CUSIP
No. 00688A106
|
13D
|
Page
2 of 7 Pages
|
1
|
NAME
OF REPORTING PERSONS
I.R.S.
IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
William
B. Stilley, III
|
2
|
CHECK
THE APPROPRIATE BOX IF A MEMBER OF A GROUP
|
|
(a)
|
☐
|
|
|
(b)
|
☐
|
|
|
|
3
|
SEC
USE ONLY
|
4
|
SOURCE
OF FUNDS
PF
|
5
|
CHECK
BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
|
|
|
☐
|
|
|
Not
Applicable
|
6
|
CITIZENSHIP
OR PLACE OF ORGANIZATION
United
States of America
|
NUMBER OF
|
7
|
SOLE
VOTING POWER
1,426,289
|
SHARES
BENEFICIALLY
OWNED BY
|
8
|
SHARED
VOTING POWER
343,074
|
EACH
REPORTING
PERSON
|
9
|
SOLE
DISPOSITIVE POWER
1,426,289
|
WITH
|
10
|
SHARED
DISPOSITIVE POWER
343,074
|
11
|
AGGREGATE
AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,769,363
|
12
|
CHECK
BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|
|
|
☒*
|
|
|
|
13
|
PERCENT
OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.1%
|
14
|
TYPE
OF REPORTING PERSON
IN
|
|
|
|
|
|
|
|
*
|
Does
not include (i) 5,580 shares of Common Stock owned by the Meredith A. Stilley Trust dtd 11/23/2010; (ii) 5,580 shares of Common
Stock owned by the Morgan J. Stilley Trust dtd 11/23/2010; and (iii) 5,580 shares of Common Stock owned by the Blair E. Stilley
Trust dtd 11/23/2010. The trusts are for the benefit of Mr. Stilley’s children and Mr. Stilley is not the trustee. Mr. Stilley
disclaims beneficial ownership of these shares except to the extent of any pecuniary interest he may have in such shares.
|
CUSIP
No. 00688A106
|
13D
|
Page
3 of 7 Pages
|
Item
1. Security and Issuer.
This Amendment No. 3 to
Schedule 13D (the “Amendment No. 3”) relates to the shares of common stock, par value $0.001 per share (the “Common
Stock”), of Adial Pharmaceuticals, Inc., a Delaware corporation (the “Issuer”) and amends the Schedule 13D,
dated November 12, 2018 (the “Original 13D”), subsequently amended by Amendment No. 1 to the Original 13D, dated March
28, 2019 (“Amendment No. 1”), and Amendment No. 2 to the Original 13D, dated December 11, 2020 (“Amendment No.
2”), filed by the reporting person, William Stilley. Capitalized terms used in this Amendment No. 3 but not defined herein
shall have the respective meanings ascribed to them in the Original 13D, Amendment No. 1 and Amendment No. 2, as the case may
be.
The
principal executive offices of the Issuer are located at 1180 Seminole Trail, Suite 495, Charlottesville, Virginia 22901.
Item
2. Identity and Background.
(a),
(f)
|
This
Amendment No. 3 to Schedule 13D is being made by William B. Stilley, III.
|
|
|
(b)
|
The
principal business address for Mr. Stilley is 1180 Seminole Trail, Suite 495, Charlottesville, Virginia 22901.
|
|
|
(c)
|
Mr.
Stilley is the President and Chief Executive Officer of Adial Pharmaceuticals, Inc.
|
|
|
(d)
|
Mr.
Stilley has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
|
|
|
(e)
|
Mr.
Stilley has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect
to such laws.
|
|
|
(f)
|
Mr.
Stilley is a citizen of the United States of America.
|
Item
3. Source and Amount of Funds or Other Consideration.
Item 3
is hereby amended and supplemented as follows:
The
shares of Common Stock issued to Mr. Stilley in connection with the consummation of the transaction to acquire Purnovate, LLC
(“Purnovate”) described hereinbelow (the “Acquisition”) were issued in exchange for the membership interests
owned by Mr. Stilley in Purnovate.
See
the responses to Item 4 and Item 6, which are incorporated by reference herein.
Item
4. Purpose of the Transaction.
Item 4
is hereby amended and supplemented as follows:
The
purpose of the transaction described in this Amendment No. 3 to Schedule 13D is solely for investment.
See
the responses to Item 3 and Item 6, which are incorporated by reference herein.
CUSIP
No. 00688A106
|
13D
|
Page
4 of 7 Pages
|
Item
5. Interest in Securities of the Issuer.
The
information in this Item 5 is provided as of the date hereof and is based 15,133,080 shares of Common Stock outstanding as of
January 28, 2021.
Mr. Stilley
is the beneficial owner of, and has the sole power to vote or direct the vote and to dispose or direct the disposition of: (a)
583,796 shares of Common Stock and warrants to purchase an aggregate of 258,908 shares of Common Stock; and (b) options to purchase
an aggregate of 1,017,474 shares of Common Stock, of which 583,585 shares are vested as of January 28, 2021 or vest within 60
days thereof.
In
addition, Mr. Stilley is deemed to be the beneficial owner of, and has shared power to vote or direct the vote and to dispose
or direct the disposition of 333,250 shares of Common Stock and warrants to purchase 9,824 shares of Common Stock, which shares
and warrants are owned jointly by Mr. Stilley and his wife, Anne T. Stilley.
Does
not include (i) 5,580 shares of Common Stock owned by the Meredith A. Stilley Trust dtd 11/23/2010; (ii) 5,580 shares of Common
Stock owned by the Morgan J. Stilley Trust dtd 11/23/2010; and (iii) 5,580 shares of Common Stock owned by the Blair E. Stilley
Trust dtd 11/23/2010. The trusts are for the benefit of Mr. Stilley’s children and Mr. Stilley is not the trustee. Mr. Stilley
disclaims beneficial ownership of these shares except to the extent of any pecuniary interest he may have in such shares.
As
of the date hereof, the aggregate number and percentage of shares of Common Stock beneficially owned by Mr. Stilley (on the basis
of 15,133,080 shares of Common Stock outstanding as January 28, 2021) are as follows:
(a)
|
Number
of shares of Common Stock beneficially owned:
|
Percent
of class of Common Stock:
|
|
1,769,363
|
11.1%
|
|
|
|
(b)
|
Number
of shares of Common Stock as to which Mr. Stilley has:
|
|
|
(i)
Sole power to vote or to direct the vote:
|
1,426,289
|
|
|
|
|
(ii)
Shared power to vote or to direct the vote:
|
343,074
|
|
|
|
|
(iii)
Sole power to dispose or to direct the disposition of:
|
1,426,289
|
|
|
|
|
(iv)
Shared power to dispose or to direct the disposition of:
|
343,074
|
|
(c)
|
See
Item 4 and Annex A hereto, both of which are incorporated by reference herein.
|
Item
6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.
Item 6
is hereby amended and supplemented as follows:
On
January 26, 2021, the Issuer closed the acquisition (the “Acquisition”) contemplated by that certain Equity Purchase
Agreement, dated December 7, 2020 (the “Purchase Agreement”), by and among the Issuer, Purnovate, LLC (“Purnovate”),
each of the members of Purnovate (the “Members”) and Robert D. Thompson, as representative of the members (the “Representative”).
The acquisition was effected by a merger (the “Merger”) of Purnovate into Purnovate, Inc., a Delaware corporation
and wholly owned subsidiary of Adial, which survived the Merger. In connection with the Merger, on January 20, 2021, Purnovate
converted from a limited liability company to a corporation and on January 26, 2021, the parties entered into an Amendment to
the Purchase Agreement (the “Amendment”) to provide for the mechanism of closing the Acquisition through a Merger.
CUSIP
No. 00688A106
|
13D
|
Page
5 of 7 Pages
|
Subject
to certain conditions, and in exchange for the outstanding membership interests of Purnovate, the Issuer at the closing of the
Acquisition (the “Closing”): (i) paid to the Members an aggregate of $350,000 (the “Cash Consideration”),
and (ii) issued to the Members an aggregate of 700,000 shares Common Stock, including 201,109 shares of Common Stock issued to
Mr. Stilley and his wife (the “Stock Consideration”). The Stock Consideration was placed into escrow to secure certain
indemnification and other obligations of Purnovate and the Members in connection with the Acquisition until: (i) with respect
to the Members other than Mr. Stilley and Dr. Robert Thompson, five (5) days after the effective date of a registration statement
registering such shares with respect to thirty percent (30%) of such shares to be received by such Members and on the one (1)
year anniversary of the Closing with respect to seventy percent (70%) of such shares to be received by such Members; (ii) with
respect to Dr. Robert Thompson five (5) days after the effective date of a registration statement registering such shares with
respect to thirty percent (30%) of such shares to be received by him; on the one (1) year anniversary of the Closing with respect
to twenty percent (20%) of such shares to be received by him; on the earlier of the two (2) year anniversary of the Closing or
on the termination date of his employment if termination is by the Issuer without cause and (iii) with respect to William Stilley
on the earlier of the two (2) year anniversary of the Closing with respect to all of such shares to be received by him; or on
the termination date of his employment if termination is by the Issuer without cause. The Stock Consideration, if not used to
satisfy indemnification obligations, and the Cash Consideration will be distributed to the Members on a pro rata basis based on
each such Members’ equity interest in Purnovate as compared to the aggregate Purnovate equity interests held by all Members.
Mr. Stilley beneficially owned 28.7% of Purnovate.
In
addition to the payments described above, under the terms of the Purchase Agreement, the Issuer agreed to make cash payments to
the Members equal to (i) 3.0% of Net Sales (as such term is defined in the Purchase Agreement) and (ii) upon the achievement of
the following clinical and commercialization milestones:
Development
& Approval Milestones
Milestone Event
|
|
Milestone
Payment
|
|
First human dosing
|
|
$
|
300,000
|
|
First dose in a Phase 2 Trial
|
|
$
|
300,000
|
|
First dose in a Phase 3 Trial
|
|
$
|
400,000
|
|
First acceptance of U.S. NDA submission
|
|
$
|
500,000
|
|
First acceptance of NDA equivalent submission in Europe
|
|
$
|
300,000
|
|
First acceptance of NDA equivalent submission in Asia
|
|
$
|
300,000
|
|
First Commercial Sale in the U.S.
|
|
$
|
10,000,000
|
|
First Commercial Sale in Europe
|
|
$
|
5,000,000
|
|
First Commercial Sale in Asia
|
|
$
|
5,000,000
|
|
Total potential
|
|
$
|
22,100,000
|
|
In
connection with the Acquisition, the Issuer received an opinion from its financial advisor that the consideration to be paid by
the Issuer to Purnovate pursuant to the Purchase Agreement is fair, from a financial point of view, to the stockholders of the
Issuer. In addition, in connection with the Acquisition, Dr. Thompson and Mr. Stilley entered into lock-up agreements with the
Issuer with respect to the Stock Consideration to be received by them to restrict the transfer of such shares of Issuer Common
Stock until the expiration of the respective Member’s applicable escrow period.
CUSIP
No. 00688A106
|
13D
|
Page
6 of 7 Pages
|
Item
7. Material to be filed as Exhibits.
Item 7
is hereby amended and supplemented as follows:
Exhibit
10:
|
|
Equity Purchase Agreement, dated December 7, 2020, by and among Adial Pharmaceuticals, Inc., Purnovate, LLC, the members of Purnovate, LLC and Robert D. Thompson, as member representative (incorporated by reference to Exhibit 10.1 of the Issuer’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 10, 2020 (File No. 001-38323))
|
|
|
|
Exhibit
11:
|
|
Amendment, dated January 26, 2021, by and among Adial Pharmaceuticals, Inc., Purnovate, Inc., a wholly owned subsidiary of Adial, PNV Conversion Corp. as successor-in interest to Purnovate, LLC, and Robert D. Thompson, as member representative, to the Equity Purchase Agreement, dated December 7, 2020 (incorporated by reference to Exhibit 10.2 of the Issuer’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 1, 2021 (File No. 001-38323))
|
|
|
|
Annex
A:
|
|
Certain Transactions by the Reporting Person
|
CUSIP
No. 00688A106
|
13D
|
Page
7 of 7 Pages
|
SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.
Date:
February 8, 2021
|
/s/
William B. Stilley, III
|
|
William
B. Stilley, III
|
Annex
A
Transactions
by the Reporting Person During the Past Sixty Days
Date
of Transaction
|
|
Number
of Securities
|
|
Price
per Share
|
January
26, 2021
|
|
201,109
shares of Common Stock
|
|
*
|
|
*
|
As
described in this Amendment No. 3 to Schedule 13D, on January 26, 2021, Mr. Stilley, in his capacity as a member of Purnovate,
LLC, received 201,109 shares of Common Stock pursuant to the Equity Purchase Agreement, as amended, by and among Adial Pharmaceuticals,
Inc., Purnovate, the members of Purnovate and Robert D. Thompson, as member representative.
|