Item 1.01. Entry into a Material Definitive Agreement.
On April 13, 2020, NeuroBo Pharmaceuticals, Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Offering”), 750,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at an offering price of $10 per share.
The Registered Offering resulted in gross proceeds of $7.5 million, before deducting the placement agent’s fees and related offering expenses. The Shares were offered by the Company pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333‑220315), which was initially filed with the Securities and Exchange Commission (the “Commission”) on September 1, 2017, and was declared effective on September 12, 2017. The Registered Offering is expected to close on or about April 16, 2020, subject to the satisfaction of customary closing conditions.
The Purchase Agreement also contains customary conditions to closing, representations and warranties of the Company, and termination rights of the parties, as well as certain indemnification obligations of the Company. The Purchase Agreement provides that subject to certain exceptions, the Company cannot offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any shares of common stock or other securities convertible into or exercisable or exchangeable for shares of common stock for a period of 90 days from the date of the closing of the Registered Offering. The Purchase Agreement also provides that from the date of the Purchase Agreement until the one year anniversary from the date thereof, the Company cannot enter into a Variable Rate Transaction (as defined in the Purchase Agreement), subject to certain exceptions.
Pursuant to an engagement agreement dated April 7, 2020, the Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) to act as the Company’s exclusive placement agent in connection with the Registered Offering. The Company has agreed to pay the Placement Agent a cash fee equal to 7.0% of the aggregate gross proceeds raised in the Registered Offering, a $75,000 non-accountable expense allowance and clearing expenses in the amount of $12,900.
The Company will also issue to the Placement Agent, or its designees, warrants (the “Placement Agent’s Warrants”) to purchase up to 37,500 shares of Common Stock, which represents 5.0% of the Shares sold in the Registered Offering. The Placement Agent’s Warrants have an exercise price of $12.50 per share, which represents 125% of the per share offering price of the Shares and a termination date of April 16, 2025.
The foregoing summaries of the Purchase Agreement and the Placement Agent Warrants do not purport to be complete and are subject to, and qualified in their entirety by, such documents attached as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K (the “Report”), and which are incorporated herein in their entirety by reference.
The Company is filing the opinion of its counsel, Sheppard, Mullin, Richter & Hampton LLP, relating to the legality of the issuance and sale of the Shares, as Exhibit 5.1 hereto.
This Report does not constitute an offer to sell any securities or a solicitation of an offer to buy any securities, nor shall there be any sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.