Item 1.01 Entry into a Material Definitive Agreement.
On December 18, 2020,
Cyclacel Pharmaceuticals, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”)
with Acorn Bioventures, LP (the “Purchaser”), pursuant to which the Company agreed to offer, issue and sell to the
Purchaser, (i) in a registered direct offering, (a) an aggregate of 485,912 shares (the “Common Shares”) of common
stock, par value $0.001 per share (“Common Stock”), and (b) an aggregate of 237,745 shares of Series B Convertible
Preferred Stock (the “Preferred Shares,” and collectively with the Common Shares, the “Shares”), par value
$0.001 per share (“Series B Preferred Stock”), and (ii) in a concurrent private placement, warrants (the “Warrants”)
to purchase up to an aggregate of 669,854 shares (the “Warrant Shares”) of Common Stock, for aggregate gross proceeds
to the Company of approximately $7 million, before deducting estimated offering expenses payable by the Company. Substantially
all of the proceeds raised in the offering shall be used to rapidly advance the clinical development of the Company’s PLK1
inhibitor product candidate, CYC140.
The combined purchase
price for each Share, together with one Warrant to purchase 0.4 shares of Common Stock, is $4.18. Each Warrant shall be exercisable
beginning on the 12-month anniversary of the date of issuance for a period of five years after the date of issuance, at an exercise
price of $4.13 per Warrant Share. The exercise price of the Warrants will be subject to adjustment in the event of any stock dividends
and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Warrants. The Warrants
may be exercised on a “cashless” basis.
On December 21, 2020,
the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series B Preferred Stock with the
Secretary of State of the State of Delaware (the “Certificate of Designation”) creating a new series of authorized
preferred stock of the Company designated as the “Series B Convertible Preferred Stock.” The Certificate of Designation
became effective with the Secretary of State of the State of Delaware upon filing.
Each share of Series
B Preferred Stock shall initially be convertible into five shares of Common Stock (the “Conversion Shares”), subject
to adjustment in accordance with the Certificate of Designation.
Holders of Series
B Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock equal, on an
as-if-converted-to-Common-Stock basis, and in the same form as dividends actually paid on shares of the Common Stock. Except
as otherwise required by law, the Series B Preferred Stock does not have voting rights. However, as long as any shares of
Series B Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of
the then outstanding shares of the Series B Preferred Stock, (a) alter or change adversely the powers, preferences or rights
given to the Series B Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend its certificate of
incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series B Preferred
Stock, (d) increase the number of authorized shares of Series B Preferred Stock, (e) pay certain dividends or (f) enter into
any agreement with respect to any of the foregoing. The Series B Preferred Stock does not have a preference upon any
liquidation, dissolution or winding-up of the Company. The Purchaser may convert shares of Series B Preferred Stock through a
conversion into shares of Common Stock if and solely to the extent that such conversion would not result in the Purchaser
beneficially owning in excess of 9.99% of then-outstanding Common Stock or aggregate voting power of the Company (such
limitation, the “Ownership Limitation”) and any portion in excess of such limitation will remain outstanding as
Series B Preferred Stock.
The Common Shares and
the Preferred Shares are being offered by the Company pursuant to an effective shelf registration statement on Form S-3, which
was originally filed with the Securities and Exchange Commission on June 3, 2019, and was declared effective on June 21, 2019 (File
No. 333-231923) (the “Registration Statement”). The Company is filing the opinion of its counsel, Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., relating to the legality of the issuance and sale such securities, as Exhibit 5.1 hereto.
The Warrants and the
Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are
instead being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated
thereunder.
The foregoing summaries
of the offerings, the securities to be issued in connection therewith, the Purchase Agreement, the Preferred Stock and the Warrants
do not purport to be complete and are qualified in their entirety by reference to the definitive transaction documents. Copies
of the Certificate of Designation, as well as the forms of Purchase Agreement and Warrant, are attached hereto as Exhibits 10.1,
3.1 and 4.1, respectively, and are incorporated herein by reference.