Filed pursuant to Rule 424(b)(5)
Registration No. 333-235674
PROSPECTUS SUPPLEMENT
(to Prospectus dated January 10, 2020)
Up to $75,000,000
Common Shares
We previously entered into an Open Market Sale
AgreementSM,
or, as amended, the Sale Agreement, with Jefferies LLC, or
Jefferies, relating to our common shares, without par value per
common share, offered by this prospectus supplement. In accordance
with the terms of the Sale Agreement, we may offer and sell our
common shares having an aggregate offering price of up to
$75,000,000, from time to time through Jefferies, acting as sales
agent.
Sales of our common shares, if any, under this prospectus
supplement will be made by any method permitted that is deemed 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. Jefferies is not required to sell any specific amount, but
will act as our sales agent using commercially reasonable efforts
consistent with its normal trading and sales practices. There is no
arrangement for funds to be received in any escrow, trust or
similar arrangement.
Jefferies will be entitled to compensation at a commission rate of
3.0% of the gross sales price of the shares sold under the Sale
Agreement. See “Plan of Distribution” beginning on page S-11 for
additional information regarding the compensation to be paid to
Jefferies. In connection with the sale of common shares on our
behalf, Jefferies will be deemed to be an “underwriter” within the
meaning of the Securities Act and the compensation of Jefferies
will be deemed to be underwriting commissions or discounts. We have
also agreed to provide indemnification and contribution to
Jefferies with respect to certain liabilities, including civil
liabilities under the Securities Act.
Our common shares trade on the Nasdaq Global Select Market under
the symbol “ABUS”. On August 6, 2020, the last reported sale price
for our common shares on the Nasdaq Global Select Market was $4.37
per common share.
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INVESTING IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD REVIEW CAREFULLY THE RISKS AND UNCERTAINTIES DESCRIBED UNDER
THE HEADING “RISK FACTORS” BEGINNING ON PAGE S-6 OF THIS PROSPECTUS
SUPPLEMENT, AS WELL AS THE OTHER INFORMATION CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT BEFORE
MAKING A DECISION TO INVEST IN OUR SECURITIES.
__________________________________________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or determined if this prospectus supplement and the
accompanying prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
Jefferies
The date of this prospectus supplement is August 7,
2020
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
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ABOUT THIS PROSPECTUS SUPPLEMENT |
ii |
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FORWARD-LOOKING STATEMENTS |
S-1 |
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SUMMARY |
S-3 |
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RISK FACTORS |
S-6 |
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USE OF PROCEEDS |
S-8 |
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DILUTION |
S-9 |
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PLAN OF DISTRIBUTION |
S-11 |
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MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS |
S-13 |
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LEGAL MATTERS |
S-20 |
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EXPERTS |
S-20 |
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WHERE YOU CAN FIND ADDITIONAL INFORMATION |
S-20 |
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PROSPECTUS
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Page
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ABOUT THIS PROSPECTUS
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1
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FORWARD-LOOKING STATEMENTS
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THE COMPANY
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4
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RISK FACTORS
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5
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USE OF PROCEEDS
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6
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GENERAL DESCRIPTION OF OUR SECURITIES
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DESCRIPTION OF OUR CAPITAL STOCK
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DESCRIPTION OF OUR WARRANTS
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11
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DESCRIPTION OF OUR DEBT SECURITIES
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DESCRIPTION OF OUR UNITS
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PLAN OF DISTRIBUTION
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LEGAL MATTERS
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EXPERTS
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
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ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement relates to the offering of our common
shares. Before buying any of the common shares that we are
offering, we urge you to carefully read this prospectus supplement,
together with the information incorporated by reference as
described under the headings “Where You Can Find Additional
Information” in the accompanying prospectus, and any free writing
prospectus that we have authorized for use in connection with this
offering. These documents contain important information that you
should consider when making your investment decision.
This prospectus supplement describes the terms of this offering of
common shares and also adds to and updates information contained in
the documents incorporated by reference into this prospectus
supplement. To the extent there is a conflict between the
information contained in this prospectus supplement, on the one
hand, and the information contained in any document incorporated by
reference into this prospectus supplement that was filed with the
Securities and Exchange Commission, or SEC, before the date of this
prospectus supplement, on the other hand, or the information
contained in any free writing prospectus prepared by us or on our
behalf that we have authorized for use in connection with this
offering, you should rely on the information in this prospectus
supplement. If any statement in one of these documents is
inconsistent with a statement in another document having a later
date—for example, a document incorporated by reference into this
prospectus supplement—the statement in the document having the
later date modifies or supersedes the earlier
statement.
We further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference into this prospectus
supplement were made solely for the benefit of the parties to such
agreement, including, in some cases, for the purpose of allocating
risk among the parties to such agreement, and should not be deemed
to be a representation, warranty or covenant to you.
Moreover, such representations, warranties or covenants were
accurate only as of the date when made. Accordingly, such
representations, warranties and covenants should not be relied on
as accurately representing the current state of our
affairs.
You should rely only on the information contained in or
incorporated by reference into this prospectus supplement and any
free writing prospectus prepared by or on our behalf that we have
authorized for use in connection with this offering. We have not,
and Jefferies
has not, authorized any dealer, salesperson or other person to
provide any information or to make any representation other than
those contained or incorporated by reference into this prospectus
supplement or into any free writing prospectus prepared by or on
our behalf or to which we have referred you. If anyone provides you
with additional, different or inconsistent information, you should
not rely on it.
We and Jefferies take no responsibility for, and can provide no
assurance as to the reliability of, any other information that
others may give you. We are not, and Jefferies is not, making an
offer to sell the common shares in any jurisdiction where the offer
or sale is not permitted. You should assume that the information
appearing or incorporated by reference into this prospectus
supplement and in any free writing prospectus prepared by or on our
behalf that we have authorized for use in connection with this
offering is accurate only as of the date of each such respective
document. Our business, financial condition, results of operations
and prospects may have changed since those dates.
You should read this prospectus supplement, including the documents
incorporated by reference, and any free writing prospectus prepared
by or on our behalf that we have authorized for use in connection
with this offering, in their entirety before making an investment
decision. You should also read and consider the information in the
documents we have referred you to in the sections of this
prospectus supplement entitled “Where You Can Find More
Information.”
Other than in the United States, no action has been taken by us or
Jefferies
that would permit a public offering of the common shares offered by
this prospectus supplement in any jurisdiction where action for
that purpose is required. The common shares offered by this
prospectus supplement may not be offered or sold, directly or
indirectly, nor may this prospectus supplement or any other
offering material or advertisements in connection with the offer
and sale of the common shares be distributed or published in any
jurisdiction, except under circumstances that will result in
compliance with the applicable rules and regulations of that
jurisdiction. Persons into whose possession this prospectus
supplement comes are advised to inform themselves about and to
observe any restrictions relating to this offering and the
distribution of this prospectus. This prospectus supplement does
not constitute an offer to sell or a solicitation of an offer to
buy the common shares offered by this prospectus supplement in any
jurisdiction in which such an offer or a solicitation is
unlawful.
Unless stated otherwise or the context otherwise requires,
references in this prospectus supplement to “Arbutus,” the
“Company,” “we,” “us,” or “our” refer to Arbutus Biopharma
Corporation and our wholly-owned subsidiaries through which we
conduct our business. The Arbutus logo and all other Arbutus
product names are trademarks of Arbutus in the United States and in
other select countries.
The Arbutus logo is a trademark of Arbutus in Canada.
We may indicate U.S. trademark registrations and U.S. trademarks
with the symbols “®” and “™”, respectively. Other third-party logos
and product/trade names are registered trademarks or trade names of
their respective owners.
FORWARD-LOOKING STATEMENTS
This prospectus supplement contains “forward-looking statements” or
“forward-looking information” within the meaning of applicable
securities laws (we collectively refer to these items as
“forward-looking statements”). Forward-looking statements are
generally identifiable by use of the words “believes,” “may,”
“plans,” “will,” “anticipates,” “intends,” “budgets,” “could,”
“estimates,” “expects,” “forecasts,” “projects” and similar
expressions that are not based on historical fact or that are
predictions of or indicate future events and trends, and the
negative of such expressions. Forward-looking statements in this
prospectus supplement, including the documents incorporated by
reference, include statements about, among other
things:
•our
strategy, future operations, pre-clinical research, pre-clinical
studies, clinical trials, prospects and the plans of
management;
•the
potential impact of the COVID-19 pandemic on our
business;
•the
discovery, development and commercialization of a curative
combination regimen for chronic hepatitis B infection, a disease of
the liver caused by the hepatitis B virus, or HBV;
•our
beliefs and development path and strategy to achieve a curative
combination regimen for HBV;
•obtaining
necessary regulatory approvals;
•obtaining
adequate financing through a combination of financing activities
and operations;
•using
the results from our HBV studies to adaptively design additional
clinical trials to test the efficacy of the combination therapy and
the duration of the result in patients;
•the
expected timing of and amount for payments related to the Enantigen
Therapeutics, Inc.’s transaction and its programs;
•the
potential of our drug candidates to improve upon the standard of
care and contribute to a curative combination treatment
regimen;
•the
potential benefits of the reversion of the Ontario Municipal
Employees Retirement System, or OMERS, royalty monetization
transaction for our ONPATTRO® (Patisiran), or ONPATTRO, royalty
interest;
•developing
a suite of products that intervene at different points in the viral
life cycle, with the potential to reactivate the host immune
system;
•using
pre-clinical results to adaptively design clinical trials for
additional cohorts of patients, testing the combination and the
duration of therapy;
•selecting
combination therapy regimens and treatment durations to conduct
Phase 3 clinical trials intended to ultimately support regulatory
filings for marketing approval;
•expanding
our HBV drug candidate pipeline through internal development,
acquisitions and in-licenses;
•our
expectation for AB-729 for preliminary results from a single-dose
90 mg cohort and multi-dose 60 mg cohorts in our Phase 1a/1b trial
to be available in the second half of 2020;
•our
expectation for AB-729 for preliminary results from a 90 mg
single-dose cohort in HBV DNA positive subjects to be available in
the second half of 2020:
•our
expectation to dose two 90 mg multi-dose cohorts in the second half
of 2020;
•our
expectation that AB-729 could be combined with our lead capsid
inhibitor candidate, AB-836, and approved NAs, in our first
combination therapy for HBV patients;
•the
potential for an oral HBsAg-reducing agent and potential all-oral
combination therapy;
•our
objective to complete IND/CTA-enabling studies for AB-836 by the
end of 2020;
•the
potential for AB-836 to be low-dose regimen with a wide therapeutic
window and to address known capsid resistant variants T33N and
1105T;
•the
potential for AB-836 to have increased potency and an enhanced
resistance profile, compared to our previous capsid inhibitor
candidate, AB-506;
•the
potential for AB-836 to be once-daily dosing;
•our
expectation to pursue development of a next generation oral HBV
RNA-destabilizer;
•payments
from our license agreement with Gritstone Oncology,
Inc.;
•the
expected return from strategic alliances, licensing agreements, and
research collaborations;
•statements
with respect to revenue and expense fluctuation and
guidance;
•having
sufficient cash resources to fund our operations through
mid-2022;
•obtaining
funding to maintain and advance our business from a variety of
sources including public or private equity or debt financing,
collaborative arrangements with pharmaceutical companies, other
non-dilutive commercial arrangements and government grants and
contracts; and
•our
use of proceeds from this offering.
We may not actually achieve the plans, intentions or expectations
disclosed in our forward-looking statements, and you should not
place undue reliance on our forward-looking statements. Actual
results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking
statements we make. We have included important factors in the
cautionary statements included in this prospectus supplement under
the heading “Risk Factors”, and in the documents incorporated by
reference into this prospectus supplement, that we believe could
cause actual results or events to differ materially from the
forward-looking statements that we make.
Moreover, we operate in a very competitive and rapidly changing
environment, and new risks emerge from time to time. It is not
possible for us to predict all risks, nor can we assess the impact
of all factors on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ
materially and adversely from those contained in any
forward-looking statements we may make. In light of these risks,
uncertainties and assumptions, the forward-looking events and
circumstances discussed in this report may not occur and actual
results could differ materially and adversely from those
anticipated or implied in the forward-looking
statements.
You should not rely upon forward-looking statements as predictions
of future events. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee that the future results, levels of activity,
performance or events and circumstances reflected in the
forward-looking statements will be achieved or occur. Moreover,
neither we nor any other person assumes responsibility for the
accuracy and completeness of the forward-looking statements. Except
as required by law, we undertake no obligation to update publicly
any forward-looking statements for any reason after the date of
this prospectus to conform these statements to actual results or to
changes in our expectations.
You should read this prospectus supplement and the documents
incorporated by reference in this prospectus supplement with the
understanding that our actual future results, levels of activity,
performance and events and circumstances may be materially
different from what we expect. We qualify all forward-looking
statements by these cautionary statements.
SUMMARY
This summary highlights certain information about us, this offering
and selected information contained elsewhere in or incorporated by
reference into this prospectus supplement. This summary is not
complete and does not contain all of the information that you
should consider before deciding to invest in our common shares. For
a more complete understanding of our company and this offering, you
should read carefully this entire prospectus supplement, including
the information incorporated by reference into this prospectus
supplement, and any free writing prospectus prepared by or on our
behalf that we have authorized for use in connection with this
offering, including the “Risk Factors” section beginning on page
S-6
of this prospectus supplement
and the other information included in, or incorporated by reference
into, this prospectus supplement.
Company Overview
Arbutus Biopharma Corporation (“Arbutus”, the “Company”, “we”,
“us”, and “our”) is a publicly traded (Nasdaq Global Select Market:
ABUS) clinical-stage biopharmaceutical company primarily focused on
developing a cure for people with HBV infection.
We are advancing multiple drug product candidates that may be
combined into a potentially curative regimen for chronic HBV
infection.
Arbutus has also initiated a drug discovery and development effort
for treating coronaviruses, including COVID-19.
Our focus is on developing new HBV treatment regimens with finite
treatment durations and higher cure rates.
We define a cure as a functional cure where HBV DNA replication and
hepatitis B surface antigen expression are reduced to undetectable
levels and this level of expression is sustained six months after a
finite duration of therapy.
Our HBV product pipeline includes RNA interference therapeutics,
oral capsid inhibitors, oral compounds that inhibit PD-L1 and oral
HBV RNA destabilizers.
We believe a combination of these product candidates could lead to
a curative treatment regimen with a finite duration for patients
with chronic HBV infection.
Corporate Information
Arbutus was incorporated pursuant to the British Columbia Business
Corporations Act, or BCBCA, on October 6, 2005, and commenced
active business on April 30, 2007, when Arbutus and its parent
company, Inex Pharmaceuticals Corporation, or Inex, were
reorganized under a statutory plan of arrangement, or the Plan of
Arrangement, completed under the provisions of the BCBCA. The Plan
of Arrangement saw Inex's entire business transferred to and
continued by Arbutus.
On March 4, 2015, we completed a business combination pursuant to
which OnCore Biopharma, Inc., or OnCore, became our wholly-owned
subsidiary. Arbutus Inc. contributed many of the assets in our HBV
pipeline. Effective July 31, 2015, our corporate name changed from
Tekmira Pharmaceuticals Corporation to Arbutus Biopharma
Corporation. Also effective July 31, 2015, the corporate name of
our wholly owned subsidiary, OnCore Biopharma, Inc. changed to
Arbutus Biopharma, Inc., or Arbutus Inc. We had two wholly owned
subsidiaries: Arbutus Inc. and Protiva Biotherapeutics Inc., or
Protiva. Effective January 1, 2018, Protiva was amalgamated with
Arbutus.
Arbutus' head office and principal place of business is located at
701 Veterans Circle, Warminster, Pennsylvania 18974 and our
telephone number is (267) 469-0914. We maintain a website at
www.arbutusbio.com. The information contained on, or that can be
accessed through, our website is not a part of this prospectus
supplement. We have included our website address in this prospectus
supplement solely as an inactive textual reference.
THE OFFERING
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Common shares offered by us:
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Common shares having an aggregate offering price of up to $75.0
million.
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Common shares to be outstanding following the offering
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Up to 97,967,830 shares (as more fully described in the notes
following this table), assuming sales of 17,162,471 of our common
shares in this offering at an offering price of $4.37 per share,
which was the last reported sale price of our common shares on the
Nasdaq Global Select Market on August 6, 2020. The actual number of
shares issued will vary depending on the sales price under this
offering.
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Plan of Distribution: |
“At the market offering” that may be made from time to time on the
Nasdaq Global Select Market or other existing trading markets for
our common shares through our sales agent, Jefferies. See “Plan of
Distribution” on page S-11 of this prospectus
supplement
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Use of Proceeds:
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We currently intend to use the net proceeds from this offering for
working capital and general corporate purposes, which may include
capital expenditures, research and development expenditures,
preclinical study and clinical trial expenditures, acquisitions or
new technologies and investments and business combinations. We
reserve the right, at the sole discretion of our management, to
reallocate the proceeds of this offering in response to
developments in our business and other factors. See “Use of
Proceeds” on page S-8 of this prospectus supplement.
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Risk Factors:
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Investing in our common shares involves a high degree of risk.
Please read the information contained in and incorporated by
reference under the heading “Risk Factors” beginning on page S-6 of
this prospectus supplement and the other information included in,
or incorporated by reference into, this prospectus supplement for a
discussion of certain factors you should carefully consider before
deciding to invest in our common shares.
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Nasdaq Global Select Market symbol:
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“ABUS”.
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Unless otherwise indicated, the number of common shares to be
outstanding after this offering is based on 71,256,579 common
shares outstanding as of June 30, 2020 plus 9,548,780 common shares
issued under the Sale Agreement from June 30, 2020 to July 24, 2020
and excludes:
•approximately
20 million of our common shares issuable upon the conversion of our
Series A participating convertible preferred shares, or the
Preferred Shares, outstanding as of June 30, 2020, including
accrued dividends thereon as of June 30, 2020;
•11,017,404
of our common shares issuable upon the exercise of stock options
outstanding as of June 30, 2020, at a weighted average exercise
price of $4.57 per common share, of which stock options to purchase
6,281,447 common shares were then exercisable (less 103,900 of our
common shares issued upon the exercise of stock options subsequent
to June 30, 2020, at a weighted average exercise price of $5.20 per
common share);
•2,943,633
of our common shares reserved for future grants of stock options
(or other similar equity instruments) under the 2016 Share and
Omnibus Incentive Plan, or the 2016 Plan, as of June 30, 2020 (less
108,200 of our common shares issuable upon the exercise of stock
options
granted under the 2016 Plan since June 30, 2020, at a weighted
average exercise price of $1.87 per common share);
•2,250
of our common shares reserved for future grants of stock options
(or other similar equity instruments) under the 2011 Omnibus Share
Compensation Plan, or the 2011 Plan, as of June 30, 2020;
and
•1,500,000
of our common shares reserved for future issuance under the 2020
Employee Stock Purchase Plan, or 2020 ESPP, as of June 30,
2020.
RISK FACTORS
Investing in our common shares is speculative and involves a high
degree of risk.
Before making an investment decision, you should carefully consider
the risks described in this prospectus supplement and the documents
incorporated by reference into this prospectus supplement,
including the “Risk Factors” section of our Annual Report on Form
10-K for the year ended December 31, 2019, which is incorporated by
reference into this prospectus supplement, as updated by annual,
quarterly and other reports and documents we file with the SEC
after the date of this prospectus supplement and that are
incorporated by reference into this prospectus supplement.
If any of these risks actually occurs, our business, financial
condition or results of operations could be materially adversely
affected.
These risks and uncertainties are not the only ones faced by
us.
Additional risks and uncertainties, including those of which we are
currently unaware or that are currently deemed immaterial, may also
materially and adversely affect our business, financial condition,
cash flows, prospects and the price of our common
shares.
Risks Related to This Offering
A substantial number of common shares may be sold in the market
following this offering, which may depress the market price for our
common shares.
Sales of a substantial number of our common shares in the public
market following this offering could cause the market price of our
common shares to decline. Although there can be no assurance that
any of the $75.0 million worth of common shares being offered under
this prospectus supplement will be sold or the price at which any
such shares might be sold, assuming that an aggregate of 17,162,471
of our common shares are sold during the term of the Sale Agreement
with Jefferies, in each case, for example, at a price of $4.37 per
share, the last reported sale price of our common shares on the
Nasdaq Global Select Market on August 6, 2020, upon completion of
this offering, based on 71,256,579 shares outstanding as of June
30, 2020 and 9,548,780 common shares issued between June 30, 2020
and July 24, 2020 under the Sale Agreement with Jefferies, we will
have outstanding an aggregate of 97,967,830 common shares, assuming
no exercise of outstanding options, and no conversion of the
Preferred Shares. A substantial majority of our outstanding common
shares are, and all of the common shares sold in this offering upon
issuance will be, freely tradable without restriction or further
registration under the Securities Act, unless these shares are
owned or purchased by “affiliates” as that term is defined in Rule
144 under the Securities Act.
In addition, as of June 30, 2020, we had outstanding Preferred
Shares convertible for approximately 20 million common shares
(including accrued interest thereon) and outstanding stock options
exercisable for 11,017,404 common shares at a weighted average
exercise price of $4.57 per share, of which stock options to
purchase 6,281,447 common shares were then exercisable. Upon
conversion of the Preferred Shares or exercise of the stock
options, we would issue additional common shares. As a result, our
current shareholders as a group would own a substantially smaller
interest in us and may have less influence on our management and
policies than they now have. Furthermore, the holders may sell
these shares in the public markets from time to time, without
limitations on the timing, amount or method of sale. Sales of these
common shares in the market could cause the market price of our
common shares to decline. Moreover, if we issue options to purchase
or acquire our common shares in the future and those options are
exercised or settled, you may experience further
dilution.
Additional dilution may result from the issuance of our common
shares in connection with collaborations or other financing
efforts.
You may experience future dilution as a result of future equity
offerings.
In order to raise additional capital, we may in the future offer
additional common shares or other securities convertible into or
exchangeable for our common shares at prices that may not be the
same as the price per share in this offering. We may sell common
shares or other securities convertible into or exchangeable for our
common shares in any other offering at a price per share that is
less than the price per share paid by investors in this offering,
and investors purchasing common shares or other securities
convertible into or exchangeable for our common shares in the
future could have rights superior to existing shareholders. The
price per share at which we sell additional
common shares or other securities convertible or exchangeable into
our common shares, in future transactions may be higher or lower
than the price per share paid by investors in this
offering.
We have broad discretion in how we use the net proceeds of this
offering, and we may not use these proceeds effectively or in ways
with which you agree.
We have not designated any portion of the net proceeds from this
offering to be used for any particular purpose. Our management will
have broad discretion as to the application of the net proceeds of
this offering and could use them for purposes other than those
contemplated at the time of this offering. Our shareholders may not
agree with the manner in which our management chooses to allocate
and spend the net proceeds. Moreover, our management may use the
net proceeds for corporate purposes that may not increase the
market price of our common shares.
Investors in this offering will experience immediate dilution in
the book value per share of the common shares purchased in the
offering.
The common shares sold in this offering, if any, will be sold from
time to time at various prices. However, the expected offering
price of our common shares will be substantially higher than the
pro forma net tangible book value per share of our outstanding
common shares. After giving effect to the sale of our common shares
in the aggregate amount of $75.0 million at an assumed offering
price of $4.37 per share, the last reported sale price of our
common shares on August 6, 2020 on the Nasdaq Global Select Market,
and after deducting estimated commissions and estimated offering
expenses, our pro forma as-adjusted net tangible book value as of
June 30, 2020, based on 71,256,579 common shares outstanding as of
June 30, 2020 plus 9,548,780 common shares issued under the Sale
Agreement from June 30, 2020 to July 24, 2020, would have been
approximately $174.6 million, or approximately $1..78 per common
share. This represents an immediate increase in pro forma net
tangible book value of approximately $0.52 per common share to our
existing shareholders and an immediate dilution in pro forma
as-adjusted net tangible book value of approximately $2.59 per
common share to new investors of our common shares in this
offering.
See “Dilution” on page S-9 of this prospectus
supplement.
It is not possible to predict the aggregate proceeds resulting from
sales made under the Sale Agreement.
Subject to certain limitations in the Sale Agreement and compliance
with applicable law, we have the discretion to deliver a placement
notice to Jefferies at any time throughout the term of the Sale
Agreement. The number of shares that are sold through Jefferies
after delivering a placement notice will fluctuate based on a
number of factors, including the market price of our common shares
during the sales period, any limits we may set with Jefferies in
any applicable placement notice and the demand for our common
shares. Because this offering can be terminated at any time and the
price per share of each common share sold pursuant to the Sale
Agreement will fluctuate over time, it is not currently possible to
predict the aggregate proceeds to be raised in connection with
sales under the Sale Agreement.
We do not expect to pay dividends in the foreseeable future. As a
result, you must rely on stock appreciation for any return on your
investment.
We do not anticipate paying cash dividends on our common shares in
the foreseeable future. Any payment of cash dividends will also
depend on our financial condition, results of operations, capital
requirements and other factors and will be at the discretion of our
board of directors. Accordingly, you will have to rely on capital
appreciation, if any, to earn a return on your investment in our
common shares. Furthermore, we may in the future become subject to
additional contractual restrictions on, or prohibitions against,
the payment of dividends.
USE OF PROCEEDS
We may issue and sell our common shares having aggregate sales
proceeds of up to $75.0 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, in the future, we will sell any shares
under or fully utilize the Sale Agreement with Jefferies as a
source of financing.
We currently intend to use the net proceeds from this offering for
working capital and general corporate purposes, which may include
capital expenditures, research and development expenditures,
preclinical study and clinical trial expenditures, acquisitions of
new technologies and investments and business
combinations.
The precise amount and timing of the application of these net
proceeds will depend upon a number of factors, such as the timing
and progress of our research and development efforts and the timing
and progress of any partnering efforts. As of the date of this
prospectus supplement, we cannot specify with certainty all of the
particular uses for the net proceeds from this offering. Depending
on the outcome of our efforts and other unforeseen events, our
plans and priorities may change and we may apply the net proceeds
of this offering in different manners than we currently anticipate.
Accordingly, our management will have broad discretion in the
timing and application of these net proceeds. Pending application
of the net proceeds as described above, we intend to temporarily
invest the proceeds in short-term, interest-bearing
instruments.
DILUTION
If you invest in our common shares in this offering, your ownership
interest will be diluted to the extent of the difference between
the public offering price per share and our pro forma net tangible
book value per share after this offering. We calculate net tangible
book value per share by dividing our net tangible book value, which
is tangible assets less total liabilities, by the number of
outstanding common shares.
The net tangible book value of our common shares as of June 30,
2020 was approximately $65.5 million, or approximately $0.92 per
common share.
Our pro forma net tangible book value as of June 30, 2020 was
$102.0 million, or $1.26 per common share. Pro forma net tangible
book value per share represents pro forma net tangible book value
divided by the pro forma number of common shares outstanding, after
giving effect to our issuance and sale of 9,548,780 common shares
pursuant to the Sale Agreement from June 30, 2020 to July 24,
2020.
After giving effect to the sale of our common shares in the
aggregate amount of $75.0 million at an assumed offering price of
$4.37 per common share, the last reported sale price of our common
shares on August 6, 2020 on the Nasdaq Global Select Market, and
after deducting estimated commissions and estimated offering
expenses, our pro forma as-adjusted net tangible book value as of
June 30, 2020 would have been approximately $174.6 million, or
approximately $1.78 per common share. This represents an immediate
increase in pro forma net tangible book value of approximately
$0.52 per common share to our existing shareholders and an
immediate dilution in pro forma as-adjusted net tangible book value
of approximately $2.59 per common share to new investors of our
common shares in this offering, as illustrated by the following
table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed public offering price per share
|
|
|
$ |
4.37 |
|
|
Net tangible book value per share as of June 30, 2020
|
$ |
0.92 |
|
|
|
|
Increase in pro forma tangible book value per share attributable to
shares sold pursuant to the Sale Agreement from June 30, 2020 to
July 24, 2020
|
$ |
0.34 |
|
|
|
|
Pro forma net tangible book value per share as of June 30,
2020
|
$ |
1.26 |
|
|
|
|
Increase in pro forma net tangible book value per share after this
offering
|
$ |
0.52 |
|
|
|
|
Pro forma as adjusted net tangible book value per share as of June
30, 2020, after giving effect to this offering
|
|
|
$ |
1.78 |
|
|
Dilution per share to new investors in this
offering(1)(2)
|
|
|
$ |
2.59 |
|
(1) Calculated as the difference between the assumed public
offering price per common share and the pro forma as-adjusted net
tangible book value per share after this offering.
(2) The foregoing is based on 71,256,579 common shares outstanding
as of June 30, 2020 plus 9,548,780 common shares issued under the
Sale Agreement from June 30, 2020 to July 24, 2020 and excludes as
of such date:
•approximately
20 million of our common shares issuable upon the conversion of
Preferred Shares outstanding as of June 30, 2020, including accrued
dividends thereon as of June 30, 2020;
•11,017,404
of our common shares issuable upon the exercise of stock options
outstanding as of June 30, 2020, at a weighted average exercise
price of $4.57 per common share, of which stock options to purchase
6,281,447common shares were then exercisable (less 103,900 of our
common shares issued upon the exercise of stock options subsequent
to June 30, 2020, at a weighted average exercise price of $5.20 per
common share);
•2,943,633
of our common shares reserved for future grants of stock options
(or other similar equity instruments) under the 2016 Plan as of
June 30, 2020 (less 108,200 of our common shares issuable upon the
exercise of stock options granted under the 2016 Plan since June
30, 2020, at a weighted average exercise price of $1.87 per common
share);
•2,250
of our common shares reserved for future grants of stock options
(or other similar equity instruments) under the 2011 Plan as of
June 30, 2020; and
•1,500,000
of our common shares reserved for future issuance under the 2020
Employee Stock Purchase Plan as of June 30, 2020.
The table above assumes for illustrative purposes that an aggregate
of 17,162,471 of our common shares are sold during the term of the
Sale Agreement with Jefferies at a price of $4.37 per share, the
last reported sale price of our common shares on the Nasdaq Global
Select Market on August 6, 2020, for aggregate net proceeds of
approximately $72.6 million, after deducting commissions and
estimated aggregate offering expenses payable by us. The pro forma
as adjusted information is illustrative only and will adjust based
on the actual price to the public, the actual number of shares sold
and other terms of the offering determined at the time our common
shares are sold pursuant to this prospectus. The shares pursuant to
the Sale Agreement with Jefferies are being 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 of $4.37
per share shown in the table above, assuming all of our common
shares in the aggregate amount of $75.0 million during the term of
the Sale Agreement with Jefferies is sold at that price, would
increase our pro forma as adjusted net tangible book value per
share after the offering to $1.84 per share and would increase the
dilution in pro forma net tangible book value per share to new
investors in this offering to $3.53 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 of $4.37 per share shown
in the table above, assuming all of our common shares in the
aggregate amount of $75.0 million during the term of the Sale
Agreement with Jefferies is sold at that price, would result in our
pro forma as adjusted net tangible book value per share after the
offering remaining at $1.69 per share but would decrease the
dilution in pro forma net tangible book value per share to new
investors in this offering to $1.68 per share, after deducting
commissions and estimated aggregate offering expenses payable by
us. This information is supplied for illustrative purposes
only.
To the extent that any options have been or are exercised,
preferred shares are converted, new options are issued under our
equity incentive plans or as inducement awards or we otherwise
issue additional common shares in the future, there will be further
dilution to new investors. In addition, we may choose to raise
additional capital due to market conditions or strategic
considerations even if we believe we have sufficient funds for our
current or future operating plans. To the extent that additional
capital is raised through the sale of equity or convertible debt
securities, the issuance of these securities could result in
further dilution to our shareholders.
PLAN OF DISTRIBUTION
We previously entered into the Sale Agreement with Jefferies
relating to our common shares. In accordance with the terms of the
Sale Agreement, we may offer and sell up to $75.0 million of our
common shares from time to time through Jefferies, acting as sales
agent. Sales of our common shares, if any, under this prospectus
supplement and the accompanying prospectus will be made by any
method that is deemed to be an “at the market offering” as defined
in Rule 415(a)(4) under the Securities Act including sales made
directly on or through the Nasdaq Global Select Market or any other
existing trading market for our common shares provided such sales
are conducted on a market or exchange outside of Canada or to
persons resident outside of Canada.
Each time we wish to issue and sell common shares under the Sale
Agreement, we will notify Jefferies of the number of shares to be
issued, the dates on which such sales are anticipated to be made,
any limitation on the number of shares to be sold in any one day
and any minimum price below which sales may not be made. Once we
have so instructed Jefferies, unless Jefferies declines to accept
the terms of such notice, Jefferies has agreed to use its
commercially reasonable efforts consistent with its normal trading
and sales practices to sell such shares up to the amount specified
on such terms. The obligations of Jefferies under the Sale
Agreement to sell our common shares are subject to a number of
conditions that we must meet.
The settlement of sales of shares between us and Jefferies is
generally anticipated to occur on the second trading day following
the date on which the sale was made. 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 Jefferies may agree upon. There is no arrangement
for funds to be received in an escrow, trust or similar
arrangement.
We will pay Jefferies a commission equal to 3.0% of the aggregate
gross proceeds we receive from each sale of our common shares.
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 estimate that the total expenses for the offering,
excluding any commissions or expense reimbursement payable to
Jefferies under the terms of the Sale Agreement, will be
approximately $120,000. The remaining sale proceeds, after
deducting any other transaction fees, will equal our net proceeds
from the sale of such shares.
Jefferies will provide written confirmation to us before the open
on the Nasdaq Global Select Market on the day following each day on
which common shares are sold under the Sale Agreement. Each
confirmation will include the number of shares sold on that day,
the aggregate gross proceeds of such sales and the proceeds to
us.
In connection with the sale of the common shares on our behalf,
Jefferies will be deemed to be an “underwriter” within the meaning
of the Securities Act, and the compensation of Jefferies will be
deemed to be underwriting commissions or discounts. We have agreed
to indemnify Jefferies against certain civil liabilities, including
liabilities under the Securities Act. We have also agreed to
contribute to payments Jefferies may be required to make in respect
of such liabilities.
The offering of our common shares pursuant to the Sale Agreement
will terminate upon the earlier of (i) the sale of all common
shares subject to the Sale Agreement and (ii) the termination of
the Sale Agreement as permitted therein.
This summary of the material provisions of the Sale Agreement, does
not purport to be a complete statement of its terms and conditions.
A copy of the Sale Agreement is filed as an exhibit to a current
report on Form 8-K filed under the Securities Exchange Act of 1934,
as amended, or the Exchange Act, and incorporated by reference in
this prospectus supplement.
Jefferies and its affiliates may in the future provide various
investment banking, commercial banking, financial advisory and
other financial services for us and our affiliates, for which
services they may in the future receive customary fees. In the
course of its business, Jefferies may actively trade our securities
for its own account or for the accounts of customers, and,
accordingly, Jefferies may at any time hold long or short positions
in such securities.
This prospectus supplement and the accompanying prospectus in
electronic format may be made available on a website maintained by
Jefferies, and Jefferies may distribute this prospectus supplement
and the accompanying prospectus electronically.
Notwithstanding the above, the securities: (i) have not been
qualified for distribution by prospectus in Canada, and (ii) may
not be offered or sold in Canada during the course of their
distribution except pursuant to a Canadian prospectus or in
reliance on an available prospectus exemption.
MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general summary of certain material U.S. federal
income tax considerations applicable to a U.S. Holder (as defined
below) arising from and relating to the acquisition, ownership, and
disposition of common shares acquired pursuant to this prospectus.
This section applies only to a U.S. Holder that holds common shares
as capital assets for U.S. federal income tax purposes. In
addition, it does not set forth all of the U.S. federal income tax
consequences that may be relevant in light of the U.S. Holder’s
particular circumstances, including alternative minimum tax
consequences, the potential application of the provisions of the
Code known as the Medicare contribution tax and tax consequences
applicable to U.S. Holders subject to special rules, such
as:
•certain
financial institutions;
•dealers
or traders in securities who use a mark-to-market method of tax
accounting;
•U.S.
expatriates and certain former citizens or long-term residents of
the United States;
•persons
holding common shares as part of a hedging transaction, straddle,
wash sale, conversion transaction or other integrated transaction
or persons entering into a constructive sale with respect to the
common shares;
•persons
whose functional currency for U.S. federal income tax purposes is
not the U.S. dollar;
•entities
classified as partnerships for U.S. federal income tax
purposes;
•tax-exempt
entities, including an “individual retirement account” or “Roth
IRA”;
•persons
that own or are deemed to own ten percent or more of our shares (by
vote or value); or
•persons
holding common shares in connection with a trade or business
conducted outside of the United States.
If an entity that is classified as a partnership for U.S. federal
income tax purposes holds common shares, the U.S. federal income
tax treatment of a partner will depend on the status of the partner
and the activities of the partnership. Partnerships holding common
shares and partners in such partnerships should consult their tax
advisers as to the particular U.S. federal income tax consequences
of owning and disposing of the common shares.
This section is based on the Code, administrative pronouncements,
judicial decisions, final, temporary and proposed Treasury
regulations, all as of the date hereof, any of which is subject to
change or differing interpretations, possibly with retroactive
effect.
A “U.S. Holder” is a holder who, for U.S. federal income tax
purposes, is a beneficial owner of common shares, and who
is:
•a
citizen or individual resident of the United States;
•a
corporation, or other entity taxable as a corporation, created or
organized in or under the laws of the United States, any state
therein or the District of Columbia;
•an
estate the income of which is subject to U.S. federal income
taxation regardless of its source; or
•a
trust if (1) a U.S. court is able to exercise primary supervision
over the administration of the trust and one or more U.S. persons
have authority to control all substantial decisions of the trust or
(2) the trust has a valid election to be treated as a U.S. person
under applicable U.S. Treasury Regulations.
U.S. Holders should consult their tax advisers concerning the U.S.
federal, state, local and non-U.S. tax consequences of owning and
disposing of common shares in their particular
circumstances.
Passive Foreign Investment Company Rules
Under the Code, we will be a passive foreign investment company, or
PFIC, for any taxable year in which, after the application of
certain “look-through” rules with respect to subsidiaries, either
(i) 75% or more of our gross income consists of “passive income,”
or (ii) 50% or more of the average quarterly value of our assets
consist of assets that produce, or are held for the production of,
“passive income.” For purposes of the above calculations, we will
be treated as if we hold our proportionate share of the assets of,
and receive directly our proportionate share of the income of, any
other corporation in which we directly or indirectly own at least
25%, by value, of the shares of such corporation.
Passive income includes, among other things, interest, dividends,
rents, certain non-active royalties and capital gains. Based on the
composition of our gross income and assets in 2019, our reasonable
estimates of our gross income and assets for 2020, and the nature
of our business, we have determined that we were not a PFIC for our
2019 taxable year and we do not expect to be a PFIC for our taxable
year ending December 31, 2020. Nevertheless, whether we are a PFIC
in 2020 or any future taxable year is uncertain because, among
other things, (i) we currently own, and will own after the closing
of this offering, a substantial amount of passive assets, including
cash, (ii) the valuation of our assets that generate non-passive
income for PFIC purposes, including our intangible assets, is
uncertain and may vary substantially over time, and (iii) the
composition of our income may vary substantially over time. If we
are a PFIC for any year during which a U.S. Holder holds common
shares, we will continue to be treated as a PFIC with respect to
that U.S. Holder for all succeeding years during which the U.S.
Holder holds common shares, even if we ceased to meet the threshold
requirements for PFIC status, unless the U.S. Holder makes a valid
deemed sale or deemed dividend election under the applicable
Treasury regulations with respect to its common
shares.
If we are a PFIC for any taxable year during which a U.S. Holder
holds common shares (assuming such U.S. Holder has not made a
timely mark-to-market election, as described below), gain
recognized by a U.S. Holder on a sale or other disposition
(including certain pledges) of the common shares would be allocated
ratably over the U.S. Holder’s holding period for the common
shares. The amounts allocated to the taxable year of the sale or
other disposition and to any year before we became a PFIC would be
taxed as ordinary income. The amount allocated to each other
taxable year would be subject to tax at the highest rate in effect
for individuals or corporations, as appropriate, for that taxable
year, and an interest charge would be imposed on the amount
allocated to that taxable year. Further, to the extent that any
distribution received by a U.S. Holder on its common shares exceeds
125% of the average of the annual distributions on the common
shares received during the preceding three years or the U.S.
Holder’s holding period, whichever is shorter, that distribution
would be subject to taxation in the same manner as gain, described
immediately above.
A U.S. Holder can avoid certain of the adverse rules described
above by making a mark-to-market election with respect to its
common shares, provided that the common shares are “marketable.”
Common shares will be marketable if they are “regularly traded” on
a “qualified exchange” or other market within the meaning of
applicable Treasury regulations. The common shares will be treated
as “regularly traded” in any calendar year in which more than a de
minimis quantity of the common shares are traded on a qualified
exchange on at least 15 days during each calendar quarter (subject
to the rule that trades that have as one of their principal
purposes the meeting of the trading requirement as disregarded).
The Nasdaq Global Select Market is a qualified exchange for this
purpose and, consequently, if the common shares are regularly
traded, the mark-to-market election will be available to a U.S.
Holder. If a U.S. Holder makes the mark-to-market election, it will
recognize as ordinary income any excess of the fair market value of
the common shares at the end of each taxable year over their
adjusted tax basis, and will recognize an ordinary loss in respect
of any excess of the adjusted tax basis of the common shares over
their fair market value at the end of the taxable year (but only to
the extent of the net amount of income previously included as a
result of the mark-to-market election). If a U.S. Holder makes the
election, the U.S. Holder’s tax basis in the common shares will be
adjusted to reflect the income or loss amounts recognized. Any gain
recognized on the sale or other disposition of common shares in a
year when we are a PFIC will be treated as ordinary income and any
loss will be treated as an ordinary loss (but only to the extent of
the net amount of income previously included as a result of the
mark-to-market election).
However, a mark-to-market election generally cannot be made for
equity interests in any lower-tier PFICs that we own, unless shares
of such lower-tier PFIC are themselves “marketable.” As a result,
even if a U.S. Holder validly
makes a mark-to-market election with respect to our common shares,
the U.S. Holder may continue to be subject to the PFIC rules
(described above) with respect to its indirect interest in any of
our investments that are treated as an equity interest in a PFIC
for U.S. federal income tax purposes. U.S. Holders should consult
their tax advisors as to the availability and desirability of a
mark-to-market election, as well as the impact of such election on
interests in any lower-tier PFICs.
Alternatively, a U.S. Holder can make an election, if we provide
the necessary information, to treat us and each lower-tier PFIC as
a qualified electing fund, or a QEF Election, in the first taxable
year we (and our relevant subsidiaries) are treated as a PFIC with
respect to the U.S. Holder. If a U.S. Holder makes a QEF Election
with respect to a PFIC, the U.S. Holder will be currently taxable
on its pro rata share of the PFIC’s ordinary earnings and net
capital gain (at ordinary income and capital gain rates,
respectively) for each taxable year that the entity is classified
as a PFIC and will not be required to include such amounts in
income when actually distributed by the PFIC. We intend to provide
the information necessary for a U.S. Holder to make a QEF Election
with respect to us and to cause each lower-tier PFIC which we
control to provide such information with respect to such lower-tier
PFIC. If such election remains in place while we and any lower-tier
PFIC subsidiaries are PFICs, we and our subsidiaries will not be
treated as PFICs with respect to such U.S. Holder. A U.S. Holder
must make the QEF Election for us and for each of our subsidiaries
that is a PFIC by attaching a separate properly completed IRS Form
8621 for each such PFIC to the U.S. Holder’s timely filed U.S.
federal income tax return.
In addition, if we are a PFIC or, with respect to a particular U.S.
Holder, are treated as a PFIC for the taxable year in which we paid
a dividend or for the prior taxable year, the preferential dividend
rates discussed above with respect to dividends paid to certain
non-corporate U.S. Holders would not apply.
If a U.S. Holder owns common shares during any year in which we are
a PFIC, the U.S. Holder must file annual reports, containing such
information as the U.S. Treasury may require on IRS Form 8621 (or
any successor form) with respect to us, with the U.S. Holder’s
federal income tax return for that year, unless otherwise specified
in the instructions with respect to such form.
U.S. Holders should consult their tax advisers concerning our PFIC
status and the application of the PFIC rules.
General Rules Applicable to the Ownership and Disposition of Common
Shares
The following discussion describes the general rules applicable to
the ownership and disposition of the common shares but is subject
in its entirety to the special rules described above under the
heading “Passive Foreign Investment Company Rules.”
Distributions on Common Shares
A U.S. Holder that receives a distribution with respect to a common
share will be required to include the amount of such distribution
in gross income as a dividend (without reduction for any Canadian
income tax withheld from such distribution) to the extent of our
current and accumulated “earnings and profits,” as computed for
U.S. federal income tax purposes. Subject to the passive foreign
investment company rules described above, a distribution generally
will be treated as a dividend to the extent paid out of our current
or accumulated earnings and profits (as determined under U.S.
federal income tax principles). To the extent that a distribution
exceeds our current and accumulated “earnings and profits,” such
distribution will be treated first as a tax-free return of capital
to the extent of a U.S. Holder's tax basis in the common shares and
thereafter as gain from the sale or exchange of such common shares.
(See “Sale or Other Taxable Disposition of Common Shares” below).
However, we may not maintain the calculations of our earnings and
profits in accordance with U.S. federal income tax principles, and
each U.S. Holder may have to assume that any distribution by us
with respect to the common shares will constitute ordinary dividend
income.
Dividends paid by a “qualified foreign corporation” to certain
non-corporate U.S. Holders may be eligible for taxation at a
reduced capital gains rate rather than the marginal tax rates
generally applicable to ordinary income provided that a holding
period requirement (more than 60 days of ownership, without
protection from the risk of loss, during the 121-day period
beginning 60 days before the ex-dividend date) and certain other
requirements are met. Each U.S. Holder is advised to consult its
tax advisors regarding the availability of the reduced tax rate on
dividends to its particular circumstances. However, if we are a
PFIC for the taxable year in which the dividend is paid or the
preceding taxable year, we will not be treated as a qualified
foreign corporation, and therefore the
reduced capital gains tax rate described above will not apply.
Dividends received on common shares by corporate U.S. Holders
generally will not be eligible for the “dividends received
deduction.” The dividend rules are complex, and each U.S. Holder
should consult its own tax advisors regarding the application of
such rules.
Sale or Other Taxable Disposition of Common Shares
Upon the sale or other taxable disposition of common shares, a U.S.
Holder generally will recognize capital gain or loss in an amount
equal to the difference between the U.S. dollar value of cash
received plus the fair market value of any property received and
such U.S. Holder's tax basis in such common shares sold or
otherwise disposed of.
A U.S. Holder’s tax basis in common shares generally will be such
holder’s U.S. dollar cost for such common shares.
Gain or loss recognized on such sale or other disposition generally
will be long-term capital gain or loss if, at the time of the sale
or other disposition, the common shares have been held for more
than one year.
Subject to the PFIC rules discussed above, preferential tax rates
currently apply to long-term capital gain of a U.S. Holder that is
an individual, estate, or trust.
There are currently no preferential tax rates for long-term capital
gain of a U.S. Holder that is a corporation.
Deductions for capital losses are subject to significant
limitations under the Code.
Receipt of Foreign Currency
The amount of any distribution paid to a U.S. Holder in foreign
currency, or on the sale, exchange or other taxable disposition of
common shares, generally will be equal to the U.S. dollar value of
such foreign currency based on the exchange rate applicable on the
date of receipt (regardless of whether such foreign currency is
converted into U.S. dollars at that time).
A U.S. Holder will have a basis in the foreign currency equal to
its U.S. dollar value on the date of receipt.
Any U.S. Holder who converts or otherwise disposes of the foreign
currency after the date of receipt may have a foreign currency
exchange gain or loss that would be treated as ordinary income or
loss, and generally will be U.S. source income or loss for foreign
tax credit purposes.
Different rules apply to U.S. Holders who use the accrual
method.
Each U.S. Holder should consult its own U.S. tax advisors regarding
the U.S. federal income tax consequences of receiving, owning, and
disposing of foreign currency.
Foreign Tax Credit
Subject to the PFIC rules discussed above, a U.S. Holder that pays
(whether directly or through withholding) Canadian income tax with
respect to dividends paid on the common shares generally will be
entitled, at the election of such U.S. Holder, to receive either a
deduction or a credit for such Canadian income tax.
Generally, a credit will reduce a U.S. Holder’s U.S. federal income
tax liability on a dollar-for-dollar basis, whereas a deduction
will reduce a U.S. Holder’s income that is subject to U.S. federal
income tax.
This election is made on a year-by-year basis and applies to all
foreign taxes paid (whether directly or through withholding) by a
U.S. Holder during a year.
Complex limitations apply to the foreign tax credit, including the
general limitation that the credit cannot exceed the proportionate
share of a U.S. Holder’s U.S. federal income tax liability that
such U.S. Holder’s “foreign source” taxable income bears to such
U.S. Holder’s worldwide taxable income.
In applying this limitation, a U.S. Holder’s various items of
income and deduction must be classified, under complex rules, as
either “foreign source” or “U.S. source.”
Generally, dividends paid by a foreign corporation should be
treated as foreign source for this purpose, and gains recognized on
the sale of stock of a foreign corporation by a U.S. Holder should
be treated as U.S. source for this purpose.
However, the amount of a distribution with respect to the common
shares that is treated as a “dividend” may be lower for U.S.
federal income tax purposes than it is for Canadian federal income
tax purposes, resulting in a reduced foreign tax credit allowance
to a U.S. Holder.
In addition, this limitation is calculated separately with respect
to specific categories of income.
The foreign tax credit rules are complex, and each U.S. Holder
should consult its own U.S. tax advisors regarding the foreign tax
credit rules.
Backup Withholding and Information Reporting
Payments made within the U.S., or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or
other taxable disposition of, common shares will generally be
subject to information reporting and backup withholding
if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct
U.S. taxpayer identification number (generally on Form W-9), (b)
furnishes an incorrect U.S. taxpayer identification number, (c) is
notified by the IRS that such U.S. Holder has previously failed to
properly report items subject to backup withholding tax, or (d)
fails to certify, under penalty of perjury, that such U.S. Holder
has furnished its correct U.S. taxpayer identification number and
that the IRS has not notified such U.S. Holder that it is subject
to backup withholding tax.
However, certain exempt persons generally are excluded from these
information reporting and backup withholding rules.
Backup withholding is not an additional tax.
Any amounts withheld under the U.S. backup withholding tax rules
will be allowed as a credit against a U.S. Holder’s U.S. federal
income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS in a timely
manner.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS
OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT
TO THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF COMMON
SHARES.
U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR
CIRCUMSTANCES.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of the principal Canadian
federal income tax considerations under the
Income Tax Act
(Canada) and the regulations thereunder (collectively, the “Tax
Act”) generally applicable to a Non-Canadian Holder (as defined
below) arising from and relating to the acquisition, ownership, and
disposition of common shares acquired pursuant to this
prospectus.
This summary is applicable to a purchaser who acquires common
shares pursuant to this offering and who, for the purposes of the
Tax Act and any applicable tax treaty at all relevant times: (i) is
not (and is not deemed to be) a resident in Canada, (ii) holds such
common shares as capital property, (iii) deals at arm’s length and
is not affiliated with the Company or the underwriter, (iv) does
not use or hold (and will not use or hold) and is not deemed to use
or hold the common shares in, or in the course of, carrying on a
business in Canada, (v) does not carry on an insurance business in
Canada and elsewhere, and (vi) is not an “authorized foreign bank”
as defined in the Tax Act (each, a “Non-Canadian
Holder”).
This summary does not apply to a Non-Canadian Holder (i) that is a
“financial institution”, as defined in the Tax Act for purposes of
the “mark-to-market property” rules; (ii) an interest in which is
or would constitute a “tax shelter investment” as defined in the
Tax Act; (iii) that is a “specified financial institution” as
defined in the Tax Act; or (iv) that has or will enter into a
“synthetic disposition arrangement” or a “derivative forward
agreement”, as those terms are defined in the Tax Act, in respect
of common shares pursuant to this offering. All such Non-Canadian
Holders should consult their own tax advisors with respect to an
investment in common shares.
This summary is based on the current provisions of the Tax Act, our
understanding of the current published administrative policies and
assessing practices of the Canada Revenue Agency (the “CRA”), all
specific proposals to amend the Tax Act announced by or on behalf
of the Minister of Finance (Canada) prior to the date hereof (the
“Tax Proposals”), and the current provisions of the Canada-US Tax
Convention (1980) (the “Canada-US Tax Treaty”). This summary
assumes that the Tax Proposals will be enacted in the current form
proposed and does not otherwise take into account or anticipate any
changes in the law or in the administrative policies and assessing
practices of the CRA, whether by judicial, administrative, or
legislative decisions or action, and whether prospective or
retroactive in effect, nor does it take into account tax
legislation or considerations of any province or territory of
Canada or any jurisdiction other than Canada.
The summary is of a general nature only, is not exhaustive of all
Canadian federal income tax considerations, and is not intended to
be, and should not be construed to be, legal or tax advice to any
particular Non-Canadian Holder of the common shares and no
representation with respect to the Canadian tax consequences to any
particular Non-Canadian Holder is made. The relevant tax
considerations applicable to the acquiring, holding and disposing
of common shares pursuant to this offering may vary according to
the status of the holder, the jurisdiction in which the holder
resides or carries on business and the holder’s own particular
circumstances. Accordingly, each Non-Canadian Holder should consult
with their own tax advisors with respect to the Canadian federal
income tax consequences to them of acquiring, holding or disposing
of the common shares.
Dividends
Dividends paid or credited (or deemed to be paid or credited,
including on a repurchase or redemption of the common shares by the
Company) on the common shares to a Non-Canadian Holder will
generally be subject to withholding tax under the Tax Act at a rate
of 25%, subject to reduction under the provisions of any applicable
tax treaty that the Non-Canadian Holder is entitled to the benefits
of, which withholding tax will be withheld and remitted by the
Company for the account of the Non-Canadian Holder as required by
law. For Non-Canadian Holders who are resident in the U.S. for
purposes of, and are entitled to the benefits of, the Canada-U.S.
Tax Treaty (a “U.S. Holder”), and are the beneficial owner of such
dividends paid on the common shares, the Canadian withholding tax
may generally be reduced to the rate of 15%, or if such
Non-Canadian Holder owns at least 10% of our voting shares, to the
rate of 5%. Not all persons who are resident of the U.S. for
purposes of the Canada-US Tax Treaty will be qualified for the
benefits of the Canada-US Tax Treaty.
Non-Canadian Holders who may be eligible for a reduced rate of
withholding tax on dividends (if any) pursuant to any applicable
tax treaty should consult with their own tax advisors with respect
to taking all appropriate steps to obtain the benefit of a reduced
withholding rate, including the execution and delivery to us of CRA
Form NR301, NR302, or NR303.
Disposition of common shares
A Non-Canadian Holder will not be subject to tax under the Tax Act
in respect of any capital gain realized upon the disposition or
deemed disposition of common shares (other than on a repurchase or
redemption of the common shares by the Company) unless the common
shares are “taxable Canadian property” (as defined in the Tax Act)
of the Non-Canadian Holder, and the gain is not otherwise exempt
from tax in Canada pursuant to the terms of an applicable tax
treaty that the Non-Canadian Holder is entitled to the benefits
of.
Provided the common shares are listed on a “designated stock
exchange” within the meaning of the Tax Act (which currently
includes Nasdaq) at the time of disposition, the common shares
generally will not constitute “taxable Canadian property” of a
Non-Canadian Holder, unless at any time during the 60-months
immediately preceding the disposition, (i) one or any combination
of (a) the Non-Canadian Holder, (b) persons with whom the
Non-Canadian Holder does not deal at arm’s length for purposes of
the Tax Act, or (c) partnerships in which the Non-Canadian Holder
or persons referred to in (b) hold a membership interest directly
or indirectly through one or more partnerships, owned at least 25%
of the issued shares of any class or series of the Company’s
capital stock, and (ii) more than 50% of the fair market value of
the common shares was derived directly or indirectly from one or
any combination of (a) real or immoveable property situated in
Canada, (b) “Canadian resource properties” (as defined in the Tax
Act), (c) “timber resource properties” (as defined in the Tax Act),
or (d) an option, interest or right in any such property described
in (a) to (c), whether or not such property exists. For a U.S.
Holder, even if the common shares are taxable Canadian property to
such holder at the time of disposition, the Canada-US Tax Treaty
will generally exempt a disposition of common shares from Canadian
federal income taxes unless the value of the common shares at that
time is derived principally from real property situated in Canada.
Common shares may also be deemed to be "taxable Canadian property"
in certain other circumstances as set out in the Tax
Act.
In the event the common shares are (or are deemed to be) taxable
Canadian property to a Non-Canadian Holder at the time of
disposition and the gain, if any, realized on the disposition of
such common shares is not exempt from tax under the Tax Act by
virtue of the terms of an applicable tax treaty, such Non-Canadian
Holder will realize a capital gain (or capital loss) equal to the
amount by which such Non-Canadian Holder’s proceeds of disposition
in respect of the common share exceeds (or is exceeded by) the
aggregate of the adjusted cost base of such common share to the
Non-Canadian Holder and any reasonable expenses associated with the
disposition. The cost to such Non-Canadian Holder of a common share
acquired pursuant to this offering generally will be averaged with
the adjusted cost base of any other common shares owned by the
Non-Canadian Holder as capital property for the purposes of
determining the adjusted cost base of each such common share to
that Non-Canadian Holder.
Such Non-Canadian Holder whose common shares are taxable Canadian
property at the time of disposition is generally required to comply
with certain reporting and notification obligations under the Tax
Act in respect of the disposition of such common shares including
the requirement to file a Canadian income tax return reporting the
disposition of such common shares. Non-Canadian Holders whose
common shares are taxable Canadian property should consult their
own tax advisors for advice having regard to their particular
circumstances.
LEGAL MATTERS
Certain United States legal matters in connection with this
offering will be passed upon on our behalf by Hogan Lovells US LLP.
Certain Canadian legal matters in connection with this offering
will be passed upon on our behalf by Farris LLP, Vancouver, British
Columbia. Jefferies LLC is being represented in connection with
this offering by Cooley LLP, New York, New York, for certain United
States legal matters and Bennett Jones LLP, Vancouver, British
Columbia, for certain Canadian legal matters.
EXPERTS
Ernst & Young LLP, independent registered public accounting
firm, has audited our consolidated financial statements included in
our Annual Report on Form 10-K for the year ended December 31, 2019
and the effectiveness of our internal control over financial
reporting as of December 31, 2019, as set forth in their reports,
which are incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements
are incorporated by reference in reliance on Ernst & Young
LLP’s reports, given on their authority as experts in accounting
and auditing.
The consolidated financial statements of Arbutus Biopharma
Corporation as of December 31, 2018 appearing in Arbutus Biopharma
Corporation’s Annual Report on Form 10-K, have been incorporated by
reference herein in reliance upon the report of KPMG LLP,
independent registered public accounting firm, also incorporated by
reference herein, and upon their authority as experts in accounting
and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. The SEC maintains an Internet
website at http://www.sec.gov that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC. Our reports on Forms 10-K,
10-Q and 8-K, and amendments to those reports, are also available
for download, free of charge, as soon as reasonably practicable
after these reports are filed with, or furnished to, the SEC, at
our website at www.arbutusbio.com. Information contained on or
accessible through our website is not a part of this prospectus
supplement, and the inclusion of our website address in this
prospectus supplement is an inactive textual reference
only.
The SEC allows us to “incorporate by reference” into this
prospectus supplement the information in other documents that we
file with it. This means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this
prospectus supplement, and information in documents that we file
later with the SEC will automatically update and supersede
information contained in documents filed earlier with the SEC or
contained in this prospectus supplement. We incorporate by
reference in this prospectus supplement (i) the documents listed
below, (ii) all documents that we file with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the
initial filing of the registration statement of which this
prospectus supplement is included and prior to the effectiveness of
such registration statement, and (iii) and any future filings that
we may make with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Exchange Act prior to the termination of the offerings under
this prospectus supplement; provided, however, that we are not
incorporating, in each case, any documents or information deemed to
have been furnished and not filed, including any information that
we disclose under Items 2.02 or 7.01 of any Current Report on Form
8-K, in accordance with SEC rules:
•our
Annual Report on Form 10-K for the year ended December 31, 2019,
filed with the SEC on March 5, 2020, as amended by our Annual
Report on Form 10-K/A, filed with the SEC on March 6,
2020;
•our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2020 and June 30, 2020, filed with the SEC on May 11, 2020 and
August 7, 2020, respectively;
•our
Current Reports on Form 8-K as filed with the SEC on January 13,
2020 (other than the portions thereof that are furnished and not
filed), February 10, 2020, February 19, 2020, March 26, 2020, May
18, 2020, June 1, 2020 and July 24, 2020;
•Our
Definitive Proxy Statement on Schedule 14A, filed with the SEC on
April 24, 2020 (other than the portions thereof that are furnished
and not filed); and
•the
description of our common shares contained in our registration
statement on Form 8-A filed with the SEC on November 4, 2010,
including any amendment or report filed for purposes of updating
such description.
You may request, orally or in writing, a copy of any or all of the
documents incorporated herein by reference. These documents will be
provided to you at no cost, by contacting: Arbutus Biopharma
Corporation, Attn: Corporate Secretary, 701 Veterans Circle,
Warminster, Pennsylvania 18974. In addition, copies of any or all
of the documents incorporated herein by reference may be accessed
at our website at www.arbutusbio.com. The information on such
website is not incorporated by reference and is not a part of this
prospectus supplement.
PROSPECTUS
$150,000,000
Common Shares
Warrants
Units
We may offer and issue from time to time common shares, preferred
shares, warrants, debt securities, or any combination of those
securities, either individually or in units, up to an aggregate
initial offering price of $150,000,000, in one or more transactions
under this prospectus. The securities may be offered in amounts, at
prices and on terms to be determined based on market conditions at
the time of sale and set forth in an accompanying prospectus
supplement.
This prospectus provides you with a general description of the
securities that we may offer. Each time we offer securities, we
will provide you with a prospectus supplement that describes
specific information about the particular securities being offered
and may add, update or change information contained or incorporated
by reference in this prospectus. You should read both this
prospectus and the applicable prospectus supplement, together with
the additional information that is incorporated by reference into
this prospectus and the applicable prospectus
supplement.
The securities may be sold by us to or through underwriters or
dealers, directly to purchasers or through agents designated from
time to time. For additional information on the methods of sale,
you should refer to the section entitled “Plan of Distribution” in
this prospectus and the comparable section of any applicable
prospectus supplement. If any underwriters are involved in the sale
of the securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable
discounts or commissions and options will be set forth in the
applicable prospectus supplement.
Our common shares are listed on the Nasdaq Global Select Market
under the ticker symbol “ABUS.” On December 19, 2019, the last
reported sale price per share of our common shares on the Nasdaq
Global Select Market was $2.28 per share. We have not yet
determined whether the other securities that may be offered by this
prospectus will be listed on any exchange, interdealer quotation
system or over-the-counter market. If we decide to seek the listing
of any such securities upon issuance, the prospectus supplement
relating to those securities will disclose the exchange, quotation
system or market on which those securities will be
listed.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. RISKS
ASSOCIATED WITH AN INVESTMENT IN OUR SECURITIES WILL BE DESCRIBED
IN THE APPLICABLE PROSPECTUS SUPPLEMENT AND CERTAIN OF OUR FILINGS
WITH THE SECURITIES AND EXCHANGE
COMMISSION INCORPORATED BY REFERENCE INTO THIS PROSPECTUS, AS
DESCRIBED UNDER “RISK FACTORS” ON PAGE 5.
You should read this prospectus and any applicable prospectus
supplement together with additional information described under the
heading “Where You Can Find Additional Information” before you make
your investment decision.
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 January 10, 2020.
TABLE OF CONTENTS
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Page
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ABOUT THIS PROSPECTUS
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1
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FORWARD-LOOKING STATEMENTS
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2
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THE COMPANY
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4
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RISK FACTORS
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5
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USE OF PROCEEDS
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6
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GENERAL DESCRIPTION OF OUR SECURITIES
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7
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DESCRIPTION OF OUR CAPITAL STOCK
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8
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DESCRIPTION OF OUR WARRANTS
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11
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DESCRIPTION OF OUR DEBT SECURITIES
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13
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DESCRIPTION OF OUR UNITS
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18
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PLAN OF DISTRIBUTION
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19
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LEGAL MATTERS
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22
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EXPERTS
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22
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
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22
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ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement that we filed
with the Securities and Exchange Commission, or the SEC, using a
“shelf” registration process. Under this shelf registration
process, we may offer to sell any of the securities, or any
combination of the securities, described in this prospectus, in
each case, in one or more offerings, up to a total dollar amount of
$150,000,000.
This prospectus provides you only with a general description of the
securities that we may offer. Each time securities are sold under
this registration statement, we will provide an accompanying
prospectus supplement that will contain specific information about
the terms of those securities and the terms of that offering. The
accompanying prospectus supplement may also add, update or change
information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and any
accompanying prospectus supplement, you should rely on the
information in the accompanying prospectus supplement. You should
read both this prospectus and any accompanying prospectus
supplement, including all documents incorporated by reference
herein and therein, together with the additional information
described under “Where You Can Find Additional Information”
below.
The information contained in this prospectus is not complete and
may be changed. You should rely only on the information provided in
or incorporated by reference in this prospectus or in any
accompanying prospectus supplement, or documents to which we
otherwise refer you. We have not authorized anyone else to provide
you with different information.
We have not authorized any dealer, agent or other person to give
any information or to make any representation other than those
contained or incorporated by reference in this prospectus and any
accompanying prospectus supplement. You must not rely upon any
information or representation not contained or incorporated by
reference in this prospectus or an accompanying prospectus
supplement. This prospectus and the accompanying prospectus
supplement, if any, do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the
registered securities to which they relate, nor do this prospectus
and any accompanying prospectus supplement, if any, constitute an
offer to sell or the solicitation of an offer to buy securities in
any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. You should not assume
that the information contained in this prospectus and any
accompanying prospectus supplement is accurate on any date
subsequent to the date set forth on the front of such document or
that any information we have incorporated by reference is correct
on any date subsequent to the date of the document incorporated by
reference, even though this prospectus and any accompanying
prospectus supplement is delivered or securities are sold on a
later date.
As used in this prospectus, unless the context otherwise requires,
the terms “Arbutus,” the “Company,” “we,” “us,” and “our” refer to
Arbutus Biopharma Corporation, and, unless the context requires
otherwise, the subsidiaries through which it conducts business. The
Arbutus logo is a trademark of Arbutus in Canada. We may indicate
U.S. trademark registrations and U.S. trademarks with the symbols
“®” and “™”, respectively. Other third-party logos and
product/trade names are registered trademarks or trade names of
their respective owners.
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference
into this prospectus, contains “forward-looking statements” or
“forward-looking information” within the meaning of applicable U.S.
and Canadian securities laws (we collectively refer to these items
as “forward-looking statements”). Forward-looking statements are
generally identifiable by use of the words “believes,” “may,”
“plans,” “will,” “anticipates,” “intends,” “budgets,” “could,”
“estimates,” “expects,” “forecasts,” “projects” and similar
expressions that are not based on historical fact or that are
predictions of or indicate future events and trends, and the
negative of such expressions. Forward-looking statements in this
prospectus, including the documents incorporated by reference,
include statements about, among other things:
•our
strategy, future operations, pre-clinical research, pre-clinical
studies, clinical trials, prospects and the plans of
management;
•the
discovery, development and commercialization of a cure for chronic
hepatitis B infection, a disease of the liver caused by the
hepatitis B virus, or HBV;
•our
beliefs and development path and strategy to achieve a cure for
HBV;
•obtaining
necessary regulatory approvals;
•obtaining
adequate financing through a combination of financing activities
and operations;
•using
the results from our HBV studies to adaptively design additional
clinical trials to test the efficacy of combination therapy and the
duration of the result in patients;
•the
expected timing of and amount for payments related to Enantigen
Therapeutics, Inc.’s transaction and its programs;
•the
potential of our drug candidates to improve upon the standard of
care and contribute to a curative combination treatment
regimen;
•the
potential benefits of the reversion of the Ontario Municipal
Employees Retirement System, or OMERS, royalty monetization
transaction for our ONPATTRO™ (Patisiran) royalty
interest;
•developing
a suite of products that intervene at diferent points in the viral
life cycle, with the potential to reactivate the host immune
system;
•using
pre-clinical results to adaptively design clinical trials for
additional cohorts of patients, testing the combination and the
duration of therapy;
•selecting
combination therapy regimens and treatment durations to conduct
Phase 3 clinical trials intended to ultimately support regulatory
filings for marketing approval;
•expanding
our HBV drug candidate pipeline through internal development,
acquisitions and in-licenses;
•the
potential of our assets, including our ownership stake in Genevant
Sciences Ltd., or Genevant, and the royalty entitlement on
ONPATTRO, to provide significant non-dilutive capital;
•our
expectation to select one of several oral next-generation capsid
inhibitor lead compounds for IND-enabling studies in December of
2019;
•our
expectation to make a decision regarding AB-452 clinical
development in early 2020;
•our
expectation for AB-729 for preliminary safety and efficacy data
from both healthy subjects and several single dose cohorts of
subjects with chronic hepatitis B to be available in the first
quarter of 2020;
•payments
from the Gritstone Oncology, Inc. licensing agreement;
•the
expected return from strategic alliances, licensing agreements, and
research collaborations;
•statements
with respect to revenue and expense fluctuation and
guidance;
•the
sufficiency of our cash and cash equivalents to extend into early
2021; and
•obtaining
funding to maintain and advance our business from a variety of
sources including public or private equity or debt financing,
collaborative arrangements with pharmaceutical companies and
government grants and contracts.
We cannot guarantee that the results and other expectations
expressed, anticipated or implied in any forward-looking statement
will be realized. The risks set forth under Item 1A of our Form
10-K for the year ended December 31, 2018, as revised or
supplemented by our Quarterly Reports on Form 10-Q and other
documents we file with the SEC, describe material risks to our
business, and you should read and interpret any forward-looking
statements together with these risks. A variety of factors,
including these risks, could cause our actual results and other
expectations to differ materially from the anticipated results or
other expectations expressed, anticipated or implied in our
forward-looking statements. Should known or unknown risks
materialize, or should underlying assumptions prove inaccurate,
actual results could differ materially from past results and those
anticipated, estimated or projected in the forward-looking
statements. You should bear this in mind as you consider any
forward-looking statements.
You should read this prospectus, any prospectus supplement and the
documents that we incorporate by reference herein and therein
completely and with the understanding that our actual future
results may be materially different from what we expect. The
forward-looking statements contained in this prospectus are made as
of the date of this prospectus and we do not assume any obligation
to update any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
applicable law.
This prospectus and any applicable prospectus supplement and the
documents incorporated by reference herein and therein contain
estimates, projections, market research and other information
concerning, among other things, our industry, our business, markets
and our product candidates. Unless otherwise expressly stated, we
obtain this information from reports, research surveys, studies and
similar data prepared by market research firms and other third
parties, industry, medical and general publications, government
data and similar sources as well as from our own internal estimates
and research and from publications, research, surveys and studies
conducted by third parties on our behalf. Information that is based
on estimates, projections, market research or similar methodologies
is inherently subject to uncertainties and actual events or
circumstances may differ materially from events and circumstances
that are reflected in this information. As a result, you are
cautioned not to give undue weight to such
information.
THE COMPANY
Company Overview
Arbutus Biopharma Corporation (“Arbutus”, the “Company”, “we”,
“us”, and “our”) is a publicly traded (Nasdaq Global Select Market:
ABUS) therapeutic solutions company dedicated to discovering,
developing, and commercializing a cure for patients suffering from
chronic hepatitis B infection, a disease of the liver caused by
HBV. HBV represents a significant, global unmet medical need. The
World Health Organization estimates that approximately 257 million
people worldwide suffer from HBV infection. With high morbidity and
mortality, and a cure rate for HBV patients taking standard of
care, or SOC, treatment regimens of less than 5%, our objective is
to develop safe and effective therapies that can be combined and
lead to higher cure rates with finite treatment
durations.
To pursue our strategy of developing a potential curative
combination regimen for chronic HBV, we are developing a diverse
product pipeline consisting of multiple drug candidates with
potential complementary mechanisms of action, each of which has the
potential to improve upon the SOC and contribute to a curative
combination treatment regimen. Our clinical and pre-clinical
pipeline includes agents that have the potential to form an
effective proprietary combination therapy.
Corporate Information
Arbutus was incorporated pursuant to the British Columbia Business
Corporations Act, or BCBCA, on October 6, 2005, and commenced
active business on April 30, 2007, when Arbutus and its parent
company, Inex Pharmaceuticals Corporation, or Inex, were
reorganized under a statutory plan of arrangement, or the Plan of
Arrangement, completed under the provisions of the BCBCA. The Plan
of Arrangement saw Inex's entire business transferred to and
continued by Arbutus.
On March 4, 2015, we completed a business combination pursuant to
which OnCore Biopharma, Inc., or OnCore, became our wholly-owned
subsidiary. Arbutus Inc. contributed many of the assets in our HBV
pipeline.
Effective July 31, 2015, our corporate name changed from Tekmira
Pharmaceuticals Corporation to Arbutus Biopharma Corporation. Also
effective July 31, 2015, the corporate name of our wholly owned
subsidiary, OnCore Biopharma, Inc. changed to Arbutus Biopharma,
Inc., or Arbutus Inc. We had two wholly owned subsidiaries: Arbutus
Inc. and Protiva Biotherapeutics Inc., or Protiva. Effective
January 1, 2018, Protiva was amalgamated with Arbutus.
Arbutus' head office and principal place of business is located at
701 Veterans Circle, Warminster, Pennsylvania 18974 and our
telephone number is (267) 469-0914. We maintain a website at
www.arbutusbio.com. The information contained on, or that can be
accessed through, our website is not a part of this prospectus or
any accompanying prospectus supplement. We have included our
website address in this prospectus solely as an inactive textual
reference.
RISK FACTORS
Investing in our securities involves a high degree of risk. The
prospectus supplement applicable to each offering of our securities
will contain a discussion of the risks applicable to an investment
in our securities. Prior to making a decision about investing in
our securities, you should carefully consider the specific factors
discussed under the heading “Risk Factors” in the applicable
prospectus supplement, together with all of the other information
contained or incorporated by reference in the prospectus supplement
or appearing or incorporated by reference in this prospectus. You
should also consider the risks, uncertainties and assumptions
discussed under the heading “Risk Factors” in our most recent
Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q
and other documents that we file with the SEC, which are
incorporated herein by reference as described in this prospectus
under the heading “Where You Can Find Additional Information”. The
risks and uncertainties we have described in such documents are not
the only risks that we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also
affect our operations.
USE OF PROCEEDS
Except as otherwise provided in the applicable prospectus
supplement relating to a specific offering, we intend to use the
net proceeds from the sale of securities by us under this
prospectus and any applicable prospectus supplement for general
corporate purposes, which may include working capital, capital
expenditures, research and development expenditures, clinical trial
expenditures, acquisitions of new technologies, products or
businesses, and investments. Additional information on the use of
net proceeds from the sale of securities by us under this
prospectus may be set forth in the accompanying prospectus
supplement relating to the specific offering.
GENERAL DESCRIPTION OF OUR SECURITIES
We may offer and sell, at any time and from time to
time:
•common
shares;
•preferred
shares;
•warrants
to purchase common shares;
•debt
securities consisting of debentures, notes or other evidences of
indebtedness;
•units
consisting of a combination of the foregoing securities;
or
•any
combination of these securities
The terms of any securities we offer will be determined at the time
of sale. We may issue debt securities that are exchangeable for
and/or convertible into common shares or any of the other
securities that may be sold under this prospectus. When particular
securities are offered by us, a supplement to this prospectus will
be filed with the SEC, which will describe the terms of the
offering and sale of the offered securities.
The descriptions below of our share capital, warrants, debt
securities and related information are summaries and are qualified
by reference to documents incorporated by reference to the
registration statement of which this prospectus is a part. Please
refer to “Where You Can Find Additional Information” below for
directions on obtaining these documents.
DESCRIPTION OF OUR CAPITAL STOCK
Authorized and Outstanding Shares
Our authorized share capital consists of an unlimited number of
common shares, without par value, and an unlimited number of
preferred shares, without par value. As of December 19, 2019, there
were (a) 62,111,972 common shares outstanding and (b) 1,164,000
preferred shares outstanding. None of our common shares or
preferred shares are held by us or on behalf of us.
Voting Rights
The holders of our common shares are entitled to receive notice of
any meeting of our shareholders and to attend and vote thereat,
except those meetings at which only the holders of shares of
another class or of a particular series are entitled to vote. Each
common share entitles its holder to one vote. There are no
cumulative voting rights.
Dividends
Subject to the rights of the holders of preferred shares, the
holders of common shares are entitled to receive on a pro rata
basis such dividends as our board of directors may declare out of
funds legally available for payment of dividends. In the event of
the dissolution, liquidation, winding-up or other distribution of
our assets, those holders are entitled to receive on a pro rata
basis all of our assets remaining after payment of all of our
liabilities, subject to the rights of holders of preferred shares.
Our common shares carry no pre-emptive or conversion
rights.
Series A Participating Convertible Preferred Shares
In October 2017, we entered into a subscription agreement with
Roivant Sciences Ltd., or Roivant, for the sale of 1,164,000 Series
A participating convertible preferred shares, or the Preferred
Shares, for gross proceeds of $116.4 million. These Preferred
Shares are non-voting and accrue an 8.75% per annum coupon in the
form of additional Preferred Shares, compounded annually, until
October 16, 2021, at which time all the Preferred Shares will be
subject to mandatory conversion into common shares (subject to
limited exceptions in the event of certain fundamental corporate
transactions relating to our capital structure or assets, which
would permit earlier conversion at Roivant’s option). The
conversion price is $7.13 per share, which will result in the
Preferred Shares being converted into approximately 23 million
common shares. After conversion of the Preferred Shares into common
shares, based on the number of common shares outstanding as of
September 30, 2019, Roivant would hold approximately 49% of our
common shares. Roivant agreed to a four year lock-up period for
this investment and its existing holdings in us. Roivant also
agreed to a four year standstill whereby Roivant will not acquire
greater than 49.99% of our common shares or securities convertible
into common shares. The initial investment of $50.0 million closed
in October 2017, and the remaining amount of $66.4 million closed
in January 2018 following regulatory and shareholder
approvals.
Registration Rights
On January 11, 2015, we entered into an Agreement and Plan of
Merger and Reorganization, or the Merger Agreement, with OnCore
pursuant to which OnCore became our wholly-owned subsidiary. In
connection with the Merger Agreement, we entered into a
Registration Rights Agreement, or the Registration Rights
Agreement, with certain of OnCore’s shareholders. On October 16,
2017, we entered into an Amending Agreement pursuant to which the
common shares underlying the Preferred Shares purchased by Roivant
were included as registrable securities under the Registration
Rights Agreement.
Pursuant to the Registration Rights Agreement, certain holders of
our common shares have registration rights. After registration of
these common shares pursuant to these rights, these shares will
become freely tradable without restriction under the Securities
Act. The registration rights will terminate with respect to each
shareholder on the
date on which such shareholder ceases to beneficially own more than
three percent of our common shares then outstanding, if such shares
may be sold pursuant to Rule 144 of the Securities
Act.
An aggregate of approximately 42 million common shares are entitled
to these registration rights, including approximately 23 million
common shares issuable upon conversion of the Preferred
Shares.
We have complied with all of our other obligations under the
Registration Rights Agreement in connection with the filing of this
registration statement.
Director Nomination Rights
Pursuant to the terms of the Amended and Restated Governance
Agreement, dated October 16, 2017, between us and Roivant and Part
28 of our Notice of Articles and Articles, or our Articles, for so
long as Roivant has "beneficial ownership" (as defined pursuant
Rule 13d-3 under the Securities Exchange Act of 1934, as amended,
or the Exchange Act), or Beneficial Ownership, or exercises control
or direction over not less than:
•thirty
percent (30%) of our issued and outstanding common shares
calculated on a partially diluted basis as of a particular date,
Roivant has the right to nominate three (3) individuals for
election to our Board of Directors at each shareholder meeting, one
(1) of whom must satisfy the applicable independence
standards;
•twenty
percent (20%) of our issued and outstanding common shares
calculated on a partially diluted basis as of a particular date,
Roivant has the right to nominate two (2) individuals for election
to our Board of Directors at each shareholder meeting;
and
•ten
percent (10%) of our issued and outstanding common shares
calculated on a partially diluted basis as of a particular date,
Roivant has the right to nominate one (1) individual for election
to our Board of Directors at each shareholder meeting.
Upon Roivant having Beneficial Ownership or exercising control or
direction over less than ten percent (10%) of our outstanding
common shares calculated on a partially diluted basis as of a
particular date, the nomination rights provided above will be of no
further force and effect. The total number of common shares
underlying the Preferred Shares beneficially owned by Roivant are
included in the Beneficial Ownership calculations described
above.
Limitations to Control due to Certain Provisions of Canadian and
British Columbian Law and our Articles
Unless such offer constitutes an exempt transaction, an offer made
by a person, or an offeror, to acquire outstanding shares of a
Canadian entity that, when aggregated with the offeror’s holdings
(and those of persons or companies acting jointly with the
offeror), would constitute 20% or more of the outstanding shares,
would be subject to the take-over provisions of Canadian securities
laws. The foregoing is a limited and general summary of certain
aspects of applicable securities law in the provinces and
territories of Canada, all in effect as of the date
hereof.
In addition to the take-over bid requirements noted above, the
acquisition of shares may trigger the application of additional
statutory regimes including amongst others, the Investment Canada
Act (Canada) and the Competition Act (Canada).
This summary is not a comprehensive description of relevant or
applicable considerations regarding such requirements and,
accordingly, is not intended to be, and should not be interpreted
as, legal advice to any prospective purchaser and no representation
with respect to such requirements to any prospective purchaser is
made. Prospective investors should consult their own Canadian legal
advisors with respect to any questions regarding securities law in
the provinces and territories of Canada.
As well, under the Business Corporations Act (British Columbia),
unless otherwise stated in the Articles, certain corporate actions
require the approval of a special majority of shareholders, meaning
holders of shares representing 66 2/3% of those votes cast in
respect of a shareholder vote addressing such matter. Those items
requiring the approval of a special majority generally relate to
fundamental changes with respect to our business, and include
amongst others, resolutions: (i) removing a director prior to the
expiry of his or her term; (ii) altering the Articles, (iii)
approving an amalgamation; (iv) approving a plan of arrangement;
and (v) providing for a sale of all or substantially all of our
assets.
Outstanding Stock Options
As of December 19, 2019, we had outstanding options to purchase
7,744,093 of our common shares at a weighted-average exercise price
of $5.40 per share, pursuant to our 2011 Omnibus Share Compensation
Plan and our 2016 Omnibus Share and Incentive Plan.
As of December 19, 2019, we had outstanding options to purchase
99,991 of our common shares at a weighted-average exercise price of
$0.56 per share, pursuant to the OnCore Option Plan.
As of December 19, 2019, we had outstanding options to purchase
1,112,000 of our common shares at a weighted-average exercise price
of $2.18 per share, which options were issued outside of our equity
compensation plans.
The Nasdaq Global Select Market
Our common shares are listed on the Nasdaq Global Select Market
under the symbol “ABUS.”
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is AST Trust
Company (Canada).
DESCRIPTION OF OUR WARRANTS
We may issue warrants to purchase our common shares with other
securities or separately, as described in each applicable
prospectus supplement. Below is a description of certain general
terms and provisions of the warrants that we may offer. Particular
terms of the warrants will be described in the applicable warrant
agreements and the applicable prospectus supplement for the
warrants.
The applicable prospectus supplement will contain, where
applicable, the following terms of and other information relating
to the warrants:
•the
specific designation and aggregate number of, and the price at
which we will issue, the warrants;
•the
currency or currency units in which the offering price, if any, and
the exercise price are payable;
•the
designation, amount and terms of the securities purchasable upon
exercise of the warrants;
•if
applicable, the exercise price for our common shares and the number
of common shares to be received upon exercise of the
warrants;
•the
date on which the right to exercise the warrants will begin and the
date on which that right will expire or, if the warrants may not be
continuously exercised throughout that period, the specific date or
dates on which the warrants may be exercised;
•whether
the warrants will be issued in fully registered form or bearer
form, in definitive or global form or in any combination of these
forms, although, in any case, the form of a warrant included in a
unit will correspond to the form of the unit and of any security
included in that unit;
•any
applicable material U.S. federal income tax or foreign tax
consequences;
•the
identity of the warrant agent for the warrants, if any, and of any
other depositaries, execution or paying agents, transfer agents,
registrars or other agents;
•the
proposed listing, if any, of the warrants or any securities
purchasable upon exercise of the warrants on any securities
exchange or market;
•if
applicable, the date from and after which the warrants and the
common shares;
•if
applicable, the minimum or maximum amount of the warrants that may
be exercised at any one time;
•information
with respect to book-entry procedures, if any;
•the
anti-dilution provisions of the warrants, if any;
•any
redemption, put or call provisions;
•whether
the warrants are to be sold separately or with other securities as
parts of units; and
•any
additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the
warrants.
•
Before the exercise of their warrants, holders of warrants will not
have any of the rights of holders of common shares. Therefore,
holders of warrants will not be entitled, by virtue of being such
holders, to vote, consent, receive dividends, receive notice as
shareholders with respect to any meeting of shareholders for the
election of our directors or any other matter, or to exercise any
rights whatsoever as our shareholders. We reserve the right to
include in an applicable prospectus supplement specific terms of
the warrants that are not within the options and
parameters
described in this prospectus. In addition, to the extent that any
particular terms of the warrants described in an applicable
prospectus supplement differ from any of the terms described in
this prospectus, the description of those terms included in this
prospectus shall be deemed to have been superseded by the
description of the differing terms set forth in such applicable
prospectus supplement with respect to such warrants.
Transfer Agent and Registrar
The transfer agent and registrar for any warrants will be set forth
in the applicable prospectus supplement.
DESCRIPTION OF OUR DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities that we may offer under this prospectus, any of which
may be issued as convertible or exchangeable debt securities. We
will set forth the particular terms of the debt securities we offer
in an applicable prospectus supplement. The extent, if any, to
which the following general provisions apply to particular debt
securities will be described in the applicable prospectus
supplement. The following description of general terms relating to
the debt securities and the indenture under which the debt
securities will be issued are summaries only and therefore are not
complete. You should read the indenture and the applicable
prospectus supplement regarding any particular issuance of debt
securities.
We will issue the debt securities offered by this prospectus and
any accompanying prospectus supplement under an indenture to be
entered into between us and the trustee identified in the
applicable prospectus supplement. The terms of the debt securities
will include those stated in the indenture and those made part of
the indenture by reference to the Trust Indenture Act of 1939, as
in effect on the date of the indenture. We have filed or will file
a copy of the form of indenture as an exhibit to the registration
statement in which this prospectus is included. The indenture will
be subject to and governed by the terms of the Trust Indenture Act
of 1939.
We may offer under this prospectus up to an aggregate principal
amount of $150,000,000 in debt securities, or if debt securities
are issued at a discount, or in a foreign currency, foreign
currency units or composite currency, the principal amount as may
be sold for an aggregate initial public offering price of up to
$150,000,000. Unless otherwise specified in the applicable
prospectus supplement, the debt securities will represent direct,
unsecured obligations of the Company and will rank equally with all
of our other unsecured indebtedness.
The following statements relating to the debt securities and the
indenture are summaries, qualified in their entirety by reference
to the detailed provisions of the indenture and the final form
indenture as may be filed with an applicable prospectus
supplement.
General
We may issue the debt securities in one or more series with the
same or various maturities, at par, at a premium, or at a discount.
We will describe the particular terms of each series of debt
securities in an applicable prospectus supplement relating to that
series, which we will file with the SEC.
The applicable prospectus supplement will set forth, to the extent
required, the following terms of the debt securities in respect of
which such prospectus supplement is delivered:
•the
title of the series;
•the
aggregate principal amount;
•the
issue price or prices, expressed as a percentage of the aggregate
principal amount of the debt securities;
•any
limit on the aggregate principal amount;
•the
date or dates on which principal is payable;
•the
interest rate or rates (which may be fixed or variable) or, if
applicable, the method used to determine such rate or
rates;
•the
date or dates from which interest, if any, will be payable and any
regular record date for the interest payable;
•the
place or places where principal and, if applicable, premium and
interest, is payable;
•the
terms and conditions upon which we may, or the holders may require
us to, redeem or repurchase the debt securities;
•the
denominations in which such debt securities may be issuable, if
other than denominations of $1,000 or any integral multiple of that
number;
•whether
the debt securities are to be issuable in the form of certificated
debt securities (as described below) or global debt securities (as
described below);
•the
portion of principal amount that will be payable upon declaration
of acceleration of the maturity date if other than the principal
amount of the debt securities;
•the
currency of denomination;
•the
designation of the currency, currencies or currency units in which
payment of principal and, if applicable, premium and interest, will
be made;
•if
payments of principal and, if applicable, premium or interest, on
the debt securities are to be made in one or more currencies or
currency units other than the currency of denomination, the manner
in which the exchange rate with respect to such payments will be
determined;
•if
amounts of principal and, if applicable, premium and interest may
be determined by reference to an index based on a currency or
currencies or by reference to a commodity, commodity index, stock
exchange index or financial index, then the manner in which such
amounts will be determined;
•the
provisions, if any, relating to any collateral provided for such
debt securities;
•any
addition to or change in the covenants and/or the acceleration
provisions described in this prospectus or in the
indenture;
•any
events of default, if not otherwise described below under “Events
of Default”;
•the
terms and conditions, if any, for conversion into or exchange for
shares of our common or preferred shares;
•any
depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents; and
•the
terms and conditions, if any, upon which the debt securities shall
be subordinated in right of payment to other indebtedness of the
Company.
We may issue discount debt securities that provide for an amount
less than the stated principal amount to be due and payable upon
acceleration of the maturity of such debt securities in accordance
with the terms of the indenture. We may also issue debt securities
in bearer form, with or without coupons. If we issue discount debt
securities or debt securities in bearer form, we will describe
material U.S. federal income tax considerations and other material
special considerations that apply to these debt securities in the
applicable prospectus supplement.
We may issue debt securities denominated in or payable in a foreign
currency or currencies or a foreign currency unit or units. If we
do, we will describe the restrictions, elections, and general tax
considerations relating to the debt securities and the foreign
currency or currencies or foreign currency unit or units in the
applicable prospectus supplement.
Exchange and/or Conversion Rights
We may issue debt securities which can be exchanged for or
converted into our common or preferred shares. If we do, we will
describe the terms of exchange or conversion in the prospectus
supplement relating to these debt securities.
Transfer and Exchange
We may issue debt securities that will be represented by
either:
•“book-entry
securities,” which means that there will be one or more global
securities registered in the name of a depositary or a nominee of a
depositary; or
•“certificated
securities,” which means that they will be represented by a
certificate issued in definitive registered form.
We will specify in the prospectus supplement applicable to a
particular offering whether the debt securities offered will be
book-entry or certificated securities.
Certificated Debt Securities
If you hold certificated debt securities issued under an indenture,
you may transfer or exchange such debt securities in accordance
with the terms of the indenture. You will not be charged a service
charge for any transfer or exchange of certificated debt securities
but may be required to pay an amount sufficient to cover any tax or
other governmental charge payable in connection with such transfer
or exchange.
Global Securities
The debt securities of a series may be issued in the form of one or
more global securities that will be deposited with a depositary or
its nominees identified in the prospectus supplement relating to
the debt securities. In such a case, one or more global securities
will be issued in a denomination or aggregate denominations equal
to the portion of the aggregate principal amount of outstanding
debt securities of the series to be represented by such global
security or securities.
Unless and until it is exchanged in whole or in part for debt
securities in definitive registered form, a global security may not
be registered for transfer or exchange except as a whole by the
depositary for such global security to a nominee of the depositary
and except in the circumstances described in the applicable
prospectus supplement relating to the debt securities. The specific
terms of the depositary arrangement with respect to a series of
debt securities will be described in the applicable prospectus
supplement relating to such series.
Protection in the Event of Change of Control
Any provision in an indenture that governs our debt securities
covered by this prospectus that includes any covenant or other
provision providing for a put or increased interest or otherwise
that would afford holders of our debt securities additional
protection in the event of a recapitalization transaction, a change
of control of the Company, or a highly leveraged transaction will
be described in the applicable prospectus supplement.
Covenants
Unless otherwise indicated in this prospectus or the applicable
prospectus supplement, our debt securities may not have the benefit
of any covenant that limits or restricts our business or
operations, the pledging of our assets or the incurrence by us of
indebtedness. We will describe in the applicable prospectus
supplement any material covenants in respect of a series of debt
securities.
Consolidation, Merger and Sale of Assets
We may agree in any indenture that governs the debt securities of
any series covered by this prospectus that we will not consolidate
with or merge into any other person or convey, transfer, sell or
lease our properties and assets substantially as an entirety to any
person, unless such person and such proposed transaction meets
various criteria, which we will describe in detail in the
applicable prospectus supplement.
Defaults and Notice
The debt securities of any series will contain events of default to
be specified in the applicable prospectus supplement, which may
include, without limitation:
•failure
to pay the principal of, or premium or make-whole amount, if any,
on any debt security of such series when due and payable (whether
at maturity, by call for redemption, through any mandatory sinking
fund, by redemption at the option of the holder, by declaration or
acceleration or otherwise);
•failure
to make a payment of any interest on any debt security of such
series when due;
•our
failure to perform or observe any other covenants or agreements in
the indenture with respect to the debt securities of such
series;
•certain
events relating to our bankruptcy, insolvency or reorganization;
and
•certain
cross defaults, if and as applicable.
If an event of default with respect to debt securities of any
series shall occur and be continuing, we may agree that the trustee
or the holders of at least 25% in aggregate principal amount of the
then outstanding debt securities of such series may declare the
principal amount (or, if the debt securities of such series are
issued at an original issue discount, such portion of the principal
amount as may be specified in the terms of the debt securities of
such series) of all debt securities of such series or such other
amount or amounts as the debt securities or supplemental indenture
with respect to such series may provide, to be due and payable
immediately. Any provisions pertaining to events of default and any
remedies associated therewith will be described in the applicable
prospectus supplement.
Any indenture that governs our debt securities covered by this
prospectus may require that the trustee under such indenture shall,
within 90 days after the occurrence of a default, give to holders
of debt securities of any series notice of all uncured defaults
with respect to such series known to it. However, in the case of a
default that results from the failure to make any payment of the
principal of, premium or make-whole amount, if any, or interest on
the debt securities of any series, or in the payment of any
mandatory sinking fund installment with respect to debt securities
of such series, if any, the trustee may withhold such notice if it
in good faith determines that the withholding of such notice is in
the interest of the holders of debt securities of such series. Any
terms and provisions relating to the foregoing types of provisions
will be described in further detail in the applicable prospectus
supplement.
Any indenture that governs our debt securities covered by this
prospectus will contain a provision entitling the trustee to be
indemnified by holders of debt securities before proceeding to
exercise any trust or power under the indenture at the request of
such holders. Any such indenture may provide that the holders of at
least a majority in aggregate principal amount of the then
outstanding debt securities of any series may direct the time,
method and place of conducting any proceedings for any remedy
available to the trustee, or of exercising any trust or power
conferred upon the trustee with respect to the debt securities of
such series. However, the trustee under any such indenture may
decline to follow any such direction if, among other reasons, the
trustee determines in good faith that the actions or proceedings as
directed may not lawfully be taken, would involve the trustee in
personal liability or would be unduly prejudicial to the holders of
the debt securities of such series not joining in such
direction.
Any indenture that governs our debt securities covered by this
prospectus may endow the holders of such debt securities to
institute a proceeding with respect to such indenture, subject to
certain conditions, which will be specified in the applicable
prospectus supplement and which may include, that the holders of at
least a majority in aggregate principal amount of the debt
securities of such series then outstanding make a written request
upon the
trustee to exercise its power under the indenture, indemnify the
trustee and afford the trustee reasonable opportunity to act. Even
so, such holders may have an absolute right to receipt of the
principal of, premium or make-whole amount, if any, and interest
when due, to require conversion or exchange of debt securities if
such indenture provides for convertibility or exchangeability at
the option of the holder and to institute suit for the enforcement
of such rights. Any terms and provisions relating to the foregoing
types of provisions will be described in further detail in the
applicable prospectus supplement.
Modification of the Indenture
We and the trustee may modify any indenture that governs our debt
securities of any series covered by this prospectus with or without
the consent of the holders of such debt securities, under certain
circumstances to be described in an applicable prospectus
supplement.
Defeasance; Satisfaction and Discharge
The applicable prospectus supplement will outline the conditions
under which we may elect to have certain of our obligations under
the indenture discharged and under which the indenture obligations
will be deemed to be satisfied.
Regarding the Trustee
We will identify the trustee and any relationship that we may have
with such trustee, with respect to any series of debt securities,
in the applicable prospectus supplement relating to the applicable
debt securities. You should note that if the trustee becomes a
creditor of the Company, the indenture and the Trust Indenture Act
of 1939 limit the rights of the trustee to obtain payment of claims
in certain cases, or to realize on certain property received in
respect of any such claim, as security or otherwise. The trustee
and its affiliates may engage in, and will be permitted to continue
to engage in, other transactions with us and our affiliates. If,
however, the trustee acquires any “conflicting interest” within the
meaning of the Trust Indenture Act of 1939, it must eliminate such
conflict or resign.
Governing Law
The law governing the indenture and the debt securities will be
identified in the applicable prospectus supplement relating to the
applicable indenture and debt securities.
DESCRIPTION OF OUR UNITS
The following description, together with the additional information
we include in any applicable prospectus supplement, summarizes the
material terms and provisions of the units that we may offer under
this prospectus. Units may be offered independently or together
with common shares, preferred shares, warrants or debt securities
offered by any prospectus supplement, and may be attached to or
separate from those securities. While the terms we have summarized
below will generally apply to any future units that we may offer
under this prospectus, we will describe the particular terms of any
series of units that we may offer in more detail in the applicable
prospectus supplement. The terms of any units offered under an
applicable prospectus supplement may differ from the terms
described below.
We will incorporate by reference into the registration statement of
which this prospectus forms a part the form of unit agreement,
including a form of unit certificate, if any, that describes the
terms of the series of units we are offering before the issuance of
the related series of units. The following summaries of material
provisions of the units, and the unit agreements, are subject to,
and qualified in their entirety by reference to, all the provisions
of the unit agreement applicable to a particular series of units.
We urge you to read the applicable prospectus supplements related
to the units that we sell under this prospectus, as well as the
complete unit agreements that contain the terms of the
units.
We may issue units comprised of one or more of the securities
described in this prospectus in any combination. Each unit will be
issued so that the holder of the unit is also the holder of each
security included in the unit. Thus, the holder of a unit will have
the rights and obligations of a holder of each included security.
The unit agreement, if any, under which a unit is issued may
provide that the securities comprising the unit may not be held or
transferred separately, at any time or at any time before a
specified date.
The particular terms and provisions of units offered by an
applicable prospectus supplement, and the extent to which the
general terms and provisions described below may apply thereto,
will be described in the applicable prospectus supplement filed in
respect of such units. This description will include, where
applicable:
•the
designation and aggregate number of units offered;
•the
price at which the units will be offered;
•the
rights and obligations of the unit agent, if any;
•the
currency or currencies in which the units are
denominated;
•any
provisions of the governing unit agreement that differ from those
described below; and
•the
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;
•the
number of securities that may be purchased upon exercise of each
unit and the price at which the currency or currencies in which
that amount of securities may be purchased upon exercise of each
unit;
•any
provisions for the issuance, payment, settlement, transfer,
adjustment or exchange of the units or of the securities comprising
the units; and
•any
other material terms of the units.
We reserve the right to set forth in an applicable prospectus
supplement specific terms of the units that are not within the
options and parameters set forth in this prospectus. In addition,
to the extent that any particular terms of the units described in
an applicable prospectus supplement differ from any of the terms
described in this prospectus, the description of such terms set
forth in this prospectus shall be deemed to have been superseded by
the description of the differing terms set forth in such prospectus
supplement with respect to such units.
PLAN OF DISTRIBUTION
We may sell the securities, from time to time, to or through
underwriters or dealers, through agents or remarketing firms, or
directly to one or more purchasers pursuant to:
•underwritten
public offerings;
•negotiated
transactions;
•block
trades;
•“At
the Market Offerings,” within the meaning of Rule 415(a)(4) of the
Securities Act of 1933, as amended, or the Securities Act, into an
existing trading market, at prevailing market prices;
or
•through
a combination of these methods.
We may sell the securities to or through one or more underwriters
or dealers (acting as principal or agent), 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
•at
negotiated prices.
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:
•he
name or names of the underwriters, dealers or agents, if
any;
•if
the securities are to be offered through the selling efforts of
brokers or dealers, the plan of distribution and the terms of any
agreement, arrangement, or understanding entered into with
broker(s) or dealer(s) prior to the effective date of the
registration statement, and, if known, the identity of any
broker(s) or dealer(s) who will participate in the offering and the
amount to be offered through each;
•the
purchase price of the securities or other consideration therefor,
and the proceeds, if any, we will receive from the
sale;
•if
any of the securities being registered are to be offered otherwise
than for cash, the general purposes of the distribution, the basis
upon which the securities are to be offered, the amount of
compensation and other expenses of distribution, and by whom they
are to be borne;
•any
delayed delivery arrangements;
•any
over-allotment or other 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, commissions or concessions allowed or reallowed or paid
to dealers;
•the
identity and relationships of any finders, if applicable;
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. Unless otherwise indicated in the
prospectus supplement, 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 underwriter’s 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, dealers or
agents with whom we have a material relationship. We will describe
in the prospectus supplement, naming the underwriter, dealer or
agent, the nature of any such relationship.
We may use a remarketing firm to offer the securities in connection
with a remarketing arrangement upon their purchase. Remarketing
firms will act as principals for their own account or as agents for
us. These remarketing firms will offer or sell the securities
pursuant to the terms of the securities. A prospectus supplement
will identify any remarketing firm and the terms of its agreement,
if any, with us and will describe the remarketing firm’s
compensation. Remarketing firms may be deemed to be underwriters in
connection the securities they remarket.
If we offer and sell securities through a dealer, we or an
underwriter will sell the securities to the dealer, as principal.
The dealer may then resell the securities to the public at varying
prices to be determined by the dealer at the time of resale. The
name of the dealer and the terms of the transaction will be set
forth in the applicable prospectus supplement.
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 payable to
the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, the agent will act on a best-efforts
basis for the period of its appointment.
Dealers and agents participating in the distribution of the
securities may be deemed to be underwriters, and compensation
received by them on resale of the securities may be deemed to be
underwriting discounts. If such dealers or agents were deemed to be
underwriters, they may be subject to statutory liabilities under
the Securities Act.
We may sell securities directly to one or more purchasers without
using underwriters or agents. Underwriters, dealers and agents that
participate in the distribution of the securities may be
underwriters as defined in the Securities Act, and any discounts or
commissions they receive from us and any profit on their resale of
the securities may be treated as underwriting discounts and
commissions under the Securities Act.
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, underwriters and dealers with
indemnification against civil liabilities, including liabilities
under the Securities Act, or contribution with respect to payments
that the agents, underwriters or dealers may make with respect to
these liabilities. Agents, underwriters and dealers, or their
respective affiliates, may engage in transactions with, or perform
services for, us in the ordinary course of business.
The securities we offer may be new issues of securities and may
have no established trading market. The securities may or may not
be listed on a securities exchange. 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 can
make no assurance as to the liquidity of, or the existence of
trading markets for, any of the securities.
Any underwriter may engage in over-allotment, stabilizing
transactions, short-covering transactions and penalty bids in
accordance with Regulation M under the Securities Exchange Act of
1934, as amended, or 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
Stock Market LLC may engage in passive market making transactions
in the common shares on the Nasdaq Stock Market LLC 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.
Notwithstanding the above, the securities: (i) have not been
qualified for distribution by prospectus in Canada, and (ii) may
not be offered or sold in Canada during the course of their
distribution except pursuant to a Canadian prospectus or in
reliance on an available prospectus exemption.
LEGAL MATTERS
Unless otherwise specified in a prospectus supplement, certain
legal matters relating to the securities will be passed upon for us
by Hogan Lovells US LLP with respect to matters of United States
law, and Farris LLP, Vancouver, B.C., Canada, with respect to
matters of Canadian law. As appropriate, legal counsel representing
the underwriters, dealers or agents will be named in the
accompanying prospectus supplement and may opine to certain legal
matters.
EXPERTS
The consolidated financial statements of Arbutus Biopharma
Corporation as of December 31, 2018 and 2017 and for each of the
years in the two-year period ended December 31, 2018 and
management’s assessment of the effectiveness of internal control
over financial reporting as of December 31, 2018, appearing in
Arbutus Biopharma Corporation’s Annual Report on Form 10-K, have
been incorporated by reference herein in reliance upon the reports
of KPMG LLP, independent registered public accounting firm, also
incorporated by reference herein, and upon their authority as
experts in accounting and auditing. The audit report covering the
December 31, 2018 financial statements refers to a change in the
accounting for revenue at January 1, 2018 upon the adoption of ASC
606,
Revenue from Contracts with Customers.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. The SEC maintains an Internet
website at http://www.sec.gov that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC. Our reports on Forms 10-K,
10-Q and 8-K, and amendments to those reports, are also available
for download, free of charge, as soon as reasonably practicable
after these reports are filed with, or furnished to, the SEC, at
our website at www.arbutusbio.com. Information contained on or
accessible through our website is not a part of this prospectus or
any prospectus supplement, and the inclusion of our website address
in this prospectus is an inactive textual reference
only.
The SEC allows us to “incorporate by reference” into this
prospectus the information in other documents that we file with it.
This means that we can disclose important information to you by
referring you to those documents. The information incorporated by
reference is considered to be a part of this prospectus, and
information in documents that we file later with the SEC will
automatically update and supersede information contained in
documents filed earlier with the SEC or contained in this
prospectus. We incorporate by reference in this prospectus (i) the
documents listed below, (ii) all documents that we file with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of the initial filing of the registration statement
of which this prospectus is included and prior to the effectiveness
of such registration statement, and (iii) and any future filings
that we may make with the SEC under Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act prior to the termination of the offerings
under this prospectus; provided, however, that we are not
incorporating, in each case, any documents or information deemed to
have been furnished and not filed, including any information that
we disclose under Items 2.02 or 7.01 of any Current Report on Form
8-K, in accordance with SEC rules:
•our
Annual Report on Form 10-K for the year ended December 31, 2018,
filed with the SEC on March 7, 2019;
•our
Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2019, June 30, 2019 and September 30, 2019, filed with the SEC
on May 6, 2019, August 5, 2019 and November 6, 2019,
respectively;
•our
Current Reports on Form 8-K as filed with the SEC on February 14,
2019 (other than the portions thereof that are furnished and not
filed), March 15, 2019, April 23, 2019, May 20, 2019, May 28, 2019,
June 18, 2019, July 3, 2019, July 18, 2019, August 9, 2019, August
20, 2019, August 26, 2019, October 3, 2019 and November 6, 2019
(other than the portions thereof that are furnished and not
filed);
•Our
Definitive Proxy Statement on Schedule 14A, filed with the SEC on
April 23, 2019 (other than the portions thereof that are furnished
and not filed); and
•the
description of our common shares contained in our registration
statement on Form 8-A filed with the SEC on November 4, 2010,
including any amendment or report filed for purposes of updating
such description.
You may request, orally or in writing, a copy of any or all of the
documents incorporated herein by reference. These documents will be
provided to you at no cost, by contacting: Arbutus Biopharma
Corporation, Attn: Corporate Secretary, 701 Veterans Circle,
Warminster, Pennsylvania 18974. In addition, copies of any or all
of the documents incorporated herein by reference may be accessed
at our website at www.arbutusbio.com. The information on such
website is not incorporated by reference and is not a part of this
prospectus.
Up to $75,000,000
Common Shares
PROSPECTUS SUPPLEMENT
Jefferies
August 7, 2020
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