Filed
pursuant to Rule 424(b)(5)
Registration
No. 333-237738
PROSPECTUS SUPPLEMENT
(To the Prospectus dated May 13, 2020)
14,285,715
Shares of Common Stock
We are offering 14,285,715
shares of our common stock, par value $0.001 per share, at a purchase price of $1.05 per share pursuant to this
prospectus supplement and the accompanying prospectus.
The offering is being underwritten on a firm commitment basis.
Our
common stock is traded on The Nasdaq Capital Market under the symbol “COCP.” On August 25, 2020, the last reported
sale price of our common stock on The Nasdaq Capital Market was $1.43 per share.
Investing
in our common stock involves a high degree of risk. Please read “Risk Factors” beginning on page S-8 of this prospectus
supplement, and in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended and supplemented by the Quarterly
Report on Form 10-Q for the three months ended June 30, 2020, which are incorporated by reference into this prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
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Per Share
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Total
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Public offering price
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$
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1.0500
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$
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15,000,001
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Underwriting discounts and commissions (1)
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$
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0.0788
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$
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1,125,000
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Proceeds, before expenses, to us
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$
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0.9712
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$
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13,875,001
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(1)
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In addition, we have agreed to pay the underwriter
a management fee of 1.0% of the aggregate gross proceeds from this offering and to reimburse the underwriter for
certain of its expenses. See the “Underwriting” section beginning on page S-21 of this prospectus supplement for
a description of the compensation payable to the underwriter.
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We have granted the underwriter a 30-day
option to purchase up to an additional 2,142,857 shares of our common stock from us at the public offering price per
share, less underwriting discounts and commissions. If the underwriter exercises its option in full, the total underwriting discounts
and commissions payable by us will be $1,294,571, and the total proceeds to us, before expenses, will be $15,956,251.
The underwriter expects to deliver the shares
of common stock on or about August 31, 2020.
H.C.
Wainwright & Co.
The date of this prospectus supplement is August 26,
2020
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is in two parts. The first part is this prospectus supplement, which describes the terms of the offering and also adds
to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus
supplement and the accompanying prospectus. The second part consists of a prospectus dated May 13, 2020, included in the registration
statement on Form S-3 (No. 333-237738) that was initially filed on April 17, 2020 with the Securities and Exchange Commission
(“SEC”), as amended on May 4, 2020, and was declared effective by the SEC on May 13, 2020. Since the accompanying
prospectus provides general information about us, some of the information may not apply to this offering. This prospectus supplement
describes the specific details regarding this offering. Generally, when we refer to the “prospectus,” we are referring
to both parts of this document. Additional information is incorporated by reference in this prospectus supplement. If information
in this prospectus supplement is inconsistent with the accompanying prospectus, you should rely on this prospectus supplement.
You should read this prospectus supplement, the accompanying prospectus and any information incorporated by reference before you
make any investment decision.
Neither
we nor Wainwright are making an offer to sell the securities in jurisdictions where the offer or sale is not permitted. The distribution
of this prospectus supplement and the accompanying prospectus and the offer and sale of our securities in certain jurisdictions
may be restricted by law. Persons outside the United States who come into possession of this prospectus supplement and the accompanying
prospectus must inform themselves about and observe any restrictions relating to the offering of the securities and the distribution
of this prospectus supplement and the accompanying prospectus outside the United States. This prospectus supplement and the accompanying
prospectus do not constitute an offer of, or an invitation to purchase, any shares of common stock in any jurisdiction in which
such offer or invitation would be unlawful.
You
should rely only on information contained in this prospectus supplement, the accompanying prospectus and the documents we incorporate
by reference in this prospectus supplement. We have not authorized anyone to provide you with information that is different from
that contained in this prospectus supplement. We are not offering to sell or seeking offers to buy shares of common stock in jurisdictions
where offers and sales are not permitted. The information contained in this prospectus supplement and the accompanying prospectus
supplement is accurate only as of their respective dates, regardless of the time of delivery of this prospectus or of any sale
of our common stock.
Unless
otherwise mentioned or unless the context requires otherwise, all references in this prospectus supplement to the “Company,”
“we,” “us,” “our” and “Cocrystal” refer to Cocrystal Pharma, Inc., a Delaware
corporation, and its consolidated subsidiaries.
To
the extent this prospectus supplement contains summaries of the documents referred to herein, you are directed to the actual documents
for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the
documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration
statement of which this prospectus supplement is a part, and you may obtain copies of those documents as described below under
the section entitled “Where You Can Find More Information.”
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement and the accompanying prospectus, including documents incorporated by reference into this prospectus supplement
and the accompanying prospectus, contain “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).
Such forward-looking statements include those statements that express plans, anticipation, intent, contingency, goals, targets
or future development and/or otherwise are not statements of historical fact. Forward-looking statements can generally be identified
by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,”
“will,” “should,” “would,” “intend,” “seem,” “potential,”
“appear,” “continue,” “future,” believe,” “estimate,” “forecast,”
“project” and other words of similar meaning, although not all forward-looking statements contain these identifying
words. In particular, these forward-looking statements include, among others, statements about our expectations with respect to
the expected progress of our coronavirus program, Influenza program, including the anticipated results of our collaboration with
Merck under the Collaboration Agreement, the expected progress of our Norovirus program, the settlement of class action and derivative
lawsuit pending final court approval, and intended use of proceeds from this offering.
These
statements are based on our current expectations and projections and involve estimates, assumptions, risks and uncertainties that
could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in
their entirety by reference to the factors discussed in this prospectus supplement, and the accompanying prospectus, and the documents
incorporated by reference herein and therein. Important factors that could cause actual results to differ from those in the forward-looking
statements include the risks arising from the impact of the COVID-19 pandemic on our Company, including supply chain disruptions,
and the national and global economy, our continued ability to proceed with our programs, our reliance on certain third parties,
our reliance on continuing collaboration with Merck under the Collaboration Agreement, the future results of preclinical and clinical
studies, general risks arising from clinical trials, receipt of regulatory approvals, and development of effective treatments
and/or vaccines by competitors. We also refer you to the Risk Factors which begin on page S-8 of this prospectus supplement
and our most recent Annual Report on Form 10-K for the year ended December 31, 2019, under the caption “Item 1A –
Risk Factors” of such report, as amended and supplemented by our Quarterly Report on Form 10-Q for the three months ended
June 30, 2020, and the other documents incorporated by reference into this prospectus supplement for both an expanded discussion
of the risks and uncertainties described above and additional risks and uncertainties that could cause actual results to differ
materially and adversely from those expressed or implied by forward-looking statements. However, factors or events that could
cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them.
You
should read this prospectus supplement, the accompanying prospectus and the documents that we reference herein and therein, completely
and with the understanding that our actual future results may be materially different from what we expect. You are cautioned not
to place undue reliance on the forward-looking statements contained in, or incorporated by reference into, this prospectus supplement.
Each forward-looking statement speaks only as of the date of this prospectus supplement or, in the case of documents incorporated
by reference, the date of the applicable document (or any earlier date indicated in the statement), and we undertake no obligation
to update or revise any of these statements, whether as a result of new information, future developments or otherwise, except
as required by law. We qualify all of our forward-looking statements by these cautionary statements.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary is not complete and does not contain all of the information that you should consider before investing in the securities
offered by this prospectus supplement and the accompanying prospectus. You should read this summary together with the entire prospectus
supplement and the accompanying prospectus, including our financial statements, the notes to those financial statements and the
other documents that are incorporated by reference in this prospectus supplement and the accompanying prospectus, before making
an investment decision. See “Risk Factors” beginning on page S-8 of this prospectus supplement for a discussion
of the risks involved in investing in our securities.
Our
Company
Cocrystal
Pharma, Inc. is a biotechnology company seeking to discover and develop novel antiviral therapeutics as treatments for serious
and/or chronic viral diseases. We employ unique structure-based technologies and Nobel Prize winning expertise to create first-
and best-in-class antiviral drugs. These technologies are designed to efficiently deliver small molecule therapeutics that are
safe, effective and convenient to administer. We have identified promising preclinical and early clinical stage antiviral compounds
for unmet medical needs including influenza, Hepatitis C virus (“HCV”), coronavirus, and norovirus infections. As
described below, we recently entered into two license agreements with Kansas State University Research Foundation (“KSURF”)
to permit us to use their patents to further develop certain proprietary broad-spectrum antiviral compounds for the treatment
of norovirus and coronavirus infections.
Cocrystal
Technology
We
are developing antiviral therapeutics that inhibit the essential replication function of various viruses. Our goals include
treating human and avian (bird) influenza and COVID-19. Additional goals include decreasing the duration of HCV therapy
by advancing drug candidates targeting the HCV RNA-dependent RNA polymerase enzyme and treating norovirus infections by discovering
and developing drug candidates targeting the viral replication complex. To discover and design these inhibitors, we use a proprietary
platform comprising computation, medicinal chemistry, X-ray crystallography, and our extensive know-how. We determine the structures
of cocrystals containing the inhibitors bound to the enzyme or protein to guide our design. We also use advanced computational
methods to screen and design product candidates using proprietary cocrystal structural information. In designing the candidates,
we seek to anticipate and avert potential viral mutations leading to resistance. By designing and selecting drug candidates that
interrupt the viral replication process and also have specific binding characteristics, we seek to develop drugs that are not
only effective against both the virus and possible mutants of the virus, but which also have reduced off-target interactions that
cause undesirable clinical side effects. This approach requires an extensive knowledge of viruses and drug targets to carry out.
In addition, knowledge and experience in the fields of structural biology, and enzymology are required. We developed our proprietary
structure-based drug design under the guidance of Dr. Roger Kornberg, a director, who is our Chief Scientist and recipient of
the Nobel Prize in Chemistry in 2006. Our drug discovery process focuses on those parts of the enzymes to which drugs bind and
on drug-enzyme interactions at the atomic level. Additionally, we have developed proprietary targeted in-house chemical libraries
of non-nucleoside inhibitors, metal-binding inhibitors, and drug-like fragments. Our drug discovery process is different from
traditional, empirical, medicinal chemistry approaches that often require iterative high-throughput compound screening and lengthy
hit-to-lead processes. We continue developing preclinical and clinical drug candidates using our proprietary drug discovery technology.
Product
Candidates
Coronavirus
We
are currently advancing our coronavirus program leveraging the rights to preclinical leads from the two License Agreements with
KSURF, entered into in February and April 2020, to further develop certain proprietary broad-spectrum antiviral compounds for
the treatment of coronavirus infections (COVID-19). Cocrystal intends to pursue research and development of these antiviral compounds
for coronavirus, including preclinical and clinical development. To our knowledge, there is currently no approved vaccine
or antiviral treatment available for COVID-19, although there are certain drugs that may offer relief and the federal government
has funded ongoing vaccine research. Remdesivir is currently used for the treatment of hospitalized patients with severe COVID-19
symptoms pursuant to an emergency use authorization granted by the U.S. Food and Drug Administration (“FDA”).
We
initiated preclinical studies in our coronavirus program during the second quarter of 2020 and plan to identify additional replication
inhibitors utilizing our proprietary platform technology during the third quarter of this year. The Company anticipates the selection
of its lead preclinical molecule in the fourth quarter of 2020.
Influenza
We
have several preclinical candidates under development for the treatment of influenza infection. CC-42344, a novel PB2 inhibitor,
has been selected as a preclinical lead. This candidate binds to a highly conserved PB2 site of influenza polymerase complex (PB1:
PB2: PA) and exhibits a novel mechanism of action. CC-42344 showed excellent preclinical antiviral activity against influenza
A strains, including avian pandemic strains and oseltamivir-resistant strains, and has a favorable pharmacokinetic profile. We
are currently conducting additional preclinical IND enabling activities and plan to initiate a Phase 1 study during 2021.
On
January 2, 2019, we entered into an Exclusive License and Research Collaboration Agreement (the “Collaboration Agreement”)
with Merck Sharp & Dohme Corp. (“Merck”) to discover and develop certain proprietary influenza A/B antiviral agents.
Under
the terms of the Collaboration Agreement, Merck is funding research and development for the program at Cocrystal and Merck, including
clinical development at Merck, and Merck is responsible for worldwide commercialization of any products derived from the collaboration.
The Company received an upfront payment of $4,000,000 at signing and is eligible to receive milestone payments related to designated
development, regulatory and sales milestones with the potential to earn up to $156,000,000, as well as royalties on product sales.
The Collaboration Agreement operates under a Research Operating Plan (ROP) which includes goals for both organizations. The Company
achieved its anticipated goals in 2019.
Hepatitis
C
On
January 22, 2019, the Company announced safety and preliminary efficacy data for the Phase 2a clinical study evaluating CC-31244
for the treatment of HCV infected individuals. All subjects had completed the six-week treatment regimen. The treatment was well
tolerated with no study discontinuations due to adverse events. Eight of 12 subjects achieved the primary efficacy endpoint of
sustained virologic response at 12 weeks after completion of treatment (SVR12). SVR12 is defined as undetectable virus in blood
12 weeks after completion of treatment and is considered a virologic cure. The trial was conducted at the Institute of Human Virology,
University of Maryland School of Medicine and the final study report was completed during the first quarter of 2020.
In
addition, the Company is party to a Clinical Trial Agreement, dated October 2018, with the Humanity & Health Research Centre
(“HHRC”) in Hong Kong, China. Under this agreement, HHRC initiated a Phase 2a investigator-sponsored study of CC-31244
for the treatment of HCV. This study has been terminated.
The
Company is in partnership discussions for further clinical development of CC-31244.
Norovirus
We
continue to identify and develop inhibitors of replication using the Company’s proprietary structure-based drug design technology
platform. We recently entered into License Agreements with the KSURF to further develop certain proprietary broad-spectrum antiviral
compounds for humans to treat Norovirus infections. Preclinical activities for our Norovirus program are currently under way.
The Company expects to complete its proof-of-concept animal model study in the fourth quarter of 2020.
Intellectual
Property
Our
success depends, in part, upon our ability to protect our core technology. To establish and protect our proprietary rights, we
rely on a combination of patents, patent applications, trademarks, copyrights, trade secrets and know-how, as well as license
agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment
agreements, and other contractual rights.
As
of the date of this prospectus supplement, our patent portfolio consisted of patents and pending applications in the areas primarily
related to the treatment of influenza A, influenza A/B, coronavirus/norovirus and HCV.
In
our influenza A and A/B programs, our patent portfolio consists of six families, including three pending U.S. provisional applications,
and three pending applications in PCT countries and Taiwan. Our influenza A patent portfolio includes four patent families, of
which three cover a genus of active compounds including CC-42344 and related uses and compositions, and one covers another genus
of active compounds. Our influenza A/B patent portfolio includes two families of applications covering genuses of active compounds.
For our influenza A/B program, the Collaboration Agreement with Merck provides for joint ownership with Merck of the patent rights
covering discoveries, improvements and inventions resulting from the collaboration.
In
our coronavirus and norovirus programs, our patent portfolio consists of four patent families licensed from KSURF, and three patent
families covering antiviral compounds developed by us.
In
our HCV program, our patent portfolio consists of four families, including granted U.S. and European patents, and pending patent
applications in the various countries around the world.
Recent
Developments
Settlement
of Class Action and Derivative Lawsuit
On
August 17, 2020, a fully executed stipulation of settlement was filed with the U.S. District Court for the District of
New Jersey with respect to the securities class action, and the parties have executed a stipulation of settlement
with respect to the derivative litigation, in each case disclosed in Part I. Item 3. Legal Proceedings of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019. Both settlement agreements are subject to the final approval
of the court. As part of the proposed settlement, the Company expects to pay $450,000 of the total settlement amount of $1,265,000
and to make certain corporate governance changes.
Corporate
Information
Our
principal executive offices are located at 19805 North Creek Parkway, Bothell, Washington 98011 and our telephone number
is (786) 459-1831. Our Internet website address is www.cocrystalpharma.com. The information on our website is not incorporated
into this prospectus supplement.
The
Offering
Issuer
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Cocrystal
Pharma, Inc.
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Common
stock offered
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14,285,715 shares of common stock
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Common
stock to be outstanding immediately after this offering
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66,426,414 shares of common stock
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Underwriter’s
option to purchase additional shares of common stock
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We have granted the underwriter an option, exercisable
for 30 days from the date of this prospectus supplement, to purchase up to an additional 2,142,857 shares of our
common stock from us.
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Use
of proceeds
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We intend to use the net proceeds from this offering
for the expansion of our coronavirus and influenza programs, and for working capital and other general corporate purposes.
See “Use of Proceeds” on page S-20 of this prospectus supplement.
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Nasdaq
Capital Market symbol
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“COCP”
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Risk
factors
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This
investment involves a high degree of risk. See “Risk Factors” beginning on page S-8 of this prospectus supplement,
our Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by reference into this prospectus
supplement, as amended and supplemented by our Quarterly Report on Form 10-Q for the three months ended June 30, 2020, and
the other reports incorporated by reference into the accompanying prospectus for a discussion of factors you should carefully
consider before deciding to invest in our common stock.
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The number of shares of common stock to be
outstanding immediately after this offering is based on 52,140,699 shares of common stock outstanding as of August 25,
2020 and excludes, as of that date:
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243,275 shares of
common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $10.53 per
share;
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1,801,065 shares
of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $2.78
per share; and
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2,718,020 shares
of common stock available for future grants under our 2015 Equity Incentive Plan (“Equity Plan”).
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Except as otherwise indicated, all information
in this prospectus supplement assumes no exercise of outstanding options and no exercise of the underwriter’s’ option
to purchase additional shares.
RISK
FACTORS
An
investment in our common stock involves a substantial risk of loss. You should carefully consider the risk factors set forth below,
in our Annual Report on Form 10-K for the year ended December 31, 2019, as amended and supplemented by the Quarterly Report for
the three months ended June 30, 2020, together with the other information included or incorporated by reference into this prospectus
supplement and the accompanying prospectus, before you decide to invest in our common stock. The occurrence of any of these risks
could harm our business. In that case, the trading price of our common stock could decline, and you may lose all or part of your
investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair
our operations. You should also refer to the other information contained in this prospectus supplement and the accompanying prospectus
or incorporated by reference herein or therein, including our financial statements and the notes to those statements and the information
set forth under the heading “Cautionary Note Regarding Forward-Looking Statements.”
Risks
Relating to Our Business
Our
coronavirus program is in the preclinical stage and we face significant competition from multiple parties pursuing the development
of an effective COVID-19 treatment or a vaccine, some of which have significantly more advanced product candidates and substantially
more resources. If we fail to gain market share as the result of our competitors developing and successfully commercializing effective
COVID-19 therapies or vaccines more quickly than we do, our business and future prospects would be materially and adversely affected.
Our
Coronavirus program is the preclinical stage. We initiated preclinical studies during the second quarter of 2020 and anticipate
the selection of the lead preclinical molecule in the fourth quarter of 2020. We may be unable to produce an effective therapy
in a timely manner or at all. Additionally, we are committing substantial financial and other resources to our Coronavirus program,
which may negatively impact our other programs. Further, in the wake of the global COVID-19 pandemic a number of third parties,
including large biotechnology and pharmaceutical companies and academic institutions have been conducting research aimed at development
of an effective treatment for, or a vaccine against, COVID-19. Some of our competitors have substantially more resources, including
government funding, than we do and have existing products in significantly more advanced stages of development. For example, remdesivir,
an investigational antiviral agent developed by Gilead Sciences, Inc. (“Gilead”), is currently used for the treatment
of hospitalized patients with severe COVID-19 symptoms pursuant to an emergency use authorization granted by the FDA, and Gilead
earlier announced that it could spend as much as $1 billion on remdesivir in 2020. In another example, on August 23, 2020 President
Trump announced that the FDA had authorized using convalescent plasma to treat COVID-19 patients on an emergency basis. If
we are unable to timely advance our Coronavirus program or if we fail to gain market share as the result of our competitors developing
and successfully commercializing effective COVID-19 therapies more quickly than we do, our business and future prospects would
be materially and adversely affected.
We
have lost approximately $241.5 million from inception through June 30, 2020 and expect to continue losing money in the
future. We may never achieve income from operations or have positive cash flow from operations.
As
an early stage drug development company, our focus is on developing product candidates, obtaining regulatory approvals and commercializing
pharmaceutical products. As a result, we have lost approximately $241.5 million from inception through June 30, 2020, expect
losses to continue, and have never generated revenue from product sales. It is likely that we will need to raise money again in
the future. We cannot assure you that we will ever generate income from operations or have positive cash flow from operations.
Because
we believe the recent volatility of our stock price was caused by our announcement of our License Agreement with KSURF and our
acquisition of rights to use the licensed patents to seek a treatment for coronavirus as well as norovirus, the increase in our
stock price may be temporary for a number of reasons.
After
we announced our entry into the first KSUFR agreement, the price of our common stock surged from $0.49 as of February 21, 2020
to the closing price of $1.77 on February 26, 2020. Our common stock traded as high as $2.37 and our daily trading volume for
the first three days of the week of February 24, 2020 averaged approximately 57.0 million shares per day (not counting after hours
trading) in contrast to an average daily trading volume of approximately 290,142 for the prior 90 trading days (which included
higher volume for a few days in January 2020 when we announced a public offering). Additionally, after our March 6, 2020 announcement
regarding the initiation of our coronavirus program, our volume continued to see extremely high trading volume. Our common stock
may continue to be volatile and could materially fall for a number of reasons including:
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Announcements
by competitors that they are initiating human trials of drugs to treat the coronavirus or with respect to a possible vaccine;
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Announcements
that a competitor has received regulatory approval of a vaccine to prevent, or a product to treat, the coronavirus or announcements
of successful trial results for a vaccine or treatment
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Public
announcement that the rapid spread of the coronavirus has receded;
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Our
disclosure that the use of our technology and the Kansas State patents do not appear promising for the treatment of this virus;
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The
continued large declines in major stock market indexes which causes investors to sell our Common Stock;
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The
termination of any other factors which may have created the unusual volatility and spike in volume; or
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Other
possible reasons for volatility which we have disclosed in our reports filed with the SEC.
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We
cannot assure you that our stock price and volume will remain at current levels in which case investors may sustain large losses.
The
COVID-19 pandemic may have a material adverse effect on our business.
We
have experienced delays in our supply chain and with service partners as a result of the COVID-19 pandemic. Because the full impact
of the COVID-19 pandemic remains uncertain, it may have a material adverse effect on us in a number of ways including:
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If
our scientists and other personnel (or their family members) are infected with the virus, it may hamper our ability to engage
in ongoing research activities;
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Similarly,
we rely on third parties who can be similarly impacted;
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If
these third parties are affected by COVID-19, they may focus on other activities which they may devote their limited time
to other priorities rather than to our joint research;
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We
may experience a shortage of laboratory materials which would impact our research activities;
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As
a result of the continuing impact of the virus, we may fail to get access to third party laboratories which would impact our
research activities; and
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We
may sustain problems due to the serious short-term and possible longer term serious economic disruptions as our economy faces
unprecedented uncertainty.
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We
have never generated revenue from product sales and expect that due to the regulatory constraints on a drug development company
with products in the pre-clinical and early clinical stages, we may not ever generate revenue and may continue to incur significant
losses for the foreseeable future.
We
are a pre-clinical and early stage clinical, biopharmaceutical discovery and development company. From inception until 2016, our
operations were limited to organizing and staffing the Company, acquiring and developing intellectual property rights, developing
our technology platform, undertaking basic research on viral replication enzyme targets and conducting preclinical studies for
our initial programs. We currently have only one product candidate in a Phase 2a clinical trial. Because of the need to complete
clinical trials, establish safety and efficacy and obtaining regulatory approval, which is an expensive and time-consuming process,
we do not anticipate generating revenue from product sales for at least five years and will continue to sustain considerable losses.
We may develop a partnership that could generate income sooner, but there is no guarantee that will be achievable.
To
date, we have devoted the majority of our financial resources to research and development. We have financed our operations primarily
through the sale of equity securities and entering into research collaborations. The results of our operations will depend, in
part, on the rate of future expenditures and our ability to obtain funding through equity or debt financings, strategic alliances
or grants. We anticipate our expenses will increase substantially if and as we continue our research and clinical and preclinical
development of our product candidates. We anticipate that if we continue to undertake clinical studies our expenses will increase
even further.
Because
we have yet to generate any revenue from product sales on which to evaluate our potential for future success and to determine
if we will be able to execute our business plan, it is difficult to evaluate our future prospects and the risk of success or failure
of our business.
Our
ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with partners, to successfully
complete the development of, obtain the regulatory approvals for and commercialize pharmaceutical product candidates. We have
no pharmaceutical product candidates that have generated any commercial revenue, do not expect to generate revenues from the commercial
sale of pharmaceutical products for many years, and might never generate revenues from the sale of pharmaceutical products. Our
ability to generate revenue and achieve profitability will depend on, among other things, the following:
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identifying
and validating new therapeutic strategies;
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entering
into collaborations with large pharmaceutical or biotechnology companies, similar to our recently announced Collaboration
Agreement with Merck;
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completing
our research and preclinical development of pharmaceutical product candidates;
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initiating
and completing clinical trials for pharmaceutical product candidates;
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seeking
and obtaining regulatory marketing approvals for pharmaceutical product candidates that successfully complete clinical trials;
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establishing
and maintaining supply and manufacturing relationships with third parties;
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launching
and commercializing pharmaceutical product candidates for which we obtain regulatory marketing approval, with a partner or,
if launched independently, successfully establishing a sales force, marketing and distribution infrastructure;
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maintaining,
protecting, enforcing, defending and expanding our intellectual property portfolio; and
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attracting,
hiring and retaining qualified personnel.
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Because
of the numerous risks and uncertainties associated with pharmaceutical product development, we cannot predict the timing or amount
of increased expenses and when we will be able to achieve or maintain profitability, if ever. Our expenses could increase beyond
expectations if we are required by regulatory agencies to perform unanticipated studies and trials.
Even
if one or more pharmaceutical product candidates we independently develop is approved for commercial sale, we anticipate incurring
significant costs associated with commercializing any approved pharmaceutical product candidate. Moreover, even if we can generate
revenues from the sale of any approved pharmaceutical products, we may not become profitable and may need to obtain additional
funding to continue operations.
Because
early stage drug development requires major capital investment, as we continue to incur operating losses, we will need to raise
additional capital or form strategic partnerships to support our research and development activities in the future.
We
are still in the early stages of development of our product candidates and have no products approved for commercial sale. Developing
pharmaceutical products, including conducting preclinical studies and clinical trials, is capital-intensive. As a rule, research
and development expenses increase substantially as we advance our product candidates toward clinical programs. We currently have
secured funding of the research and development of influenza A/B product candidates under our Collaboration Agreement with Merck.
We also have one hepatitis C product candidate in a Phase 2a clinical study. However, in order to conduct trials for our other
product candidates, we will need to raise additional capital to support our operations or form partnerships, in addition to our
existing collaborative alliances, which may give substantial rights to a partner. Such funding or partnerships may not be available
to us on acceptable terms, or at all. Moreover, any future financing may be very dilutive to our existing stockholders.
As
we move lead compounds through toxicology and other preclinical studies, also referred to as nonclinical studies, we have and
we will be required to file an Investigational New Drug application (“IND”) or its equivalent in foreign countries,
and as we conduct clinical development of product candidates, we may have adverse results that may cause us to consume additional
capital. Our partners may not elect to pursue the development and commercialization of our product candidates subject to our respective
agreements with them. These events may increase our development costs more than we expect. We may need to raise additional capital
or otherwise obtain funding through strategic alliances if we initiate clinical trials for new product candidates other than programs
currently partnered. We will require additional capital to obtain regulatory approval for, and to commercialize, product candidates.
In
securing additional financing, such additional fundraising efforts may divert our management’s attention from our day-to-day
activities, which may adversely affect our ability to develop and commercialize product candidates. We cannot guarantee that future
financing will be available in sufficient amounts or on terms acceptable to us, if at all. If we cannot raise additional capital
when required or on acceptable terms, we may be required to:
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significantly
delay, scale back or discontinue the development or commercialization of any product candidates;
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seek
strategic alliances for research and development programs at an earlier stage than otherwise would be desirable or on terms
less favorable than might otherwise be available; or
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relinquish
or license on unfavorable terms, our rights to technologies or any product candidates we otherwise would seek to develop or
commercialize ourselves.
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If
we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing
development and commercialization efforts, which will have a material adverse effect on our business, operating results and prospects
or may render the Company unable to continue operations.
We
will depend substantially on Merck for the successful research, development and commercialization of our influenza A/B product
candidates.
In
January 2019, we entered into the Collaboration Agreement with Merck to research, develop, and commercialize certain proprietary
influenza A/B antiviral agents. See “Product Candidates – Influenza” for more information on the Collaboration
Agreement. The success of this collaborative alliance will depend substantially on the efforts and activities of Merck. Pursuant
to the Collaboration Agreement, in case the joint research committee overseeing the research program cannot reach an agreement,
the ultimate decision-making authority is vested in Merck as to most matters. Furthermore, Merck will be solely responsible for
the development and commercialization of any products derived from the collaboration.
In
addition, during the term of the research program and for a period of 12 months following the expiration or termination of the
research program under the Collaboration Agreement, we have agreed to work exclusively with Merck on the research and development
of influenza A/B antiviral agents. During the term of the Collaboration Agreement, we will be unable to conduct, or enable third
parties to conduct, research, development and commercialization activities related to such agents. These restrictions may impair
our ability to pursue research, development and commercialization opportunities that we would otherwise deem to be beneficial
to our business.
If
our research collaboration with Merck is terminated or is otherwise unsuccessful, including failure to reach milestones, we could
lose the research program funding, and would not receive milestone payments or royalties, which could materially and adversely
affect our business, our ability to successfully develop and commercialize influenza A/B product candidates and our future financial
condition.
Pursuant
to the terms of the Collaboration Agreement, Merck agreed to, among other things, (i) fund the research and development collaboration,
including clinical development and commercialization; (ii) make certain milestone payments up to a total of $156 million, including
payments associated with the successful product development and attainment of certain U.S. and EU regulatory approvals for the
developed products and sales volume; and (iii) pay royalties on net sales of the products.
Merck
can terminate the Collaboration Agreement at any time prior to the first commercial sale of the first product developed under
the Collaboration Agreement, in its sole discretion, without cause. Furthermore, research collaborations, including the Collaboration
Agreement, may turn out to be unsuccessful and are subject to certain risks, including the following risks:
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disagreements
with Merck resulting in delays or termination of the research, development or commercialization of product candidates, or
litigation;
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change
the focus by Merck of its development and commercialization efforts;
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failure
by Merck to commit sufficient resources to the testing, marketing, distribution or development of product candidates; and
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development
by Merck of alternative products either on its own or in collaboration with others, or conflicts of interest or changes in
business strategy or other business issues, which could adversely affect its willingness or ability to fulfill their obligations
to us.
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If
our collaboration with Merck is unsuccessful for these or other reasons, or is otherwise terminated for any reason, we may lose
the research program funding, and would not receive the milestone payments or royalties under the Collaboration Agreement.
Further,
pursuant to the Collaboration Agreement Merck will only be obligated to make many of the milestone payments if our influenza A/B
product receives required regulatory approvals, is commercialized and net sales exceed the thresholds set forth in the Collaboration
Agreement. Achieving the milestones may be difficult and time-consuming. If some or all of these goals are not achieved, we may
not receive some or all of the milestone payments under the Collaboration Agreement.
Any
of the foregoing could have a material adverse effect on our business, our ability to successfully develop and commercialize influenza
A/B product candidates and our future financial condition.
We
have been sued by our former investment banking firm for purported damages related to the failure to obtain their written consent
prior to closing on our February 2020 $11 million registered direct offering.
On
May 19, 2020, AGP, our former underwriter, placement agent and sales agent, filed a lawsuit against the Company alleging violation
of a lock-up provision under the Placement Agent Agreement. Defending this proceeding can be time consuming, divert management’s
attention and resources and cause us to incur significant expenses. Any adverse result to this lawsuit could adversely affect
our cash position and in turn your investment.
We
have been involved in a class action lawsuit, a related derivative action, and other litigation, and may in the future be involved
in other legal proceedings, which may be expensive and time consuming to defend, and, if resolved adversely, could harm our business
and financial condition.
While
we and certain current and former executive officers and directors
of the Company are defendants in a class action lawsuit alleging violation of Section 10(b) of the Exchange Act and Rule
10b-5 promulgated thereunder, and a related derivative action litigation, these lawsuits have been settled subject to court
approval. See “Recent Developments” on p. S-6 for more information. We may become involved in additional legal
proceedings in the future. We were also a defendant in two lawsuits filed with the U.S. District Court for the District of Minnesota
by a former Biozone Pharmaceuticals, Inc. (“Biozone”) lawyer; the first lawsuit was dismissed and the dismissal was
affirmed. Pending an appeal to the U.S. Supreme court of the dismissal, the second lawsuit has been stayed by the lower court.
These proceedings can be time consuming, divert management’s attention and resources and cause us to incur significant expenses.
While we believe we have insurance coverage for the class action suit and the derivative action, our insurance carrier has initially
declined to cover the lawsuits. While we are seeking to reverse this decision, even if we can do so the amount of insurance may
be insufficient. Furthermore, because litigation is inherently unpredictable, the adverse results of any such actions may have
a material adverse effect on our business and financial condition, and cause our stock price to decrease.
Because,
we are unable to rely on certain exemptions from registration under the federal securities laws, as the result of a “disqualifying
event” involving a director of the Company, it could materially and adversely affect our ability to obtain future financing.
On
January 10, 2019, Dr. Frost, one of our directors, was permanently enjoined from violating a certain anti-fraud provision of the
Securities Act of 1933, future violations of Section 13(d) of the Exchange Act and Rule 13d-1(a) thereunder, and participating
in penny stock offerings with certain exceptions. So long as Dr. Frost is a director, the Company will be unable to rely on certain
exemptions from registration including the exemptions under Regulation A and Rule 506 promulgated under the Securities Act absent
a waiver issued by the SEC. We have not applied for a waiver, and even if we do, the SEC may choose not to grant us a waiver.
While there is a statutory exemption for private placements under Section 4(a)(2) of the Securities Act, the absence of the Rule
506 safe harbor under Regulation D could adversely affect our ability to raise necessary financing in the future on terms favorable
to us, or at all.
Risk
Related to This Offering and Our Common Stock
We
have broad discretion in the use of the net proceeds we receive from this offering and may not use them effectively.
We
cannot specify with certainty the particular uses of the net proceeds we will receive from this offering. We will have broad discretion
in the application of these net proceeds, including for any of the purposes described in the section entitled “Use of Proceeds.”
Accordingly, you will have to rely upon our judgment with respect to the use of these net proceeds, with only limited information
concerning our specific intentions. We may spend a portion or all of the net proceeds we will receive from this offering in ways
that our stockholders may not desire or that may not yield a favorable return. Our failure to apply these funds effectively could
harm our business.
The
price of our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell
your shares at or above the price at which you purchase them in this offering.
The
market price of our common stock following this offering may be higher or lower than the price at which you purchase them in this
offering. The market price of our common stock your purchase of shares in this offering will depend on a number of factors, many
of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose
part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid in this
offering. Factors that could cause fluctuations in the market price of our common stock include the following:
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price
and volume fluctuations in the overall stock market from time to time;
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volatility
in the market prices and trading volumes of biotechnology stocks generally, or those in our industry in particular;
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our
announcements concerning the initiation and results of clinical trials or entering into collaboration or license agreements;
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changes
in operating performance and stock market valuations of other biotechnology companies generally, or those in our industry
in particular;
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sales
of shares of our stock by us or our stockholders;
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the
failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow
us or our failure to meet these estimates or the expectations of investors;
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the
financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;
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announcements
by us or our competitors of new novel medicines;
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the
public’s reaction to our earnings releases, other public announcements and filings with the SEC;
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rumors
and market speculation involving us or other companies in our industry;
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actual
or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;
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actual
or anticipated changes in our operating results or fluctuations in our operating results;
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litigation
involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;
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developments
or disputes concerning our intellectual property or other proprietary rights;
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new
laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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changes
in accounting standards, policies, guidelines, interpretations or principles;
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any
significant change in our management; and
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general
economic conditions and slow or negative growth in any of our significant markets.
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In
addition, in the past, following periods of volatility in the overall market and the market price of particular companies’
securities, securities class action litigation has often been instituted against companies. This litigation, if instituted against
us, could result in substantial costs and a diversion of our management’s attention and resources.
If
you purchase shares in this offering, you will suffer immediate and substantial dilution of your investment. You will experience
further dilution if we issue additional equity securities in future financing transactions.
Because
the offering price per share of our common stock is higher than the net tangible book value per share of our common stock, you
will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering.
Investors purchasing shares of common
stock in this offering will incur immediate dilution of approximately $0.58 per share. In addition, we have stock options
and warrants outstanding that are exercisable into shares of our common stock. To the extent that such outstanding securities
are exercised into shares of our common stock, investors purchasing our securities in this offering may experience further dilution.
Because
certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actions
requiring stockholder approval.
As
of the date of this prospectus supplement, our directors, executive officers and principal stockholders (those beneficially owning
in excess of 5%), and their respective affiliates, beneficially own approximately 28.6% of our outstanding shares of common
stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to
our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially
all of our assets.
Dr. Raymond Schinazi, our principal
stockholder and former Chairman of the Board, Dr. Phillip Frost, a director, and certain other stockholders entered into a Stockholders
Rights Agreement (the “SRA”) in November 2014 when we acquired another company controlled by Dr. Schinazi. This SRA
gives each Dr. Schinazi and Dr. Frost (and certain other stockholders) the right to designate three directors to a seven person
board of directors and together agree upon the seventh designee. In addition, our principal stockholders, acting together, would
have the ability to control our management and affairs. Accordingly, this concentration of ownership might harm the market price
of our common stock by:
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delaying,
deferring or preventing a change in corporate control;
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impeding
a merger, consolidation, takeover or other business combination involving us; or
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discouraging
a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company.
|
The SRA contains, among other things,
a covenant pursuant to which the Company may not issue or sell any capital stock without written consent or affirmative vote of
(i) the majority of shares of the Company’s common stock issued upon conversion of Series A Preferred Stock (the “Series
A Majority”), and (ii) the majority of shares of the Company’s common stock issued upon conversion of Series B Preferred
Stock (the “Series B Majority”). The SRA also grants the holders of the common stock issued upon conversion of the
Series A Preferred Stock and the Series B Preferred Stock a right of first refusal to purchase the Company’s equity securities
in connection with any financing. Any amendment or waiver of the SRA provisions requires the written consent of the (i) Series
A Majority; (ii) the Series B Majority; (iii) the holders of a majority of the capital stock of the Company held by the former
holders of Series A Preferred Stock; and (iv) the holders of a majority of the capital stock of the Company held by the former
holders of the Series B Preferred Stock. Dr. Raymond Schinazi, the former Chairman of the Board and the principal stockholder
of the Company, is the holder of the majority of the common stock issued upon conversion of Series A Preferred Stock. Dr. Schinazi
refused to provide a waiver of the SRA provisions requiring the consent of the Series A Majority for the offering of our common
stock in March 2020 and the launch of our “at-the-market offering” in July 2020 and his right of first refusal. The
SRA provides that specific performance is the proper remedy for violation of the covenants under the SRA, and any breach or threatened
breach thereof shall be the proper subject of a temporary or permanent injunction or restraining order. Following the filing
of the preliminary prospectus supplement, Dr. Schinazi provided his consent and waived his right of first refusal in connection
with the offering of our common stock pursuant to this prospectus supplement and the accompanying prospectus.
Failure
to meet the continued listing requirements of The Nasdaq Capital Market could result in delisting of our common stock, which in
its turn would negatively affect the price of our common stock and limit investors’ ability to trade in our common stock.
Our
common stock is listed on The Nasdaq Capital Market (“Nasdaq”). Nasdaq rules impose certain continued listing requirements,
including the minimum $1.00 bid price, corporate governance standards and number of public stockholders. On December 13, 2019,
we were notified by Nasdaq that we were not compliant with its closing bid price requirement because the closing bid price of
our Common Stock was below $1.00 per share for 30 consecutive trading days. While we have regained compliance and this matter
has since been resolved, if we fail to meet these continued listing requirements in the future, Nasdaq may take steps to delist
our common stock. If our common stock is delisted from The Nasdaq Capital Market, we could face significant material adverse consequences,
including:
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a
limited availability of market quotations for our common stock;
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reduced
liquidity with respect to our common stock;
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a
determination that our shares of common stock are a “penny stock” which will require broker-dealers trading in
our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary
trading market for our common stock;
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a
limited amount of news and analyst coverage for our Company; and
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a
limited ability to issue additional securities or obtain additional financing in the future.
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Because
our common stock was, with infrequent exceptions, not actively traded, if the current liquidity dissipates purchasers of our stock
may incur difficulty in selling their shares at or above the price they paid for them, or at all.
Until
2020, our common stock was not actively traded with infrequent exceptions. The active market for our common stock in 2020 may
not be sustained. Accordingly, investors may experience difficulty is selling their shares of Common Stock at or above the price
they paid for them.
Future
sales of our common stock, or the perception that such sales may occur, could cause the market price for our common stock to decline.
We
cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common
stock for sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of
shares of our common stock in the public market, or the perception that those sales will occur, could cause the market price of
our common stock to decline or be depressed.
USE
OF PROCEEDS
We estimate that the net proceeds from this
offering will be approximately $13.5 million, after deducting underwriting discounts and commissions and estimated offering
expenses payable by us, or approximately $15.6 million if the underwriter exercises in full its option to purchase 2,142,857
additional shares. We intend to use the net proceeds from this offering for the expansion of our coronavirus and influenza
programs, and for general corporate purposes and working capital.
As
of the date of this prospectus supplement, we cannot specify with certainty all of the particular uses of the proceeds from this
offering. Accordingly, we will retain broad discretion over the use of such proceeds.
DILUTION
If
you purchase shares of our common stock in this offering, your interest will be diluted to the extent of the difference between
the price per share you pay in this offering and the net tangible book value per share of our common stock after this offering.
Our net tangible book value as of June 30, 2020 was approximately $17.96 million, or $0.34 per share. Net tangible book value
per share represents the amount of our total tangible assets, excluding goodwill and intangible assets, less total liabilities
divided by the total number of shares of our common stock outstanding.
After giving effect to the sale of 14,285,715
shares of our common stock at the public offering price of $1.05 per share, and after deducting the underwriting discounts
and commissions and estimated offering expenses, our as adjusted net tangible book value as of June 30, 2020 would have been approximately
$31.5 million or approximately $0.47 per share. This represents an immediate increase in the net tangible book value
of approximately $0.13 per share to our existing stockholders and an immediate dilution in as adjusted net tangible book
value of approximately $0.58 per share to purchasers of our common stock in this offering.
Dilution
per share of common stock to new investors is determined by subtracting as adjusted net tangible book value per share of common
stock after this offering from the offering price per share of common stock paid by new investors.
The
following table illustrates this per share dilution:
Public offering price per share
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$
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1.05
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Net tangible book value per share as of June 30, 2020
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$
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0.34
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Increase in net tangible book value per share attributable to new investors this offering
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$
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0.13
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As adjusted net tangible book value per share after giving effect to this offering
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$
|
0.47
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|
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|
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Dilution in net tangible book value per share to new investors in this offering
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|
|
|
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$
|
0.58
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|
If the underwriter exercises its option
to purchase additional shares in full, the as adjusted net tangible book value per share after this offering would be $0.49 per
share, and the dilution in net tangible book value per share to new investors purchasing common stock in this offering would be
$0.56 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
The
number of shares of our common stock to be outstanding after this offering is based on the actual number of shares outstanding
as of June 30, 2020, which was 52,140,699, and excludes as of such date:
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243,275 shares of
common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $15.00 per
share;
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1,801,065 shares
of common stock issuable upon the exercise of outstanding stock options at a weighted average exercise price of $2.78
per share; and
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●
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2,718,020 shares
of common stock available for future grants under our Equity Plan.
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To
the extent that any outstanding options or warrants are exercised, or we otherwise issue additional shares of common stock in
the future, at a price less than the public offering price, there will be further dilution to the investors.
UNDERWRITING
Pursuant to an
underwriting agreement with H.C. Wainwright & Co., LLC (the “underwriter”), we have agreed to issue and sell,
and the underwriter has agreed to purchase, the number of shares of common stock listed opposite its name below, less the underwriting
discount, on the closing date, subject to the terms and conditions contained in the underwriting agreement. The underwriting agreement
provides that the obligations of the underwriter are subject to certain customary conditions precedent, representations and warranties
contained therein.
Underwriter
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Number of
Shares
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|
H.C. Wainwright & Co., LLC
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14,285,715
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Total
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14,285,715
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Pursuant to the
underwriting agreement, the underwriter has agreed to purchase all of the shares sold under the underwriting agreement if any
of these shares are purchased, other than those shares covered by the underwriter’s option to purchase additional shares
of common stock described below. The underwriter has advised us that it does not intend to confirm sales to any account over which
it exercises discretionary authority.
Discounts,
Commissions and Expenses
The underwriter
may offer the shares of common stock from time to time to purchasers directly or through agents, or through brokers in brokerage
transactions on Nasdaq, or to dealers in negotiated transactions or in a combination of such methods of sale, or otherwise, at
a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices, subject to receipt and acceptance by it and subject to its right to reject any order in
whole or in part. The difference between the price at which the underwriter purchases shares from us and the price at which the
underwriter resells such shares may be deemed underwriting compensation. If the underwriter effects such transactions by selling
shares of common stock to or through dealers, such dealers may receive compensation in the form of discounts, concessions or commissions
from the underwriter and/or purchasers of shares of common stock for whom they may act as agents or to whom they may sell as principal.
The underwriter
is offering the shares, subject to prior sale, when, as and if issued to and accepted by it, subject to approval of legal matters
and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
We have granted to
the underwriter an option to purchase up to additional 2,142,857 shares of common stock at the public offering price, less
the underwriting discount. The option is exercisable for 30 days from the date of this prospectus supplement.
Any shares sold
by the underwriter to securities dealers will be sold at the public offering price less a selling concession not in excess of
$0.04725 per share.
The following
table shows the public offering price, underwriting discount and proceeds, before expenses, to us. These amounts are shown assuming
both no exercise and full exercise of the underwriter’s option to purchase additional shares.
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Per Share
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Total
without
Option
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Total
with
Option
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|
Public offering price
|
|
$
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1.05
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$
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15,000,001
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|
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$
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17,250,001
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Underwriting discounts and commissions payable by us
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|
$
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0.0788
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$
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1,125,000
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$
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1,293,750
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Proceeds, before expenses, to us
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|
$
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0.9712
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|
$
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13,875,001
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|
$
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15,956,2 51
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|
We have also agreed
to pay the underwriter a management fee equal to 1.0% of the aggregate gross proceeds in this offering. We have agreed to reimburse
the expenses of the underwriter in the non-accountable sum of $50,000 in connection with this offering, up to $90,000 for expenses
of legal counsel, and up to $12,900 for the clearing expenses of the underwriter in connection with this offering.
Right
of First Refusal
We have
granted the underwriter a twelve-month right of first refusal to act as our exclusive underwriter or placement agent for any further
capital raising transactions undertaken by us, and to act as the exclusive advisor, manager or underwriter or placement agent,
as applicable, if we sell or acquire a business, finance any indebtedness, or decide to raise funds by means of a public offering
or a private placement or any other capital-raising financing of equity, equity-linked or debt securities using an underwriter
or placement agent.
Tail Financing Payments
In the event
that any investors that participate in this offering or were introduced to this offering by the underwriter provide any capital
to us in a public or private offering or capital-raising transaction within 6 months following the termination of our engagement
of the underwriter, we shall pay the underwriter the cash compensation provided above on the gross proceeds from such investors.
Indemnification
We have
agreed to indemnify the underwriter against certain liabilities, including civil liabilities under the Securities Act of 1933,
as amended, or the Securities Act, or to contribute to payments that the underwriter may be required to make in respect of those
liabilities.
Lock-Up
Agreements
We have
agreed to not sell any shares of our common stock or any securities convertible into or exercisable or exchangeable into share
of common stock, subject to certain exceptions, for a period of 90 days after the date of this prospectus supplement.
Price
Stabilization, Short Positions and Penalty Bids
In connection
with this offering, the underwriter may engage in stabilizing transactions, overallotment transactions, syndicate covering transactions
and penalty bids in connection with our common stock.
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Stabilizing transactions
permit bids to purchase shares of common stock so long as the stabilizing bids do not
exceed a specified maximum.
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Overallotment transactions
involve sales by the underwriter of shares of common stock in excess of the number of
shares the underwriter is obligated to purchase. This creates a syndicate short position
which may be either a covered short position or a naked short position. In a covered
short position, the number of shares over-allotted by the underwriter is not greater
than the number of shares that it may purchase in the overallotment option. In a naked
short position, the number of shares involved is greater than the number of shares in
the overallotment option. The underwriter may close out any short position by exercising
its overallotment option and/or purchasing shares in the open market.
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Syndicate covering transactions
involve purchases of common stock in the open market after the distribution has been
completed in order to cover syndicate short positions. Such a naked short position would
be closed out by buying securities in the open market. A naked short position is more
likely to be created if the underwriter is concerned that there could be downward pressure
on the price of the securities in the open market after pricing that could adversely
affect investors who purchase in the offering.
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Penalty bids permit the
underwriter to reclaim a selling concession from a syndicate member when the securities
originally sold by the syndicate member are purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
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These stabilizing
transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price
of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our
common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor
the underwriter make any representation or prediction as to the effect that the transactions described above may have on the price
of our common stock. These transactions may be effected on The Nasdaq Capital Market, in the over-the-counter market or otherwise
and, if commenced, may be discontinued at any time.
Regulation
M
In connection
with this offering, the underwriter also may engage in passive market making transactions in our common stock in accordance with
Regulation M during a period before the commencement of offers or sales of shares of our common stock in this offering and extending
through the completion of the distribution. In general, a passive market maker must display its bid at a price not in excess of
the highest independent bid for that security. However, if all independent bids are lowered below the passive market maker’s
bid that bid must then be lowered when specific 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.
Electronic
Distribution
A prospectus
in electronic format may be made available on the websites maintained by the underwriter, if any, participating in this offering
and the underwriter may distribute prospectuses electronically. Other than the prospectus in electronic format, the information
on these websites is not part of this prospectus or the registration statement of which this prospectus form a part, has not been
approved or endorsed by us or the underwriter, and should not be relied upon by investors.
Other Relationships
From time to time, the underwriter
has provided and may provide in the future, various advisory, investment and commercial banking and other services to us in the
ordinary course of business, for which they have received and may continue to receive customary fees and discounts and commissions.
However, except as disclosed in this prospectus supplement, we have no present arrangements with the underwriter for any further
services.
H.C. Wainwright & Co., LLC acted
as our exclusive placement agent in connection with our registered direct offering we consummated in March 2020 and as our exclusive
sales agent in connection with an at-the-market offering facility in June 2020, in each case for which it received compensation.
Transfer
Agent
The transfer
agent of our common stock is Equity Stock Transfer. Their address is 237 West 37th Street,
Suite 602, New York, NY 10018.
Nasdaq
Capital Market Listing
Our common
stock is listed on The Nasdaq Capital Market under the symbol “COCP”.
DIVIDEND
POLICY
We
have never declared or paid cash dividends on our capital stock. We currently intend to retain our future earnings, if any, for
use in our business and therefore do not anticipate paying cash dividends in the foreseeable future. Payment of future dividends,
if any, will be at the discretion of our Board after taking into account various factors, including our financial condition, operating
results, current and anticipated cash needs and plans for expansion.
LEGAL
MATTERS
Nason, Yeager, Gerson, Harris & Fumero,
P.A., Palm Beach Gardens, Florida, will pass upon certain legal matters relating to this offering. Ellenoff Grossman & Schole
LLP, New York, New York, is acting as counsel to the underwriter in connection with certain legal matters relating to this
offering.
EXPERTS
The
consolidated financial statements as of December 31, 2019 and 2018 and for the years then ended incorporated by reference in this
prospectus supplement have been so incorporated by reference in reliance on the reports of Weinberg & Company, our independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an internet
website that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC, including Cocrystal at www.sec.gov. You may also access our SEC reports and proxy statements free of charge at our
website, www.cocrystalpharma.com. The information contained in, or that can be accessed through, our website is not part of this
prospectus supplement.
This
prospectus supplement and the accompanying prospectus are part of the registration statement on Form S-3 filed with the SEC under
the Securities Act for the common stock offered by this prospectus supplement. This prospectus supplement does not contain all
of the information set forth in the registration statement, certain parts of which have been omitted in accordance with the rules
and regulations of the SEC. For further information, reference is made to the registration statement and its exhibits. Whenever
we make references in this prospectus supplement or the accompanying prospectus to any of our contracts, agreements or other documents,
the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for the
copies of the actual contract, agreement or other document.
DOCUMENTS
INCORPORATED BY REFERENCE
The
SEC allows us to incorporate by reference the information we file with it, which means that we can disclose important information
to you by referring you to another document that we have filed separately with the SEC. Any information that we incorporate by
reference is considered part of this prospectus supplement. We hereby incorporate by reference the following information or documents
into this prospectus supplement and the accompanying prospectus:
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Our
Annual Report on Form 10-K for the year ended December 31, 2019;
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Our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020;
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Our
current reports on Form 8-K filed on January 29, 2020, January 31, 2020, February 24, 2020, March 4, 2020, March 13, 2020,
March 30, 2020, April 20, 2020, April 22, 2020, June 8, 2020, June 15, 2020, June 26, 2020 and July 2, 2020 (other than current
reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits that are related to such item); and
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The
description of our common stock contained in our Registration Statement on Form 8-A (File No. 001-38418), filed under Section
12(b) of the Exchange Act on March 9, 2018, including any subsequent amendment or report filed for the purpose of amending
such description.
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Any
information in any of the foregoing documents will automatically be deemed to be modified or superseded to the extent that information
in this prospectus supplement or the accompanying prospectus or in a later filed document that is incorporated or deemed to be
incorporated herein by reference modifies or replaces such information.
We
also incorporate by reference any future filings (excluding information furnished under Item 2.02 or Item 7.01 of Form 8-K and
exhibits filed on such form that are related to such items) made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, until we sell all of the securities offered by this prospectus supplement. Information in such future filings
updates and supplements the information provided in this prospectus supplement. Any statements in any such future filings will
automatically be deemed to modify and supersede any information in any document we previously filed with the SEC that is incorporated
or deemed to be incorporated herein by reference to the extent that statements in the later filed document modify or replace such
earlier statements.
Upon
written or oral request, we will provide to you, without charge, a copy of any or all of the documents that are incorporated by
reference into this prospectus supplement and the accompanying prospectus but not delivered with the prospectus, including exhibits
which are specifically incorporated by reference into such documents. Requests should be directed to:
Cocrystal
Pharma, Inc.
19805
North Creek Parkway
Bothell,
Washington 98011
Telephone
number: (786) 459-1831
PROSPECTUS
$150,000,000
Cocrystal
Pharma, Inc.
Common
Stock
Preferred
Stock
Warrants
Units
Cocrystal
Pharma, Inc. intends to offer and sell from time to time the securities described in this prospectus. The total offering price
of the securities described in this prospectus will not exceed a total of $150,000,000.
This
prospectus describes some of the general terms that apply to the securities. We will provide specific terms of any securities
we may offer in supplements to this prospectus. You should read this prospectus and any applicable prospectus supplement carefully
before you invest. We also may authorize one or more free writing prospectuses to be provided to you in connection with the offering.
The prospectus supplement and any free writing prospectus also may add, update or change information contained or incorporated
in this prospectus.
We
may offer and sell these securities to or through one or more underwriters, brokers or agents, or directly to purchasers on a
continuous or delayed basis. The prospectus supplement for each offering of securities will describe the plan of distribution
for that offering. For general information about the distribution of securities offered, see “Plan of Distribution”
in this prospectus. The prospectus supplement also will set forth the price to the public of the securities and the net proceeds
that we expect to receive from the sale of such securities.
Our
common stock is traded on The Nasdaq Capital Market under the symbol “COCP.” On April 16, 2020, the last reported
sales price of our common stock on the Nasdaq Capital Market was $0.90 per share and our public float consisted of 36,909,583
shares of common stock.
Investing
in our securities involves risks. You should read carefully and consider “Risk Factors” included in our most recent
Annual Report on Form 10-K and on page 2 of this prospectus and in the applicable prospectus supplement before investing in our
securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 13,
2020
TABLE
OF CONTENTS
You
should rely only on information contained in this prospectus. We have not authorized anyone to provide you with information that
is different from that contained in this prospectus. We are not offering to sell or seeking offers to buy shares of common stock
or other securities in jurisdictions where offers and sales are not permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common
stock or other securities. We are responsible for updating this prospectus to ensure that all material information is included
and will update this prospectus to the extent required by law.
PROSPECTUS
SUMMARY
This
summary only highlights the more detailed information appearing elsewhere in this prospectus or incorporated by reference in this
prospectus. It may not contain all of the information that is important to you. You should carefully read the entire prospectus
and the documents incorporated by reference in this prospectus before deciding whether to invest in our securities. Unless otherwise
indicated or the context requires otherwise, in this prospectus and any prospectus supplement hereto references to “Cocrystal,”
“we,” “us,” and “our” refer to Cocrystal Pharma, Inc. and its consolidated subsidiaries.
About
This Prospectus
This
prospectus is part of a “shelf” registration statement that we have filed with the Securities and Exchange Commission
(the “Commission”). By using a shelf registration statement, we may sell, at any time and from time to time, in one
or more offerings, any combination of the securities described in this prospectus. The exhibits to our registration statement
contain the full text of certain contracts and other important documents we have summarized in this prospectus. Since these summaries
may not contain all the information that you may find important in deciding whether to purchase the securities we offer, you should
review the full text of these documents. The registration statement and the exhibits can be obtained from the Commission as indicated
under the section entitled “Incorporation of Certain Information by Reference.”
This
prospectus only provides you with a general description of the securities we may offer. Each time we sell securities, we will
provide a prospectus supplement that contains specific information about the terms of those securities. The prospectus supplement
also may add, update or change information contained in this prospectus. If there is an inconsistency between the information
in this prospectus and any prospectus supplement, you should rely on the information in the prospectus supplement. You should
read carefully both this prospectus and any prospectus supplement together with the additional information described below under
the section entitled “Incorporation of Certain Information by Reference.”
We
are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the
information in this prospectus or a prospectus supplement is accurate as of any date other than the date on the front of the document.
Our
Company
Cocrystal
Pharma, Inc. is a biotechnology company seeking to discover and develop novel antiviral therapeutics as treatments for serious
and/or chronic viral diseases. We employ unique structure-based technologies and Nobel Prize winning expertise to create first-
and best-in-class antiviral drugs. These technologies are designed to efficiently deliver small molecule therapeutics that are
safe, effective and convenient to administer. We have identified promising preclinical and early clinical stage antiviral compounds
for unmet medical needs including influenza, Hepatitis C virus, coronavirus, and norovirus infections.
Corporate
Information
Our
principal executive offices are located at 19805 N. Creek Parkway, Bothell, WA 98011 and our telephone number is (786) 459-1831.
Our Internet website address is www.cocrystalpharma.com. The information on our website is not incorporated into this prospectus.
CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
This
prospectus including the documents incorporated by reference contains forward-looking statements. All statements other than statements
of historical facts, including statements regarding our future financial position, liquidity, business strategy and plans and
objectives of management for future operations, are forward-looking statements. The words “believe,” “may,”
“estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,”
“could,” “target,” “potential,” “is likely,” “will,” “expect”
and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking
statements largely on our current expectations and projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial needs.
The
results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks
that may cause actual results to differ materially from these forward-looking statements are contained in the risk factors that
follow and elsewhere in this prospectus and the incorporated documents. We undertake no obligation to publicly update or revise
any forward-looking statements, whether as the result of new information, future events or otherwise. For more information regarding
some of the ongoing risks and uncertainties of our business, see the risk factors that follow and or that are disclosed in our
incorporated documents.
RISK
FACTORS
Investing
in our securities involves risks. Before purchasing the securities offered by this prospectus you should consider carefully the
risk factors incorporated by reference in this prospectus from our Annual Report on Form 10-K for the year ended December 31,
2019 filed with the Commission on March 27, 2020, as well as the risks, uncertainties and additional information (i) set forth
in our reports on Forms 10-K, 10-Q and 8-K and in the other documents incorporated by reference in this prospectus that we file
with the Commission after the date of this prospectus and which are deemed incorporated by reference in this prospectus, and (ii)
the information contained in any applicable prospectus supplement. For a description of these reports and documents, and information
about where you can find them, see “Incorporation of Certain Information By Reference.” The risks and uncertainties
we discuss in this prospectus and in the documents incorporated by reference in this prospectus are those that we currently believe
may materially affect our company. Additional risks not presently known, or currently deemed immaterial, also could materially
and adversely affect our financial condition, results of operations, business and prospects.
USE
OF PROCEEDS
Unless
we specify otherwise in an accompanying prospectus supplement, we intend to use the net proceeds from the sale of the securities
by us to provide additional funds for working capital and other general corporate purposes. Any specific allocation of the net
proceeds of an offering of securities will be determined at the time of such offering and will be described in the accompanying
supplement to this prospectus.
DESCRIPTION
OF CAPITAL STOCK
We
are authorized to issue 100,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock,
par value $0.001 per share.
Common
Stock
We
are authorized to issue 100,000,000 shares of common stock, par value $0.001 per share. The holders of common stock are entitled
to one vote per share on all matters submitted to a vote of shareholders, including the election of directors. There is no cumulative
voting in the election of directors. In the event of our liquidation or dissolution, holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred
stock. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities
and there are no redemption provisions applicable to our common stock.
The
holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available
for payment of dividends subject to the prior rights of holders of preferred stock and any contractual restrictions we have against
the payment of dividends on common stock. We have not paid dividends on our common stock since inception and do not plan to pay
dividends on our common stock in the foreseeable future.
As
of April 1, 2020, we had 52,140,699 shares of common stock outstanding. In addition, as of that date, there were 1,084,229 shares
underlying our outstanding warrants and stock options.
Preferred
Stock
We
are authorized to issue 5,000,000 shares of “blank check” preferred stock with designations, rights and preferences
as may be determined from time to time by our Board of Directors. As the date of this prospectus, we had no shares of preferred
stock issued and outstanding.
Preferred
stock is available for possible future financings or acquisitions and for general corporate purposes without further authorization
of our shareholders unless such authorization is required by applicable law, or the rules of any securities exchange or market
on which our stock is then listed or admitted or trading.
Our
Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility
in connection with possible acquisitions and other corporate purposes could, under some circumstances, have the effect of delaying,
deferring or preventing a change in control of the Company. For a description of how future issuances of our preferred stock could
affect the rights of our shareholders, see “Certain Provisions of Delaware Law and of Our Charter and Bylaws - Issuance
of “blank check” Preferred Stock,” below.
A
prospectus supplement relating to any series of preferred stock being offered will include specific terms relating to the offering.
Such prospectus supplement will include:
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the
title and stated or par value of the preferred stock;
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the
number of shares of the preferred stock offered, the liquidation preference per share and the offering price of the preferred
stock;
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the
dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation thereof applicable to the preferred stock;
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whether
dividends shall be cumulative or non-cumulative and, if cumulative, the date from which dividends on the preferred stock shall
accumulate;
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the
provisions for a sinking fund, if any, for the preferred stock;
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any
voting rights of the preferred stock;
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the
provisions for redemption, if applicable, of the preferred stock;
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any
listing of the preferred stock on any securities exchange;
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the
terms and conditions, if applicable, upon which the preferred stock will be convertible into our common stock, including the
conversion price or the manner of calculating the conversion price and conversion period;
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if
appropriate, a discussion of federal income tax consequences applicable to the preferred stock; and
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any
other specific terms, preferences, rights, limitations or restrictions of the preferred stock.
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DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of common stock. Warrants may be issued independently or together with other securities and
may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement.
The following outlines some of the general terms and provisions of the warrants that we may issue from time to time. Additional
terms of the warrants and the applicable warrant agreement will be set forth in the applicable prospectus supplement.
The
following descriptions, and any description of the warrants included in a prospectus supplement, may not be complete and is subject
to and qualified in its entirety by reference to the terms and provisions of the applicable warrant agreement, which we will file
with the Commission in connection with any offering of warrants.
General
The
prospectus supplement relating to a particular issue of warrants will describe the terms of the warrants, including the following:
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the
title of the warrants;
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the
offering price for the warrants, if any;
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the
aggregate number of the warrants;
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the
terms of the security that may be purchased upon exercise of the warrants;
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if
applicable, the designation and terms of the securities that the warrants are issued with and the number of warrants issued
with each security;
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if
applicable, the date from and after which the warrants and any securities issued with the warrants will be separately transferable;
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the
dates on which the right to exercise the warrants commence and expire;
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if
applicable, the minimum or maximum amount of the warrants that may be exercised at any one time;
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if
applicable, a discussion of material United States federal income tax considerations;
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anti-dilution
provisions of the warrants, if any;
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redemption
or call provisions, if any, applicable to the warrants; and
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any
additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the
warrants.
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Exercise
of warrants
Each
warrant will entitle the holder of the warrant to purchase the securities that we specify in the applicable prospectus supplement
at the exercise price that we describe in the applicable prospectus supplement. Holders may exercise warrants at any time up to
the close of business on the expiration date set forth in the applicable prospectus supplement. After the close of business on
the expiration date, unexercised warrants will be void. Holders may exercise warrants as set forth in the prospectus supplement
relating to the warrants being offered. Until a holder exercises the warrants to purchase any securities underlying the warrants,
the holder will not have any rights as a holder of the underlying securities by virtue of ownership of warrants.
DESCRIPTION OF UNITS
As specified in any applicable prospectus
supplement, we may issue units consisting of one or more warrants, debt securities, shares of preferred stock, shares of common
stock or any combination of such securities.
Transfer
Agent
We
have appointed Equity Stock Transfer as our transfer agent. Their contact information is: 237 West 37th Street, Suite 602, New
York, New York 10018, phone number (212) 575-5757.
CERTAIN
PROVISIONS OF DELAWARE LAW AND OF OUR CHARTER AND BYLAWS
Anti-takeover
Provisions
In
general, Section 203 of the Delaware General Corporation Law (the “DGCL”) prohibits a Delaware corporation with a
class of voting stock listed on a national securities exchange or held of record by 2,000 or more shareholders from engaging in
a “business combination” with an “interested shareholder” for a three-year period following the time that
this shareholder becomes an interested shareholder, unless the business combination is approved in a prescribed manner. A “business
combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit
to the interested shareholder. An “interested shareholder” is a person who, together with affiliates and associates,
owns, or did own within three years prior to the determination of interested shareholder status, 15% or more of the corporation’s
voting stock. Under Section 203, a business combination between a corporation and an interested shareholder is prohibited unless
it satisfies one of the following conditions:
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before
the shareholder became interested, the board of directors approved either the business combination or the transaction which
resulted in the shareholder becoming an interested shareholder;
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upon
consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee
stock plans, in some instances; or
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at
or after the time the shareholder became interested, the business combination was approved by the board of directors of the
corporation and authorized at an annual or special meeting of the shareholders by the affirmative vote of at least two-thirds
of the outstanding voting stock which is not owned by the interested shareholder.
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The
DGCL permits a corporation to opt out of, or choose not to be governed by, its anti-takeover statute by expressly stating so in
its original certificate of incorporation (or subsequent amendment to its certificate of incorporation or bylaws approved by its
shareholders). Our Certificate of Incorporation does not contain a provision expressly opting out of the application of Section
203 of the DGCL; therefore we are subject to the anti-takeover statute.
Issuance
of “Blank Check” Preferred Stock
Our
Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of “blank check” preferred stock with
designations, rights and preferences as may be determined from time to time by our Board of Directors. Our Board of Directors
is empowered, without shareholder approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting
or other rights which could dilute the interest of, or impair the voting power of, our common shareholders. The issuance of a
series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example,
it would be possible for our Board of Directors to issue preferred stock with voting or other rights or preferences that could
impede the success of any attempt to effect a change in control of our Company.
Our
Bylaws also allow our Board of Directors to fix the number of directors. Our shareholders do not have cumulative voting in the
election of directors.
Special
Shareholder Meetings and Action by Written Consent
Under
our Bylaws, special meetings of the shareholders shall be held when directed by (i) the
Board of Directors, or (ii) when requested in writing by the holders of not less than 20 percent of all the shares entitled to
vote at the meeting. Our Bylaws do not permit meetings of shareholders to be called by any other person. This could have
the effect of delaying or preventing unsolicited takeovers and changes in control or changes in our management.
Indemnification
of Directors and Officers.
Section
145(a) of the DGCL, which Cocrystal is subject to, provides that a corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person
is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by
the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe the person’s conduct was unlawful. Section 145(b) of the DGCL provides that a corporation
may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including
attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action
or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper. To the extent that a present or former director or officer of a corporation
has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 145(a) and
(b) of the DGCL, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including
attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
Any
indemnification under Section 145(a) and (b) of the DGCL (unless ordered by a court) shall be made by Cocrystal only as authorized
in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because the person has met the applicable standard of conduct set forth in Section 145(a) and (b).
Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1)
by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the
shareholders. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this
section. Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. The indemnification and advancement
of expenses provided by, or granted pursuant to, Section 145 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while
holding such office. We have entered into Indemnification Agreements with each director and executive officer.
Section
145 of the DGCL also empowers a corporation to purchase and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether
or not the corporation would have the power to indemnify such person against such liability under Section 145.
Article
11 of Cocrystal’s Certificate of Incorporation provides that directors and officers of the Company, and any persons serving
at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit plans, shall be indemnified to the fullest extent
permitted by the DGCL.
Cocrystal
carries directors and officers liability coverages designed to insure its officers and directors and those of its subsidiaries
against certain liabilities incurred by them in the performance of their duties, and also providing for reimbursement in certain
cases to Cocrystal and its subsidiaries for sums paid to directors and officers as indemnification for similar liability.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the “Securities Act”) may be permitted
to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, Cocrystal has been advised
that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
Governing Law and Forum Selection
Article 12 of Cocrystal’s Certificate
of Incorporation provides that the internal affairs of the Company shall be governed by and interpreted under the laws of the
State of Delaware, excluding its conflict of laws principles, and that unless the Company consents in writing to the selection
of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative
action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by
any director or officer (or affiliate of any of the foregoing) of the Company to the Company or the Company’s shareholders,
(iii) any action asserting a claim arising pursuant to any provision of the DGCL or the Company’s Certificate of Incorporation
or Bylaws, or (iv) any other action asserting a claim arising under, in connection with, and governed by the internal affairs
doctrine.
Article 12 of the Company’s Certificate
of Incorporation has the effect of requiring parties bringing actions concerning the Company’s internal affairs, including
actions brought by the Company’s shareholders, to litigate such matters in the Delaware Court of Chancery, to the extent
such exclusive jurisdiction is permitted under applicable law. As such, shareholders of the Company seeking to bring a claim regarding
the internal affairs of the Company may be subject to increased costs associated with litigating in Delaware as opposed to their
home state or other forum, precluded from bringing such a claim in a forum they otherwise consider to be more favorable, and discouraged
from bringing such claims as a result of the foregoing or other factors related to forum selection.
Article 12 of the Company’s Certificate
of Incorporation does not provide the Delaware Court of Chancery with jurisdiction over matters for which federal courts have
exclusive jurisdiction, such as suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations
promulgated thereunder. Based on a case brought against Facebook, Inc. and its directors in a federal district court in California,
the Company believes that Article 12 will effect a claim made under the DGCL that is combined with a claim made under the Exchange
Act by causing the DGCL claim and the Exchange Act claim to be separated between the courts having jurisdiction over the respective
claims. However, because the case in question was decided by a federal district court, its ruling is not binding on any other
courts, and we cannot assure you that other courts will rule the same way.
Additionally, Section 22 of the Securities
Act provides that state and federal courts have concurrent jurisdiction over claims to enforce any duty or liability created by
the Securities Act or the rules and regulations promulgated thereunder. As such, there is some uncertainty as to the effect that
Article 12 of our Certificate of Incorporation would have when a claim under the DGCL is combined with a claim under the Securities
Act, and in such a case Article 12 may cause the DGCL claim and the Securities Act claim to be separated between the courts having
jurisdiction over the respective claims, or alternatively it may cause the DGCL claim and the Securities Act claim to be consolidated
in the Delaware Court of Chancery.
Because Article 12 of our Certificate of
Incorporation may have the effect of severing certain causes of action between federal and state courts, shareholders seeking
to assert such claims face the risk of increased litigation expenses arising from litigating multiple related claims in two separate
courts, and shareholders may be discouraged from bringing all or some of these claims as a result. Notwithstanding the foregoing,
the Company’s shareholders will not be deemed to have waived the Company’s compliance obligations with respect to
the federal securities laws, including the Exchange Act and the Securities Act, or the rules and regulations promulgated thereunder.
PLAN
OF DISTRIBUTION
We
may sell the securities offered by this prospectus from time to time in one or more transactions, including without limitation:
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through
underwriters or brokers;
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directly
to purchasers;
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in
a rights offering;
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in
“at-the-market” offerings, within the meaning of Rule 415(a)(4) of the Securities Act to or through a market maker
or into an existing trading market on an exchange or otherwise;
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through
agents;
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in
block trades;
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through
a combination of any of these methods; or
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through
any other method permitted by applicable law and described in a prospectus supplement.
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In
addition, we may issue the securities as a dividend or distribution to our existing stockholders or other security holders.
The
prospectus supplement with respect to any offering of securities will include the following information:
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the
terms of the offering;
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the
names of any underwriters or agents;
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the
name or names of any managing underwriter or underwriters;
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the
purchase price or initial public offering price of the securities;
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the
net proceeds from the sale of the securities;
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any
delayed delivery arrangements;
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any
underwriting discounts, commissions and other items constituting underwriters’ compensation;
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any
discounts or concessions allowed or re-allowed or paid to brokers;
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any
commissions paid to agents; and
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any
securities exchange on which the securities may be listed.
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Sale
through Underwriters or Brokers
If
underwriters are used in the sale, the underwriters may resell the securities from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may
offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly
by one or more firms acting as underwriters. Unless we inform you otherwise in the applicable prospectus supplement, the obligations
of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will be obligated to
purchase all of the offered securities if they purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or re-allowed or paid to brokers.
We
will describe the name or names of any underwriters, brokers or agents and the purchase price of the securities in a prospectus
supplement relating to the securities.
In
connection with the sale of the securities, underwriters may receive compensation from us or from purchasers of the securities,
for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell the securities to
or through brokers, and these brokers may receive compensation in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents, which is not expected to exceed that customary in the
types of transactions involved. Underwriters, brokers and agents that participate in the distribution of the securities may be
deemed to be underwriters, and any discounts or commissions they receive from us, and any profit on the resale of the securities
they realize may be deemed to be underwriting discounts and commissions, under the Securities Act. The prospectus supplement will
identify any underwriter or agent and will describe any compensation they receive from us.
Underwriters
could make sales in privately negotiated transactions and/or any other method permitted by law, including sales deemed to be an
“at-the-market” offering, sales made directly on The Nasdaq Capital Market, the existing trading market for our shares
of common stock, or sales made to or through a market maker other than on The Nasdaq Capital Market. The name of any such underwriter
or agent involved in the offer and sale of our securities, the amounts underwritten, and the nature of its obligations to take
our securities will be described in the applicable prospectus supplement.
Unless
otherwise specified in the prospectus supplement, each series of the securities will be a new issue with no established trading
market, other than our shares of common stock, which are currently traded on The Nasdaq Capital Market. It is possible that one
or more underwriters may make a market in a series of the securities, but underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, we can give no assurance about the liquidity of the trading
market for any of the securities.
Under
agreements we may enter into, we may indemnify underwriters, brokers, and agents who participate in the distribution of the securities
against certain liabilities, including liabilities under the Securities Act, or contribute with respect to payments that the underwriters,
brokers or agents may be required to make.
Any
compensation we pay underwriters or brokers will be subject to the guidelines of the Financial Industry Regulatory Authority,
Inc. We will disclose the compensation in any applicable prospectus supplement or pricing supplement, as the case may be.
To
facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize,
maintain, or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities,
which involve the sale by persons participating in the offering of more securities than we sold to them. In these circumstances,
these persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their
over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities by bidding for
or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to brokers participating
in the offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The
effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might
otherwise prevail in the open market. These transactions may be discontinued at any time.
From
time to time, we may engage in transactions with these underwriters, brokers, and agents in the ordinary course of business.
Direct
Sales and Sales through Agents
We
may sell the securities directly. In this case, no underwriters or agents would be involved. We also may sell the securities through
agents designated by us from time to time. In the applicable prospectus supplement, we will name any agent involved in the offer
or sale of the offered securities, and we will describe any commissions payable to the agent. Unless we inform you otherwise in
the applicable prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period
of its appointment.
We
may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any sale of those securities. We will describe the terms of any sales of these securities
in the applicable prospectus supplement.
Remarketing
Arrangements
Securities
also may be offered and sold, if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms,
acting as principals for their own accounts or as agents for us. Any remarketing firm will be identified and the terms of its
agreements, if any, with us and its compensation will be described in the applicable prospectus supplement.
Delayed
Delivery Contracts
If
we so indicate in the applicable prospectus supplement, we may authorize agents, underwriters or brokers to solicit offers from
certain types of institutions to purchase securities from us at the public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those
conditions described in the applicable prospectus supplement. The applicable prospectus supplement will describe the commission
payable for solicitation of those contracts.
General
Information
We
may have agreements with the underwriters, brokers, agents and remarketing firms to indemnify them against certain civil liabilities,
including liabilities under the Securities Act, or to contribute with respect to payments that the underwriters, brokers, agents
or remarketing firms may be required to make. Underwriters, brokers, agents and remarketing firms may be customers of, engage
in transactions with or perform services for us in the ordinary course of their businesses.
LEGAL
MATTERS
The
validity of the securities offered hereby will be passed upon for us by Nason, Yeager, Gerson, Harris & Fumero, P.A., Palm
Beach Gardens, Florida.
EXPERTS
The
consolidated financial statements as of December 31, 2019 and 2018 incorporated by reference in this prospectus have been so incorporated
in reliance on the report of Weinberg & Company.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
documents listed below are incorporated by reference into this prospectus:
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Our
annual report on Form 10-K for the year ended December 31, 2019 filed on March 27, 2020; and
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Our
current report on Form 8-K filed on January 29, 2020, January 31, 2020, February 24, 2020, March 4, 2020, March 13, 2020,
March 30, 2020, April 20, 2020 and April 22, 2020 (other than current reports furnished under Item 2.02 or Item
7.01 of Form 8-K and exhibits that are related to such item); and
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The
description of our common stock contained in our Registration Statement on Form 8-A (File No. 001-38418), filed under Section
12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) on March 9, 2018, including any subsequent amendment
or report filed for the purpose of amending such description; and
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All
documents subsequently filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of
the offering, other than information furnished pursuant to Items 2.02 and 7.01 of Form 8-K and any related exhibits, shall
be deemed to be incorporated by reference into the prospectus.
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Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus is modified or superseded
for purposes of the prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement.
We
will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information
that has been incorporated by reference in this prospectus but not delivered with the prospectus.
We
are an Exchange Act reporting company and are required to file periodic reports on Form 10-K and 10-Q and current reports on Form
8-K. The Commission maintains an internet website that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission, including Cocrystal at www.sec.gov. You may also access our Exchange
Act reports and proxy statements free of charge at our website, www.cocrystalpharma.com.
You
may obtain a copy of any of our filings, at no cost, by contacting us at:
19805
N. Creek Parkway
Bothell,
WA 98011
(786)
459-1831
14,285,715
Shares
Common
Stock
PROSPECTUS
SUPPLEMENT
H.C.
Wainwright & Co.
August
26, 2020
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