, persons with whom the Holder
does not deal at arm’s length, partnerships whose members
include, either directly or indirectly through one or more
partnerships, the Holder or persons who do not deal at arm’s
length with the Holder, or any combination of them, owned 25% or
more of the issued shares of any class or series of shares of the
capital stock of the company, and (b) more than 50% of the fair
market value of the Common Shares was derived directly or
indirectly, from one or any combination of real or immovable
property situated in Canada, “Canadian resource
properties”, “timber resource properties” (each
as defined in the Tax Act), and options in respect of or interests
in, or for civil law rights in, any such property (whether or not
such property exists). Notwithstanding the foregoing, a Common
Share may otherwise be deemed to be taxable Canadian property to a
Holder for purposes of the Tax Act in particular
circumstances.
Holders Resident in the United States
A
Holder who is a resident of the United States and realizes a
capital gain on a disposition of Common Shares that was taxable
Canadian property will, if qualified for benefits under the Tax
Convention, generally be exempt from Canadian tax thereon unless
(a) more than 50% of the value of the Common Shares is derived
from, or from an interest in, real property situated in Canada
which generally includes certain Canadian natural resource
properties, (b) the Common Shares formed part of the business
property of a permanent establishment that the Holder has or had in
Canada within the 12 months preceding disposition, or (c) the
Holder is an individual who (i) was a resident of Canada at any
time within the ten years immediately preceding the disposition,
and for a total of 120 months during any period of 20 consecutive
years, preceding the disposition, (ii) owned the Common Shares when
the individual ceased to be resident in Canada, and (iii) the
Common Shares were not subject to a deemed disposition on the
Holder’s departure from Canada.
Inclusion in Taxable Income
A
Holder who is subject to Canadian tax in respect of a capital gain
realized on a disposition of Common Shares must include one half of
the capital gain (“taxable capital gain”) in computing
the Holder’s taxable income earned in Canada. The Holder may,
subject to certain limitations, deduct one half of any capital loss
(“allowable capital loss”) arising on a disposition of
taxable Canadian property from taxable capital gains realized in
the year of disposition in respect of taxable Canadian property
and, to the extent not so deductible, from such taxable capital
gains of any of the three preceding years or any subsequent
year.
Subject
to certain exceptions, a non-resident person who disposes of
taxable Canadian property must notify the Canada Revenue Agency
either before or after the disposition (within ten days of the
disposition).
We have
entered into an Equity Distribution Agreement, or the sales
agreement, with RBCCM, under which we may offer and sell
our Common Shares having an
aggregate offering price of up to $9.2 million from time to time
through RBCCM, acting as sales agent. The sales agreement has been
filed as an exhibit to a Current Report on
Form 8-K. If
authorized by us in writing, RBCCM may also purchase our Common
Shares as principal.
Upon
delivery of a placement notice to RBCCM and subject to the terms
and conditions of the sales agreement, RBCCM may offer and sell
our Common Shares by any method
permitted by law deemed to be an "at the market offering," as
defined in Rule 415(a)(4) promulgated under the Securities
Act. We may instruct RBCCM not to sell our Common Shares if the
sales cannot be effected at or above the price designated by us
from time to time. We or RBCCM may suspend the offering of our
Common Shares upon notice and subject to other
conditions.
RBCCM
will provide to us written confirmation following the close of
trading on the Nasdaq Capital Market each day on which our Common
Shares are sold under the sales agreement. Each confirmation will
include the number of Common Shares sold on such day, the net
proceeds to the Company, and the compensation payable by us to
RBCCM with respect to such sales.
We will
pay RBCCM commissions for its services in acting as sales agent in
the sale of our Common Shares.
RBCCM is entitled to compensation at a commission rate of 3.5% of
the gross sales price per share sold by RBCCM under the sales
agreement. Because there is no minimum offering amount required as
a condition to close this offering, the actual total public
offering amount, commissions and proceeds to us, if any, are not
determinable at this time. We have agreed to reimburse RBCCM for
certain of its expenses.
Settlement
for sales of our Common Shares will occur on the second business
day following the date on which any sales are made, in return for
payment of the net proceeds to us. Sales of our Common Shares as
contemplated in this prospectus supplement will be settled through
the facilities of The Depository Trust Company or by such other
means as we and RBCCM may agree upon. There is no arrangement for
funds to be received in an escrow, trust or similar
arrangement.
RBCCM
will use commercially reasonable efforts, consistent with their
sales and trading practices, to solicit offers to purchase our
Common Shares under the terms and subject to the conditions set
forth in the sales agreement. In connection with the sale of our
Common Shares on our behalf, RBCCM may be deemed to be an
"underwriter" within the meaning of the Securities Act, and the
compensation of RBCCM (and its partners, members, directors,
officers, employees and agents) may be deemed to be underwriting
commissions or discounts. We have agreed to provide indemnification
and contribution to RBCCM against certain liabilities, including
civil liabilities under the Securities Act.
The
offering of our Common Shares pursuant to the sales agreement will
terminate upon the termination of the sales agreement as permitted
therein. RBCCM and we each have the right, by giving written notice
as specified in the sales agreement, to terminate the sales
agreement in each party’s sole discretion at any
time.
RBCCM
and its respective affiliates may in the future provide various
investment banking, commercial banking and other financial services
for us, our subsidiaries and our affiliates, for which services
they may in the future receive customary fees. To the extent
required by Regulation M, RBCCM will not engage in any
market-making activities involving our Common Shares while the
offering is ongoing under this prospectus supplement.
The
validity of the securities offered hereby will be passed upon for
us by Fasken Martineau DuMoulin, LLP, Toronto, Ontario, Canada
and certain
other matters related to the laws of the United States
will be
passed upon for us by Stubbs Alderton & Markiles, LLP, Sherman
Oaks, California. Foley Hoag LLP, Boston, Massachusetts is
acting as counsel for RBCCM in connection with certain legal
matters relating to the Common Shares offered by this prospectus
supplement.
The
balance sheets of Edesa Biotech, Inc. as of September 30, 2019 and
December 31, 2018 and the related consolidated statements of
operations and comprehensive loss, changes in shareholders’
equity and cash flows for the nine-month period ended September 30,
2019 and year ended December 31, 2018 incorporated in this
prospectus supplement by reference to the Annual Report on
Form 10-K for the year ended September 30, 2019 have been so incorporated in
reliance on the report of MNP LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE
INFORMATION
This prospectus supplement is part of the registration statement on
Form S-3 we filed with the SEC under the Securities Act and
does not contain all the information set forth in the registration
statement. Whenever a reference is made in this prospectus
supplement to any of our contracts, agreements or other documents,
the reference may not be complete and you should refer to the
exhibits that are a part of the registration statement or the
exhibits to the reports or other documents incorporated by
reference into this prospectus supplement for a copy of such
contract, agreement or other document. Because we are subject to
the information and reporting requirements of the Exchange Act, we
file annual, quarterly and current reports, proxy statements and
other information with the SEC. Our SEC filings are available to
the public over the Internet at the SEC’s website at
http://www.sec.gov. You may also read and copy any document we file
at the SEC’s Public Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the Public Reference
Room.
You
should rely only on the information provided in, and incorporated
by reference in, this prospectus supplement and the accompanying
prospectus and the registration statement. We have not authorized
anyone else to provide you with different information. Our
securities are not being offered in any state where the offer is
not permitted. The information contained in documents that are
incorporated by reference in this prospectus supplement is accurate
only as of the dates of those documents. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE
The
SEC allows us to incorporate by reference the information we file
with it, which means that we can disclose important information to
you by referring you to another document that we have filed
separately with the SEC. You should read the information
incorporated by reference because it is an important part of this
prospectus. We incorporate by reference the following information
or documents that we have filed with the SEC (Commission File No.
001-37619):
●
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Our Annual Transition Report on Form 10-KT for the nine-month
period ended September 30, 2019 (filed on December 12,
2019);
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●
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Our
Quarterly Reports on Form 10-Q for the quarter ended December 31,
2019, filed February 13, 2020, for the quarter ended March 31,
2020, filed May 15, 2020, for the quarter ended June 30, 2020,
filed August 12, 2020;
|
●
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Our Current Reports on Form 8-K, dated January 6, 2020 (filed on
January 6, 2020), dated January 8, 2020 (filed on January 9, 2020),
dated March 27, 2020 (filed on March 27, 2020), dated April 17,
2020 (filed on April 23, 2020), dated May 13, 2020 (filed on May
14, 2020) and dated September 28, 2020 (filed on September 28,
2020);
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●
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Our definitive proxy statement on Schedule 14A dated March 23, 2020
(filed March 23, 2020) as amended by Amendment No. 1 to Schedule
14A (filed on March 24, 2020); and
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●
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The
description of our Common Shares contained in our Registration
Statement on Form 8-A filed with the SEC on November 3, 2015,
including any amendment or report filed for the purpose of updating
such description.
|
Any information in any of the foregoing documents will
automatically be deemed to be modified or superseded to the extent
that information in this prospectus supplement or in a later filed
document that is incorporated or deemed to be incorporated herein
by reference modifies or replaces such information.
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, including all such
reports filed after the date of this prospectus supplement until
the completion or termination of the offering of the securities
made by this prospectus supplement. Information in such future
filings updates and supplements the information provided in this
prospectus supplement. Any statements in any such future filings
will automatically 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.
We will furnish without charge to each person, including any
beneficial owner, to whom a copy of this prospectus supplement is
delivered, upon written or oral request, a copy of the documents
that have been incorporated by reference into this prospectus
supplement, including exhibits to these documents. You should
direct any requests for copies to: Investor Relations,
Edesa Biotech, Inc., 100 Spy Court,
Markham, Ontario L3R 5H6 Canada; telephone number (289)
800-9600.
PROSPECTUS
$50,000,000
Common
Shares
Preferred
Shares
Warrants
Units
From time to time, Edesa Biotech, Inc.
may offer and sell up to $50,000,000
of any combination of the securities described in this prospectus,
either individually or in combination with other securities. We may
also offer common shares upon conversion of preferred shares, or
common shares or preferred shares upon the exercise of
warrants.
We
will provide the specific terms of these offerings and securities
in one or more supplements to this prospectus. We may also
authorize one or more free writing prospectuses to be provided to
you in connection with these offerings. The prospectus supplement
and any related free writing prospectus may also add, update or
change information contained in this prospectus. You should
carefully read this prospectus, the applicable prospectus
supplement and any related free writing prospectus, as well as any
documents incorporated by reference, before buying any of the
securities being offered.
Our
common shares are traded on The Nasdaq Capital Market under the
symbol “EDSA.” On August 29, 2019, the last reported
sale price of our common shares on The Nasdaq Capital Market
was $3.64. The applicable prospectus supplement will contain
information, where applicable, as to other listings, if any, on The
Nasdaq Capital Market or other securities exchange of the
securities covered by the applicable prospectus
supplement.
Investing in our securities involves risks. You should review
carefully the risks and uncertainties described under the heading
“Risk Factors” contained in the applicable prospectus
supplement and any related free writing prospectus, and under
similar headings in the other documents that are incorporated by
reference into this prospectus.
This
prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement.
The
securities may be sold directly by us to investors, through agents
designated from time to time or to or through underwriters or
dealers, on a continuous or delayed basis. For additional
information on the methods of sale, you should refer to the section
titled “Plan of Distribution” in this prospectus. If
any agents or underwriters are involved in the sale of any
securities with respect to which this prospectus is being
delivered, the names of such agents or underwriters and any
applicable fees, commissions, discounts and over-allotment options
will be set forth in a prospectus supplement. The price to the
public of such securities and the net proceeds we expect to receive
from such sale will also be set forth in a prospectus
supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is September 12, 2019
.
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______________
You
should rely only on the information that we have provided or
incorporated by reference in this prospectus, any applicable
prospectus supplement and any related free writing prospectus that
we may authorize to be provided to you. We have not authorized
anyone to provide you with different information. No dealer,
salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus, any
applicable prospectus supplement or any related free writing
prospectus that we may authorize to be provided to you. You must
not rely on any unauthorized information or representation. This
prospectus is an offer to sell only the securities offered hereby,
but only under circumstances and in jurisdictions where it is
lawful to do so. You should assume that the information in this
prospectus, any applicable prospectus supplement or any related
free writing prospectus is accurate only as of the date on the
front of the document and that any information we have incorporated
by reference is accurate only as of the date of the document
incorporated by reference, regardless of the time of delivery of
this prospectus, any applicable prospectus supplement or any
related free writing prospectus, or any sale of a
security.
This
prospectus is part of a registration statement on Form S-3
that we filed with the Securities and Exchange Commission utilizing
a “shelf” registration process. Under this shelf
registration process, we may offer our common shares and preferred
shares and/or warrants to purchase any of such securities, either
individually or in combination with other securities in one or more
offerings, up to a total dollar amount of $50,000,000. This
prospectus provides you with a general description of the
securities we may offer.
Each
time we offer a type or series of securities under this prospectus,
we will provide a prospectus supplement that will contain more
specific information about the terms of those securities. We may
also authorize one or more free writing prospectuses to be provided
to you that may contain material information relating to these
offerings. We may also add, update or change in the prospectus
supplement (and in any related free writing prospectus that we may
authorize to be provided to you) any of the information contained
in this prospectus or in the documents that we have incorporated by
reference into this prospectus. We urge you to carefully read this
prospectus, any applicable prospectus supplement and any related
free writing prospectus, together with the information incorporated
herein by reference as described under the heading
“Incorporation of Certain Information by Reference,”
before buying any of the securities being offered.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES
UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The
information appearing in this prospectus, any applicable prospectus
supplement or any related free writing prospectus is accurate only
as of the date on the front of the document and any information we
have incorporated by reference is accurate only as of the date of
the document incorporated by reference, regardless of the time of
delivery of this prospectus, any applicable prospectus supplement
or any related free writing prospectus, or any sale of a security.
Our business, financial condition, results of operations and
prospects may have changed since those dates.
This
prospectus contains summaries of certain provisions contained in
some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of
some of the documents referred to herein have been filed, will be
filed or will be incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under the
heading “Where You Can Find More
Information.”
This
prospectus and the information incorporated herein by reference
include trademarks, services marks and trade names owned by us or
other companies. All trademarks, service marks and trade names
included or incorporated by reference into this prospectus, any
applicable prospectus supplement or any related free writing
prospectuses are the property of their respective
owners.
Unless
the context otherwise requires, the terms “we,”
“our,” “us,” “our company,” and
“Edesa” refer to Edesa Biotech, Inc. and its
subsidiaries.
Edesa
Biotech, Inc. is a biopharmaceutical company focused on acquiring,
developing and commercializing innovative drugs for dermatological
and gastrointestinal indications with clear unmet medical needs.
Our lead product candidate, referred to as “EB01,” is a
novel soluble phospholipase A2 (“sPLA2”) inhibitor
for the topical treatment of chronic allergic contact dermatitis
(“ACD”). EB01 employs a novel mechanism of action and
in two clinical studies has demonstrated statistically significant
improvement of multiple symptoms in contact dermatitis
patients. The company’s IND application for EB01 was accepted
by the U.S. Food and Drug Administration (FDA) in November 2018 and
we are planning to initiate a Phase 2B clinical study evaluating
EB01 in the third calendar quarter of 2019.
We also
intend to expand the utility of our sPLA2 inhibitor
technology, which forms the basis for EB01, across multiple
indications, which could include other inflammatory disorders. For
example, “EB02” is a sPLA2 inhibitor for the
potential treatment of hemorrhoids, and we are planning to evaluate
EB02 in a proof-of-concept study beginning in the second half of
2019. In addition to EB01 and EB02, we have licensed technology to
treat other indications and are in discussions with third parties
to expand our portfolio with assets to treat other serious skin and
gastrointestinal conditions.
Our
business strategy is to develop and commercialize innovative drug
products that address unmet medical needs for large, underserved
markets with limited competition. Key elements of our strategy
include:
·
Establish EB01 as the leading treatment for chronic ACD. Our
primary goal is to obtain regulatory approval for EB01 and
commercialize EB01 for use in the treatment of ACD. The utility of
EB01 in treatment of ACD has been demonstrated in two proof of
concept clinical studies. Based on these promising clinical trial
results, we plan to initiate a Phase 2B clinical study evaluating
EB01 for treatment of chronic ACD. We expect the first patient to
be enrolled in the study in the third calendar quarter of
2019.
·
Selectively targeting additional indications within the areas of
dermatology and gastroenterology. In addition to our ACD
program, we plan to efficiently generate proof-of-concept data for
other programs where the inhibition of sPLA2 may have a therapeutic
benefit. For example, EB02, a therapeutic expansion of EB01, is
indicated for hemorrhoids, and we are currently planning to
evaluate EB02 in a proof-of-concept study beginning in the second
half of 2019. We believe there are other indications where the
inhibition of sPLA2 activity may result in clinical benefit to
patients.
·
In-license promising product candidates . We are applying
our cost-effective development approach to advance and expand our
pipeline. The company’s current product candidates are
in-licensed from academic institutions or other pharmaceutical
companies, and we plan to continue to evaluate and in-license
assets and technology that can drive long-term growth potential.
Edesa does not currently intend to invest significant capital in
basic research, which can be expensive and
time-consuming.
·
Capture the full commercial potential of our product
candidates. If our product candidates are successfully
developed and approved, we may build commercial infrastructure
capable of directly marketing the products in North America and
potentially other major geographies of strategic interest. We also
plans to evaluate strategic licensing arrangements with
pharmaceutical companies for the commercialization of our drugs,
where applicable, such as in territories where a partner may
contribute additional resources, infrastructure and
expertise.
We were
incorporated in Canada in 2007 and we operate through our
wholly-owned subsidiaries, Edesa Biotech Research, Inc., an Ontario
corporation incorporated in 2015, formerly known as Edesa Biotech
Inc., which we acquired on June 7, 2019, and Stellar
Biotechnologies, Inc., a California corporation organized September
9, 1999 and acquired on April 12, 2010. Our common shares are
traded on The Nasdaq Capital Market under the symbol
“EDSA”. Our executive offices are located at 100 Spy
Court, Markham, Ontario L3R 5H6 Canada and our telephone number at
this location is (905) 475-1234. Our website address is
www.edesabiotech.com. The information contained on, or that can be
accessed through, our website is not a part of this prospectus. Our
trademarks and trade names include, but may not be limited to,
“Edesa Biotech,” and the Edesa logo.
Investing in our
securities involves a high degree of risk. Before deciding whether
to invest in our securities, you should consider carefully the
risks and uncertainties described under the heading “Risk
Factors” contained in the applicable prospectus supplement
and any related free writing prospectus, and discussed under the
section titled “Risk Factors” contained in our most
recent Annual Report on Form 10-K and in our most recent Quarterly
Report on Form 10-Q, as well as any amendments thereto reflected in
subsequent filings with the SEC, which are incorporated by
reference into this prospectus in their entirety, together with
other information in this prospectus, the documents incorporated by
reference, including our Definitive
Proxy Statement on Schedule 14A filed with the SEC on April 18,
2019, and any free writing prospectus that we may authorize
for use in connection with a specific offering. The risks described
in these documents are not the only ones we face, but those that we
consider to be material. There may be other unknown or
unpredictable economic, business, competitive, regulatory or other
factors that could have material adverse effects on our future
results. Past financial performance may not be a reliable indicator
of future performance, and historical trends should not be used to
anticipate results or trends in future periods. If any of these
risks actually occurs, our business, financial condition, results
of operations or cash flow could be seriously harmed. This could
cause the trading price of our securities to decline, resulting in
a loss of all or part of your investment. Please also read
carefully the section below titled “Forward-Looking
Statements.”
FORWARD-LOOKING
STATEMENTS
This
prospectus and the documents incorporated by reference contain
forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, or Securities Act, and
Section 21E of the Securities Exchange Act of 1934, or
Exchange Act. These statements involve known and unknown risks,
uncertainties and other important factors that 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. These forward looking
statements include, but are not limited to, those concerning the
following:
●
the
scope, number, progress, duration, cost, results and timing of
clinical trials and nonclinical studies of our current or future
product candidates;
●
our
ability to raise sufficient funds to support the development and
potential commercialization of our product candidates;
●
the
outcomes and timing of regulatory reviews, approvals or other
actions;
●
our
ability to obtain marketing approval for our product candidates and
otherwise execute our business plan;
●
our
ability to establish and maintain licensing, collaboration or
similar arrangements on favorable terms and whether and to what
extent we retain development or commercialization responsibilities
under any new licensing, collaboration or similar
arrangement;
●
the
success of any other business, product or technology that we
acquire or in which we invest;
●
our
ability to maintain, expand and defend the scope of our
intellectual property portfolio;
●
our
ability to manufacture any approved products on commercially
reasonable terms;
●
our
ability to establish a sales and marketing organization or suitable
third-party alternatives for any approved product;
●
the
number and characteristics of product candidates and programs that
we pursue;
●
the
attraction and retention of qualified employees and
personnel;
●
future
acquisitions or investments in complementary companies or
technologies; and
●
our
ability to comply with evolving legal standards and regulations
pertaining to our industry.
In
some cases, you can identify forward-looking statements by terms
such as “anticipates,” “believes”,
“could”, “estimates”,
“expects”, “intends”, “may”,
“plans”, “potential”,
“predicts”, “projects”,
“should”, “will”, “would” as
well as similar expressions. Forward-looking statements reflect our
current views with respect to future events, are based on
assumptions and are subject to risks, uncertainties and other
important factors. We discuss many of these risks, uncertainties
and other important factors in greater detail under the heading
“Risk Factors” contained in the applicable prospectus
supplement and any related free writing prospectus, and in our most
recent annual report on Form 10-K and in our most recent
quarterly report on Form 10-Q, as well as any amendments
thereto reflected in subsequent filings with the SEC. Given these
risks, uncertainties and other important factors, you should not
place undue reliance on these forward-looking statements. Also,
these forward-looking statements represent our estimates and
assumptions only as of the date such forward-looking statements are
made. Except as required by law, we assume no obligation to update
any forward-looking statements publicly, or to reflect facts and
circumstances after the date of this prospectus. Before deciding to
purchase our securities, you should carefully read both this
prospectus, the applicable prospectus supplement and any related
free writing prospectus, together with the information incorporated
herein by reference as described under the heading
“Incorporation of Certain Information by Reference,”
completely and with the understanding that our actual future
results may be materially different from what we
expect.
THE SECURITIES WE MAY
OFFER
We
may offer our common shares and preferred shares and/or warrants to
purchase any of such securities, either individually or in
combination with other securities, with a total value of up to
$50,000,000 from time to time under this prospectus, together with
the applicable prospectus supplement and any related free writing
prospectus, at prices and on terms to be determined by market
conditions at the time of any offering. We may also offer common
shares and/or preferred shares upon the exercise of warrants. This
prospectus provides you with a general description of the
securities we may offer. Each time we offer a type or series of
securities under this prospectus, we will provide a prospectus
supplement that will describe the specific amounts, prices and
other important terms of the securities, including, to the extent
applicable:
●
designation
or classification;
●
aggregate
offering price;
●
rates
and times of payment of dividends, if any;
●
redemption,
conversion, exercise, exchange or sinking fund terms, if
any;
●
restrictive
covenants, if any;
●
voting
or other rights, if any;
●
conversion
prices, if any; and
●
important
Canadian and/or United States federal income tax
considerations.
The
prospectus supplement and any related free writing prospectus that
we may authorize to be provided to you may also add, update or
change information contained in this prospectus or in documents we
have incorporated by reference. However, no prospectus supplement
or free writing prospectus will offer a security that is not
registered and described in this prospectus at the time of the
effectiveness of the registration statement of which this
prospectus is a part.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES
UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
We
may sell the securities directly to investors or to or through
agents, underwriters or dealers. We, and our agents or
underwriters, reserve the right to accept or reject all or part of
any proposed purchase of securities. If we do offer securities to
or through agents or underwriters, we will include in the
applicable prospectus supplement:
●
the
names of those agents or underwriters;
●
applicable
fees, discounts and commissions to be paid to them;
●
details
regarding over-allotment options, if any; and
●
the
net proceeds to us.
Common
Shares. We may issue our common
shares from time to time. The holders of our common shares are
entitled to one vote for each share held of record on all matters
submitted to a vote of shareholders. Subject to preferences that
may be applicable to any of our outstanding preferred shares, the
holders of our common shares are entitled to receive ratably such
dividends as may be declared by our board of directors out of
legally available funds. Upon our liquidation, dissolution or
winding up, holders of our common shares are entitled to share
ratably in all assets legally available for distribution to
shareholders remaining after payment of liabilities and the
liquidation preferences of any outstanding preferred shares.
Holders of common shares have no preemptive rights and no right to
convert their common shares into any other securities. There are no
redemption or sinking fund provisions applicable to our common
shares. When we issue common shares under this prospectus, the
shares will be fully paid and non-assessable. The rights,
preferences and privileges of the holders of common shares are
subject to, and may be adversely affected by, the rights of the
holders of any series of preferred shares which we may designate in
the future. In this prospectus, we have summarized certain general
features of the common shares under “Description of Capital
Stock—Common Shares.” We urge you, however, to read the
applicable prospectus supplement (and any related free writing
prospectus that we may authorize to be provided to you) related to
any common shares being offered.
Preferred
Shares. We may issue preferred
shares from time to time, in one or more series. The board of
directors has the authority to approve the issuance of any number
of preferred shares in one or more series at any time and from time
to time, to determine the number of shares constituting any series,
and to determine any voting powers, conversion rights, dividend
rights, and other designations, preferences, limitations,
restrictions and rights relating to such shares without any further
prior approval of the shareholders. Convertible preferred shares
can be convertible into our common shares or exchangeable for our
other securities. Conversion may be mandatory or at a
shareholder’s option and would be at prescribed conversion
rates. Upon any such issuance, the designations, preferences,
limitations, restrictions and rights of any series of preferred
shares designated by the board of directors will be set forth in an
alteration to the Articles and a further Notice of Alteration to
the Notice of Articles of the Company will be filed in accordance
with British Columbia law.
If
we sell any series of preferred shares under this prospectus, we
will file as an exhibit to the registration statement of which this
prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, the alteration to the Articles and a
Notice of Alteration to the Notice of Articles of the Company filed
in accordance with British Columbia law which shall set forth the
designations, preferences, limitations, restrictions and rights of
any series of preferred shares designated by the board of
directors.
In
this prospectus, we have summarized certain general features of the
preferred shares under “Description of Capital
Stock—Preferred Shares.” We urge you, however, to read
the applicable prospectus supplement (and any free writing
prospectus that we may authorize to be provided to you) related to
the series of preferred shares being offered which will contain the
terms of the applicable series of preferred shares.
Warrants. We may issue warrants for the purchase of common
shares and/or preferred shares in one or more series. We may issue
warrants independently or in combination with common shares and/or
preferred shares. In this prospectus, we have summarized certain
general features of the warrants under “Description of
Warrants.” We urge you, however, to read the applicable
prospectus supplement (and any related free writing prospectus that
we may authorize to be provided to you) related to the particular
series of warrants being offered, as well as the form of warrant
and/or the warrant agreement and warrant certificate, as
applicable, that contain the terms of the warrants. We will file as
exhibits to the registration statement of which this prospectus is
a part, or will incorporate by reference from reports that we file
with the SEC, the form of warrant and/or the warrant agreement and
warrant certificate, as applicable, that contain the terms of the
particular series of warrants we are offering, and any supplemental
agreements, before the issuance of such
warrants.
Warrants
may be issued under a warrant agreement that we enter into with a
warrant agent. We will indicate the name and address of the warrant
agent, if any, in the applicable prospectus supplement relating to
a particular series of warrants.
Units. We may issue units consisting of common shares,
preferred shares and/or warrants to purchase any of such securities
in one or more series. In this prospectus, we have summarized
certain general features of the units under “Description of
Units.” We urge you, however, to read the prospectus
supplements and any free writing prospectus that we may authorize
to be provided to you related to the series of units being offered,
as well as the unit agreements that contain the terms of the units.
We will file as exhibits to the registration statement of which
this prospectus is a part, or will incorporate by reference from a
current report on Form 8-K that we file with the SEC, the form of
unit agreement and any supplemental agreements that describe the
terms of the series of units we are offering before the issuance of
such units.
Unless
otherwise provided in the applicable prospectus supplement or in
any related free writing prospectus that we may authorize to be
provided to you, we intend to use the net proceeds from the sale of
the securities offered hereby for general corporate purposes,
including capital expenditures, research and development, and
working capital. We may use a portion of our net proceeds to
in-license, acquire or invest in complementary businesses,
technologies, products or assets. However, we have no current
commitments or obligations to do so. We may set forth additional
information on the use of proceeds from the sale or the securities
we offer under this prospectus in a prospectus supplement relating
to the specific offering or in any related free writing prospectus
that we may authorize to be provided to you. We cannot currently
allocate specific percentages of the net proceeds that we may use
for the purposes specified above. As a result, our management will
have broad discretion in the allocation of the net proceeds.
Pending the application of the net proceeds, we intend to invest
the net proceeds in short- and intermediate-term, interest-bearing
obligations, investment-grade instruments, certificates of deposit
or direct or guaranteed obligations of the U.S.
government.
DESCRIPTION OF CAPITAL
STOCK
We are authorized to issue an unlimited number of
common shares and preferred shares, no par value.
As of August 29, 2019, there were
7,504,468 common shares outstanding and no preferred shares
outstanding.
The following summary description of our capital
shares is based on the provisions of our Notice of Articles and
Articles. This information is qualified entirely by reference to
the applicable provisions of our Articles and the British
Columbia Business Corporations
Act. For information on how to
obtain copies of our Notice of Articles and Articles, which are
exhibits to the registration statement of which this prospectus is
a part, see “Where You Can Find More
Information.”
Common Shares
The
holders of our common shares are entitled to one vote for each
share held of record on all matters submitted to a vote of the
shareholders. Our shareholders do not have cumulative voting rights
in the election of directors. Subject to preferences that may be
applicable to any outstanding preferred shares, the holders of
common shares are entitled to receive ratably only those dividends
as may be declared by our board of directors out of legally
available funds. Upon our liquidation, dissolution or winding up,
holders of our common shares are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation
preferences of any outstanding preferred shares. Holders of common
shares have no preemptive or other subscription or conversion
rights. There are no redemption or sinking fund provisions
applicable to our common shares. Common shares outstanding, and to
be issued, are, and will be, fully paid and non-assessable.
Additional shares of authorized common shares may be issued, as
authorized by our board of directors from time to time, without
shareholder approval, except as may be required by applicable stock
exchange requirements.
Preferred Shares
Pursuant to our Notice of Articles and Articles,
and the provisions of the British Columbia Business Corporations
Act, our board of directors has the
authority, without further action by the shareholders (unless such
shareholder action is required by applicable law or the rules of
The Nasdaq Stock Market), to designate and issue an unlimited
number of preferred shares in one of more series, to establish from
time to time the number of shares to be included in each such
series, to fix the designations, powers, preferences and rights of
the shares of each wholly unissued series, and any qualifications,
limitations or restrictions thereon, and to increase or decrease
the number of shares of any such series, but not below the number
of shares of such series then outstanding. Preferred shares, if
issued, will be fully paid and non-assessable.
The
board of directors’ authority to determine the terms of any
such preferred shares include, without limitation: (i) the
designation of each series and the number of preferred shares that
will constitute each such series; (ii) the dividend rate or amount,
if any, for each series; (iii) the price at which, and the terms
and conditions on which, the preferred shares of each series may be
redeemed, if such shares are redeemable; (iv) the terms and
conditions, if any, upon which preferred shares of such series may
be converted into shares of other classes or series of shares of
the Company, or other securities; and (v) the maturity date, if
any, for each such series; but no such special rights or
restriction shall contravene any other provision of Part 26 of the
Articles of the Company.
We
will file as an exhibit to the registration statement of which this
prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, a Notice of Alteration to the Notice of
Articles of the Company, which will be filed in accordance with
British Columbia law and which shall describe the designations,
preferences, limitations, restrictions and rights of the series of
preferred shares that we are offering before the issuance of that
series of preferred shares. This description will
include:
●
the
title and stated value;
●
the
number of shares we are offering;
●
the
liquidation preference per share;
●
the
rate and amount of dividends (whether cumulative, non-cumulative or
partially cumulative), the dates and places of payment
thereof;
●
the
consideration for, and the terms and conditions of, any purchase
for cancellation or redemption thereof (including redemption after
a fixed term or at a premium);
●
the
conversion or exchange rights;
●
the
terms and conditions of any share purchase plan or sinking
fund;
●
the
restrictions respecting payment of dividends on, or the repayment
of capital in respect of, any other share of the
Company;
●
the
voting rights and restrictions, if any;
●
any
listing of the preferred shares on any securities exchange or
market;
●
whether
the preferred shares will be convertible into our common shares,
and, if applicable, the conversion price, or how it will be
calculated, and the conversion period;
●
preemptive
rights, if any;
●
restrictions
on transfer, sale or other assignment, if any;
●
whether
interests in the preferred shares will be represented by depositary
shares;
●
a
discussion of any material Canadian or United States federal income
tax considerations applicable to the preferred shares;
●
the
relative ranking and preferences of the preferred shares as to
dividend rights and rights if we liquidate, dissolve or wind up our
affairs;
●
any
limitations on the issuance of any class or series of preferred
shares ranking senior to or on a parity with the series of
preferred shares as to dividend rights and rights if we liquidate,
dissolve or wind up our affairs; and
●
any
other specific terms, preferences, rights or limitations of, or
restrictions on, the preferred shares.
The issuance of preferred shares may or may
not have a dilutive effect on the voting rights of shareholders
owning common shares, depending on the rights and preferences set
by the board of directors. Preferred shares may be issued quickly
with terms designed to delay or prevent a change in control of our
company or make removal of management more difficult. However,
except for such rights relating to the election of directors on a
default in payment of dividends as may be attached to any series of
the preferred shares by the board of directors or in connection
with convertible preferred shares, the holders of preferred shares
shall not be entitled, as such, to receive notice of, or to attend
or vote at, any general meeting of shareholders of the Company.
Section 61 of the British Columbia Business
Corporations Act provides that
the special rights attached to preferred shares may not be
prejudiced or interfered with unless the shareholders holding such
class of shares consent to such matter by a special resolution of
such holders of preferred shares. Additionally, the issuance of
preferred shares may have the effect of decreasing the market price
of our common shares.
CERTAIN
PROVISIONS OF OUR CHARTER DOCUMENTS AND BRITISH COLUMBIA
LAW
Anti-takeover Provisions of our Articles of
Incorporation
In
addition to the board of directors’ ability to issue
preferred shares, our Articles, as amended, contain other
provisions that are intended to enhance the likelihood of
continuity and stability in the composition of our board of
directors and which may have the effect of delaying, deferring or
preventing a future takeover or change in control of our Company
unless such takeover or change in control is approved by our board
of directors. These provisions include advance notice procedures
for shareholder proposals and a supermajority vote requirement for
business combinations.
Advance Notice Procedures for Shareholder Proposals
Effective October
31, 2013, our board of directors adopted an advance notice policy
(the “Advance Notice Policy”) with immediate effect for
the purpose of providing our shareholders, directors and management
with a clear framework for nominating our directors in connection
with any annual or special meeting of shareholders. The Advance
Notice Policy was approved by the shareholders at our annual
meeting on February 13, 2014.
Purpose of the Advance Notice Policy.
Our directors are committed to: (i) facilitating an orderly and
efficient annual general or, where the need arises, special
meeting, process; (ii) ensuring that all shareholders receive
adequate notice of the director nominations and sufficient
information with respect to all nominees; and (iii) allowing
shareholders to register an informed vote having been afforded
reasonable time for appropriate deliberation. The purpose of the
Advance Notice Policy is to provide our shareholders, directors and
management with a clear framework for nominating directors. The
Advance Notice Policy fixes a deadline by which holders of record
of our common shares must submit director nominations to the
Company prior to any annual or special meeting of shareholders and
sets forth the information that a shareholder must include in the
notice to the Company for the notice to be in proper written form
in order for any director nominee to be eligible for election at
any annual or special meeting of shareholders.
Terms of the Advance Notice Policy. The
Advance Notice Policy provides that advance notice to the Company
must be made in circumstances where nominations of persons for
election to our board of directors are made by shareholders of the
Company other than pursuant to: (i) a "proposal" made in accordance
with Division 7 of Part 5 of the British Columbia Business
Corporations Act, or the Act; or (ii) a requisition of the
shareholders made in accordance with section 167 of the Act. Among
other things, the Advance Notice Policy fixes a deadline by which
holders of record of our common shares must submit director
nominations to the secretary of the Company prior to any annual or
special meeting of shareholders and sets forth the specific
information that a shareholder must include in the written notice
to the secretary of the Company for an effective nomination to
occur. No person will be eligible for election as a director of the
Company unless nominated in accordance with the provisions of the
Advance Notice Policy.
In the
case of an annual meeting of shareholders, notice to the Company
must be made not less than 30 nor more than 65 days prior to the
date of the annual meeting; provided, however, that in the event
that the annual meeting is to be held on a date that is less than
50 days after the date on which the first public announcement of
the date of the annual meeting was made, notice may be made not
later than the close of business on the 10th day following such
public announcement.
In the
case of a special meeting of shareholders (which is not also an
annual meeting), notice to the Company must be made not later than
the close of business on the 15th day following the day on which
the first public announcement of the date of the special meeting
was made.
Our
board of directors may, in its sole discretion, waive any
requirement of the Advance Notice Policy.
Provisions of British Columbia Law Governing Business
Combinations
All
provinces of Canada have adopted National Instrument 62-104
entitled “Take-Over Bids and
Issuer Bids” and related forms to harmonize and
consolidate take-over bid and issuer bid regimes nationally
(“NI 62-104”). The Canadian Securities Administrators,
or CSA, have also issued National Policy 62-203 entitled
“Take-Over Bids and Issuer
Bids” (the “National Policy”) which
contains regulatory guidance on the interpretation and application
of NI 62-104 and on the conduct of parties involved in a bid. The
National Policy and NI 62-104 are collectively referred to as the
“Bid Regime.” The National Policy does not have the
force of law, but is an indication by the CSA of what the
intentions and desires of the regulators are in the areas covered
by their policies. Unlike some regimes where the take-over bid
rules are primarily policy-driven, in Canada the regulatory
framework for take-over bids is primarily rules-based, which rules
are supported by policy.
A
“take-over bid” or “bid” is an offer to
acquire outstanding voting or equity securities of a class made to
any person who is in one of the provinces of Canada or to any
securityholder of an offeree issuer whose last address as shown on
the books of a target is in such province, where the securities
subject to the offer to acquire, together with the securities
“beneficially owned” by the offeror, constitute in the
aggregate 20% or more of the outstanding securities of that class
of securities at the date of the offer to acquire. For the purposes
of the Bid Regime, a security is deemed to be “beneficially
owned” by an offeror as of a specific date if the offeror is
the beneficial owner of a security convertible into the security
within 60 days following that date, or has a right or obligation
permitting or requiring the offeror, whether or not on conditions,
to acquire beneficial ownership of the security within 60 days by a
single transaction or a series of linked transactions. Offerors are
also subject to early warning requirements, where an offeror who
acquires “beneficial ownership of”, or control or
direction over, voting or equity securities of any class of a
reporting issuer or securities convertible into, voting or equity
securities of any class of a target that, together with the
offeror’s securities, would constitute 10% or more of the
outstanding securities of that class must promptly publicly issue
and file a news release containing certain prescribed information,
and, within two business days, file an early warning report
containing substantially the same information as is contained in
the news release.
In
addition, where an offeror is required to file an early warning
report or a further report as described and the offeror acquires or
disposes of beneficial ownership of, or the power to exercise
control or direction over, an additional 2% or more of the
outstanding securities of the class, or disposes of beneficial
ownership of outstanding securities of the class below 10%, the
offeror must issue an additional press release and file a new early
warning report. Any material change in a previously filed early
warning report also triggers the issuance and filing of a new press
release and early warning report. During the period commencing on
the occurrence of an event in respect of which an early warning
report is required and terminating on the expiry of one business
day from the date that the early warning report is filed, the
offeror may not acquire or offer to acquire beneficial ownership of
any securities of the class in respect of which the early warning
report was required to be filed or any securities convertible into
securities of that class. This requirement does not apply to an
offeror that has beneficial ownership of, or control or direction
over, securities that comprise 20% of more of the outstanding
securities of the class.
Related
party transactions, issuer bids and insider bids are subject to
additional regulation that may differ depending on the particular
jurisdiction of Canada in which it occurs.
Transfer Agent and Registrar
The
transfer agent and registrar for our common shares is Computershare
Investor Services Inc. located at 100 University Avenue, 8th Floor,
Toronto, Ontario M5J 2Y1, and its telephone number is
1-800-564-6253. The transfer agent for any series of preferred
shares that we may offer under this prospectus will be named and
described in the prospectus supplement for that
series.
Listing on The Nasdaq Capital Market
Our
common shares are listed on The Nasdaq Capital Market under the
symbol “EDSA.”
The
following description, together with the additional information we
may include in any applicable prospectus supplement and free
writing prospectus, summarizes the material terms and provisions of
the warrants that we may offer under this prospectus, which may
consist of warrants to purchase common shares or preferred shares
and may be issued in one or more series. Warrants may be offered
independently or in combination with common shares and/or preferred
shares offered by any prospectus supplement. While the terms we
have summarized below will apply generally to any warrants that we
may offer under this prospectus, we will describe the particular
terms of any series of warrants in more detail in the applicable
prospectus supplement. The following description of warrants will
apply to the warrants offered by this prospectus unless we provide
otherwise in the applicable prospectus supplement. The applicable
prospectus supplement for a particular series of warrants may
specify different or additional terms.
We
will file as exhibits to the registration statement of which this
prospectus is a part, or will incorporate by reference from reports
that we file with the SEC, the form of warrant and/or the warrant
agreement and warrant certificate, as applicable, that contain the
terms of the particular series of warrants we are offering, and any
supplemental agreements, before the issuance of such warrants. The
following summaries of material terms and provisions of the
warrants are subject to, and qualified in their entirety by
reference to, all the provisions of the form of warrant and/or the
warrant agreement and warrant certificate, as applicable, and any
supplemental agreements applicable to a particular series of
warrants that we may offer under this prospectus. We urge you to
read the applicable prospectus supplement related to the particular
series of warrants that we may offer under this prospectus, as well
as any related free writing prospectus, and the complete form of
warrant and/or the warrant agreement and warrant certificate, as
applicable, and any supplemental agreements, that contain the terms
of the warrants.
General
We
will describe in the applicable prospectus supplement the terms of
the series of warrants being offered, including:
●
the
offering price and aggregate number of warrants
offered;
●
the
currency for which the warrants may be purchased;
●
if
applicable, the designation and terms of the securities with which
the warrants are issued and the number of warrants issued with each
such security or each principal amount of such
security;
●
in
the case of warrants to purchase common shares or preferred shares,
the number of common shares or preferred shares, as the case may
be, purchasable upon the exercise of one warrant and the price at
which these shares may be purchased upon such
exercise;
●
the
effect of any merger, consolidation, sale or other disposition of
our business on the warrant agreements and the
warrants;
●
the
terms of any rights to redeem or call the warrants;
●
any
provisions for changes to or adjustments in the exercise price or
number of securities issuable upon exercise of the
warrants;
●
the
dates on which the right to exercise the warrants will commence and
expire;
●
the
manner in which the warrant agreements and warrants may be
modified;
●
a
discussion of material or special Canadian and U.S. federal income
tax considerations, if any, of holding or exercising the
warrants;
●
the
terms of the securities issuable upon exercise of the warrants;
and
●
any
other specific terms, preferences, rights or limitations of or
restrictions on the warrants.
Before
exercising their warrants, holders of warrants will not have any of
the rights of holders of the securities purchasable upon such
exercise, including:
●
in
the case of warrants to purchase common shares or preferred shares,
the right to receive dividends, if any, or payments upon our
liquidation, dissolution or winding up or to exercise voting
rights, if any.
Exercise of Warrants
Each
warrant will entitle the holder to purchase the securities that we
specify in the applicable prospectus supplement at the exercise
price that we describe in the applicable prospectus supplement. The
warrants may be exercised as set forth in the prospectus supplement
relating to the warrants offered. Unless we otherwise specify in
the applicable prospectus supplement, warrants may be exercised at
any time up to the close of business on the expiration date set
forth in the prospectus supplement relating to the warrants offered
thereby. After the close of business on the expiration date,
unexercised warrants will become void.
Upon
receipt of payment and the warrant or warrant certificate, as
applicable, properly completed and duly executed at the corporate
trust office of the warrant agent, if any, or any other office,
including ours, indicated in the prospectus supplement, we will, as
soon as practicable, issue and deliver the securities purchasable
upon such exercise. If less than all of the warrants (or the
warrants represented by such warrant certificate) are exercised, a
new warrant or a new warrant certificate, as applicable, will be
issued for the remaining warrants.
Governing Law
Unless
we provide otherwise in the applicable prospectus supplement, the
warrants and any warrant agreements will be governed by and
construed in accordance with the laws of the Province of British
Columbia, Canada.
Enforceability of Rights by Holders of Warrants
Each
warrant agent, if any, will act solely as our agent under the
applicable warrant agreement and will not assume any obligation or
relationship of agency or trust with any holder of any warrant. A
single bank or trust company may act as warrant agent for more than
one issue of warrants. A warrant agent will have no duty or
responsibility in case of any default by us under the applicable
warrant agreement or warrant, including any duty or responsibility
to initiate any proceedings at law or otherwise, or to make any
demand upon us. Any holder of a warrant may, without the consent of
the related warrant agent or the holder of any other warrant,
enforce by appropriate legal action its right to exercise, and
receive the securities purchasable upon exercise of, its
warrants.
Outstanding Warrants
As
of August 29, 2019, there were 48,914 common shares issuable upon
exercise of outstanding warrants at a weighted-average exercise
price of $11.19 per share. The warrants may be exercised for cash
or, under certain circumstances, on a cashless basis, in which case
we will deliver, upon exercise, the number of shares with respect
to which the warrant is being exercised reduced by a number of
shares having a value (as determined in accordance with the terms
of the applicable warrant) equal to the aggregate exercise price of
the shares with respect to which the warrant is being
exercised.
The
following description, together with the additional information we
may include in any applicable prospectus supplements and free
writing prospectuses, summarizes the material terms and provisions
of the units that we may offer under this prospectus. While the
terms we have summarized below will apply generally to any units
that we may offer under this prospectus, we will describe the
particular terms of any series of units in more detail in the
applicable prospectus supplement. The terms of any units offered
under a prospectus supplement may differ from the terms described
below. However, no prospectus supplement will fundamentally change
the terms that are set forth in this prospectus or offer a security
that is not registered and described in this prospectus at the time
of its effectiveness.
We
will file as exhibits to the registration statement of which this
prospectus is a part, or will incorporate by reference from a
current report on Form 8-K that we file with the SEC, the form of
unit agreement that describes the terms of the series of units we
are offering, and any supplemental agreements, before the issuance
of the related series of units. The following summaries of material
terms and provisions of the units are subject to, and qualified in
their entirety by reference to, all the provisions of the unit
agreement and any supplemental agreements applicable to a
particular series of units. We urge you to read the applicable
prospectus supplements related to the particular series of units
that we sell under this prospectus, as well as the complete unit
agreement and any supplemental agreements that contain the terms of
the units.
General
We
will describe in the applicable prospectus supplement the terms of
the series of units being offered, including:
●
the
offering price and aggregate number of units offered;
●
the
currency for which the units may be purchased;
●
if
applicable, the designation and terms of the units and of the
securities comprising the units, including whether and under what
circumstances those securities may be held or transferred
separately;
●
a
discussion of material or special Canadian and U.S. federal income
tax considerations, if any, of holding the units; and
●
any
other specific terms, preferences, rights or limitations of or
restrictions on the units.
The
provisions described in this section, as well as those described
under “Description of Capital Stock” and
“Description of Warrants” will apply to each unit and
to any common shares, preferred shares or warrant included in each
unit, respectively.
Governing Law
Unless
we provide otherwise in the applicable prospectus supplement, the
units and any unit agreements will be governed by and construed in
accordance with the laws of the Province of British Columbia,
Canada.
Enforceability of Rights by Holders of Units
Each
unit agent, if any, will act solely as our agent under the
applicable unit agreement and will not assume any obligation or
relationship of agency or trust with any holder of any unit. A
single bank or trust company may act as unit agent for more than
one series of units. A unit agent will have no duty or
responsibility in case of any default by us under the applicable
unit agreement or unit, including any duty or responsibility to
initiate any proceedings at law or otherwise, or to make any demand
upon us. Any holder of a unit may, without the consent of the
related unit agent or the holder of any other unit, enforce by
appropriate legal action its rights as holder under any security
included in the unit.
LEGAL OWNERSHIP OF
SECURITIES
We
can issue securities in registered form or in the form of one or
more global securities. We describe global securities in greater
detail below. We refer to those persons who have securities
registered in their own names on the books that we or any
applicable trustee, depositary or warrant agent maintain for this
purpose as the “holders” of those securities. These
persons are the legal holders of the securities. We refer to those
persons who, indirectly through others, own beneficial interests in
securities that are not registered in their own names, as
“indirect holders” of those securities. As we discuss
below, indirect holders are not legal holders, and investors in
securities issued in book-entry form or in street name will be
indirect holders.
Book-Entry Holders
We
may issue securities in book-entry form only, as we will specify in
the applicable prospectus supplement. This means securities may be
represented by one or more global securities registered in the name
of a financial institution that holds them as depositary on behalf
of other financial institutions that participate in the
depositary’s book-entry system. These participating
institutions, which are referred to as participants, in turn, hold
beneficial interests in the securities on behalf of themselves or
their customers.
Only
the person in whose name a security is registered is recognized as
the holder of that security. Securities issued in global form will
be registered in the name of the depositary or its participants.
Consequently, for securities issued in global form, we will
recognize only the depositary as the holder of the securities, and
we will make all payments on the securities to the depositary. The
depositary passes along the payments it receives to its
participants, which in turn pass the payments along to their
customers who are the beneficial owners. The depositary and its
participants do so under agreements they have made with one another
or with their customers; they are not obligated to do so under the
terms of the securities.
As
a result, investors in a book-entry security will not own
securities directly. Instead, they will own beneficial interests in
a global security, through a bank, broker or other financial
institution that participates in the depositary’s book-entry
system or holds an interest through a participant. As long as the
securities are issued in global form, investors will be indirect
holders, and not holders, of the securities.
Street Name Holders
We
may terminate a global security or issue securities in non-global
form. In these cases, investors may choose to hold their securities
in their own names or in “street name.” Securities held
by an investor in street name would be registered in the name of a
bank, broker or other financial institution that the investor
chooses, and the investor would hold only a beneficial interest in
those securities through an account he or she maintains at that
institution.
For
securities held in street name, we will recognize only the
intermediary banks, brokers and other financial institutions in
whose names the securities are registered as the holders of those
securities, and we will make all payments on those securities to
them. These institutions pass along the payments they receive to
their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they
are legally required to do so. Investors who hold securities in
street name will be indirect holders, not holders, of those
securities.
Legal Holders
Our
obligations, as well as the obligations of any applicable trustee
and of any third parties employed by us or a trustee, run only to
the legal holders of the securities. We do not have obligations to
investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect holder of a security
or has no choice because we are issuing the securities only in
global form. For example, once we make a payment or give a notice
to the holder, we have no further responsibility for the payment or
notice even if that holder is required, under agreements with
depositary participants or customers or by law, to pass it along to
the indirect holders but does not do so.
Special Considerations For Indirect Holders
If
you hold securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you
should check with your own institution to find out:
●
how
it handles securities payments and notices;
●
whether
it imposes fees or charges;
●
how
it would handle a request for the holders’ consent, if ever
required;
●
whether
and how you can instruct it to send you securities registered in
your own name so you can be a holder, if that is permitted in the
future;
●
how
it would exercise rights under the securities if there were a
default or other event triggering the need for holders to act to
protect their interests; and
●
if
the securities are in book-entry form, how the depositary’s
rules and procedures will affect these matters.
Global Securities
A
global security is a security that represents one or any other
number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have
the same terms.
Each
security issued in book-entry form will be represented by a global
security that we deposit with and register in the name of a
financial institution or its nominee that we select. The financial
institution that we select for this purpose is called the
depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York,
New York, known as DTC, will be the depositary for all securities
issued in book-entry form.
A
global security may not be transferred to or registered in the name
of anyone other than the depositary, its nominee or a successor
depositary, unless special termination situations arise. We
describe those situations below under “Special Situations
When a Global Security Will Be Terminated.” As a result of
these arrangements, the depositary, or its nominee, will be the
sole registered owner and holder of all securities represented by a
global security, and investors will be permitted to own only
beneficial interests in a global security. Beneficial interests
must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the
depositary or with another institution that does. Thus, an investor
whose security is represented by a global security will not be a
holder of the security, but only an indirect holder of a beneficial
interest in the global security.
If
the prospectus supplement for a particular security indicates that
the security will be issued in global form only, then the security
will be represented by a global security at all times unless and
until the global security is terminated. If termination occurs, we
may issue the securities through another book-entry clearing system
or decide that the securities may no longer be held through any
book-entry clearing system.
Special Considerations For Global Securities
The
rights of an indirect holder relating to a global security will be
governed by the account rules of the investor’s financial
institution and of the depositary, as well as general laws relating
to securities transfers. We do not recognize an indirect holder as
a holder of securities and instead deal only with the depositary
that holds the global security.
If
securities are issued only in the form of a global security, an
investor should be aware of the following:
●
an
investor cannot cause the securities to be registered in his or her
name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we
describe below;
●
an
investor will be an indirect holder and must look to his or her own
bank or broker for payments on the securities and protection of his
or her legal rights relating to the securities, as we describe
above;
●
an
investor may not be able to sell interests in the securities to
some insurance companies and to other institutions that are
required by law to own their securities in non-book-entry
form;
●
an
investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the
securities must be delivered to the lender or other beneficiary of
the pledge in order for the pledge to be effective;
●
the
depositary’s policies, which may change from time to time,
will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in a global
security;
●
we
and any applicable trustee have no responsibility for any aspect of
the depositary’s actions or for its records of ownership
interests in a global security, nor do we or any applicable trustee
supervise the depositary in any way;
●
the
depositary may, and we understand that DTC will, require that those
who purchase and sell interests in a global security within its
book-entry system use immediately available funds, and your broker
or bank may require you to do so as well; and
●
financial
institutions that participate in the depositary’s book-entry
system, and through which an investor holds its interest in a
global security, may also have their own policies affecting
payments, notices and other matters relating to the
securities.
There
may be more than one financial intermediary in the chain of
ownership for an investor. We do not monitor and are not
responsible for the actions of any of those
intermediaries.
Special Situations When a Global Security Will Be
Terminated
In
a few special situations described below, the global security will
terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the
choice of whether to hold securities directly or in street name
will be up to the investor. Investors must consult their own banks
or brokers to find out how to have their interests in securities
transferred to their own name, so that they will be direct holders.
We have described the rights of holders and street name investors
above.
Unless
we provide otherwise in the applicable prospectus supplement, the
global security will terminate when the following special
situations occur:
●
if
the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary
within 90 days;
●
if
we notify any applicable trustee that we wish to terminate that
global security; or
●
if
an event of default has occurred with regard to securities
represented by that global security and has not been cured or
waived.
The
prospectus supplement may also list additional situations for
terminating a global security that would apply only to the
particular series of securities covered by the applicable
prospectus supplement. When a global security terminates, the
depositary, and not we or any applicable trustee, is responsible
for deciding the names of the institutions that will be the initial
direct holders.
We
may sell the securities from time to time pursuant to underwritten
public offerings, “at the market” offerings, negotiated
transactions, block trades or a combination of these methods. We
may sell the securities to or through underwriters or dealers,
through agents, or directly to one or more purchasers. We may
distribute securities from time to time in one or more
transactions:
●
at
a fixed price or prices, which may be changed;
●
at
market prices prevailing at the time of sale;
●
at
prices related to such prevailing market prices; or
A
prospectus supplement or supplements (and any related free writing
prospectus that we may authorize to be provided to you) will
describe the terms of the offering of the securities, including, to
the extent applicable:
●
the
name or names of the underwriters, if any;
●
the
purchase price of the securities or other consideration therefor,
and the proceeds, if any, we will receive from the
sale;
●
any
over-allotment options under which underwriters may purchase
additional securities from us;
●
any
agency fees or underwriting discounts and other items constituting
agents’ or underwriters’ compensation;
●
any
public offering price;
●
any
discounts or concessions allowed or reallowed or paid to dealers;
and
●
any
securities exchange or market on which the securities may be
listed.
Only
underwriters named in the prospectus supplement will be
underwriters of the securities offered by the prospectus
supplement.
If
underwriters are used in the sale, they will acquire the securities
for their own account and may resell the securities from time to
time in one or more transactions at a fixed public offering price
or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be
subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Subject to certain conditions,
the underwriters will be obligated to purchase all of the
securities offered by the prospectus supplement, other than
securities covered by any over-allotment option. Any public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may change from time to time. We may
use underwriters with whom we have a material relationship. We will
describe in the prospectus supplement, naming the underwriter, the
nature of any such relationship.
We
may sell securities directly or through agents we designate from
time to time. We will name any agent involved in the offering and
sale of securities and we will describe any commissions we will pay
the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts
basis for the period of its appointment.
We
may authorize agents or underwriters to solicit offers by certain
types of institutional investors to purchase securities from us at
the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. We will describe the
conditions to these contracts and the commissions we must pay for
solicitation of these contracts in the prospectus
supplement.
We
may provide agents and underwriters with indemnification against
civil liabilities, including liabilities under the Securities Act,
or contribution with respect to payments that the agents or
underwriters may make with respect to these liabilities. Agents and
underwriters may engage in transactions with, or perform services
for, us in the ordinary course of business.
All
securities we may offer, other than common shares, will be new
issues of securities with no established trading market. Any
underwriters may make a market in these securities, but will not be
obligated to do so and may discontinue any market making at any
time without notice. We cannot guarantee the liquidity of the
trading markets for any securities.
Any
underwriter may engage in over-allotment, stabilizing transactions,
short-covering transactions and penalty bids in accordance with
Regulation M under the Exchange Act. Over-allotment involves sales
in excess of the offering size, which create a short position.
Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified
maximum price. Syndicate-covering or other short-covering
transactions involve purchases of the securities, either through
exercise of the over-allotment option or in the open market after
the distribution is completed, to cover short positions. Penalty
bids permit the underwriters to reclaim a selling concession from a
dealer when the securities originally sold by the dealer are
purchased in a stabilizing or covering transaction to cover short
positions. Those activities may cause the price of the securities
to be higher than it would otherwise be. If commenced, the
underwriters may discontinue any of the activities at any
time.
Any
underwriters that are qualified market makers on The Nasdaq Capital
Market may engage in passive market making transactions in the
common shares on The Nasdaq Capital Market in accordance with
Regulation M under the Exchange Act, during the business day prior
to the pricing of the offering, before the commencement of offers
or sales of the common shares. Passive market makers must comply
with applicable volume and price limitations and must be identified
as passive market makers. In general, a passive market maker must
display its bid at a price not in excess of the highest independent
bid for such security; if all independent bids are lowered below
the passive market maker’s bid, however, the passive market
maker’s bid must then be lowered when certain purchase limits
are exceeded. Passive market making may stabilize the market price
of the securities at a level above that which might otherwise
prevail in the open market and, if commenced, may be discontinued
at any time.
CERTAIN TAX
CONSIDERATIONS
Edesa
Biotech, Inc. is a British Columbia, Canada corporation. As such,
there are important tax considerations to U.S. holders and non-U.S.
holders under United States and Canadian federal income taxation.
Certain tax considerations are included in our most recent Annual
Report on Form 10-K for the fiscal year ended September 30, 2018,
on file with the SEC, which is incorporated by reference into this
prospectus.
Given
the complexity of the tax laws and because the tax consequences to
any particular shareholder may be affected by matters not discussed
in our Annual Report on Form 10-K, shareholders are urged to
consult their own tax advisors with respect to the specific tax
consequences of the acquisition, ownership and disposition of our
equity securities, including the applicability and effect of state,
local and non-U.S. tax laws, as well as U.S. federal tax
laws.
In connection with
particular offerings of the securities in the future, unless
otherwise stated in the applicable prospectus supplement,
the validity of the securities being offered hereby will be passed
upon for us by Fasken Martineau DuMoulin, LLP, Toronto, Ontario,
Canada and
certain other matters will be passed upon for us by Stubbs Alderton
& Markiles, LLP, Sherman Oaks, California. Any underwriters
will also be advised about legal matters by their own counsel,
which will be named in the prospectus
supplement.
The
balance sheets of Edesa Biotech Research, Inc. (formerly known as
Edesa Biotech Inc.) as of December 31, 2018 and 2017, and the
related statements of operations and comprehensive loss, changes in
shareholders’ equity and cash flows of Edesa Biotech Inc. for
each of the two years ended December 31, 2018 and 2017,
incorporated by reference in this Registration Statement on Form
S-3 have been so incorporated in reliance on the report of MNP LLP,
an independent registered public accounting firm, given on the
authority of said firm as experts in auditing and
accounting.
The consolidated financial
statements of Stellar Biotechnologies, Inc. incorporated in this
Registration Statement on Form S-3 of Edesa Biotech, Inc. (formerly
known as Stellar Biotechnologies, Inc.) by reference from Edesa
Biotech, Inc.’s Annual Report on Form 10-K for the year ended
September 30, 2018 have been audited by Moss Adams LLP, an
independent registered public accounting firm, as stated in their
report, which is incorporated herein by reference. Such
consolidated financial statements have been so incorporated in
reliance upon the report of such firm given upon their authority as
experts in accounting and auditing
WHERE YOU CAN FIND MORE
INFORMATION
This
prospectus is part of the registration statement on Form S-3 we
filed with the SEC under the Securities Act and does not contain
all the information set forth in the registration statement.
Whenever a reference is made in this prospectus to any of our
contracts, agreements or other documents, the reference may not be
complete and you should refer to the exhibits that are a part of
the registration statement or the exhibits to the reports or other
documents incorporated by reference into this prospectus for a copy
of such contract, agreement or other document. Because we are
subject to the information and reporting requirements of the
Exchange Act, we file annual, quarterly and current reports, proxy
statements and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SEC’s
website at www.sec.gov. Our Internet address is
www.edesabiotech.com. You may also read and copy any document we
file at the SEC’s Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the Public Reference
Room. We are also a “reporting issuer” in the Canadian
provinces of British Columbia and Alberta. As such, information we
file the SEC is also available under our profile at
www.SEDAR.com.
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE
The
SEC allows us to incorporate by reference the information we file
with it, which means that we can disclose important information to
you by referring you to another document that we have filed
separately with the SEC. You should read the information
incorporated by reference because it is an important part of this
prospectus. We incorporate by reference the following information
or documents that we have filed with the SEC (Commission File No.
001-37619):
●
Our
Annual Report on Form 10-K for our fiscal year ended September 30,
2018 (filed on November 30, 2018);
●
Our
Quarterly Reports on Form 10-Q for our quarters ended December 31,
2018 (filed on February 5, 2019), March 31, 2019 (filed on May 8,
2019) and June 30, 2019 (filed on August 14, 2019);
●
Our
Current Reports on Form 8-K, dated March 7, 2019, 2018 (filed on
March 8, 2019); dated May 30, 2019 (filed on May 30, 2019); dated
June 7, 2019 (filed on June 10, 2019 and amended on each of June
20, 2019 and August 14, 2019) and August 30, 2019 (filed on August
30, 2019);
●
Our
Definitive Proxy Statement filed with the SEC on April 18, 2019;
and
●
The description of
our common shares contained in Amendment No. 2 to our Registration
Statement on Form 20-F/A, filed with the SEC on July 5, 2012,
including any amendment or report filed for the purpose of updating
such description.
Any
information in any of the foregoing documents will automatically be
deemed to be modified or superseded to the extent that information
in this prospectus or in a later filed document that is
incorporated or deemed to be incorporated herein by reference
modifies or replaces such information.
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, including all such reports
filed after the date of the initial registration statement and
prior to effectiveness of the registration statement, until we file
a post-effective amendment that indicates the termination of the
offering of the securities made by this prospectus. Information in
such future filings updates and supplements the information
provided in this prospectus. Any statements in any such future
filings will automatically 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.
We will
furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of
the documents that have been incorporated by reference into this
prospectus, including exhibits to these documents. You should
direct any requests for copies to: Investor Relations, Edesa
Biotech, Inc., 100 Spy Court, Markham, Ontario L3R 5H6 Canada;
telephone number (905) 475-1234.
Up to $9.2 Million
Common Shares
________________________________________
PROSPECTUS SUPPLEMENT
September 28, 2020
________________________________________
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