Item 1.01
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Entry into a Material Definitive Agreement
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On
June 18, 2019, SELLAS Life Sciences Group, Inc. (the “Company”) consummated an underwritten public offering (the “Offering”)
of (i) 26,367,200 shares of common stock, (ii) 73,632,800 pre-funded warrants exercisable for shares of common stock, and (iii)
accompanying common stock warrants to purchase up to an aggregate of 100,000,000 shares of common stock. The Offering was conducted
pursuant to an Underwriting Agreement dated June 14, 2019 by and between the Company and A.G.P./Alliance Global Partners, LLC (the
“Underwriting Agreement”).
The shares of common stock and accompanying
common stock warrants were sold at a combined Offering price of $0.15 per share and common stock warrant.
Each
common stock warrant sold with the shares of common stock represents the right to purchase one share of common stock at an exercise
price of $0.50 per share. The common stock warrants are exercisable immediately, expire five years from the date of issuance
and contain anti-dilution protection upon the issuance of any common stock, securities convertible into common stock, or certain
other issuances at a price below the then-existing exercise price of the warrants, subject to certain exceptions. Additionally,
the common stock warrants provide that, beginning 60 days after issuance, each common stock warrant may be exercised on a
cashless basis, at the option of the holder, in whole or in part, for one share of common stock, if during the period of time between
the date that is 60 days after issuance and the date that is 15 months after issuance, the weighted average price of the common
stock on any trading day immediately prior to the exercise date is lower than the then-applicable exercise price per share.
The
pre-funded warrants and accompanying common stock warrants were sold at a combined Offering price of $0.1499 per pre-funded warrant
and common stock warrant. The pre-funded warrants were sold to purchasers whose purchase of shares of common stock in the Offering
would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than
4.99% of the Company’s outstanding common stock immediately following the consummation of the Offering, in lieu of shares
of common stock. Each pre-funded warrant represents the right to purchase one share of the Company’s common stock at an exercise
price of $0.0001 per share. The pre-funded warrants are exercisable immediately and may be exercised at any time until the pre-funded
warrants are exercised in full. The shares of common stock and pre-funded warrants, and accompanying common stock warrants, were
issued separately and are immediately separable upon issuance.
In
connection with the Offering, the Company agreed to take such appropriate steps as are necessary to promptly reduce the exercise
price of those warrants that were issued pursuant to that certain Warrant Agreement dated July 16, 2018 to $0.15 (subject to adjustment
for stock splits and the like). The Offering is also contemplated to result in an adjustment to the exercise price of those private
placement warrants that were issued to certain investors on March 9, 2018 and May 1, 2018, pursuant to Section 3(b) thereof. Additionally,
no later than November 8, 2019, the Company has agreed to seek the approval of The Nasdaq Stock Market to reduce the exercise price
to $0.15 (subject to adjustment for stock splits and the like) of those warrants what were issued to certain holders pursuant to
those certain Warrant Exercise Agreements entered into by and among the Company such holders on March 6, 2019.
On
June 18, 2019, the Company entered into a Warrant Agreement with Computershare, Inc., and Computershare Trust Company N.A.(together,
“Computershare”), appointing Computershare as Warrant Agent for purposes of the Offering (the “2019 Warrant Agreement”),
defining the mechanism and timing for issuance of warrants in the Offering, and attaching the form of common warrant issued to
the investors in the Offering. A registration statement on Form S-1 relating to the offering was filed with the Securities and
Exchange Commission (the “SEC”) on May 23, 2019, amended on June 6, 2019 and June 13, 2019, and was declared effective
on June 13, 2019.
The
gross proceeds to the Company from the Offering, before deducting underwriting discounts and commissions and other estimated Offering
expenses, and excluding the exercise of any warrants, was approximately $15 million.
The
Underwriting Agreement and the 2019 Warrant Agreement with accompanying form of common warrant are filed as Exhibits 1.1 and 10.1,
respectively, to this Current Report on Form 8-K, and the description of the terms of the Underwriting Agreement and the 2019 Warrant
Agreement are qualified in their entirety by reference to such exhibit. The form of pre-funded warrant is filed as Exhibit 10.2
to this Current Report on Form 8-K, and the description of the terms of the pre-funded warrant is qualified in its entirety by
reference to such exhibit.