Item 8.01. Other Events.
IND Acceptance
On December 27, 2022, the Company announced that the U.S. Food and
Drug Administration (the “FDA”) has accepted an investigational new drug (“IND”) application for the Company’s
lead product candidate, KPI-012, for the treatment of persistent corneal epithelial defect (“PCED”).
The Company expects to initiate a Phase 2b
clinical trial of KPI-012 for PCED in the first quarter of 2023. The Phase 2b clinical trial will be a multicenter, randomized, double-masked,
vehicle-controlled, parallel-group study to evaluate the safety and efficacy of two doses of KPI-012 ophthalmic solution compared to vehicle
when dosed topically four times per day for 56 days. The trial is expected to enroll approximately 90 adult patients with PCED, and the
primary endpoint of the trial will be complete healing of the PCED as measured by corneal fluorescein staining. The Company expects to
report topline data from the trial in the first quarter of 2024. If the results are positive, the Company believes the trial could serve
as the first of two pivotal trials required to support the submission of a Biologics License Application to the FDA.
Second Closing of Private Placement
As previously disclosed, on November 28, 2022, the Company entered
into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional investors named therein
(the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a private placement priced at-the-market under
Nasdaq rules, shares (the “Common Shares”) of Common Stock and shares (the “Preferred Shares”, and together with
the Common Shares, the “Private Placement Shares”) of Series E Convertible Non-Redeemable Preferred Stock, par value $0.001
per share, of the Company (the “Series E Preferred Stock”), in two tranches for aggregate gross proceeds of up to $31.0 million
(collectively, the “Private Placement”).
On December 1, 2022, the Company issued and sold to the Purchasers at the first closing of the Private Placement, (i) 76,813 Common Shares,
at a price per Common Share equal to $5.75 and (ii) 9,666 Preferred Shares, at a price per Preferred Share equal to $575.00 (the “Preferred
Stock Price”), for aggregate gross proceeds of approximately $6.0 million.
On December 27, 2022, following the certification by the Chief Executive
Officer of the Company that the FDA accepted the Company’s IND application for KPI-012, the Company issued and sold to the Purchasers
at a second closing of the Private Placement a total of 43,478 Preferred Shares, at a price per Preferred Share equal to the Preferred
Stock Price, for aggregate gross proceeds of approximately $25.0 million. The Private Placement and related matters are described in more
detail in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 28, 2022.
Cash Runway
The Company anticipates that its existing cash and cash equivalents,
including the gross proceeds from the Private Placement, will enable it to fund its operations, lease and debt service obligations and
capital expenditure requirements for approximately 24 months. The Company has based this estimate on assumptions that may prove to be
wrong, and it could use its capital resources sooner than it currently expects.
Nasdaq Listing
As previously disclosed, on July 6, 2022, the Company received a deficiency
letter from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying
the Company that the listing of its Common Stock was not in compliance with Nasdaq Listing Rule 5450(b)(2)(A) (the “Minimum MVLS
Requirement”) for continued listing on The Nasdaq Global Select Market, as the market value of the Company’s listed securities
was less than $50,000,000 for the previous 30 consecutive business days. The Staff also noted in its July 2022 letter that the Company
was not in compliance with Nasdaq Listing Rule 5450(b)(1)(A), as its stockholders’ equity was less than $10,000,000 and Nasdaq Listing
Rule 5450(b)(3)(A), as its total assets and total revenue for the most recently completed fiscal year or for two of the three most recently
completed fiscal years were less than $50,000,000. A company that has its primary equity security listed on The Nasdaq Global Select Market
must satisfy at least one of the standards in Nasdaq Listing Rule 5450(b).
In addition, as previously disclosed, on December 5, 2022, the Company
received a deficiency letter from the Staff of Nasdaq notifying the Company that the listing of its Common Stock was not in compliance
with Nasdaq Listing Rule 5450(b)(2)(C) (the “Minimum MVPHS Requirement”) for continued listing on The Nasdaq Global Select
Market, as the market value of the Company’s publicly held shares was less than $15,000,000 for each of the previous 30 consecutive
business days.
In accordance with Nasdaq Listing Rule 5810(c)(3), the Company was
provided a period of 180 calendar days, or until January 2, 2023, to regain compliance with the Minimum MVLS Requirement and a period
of 180 calendar days, or until June 5, 2023, to regain compliance with the Minimum MVPHS Requirement. Alternatively, if the Company does
not regain compliance with the Minimum MVLS Requirement or the Minimum MVPHS Requirement by the applicable compliance date, the Company
may be eligible to transfer the listing of its Common Stock to The Nasdaq Capital Market, provided that the Company then meets the applicable
requirements for continued listing on The Nasdaq Capital Market.
Following the receipt of the gross proceeds from the second tranche
of the Private Placement and as of the date of this Current Report on Form 8-K, the Company believes it meets all of the applicable requirements
to transfer the listing of its Common Stock from The Nasdaq Global Select Market to The Nasdaq Capital Market, including the requirements
under Nasdaq’s “Equity” standard to maintain a minimum stockholders equity of $2.5 million and a minimum market value
of publicly held securities of $1.0 million. Accordingly, the Company has applied to transfer the listing of its Common Stock to The Nasdaq
Capital Market.
If Nasdaq does not approve a transfer to The Nasdaq Capital Market,
and the Company does not regain compliance with the Minimum MVLS Requirement by January 2, 2023, the Company will receive written notification
that its securities are subject to delisting. At that time, the Company may request a hearing before a Nasdaq Listing Qualifications Panel
pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance that, if the Company receives
a delisting notice and requests a hearing, it will be successful in maintaining its listing on Nasdaq.