PROPOSAL 2
APPROVAL OF AUTHORIZED SHARE INCREASE PROPOSAL
Overview
Our Board of Directors believes that it is advisable and in Outlook Therapeutics’ best interests and in the best interests of our stockholders to amend our Amended and Restated Certificate of Incorporation, as amended, or the Restated Certificate, to increase the total number of authorized shares of common stock from 325,000,000 shares to 425,000,000 shares, or the Authorized Share Increase Proposal. On January 20, 2023, the Board adopted resolutions approving the proposed certificate of amendment of the Restated Certificate, or the Common Increase Certificate, in substantially the form attached as Appendix A hereto. At that time, the Board declared the proposed Common Increase Certificate to be advisable and in the best interests of Outlook Therapeutics and our stockholders and is accordingly submitting the Authorized Share Increase Proposal for approval by our stockholders.
If stockholders approve this Proposal No. 2, we expect to file the Common Increase Certificate with the Secretary of State of the State of Delaware to increase the number of authorized shares of our common stock as soon as practicable following stockholder approval. In this regard, upon filing of the Common Increase Certificate with the Secretary of State of the State of Delaware, Article IV, Paragraph A of the Restated Certificate would be amended as follows, with the proposed additions underlined and proposed deletions stricken through:
“A. The Company is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Company is authorized to issue is three hundred thirty-five million (335,000,000) four hundred thirty-five million (435,000,000) shares. Three hundred twenty-five Four hundred twenty-five million (325,000,000) (425,000,000) shares shall be Common Stock, each having a par value of one cent ($0.01). Ten million (10,000,000) shares shall be Preferred Stock, each having a par value of one cent ($0.01).”
As of the close of business on January 30, 2023, of our 325,000,000 authorized shares of common stock, there were 256,666,794 shares of common stock issued and outstanding. In addition to the 256,666,794 shares of common stock outstanding on January 30, 2023, there were 7,328,552 shares reserved for issuance pursuant to outstanding warrants and 42,581,804 shares reserved for issuance under our various equity compensation plans. As of January 30, 2023, there were 18,422,850 shares remaining available for issuance. Accordingly, at present, there are not sufficient available unissued and unreserved authorized shares of our common stock to meet the needs of our business described below under “— Reasons for the Increase in Authorized Shares”.
The proposed Common Increase Certificate would increase the number of shares of common stock that we are authorized to issue from 325,000,000 shares of common stock to 425,000,000 shares of common stock, representing an increase of 100,000,000 shares of authorized common stock, with a corresponding increase in the total authorized capital stock, which includes common stock and preferred stock, from 335,000,000 shares to 435,000,000 shares.
Reasons for the Increase in Authorized Shares
We have not generated any revenue from product sales. Since inception, we have incurred net losses and negative cash flows from our operations. Through September 30, 2022, we have funded substantially all of our operations through the sale and issuance of $410.6 million in net proceeds of our equity and debt securities. We have also received an aggregate of $29.0 million pursuant to our collaboration and licensing agreements through such date. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of ONS-5010 or any other product candidate we may develop. We will need substantial additional financing to fund our operations and to commercially launch ONS-5010 or any other product candidate we may develop. Management is currently evaluating various strategic opportunities to obtain the required funding for future operations. These strategies may include but are not limited to payments from potential strategic research and development, licensing and/or marketing arrangements with pharmaceutical companies, private placements and/or public offerings of equity and/or debt securities.