On May 27, 2020, we entered into an underwriting agreement (the “Underwriting Agreement”) with BofA Securities, Inc., Citigroup Global Markets Inc. and SVB Leerink LLC, as representatives of the several underwriters named therein (collectively, the “Underwriters”), relating to the issuance and sale in a public offering of 5,500,000 shares of our common stock, par value $0.0001 per share. The price to the public in the offering is $50.00 per share and the Underwriters have agreed to purchase the shares from us pursuant to the Underwriting Agreement at a price of $47.75. The net proceeds to us from the offering are expected to be approximately $262.4 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The closing of the offering is expected to occur on June 1, 2020, subject to the satisfaction of customary closing conditions. In addition, we granted the Underwriters a 30-day option to purchase up to 825,000 additional shares of our common stock at the public offering price, less the underwriting discounts and commissions. We anticipate using the net proceeds from the offering for the clinical and preclinical development of drug candidates, including: (i) planning a Phase 3 registrational program for etrasimod for the treatment of atopic dermatitis; (ii) accelerating efforts to support the future commercialization of etrasimod, including through specific programs to promote payor acceptance; (iii) advancing our etrasimod controlled-release program; (iv) advancing our other clinical-stage programs, olorinab and APD418; and (v) funding our early research program with Beacon Discovery to discover and develop novel immune and inflammatory compounds, as well as for general corporate purposes, including working capital and capital expenditures.
The Underwriting Agreement contains customary representations, warranties and agreements by us, customary conditions to closing, indemnification obligations of Arena and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by such parties.
The offering is being made pursuant to our registration statement on Form S-3 (Registration Statement No. 333-236717), which became automatically effective upon filing with the Securities and Exchange Commission (“SEC”) on February 27, 2020, and a prospectus supplement thereunder. A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this report, and the foregoing description of the terms of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. A copy of the opinion of Cooley LLP relating to the legality of the issuance and sale of the shares in the offering is attached as Exhibit 5.1 hereto.
On May 27, 2020, we issued a press release announcing the offering, and on May 28, 2020, we issued a press release announcing that we had priced the offering. Copies of these press releases are attached as Exhibits 99.1 and 99.2 hereto, respectively.
Forward-Looking Statements
Certain statements contained in this report are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements include, without limitation, statements about our expectations with respect to the completion, timing and size of the public offering; the expected net proceeds from the offering; and our anticipated use of the net proceeds from the offering. Words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements necessarily contain these identifying words. For such statements, we claim the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from our expectations. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the public offering and the COVID-19 global pandemic. Additional factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements are disclosed in our filings with the SEC, including our quarterly report on Form 10-Q for the quarterly period ended March 31, 2020. These forward-looking statements represent our judgment as of the time of this report. We disclaim any intent or obligation to update these forward-looking statements, other than as may be required under applicable law.