|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On November 21, 2019, Onconova Therapeutics,
Inc. (the “Company”) announced the pricing of a public offering of (i) 30,250,000 shares (the “Shares”)
of its common stock, par value $0.01 per share (the “Common Stock”), and warrants to purchase shares of Common Stock
(“Common Warrants”) for an aggregate purchase price of $0.20 per share and Common Warrant and (ii) 24,750,000 pre-funded
warrants to purchase one share of Common Stock (“Pre-Funded Warrants”) and Common Warrants for an aggregate purchase
price of $0.1999 per Pre-Funded Warrant and Common Warrant.
Subject to certain ownership limitations
described in the Common Warrants, the Common Warrants have an exercise price of $0.20 per share of Common Stock, will be exercisable
upon issuance and will expire five years from the date of issuance. The exercise price of the Common Warrants will be subject to
adjustment for stock splits, reverse splits, and similar capital transactions as described in the Common Warrants. In connection
with the offering, the Company will issue 55,000,000 Common Warrants.
Subject to certain ownership limitations
described in the Pre-Funded Warrants, the Pre-Funded Warrants are immediately exercisable and may be exercised at any time until
all of the Pre-Funded Warrants are exercised in full. The Common Warrants and the Pre-Funded Warrants provide that holders will
have the right to participate in any rights offering or distribution of assets, and will have the right to receive certain consideration
in fundamental transactions, together with the holders of Common Stock on an as-exercised basis. In addition, upon a fundamental
transaction, the holder of either of the Common Warrants shall have the right to receive payment in cash, or under certain circumstances
in other consideration, from the Company at the Black Scholes value as described in the Common Warrants. A holder will not have
the right to exercise any portion of the Common Warrants or the Pre-Funded Warrants if the holder (together with its affiliates)
would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the number of shares of Common Stock outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the
Common Warrants or the Pre-Funded Warrants, respectively. However, any holder may increase or decrease such percentage to any other
percentage not in excess of 9.99% upon notice to the Company, provided that any increase in such percentage shall not be effective
until 61 days after such notice. If not previously exercised in full, at the expiration of their terms, the Common Warrants will
be automatically exercised via cashless exercise.
In connection with the offering, the Company
entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors. The Purchase
Agreement contains customary representations and warranties of the Company, termination rights of the parties, and certain indemnification
obligations of the Company and ongoing covenants of the Company, including a prohibition on issuance of Common Stock or securities
convertible or exchangeable into Common Stock by the Company for a period of 90 days after the date of the Purchase Agreement and
a prohibition on the Company entering into variable rate transactions for a period of 12 months after the date of the Purchase
Agreement, subject to certain exceptions.
The net proceeds to the Company from the
offering are expected to be approximately $9.7 million, after deducting placement agent’s fees and other estimated
offering expenses payable by the Company. The Company intends to use the net proceeds from the offering to fund the development
of its clinical and preclinical programs, for other research and development activities and for general corporate purposes, which
may include capital expenditures and funding working capital needs. All of the securities in the offering are being sold by the
Company.
The public offering was made
pursuant to the Company’s effective registration statement on Form S-1 (Registration No. 333-234360) previously filed
with and declared effective by the Securities and Exchange Commission and a preliminary and final prospectus thereunder. The
closing of the offering took place on November 25, 2019.
As previously disclosed on our
Current Report on Form 8-K filed with the Securities and Exchange Commission on September 25, 2019, the Company also entered
into an engagement letter (the “Engagement Letter”) with H.C. Wainwright & Co., LLC
(“Wainwright”), pursuant to which Wainwright agreed to serve as exclusive placement agent for the public
offering. The Company has agreed to pay Wainwright an aggregate fee equal to 7% of the gross proceeds received by the Company
from such offering as well as a management fee equal to 1.0% of the gross proceeds raised in the offering. The Company also
will pay Wainwright a reimbursement for non-accountable expenses in the amount of $50,000 and a reimbursement for legal fees
and expenses of the placement agent in the amount of up to $110,000. Pursuant to the Engagement Letter, the Company also
agreed to grant to Wainwright or its designees warrants to purchase up to 5.0% of the aggregate number of shares of Common
Stock and Pre-Funded Warrants sold in such offerings (the “Placement Agent Warrants”). The Placement Agent
Warrants have substantially the same terms as the Common Warrants, except that the Placement Agent Warrants will have an
exercise price equal to 125% of the per share purchase price and expire on the five year anniversary of the effective date of
the registration statement. The Engagement Letter has a tail period of six (6) months and indemnity and other customary
provisions for transactions of this nature.
The foregoing is only a brief
description of the Common Warrants, the Pre-Funded Warrants, the Placement Agent Warrants, the Engagement Letter and the
Purchase Agreement and does not purport to be a complete description thereof. Such descriptions are qualified in their
entirety by reference to the forms of Common Warrant, the Pre-Funded Warrant, the Placement Agent Warrant and the Purchase
Agreement, copies of which are filed as Exhibits 4.1, 4.2, 4.3 and 10.1, respectively, to this Current Report on Form 8-K and
are incorporated by reference herein.