Securities Purchase Agreement
On July 3, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with several institutional accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement (the “Private Placement”) an aggregate of 63,871,778 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), and, in lieu of Shares to certain investors, pre-funded warrants to purchase an aggregate of 74,267,400 shares of common stock (the “Pre-Funded Warrants”), and, in each case, accompanying warrants (the “Warrants”) to purchase an aggregate of up to 138,139,178 additional shares of common stock (or Pre-Funded Warrants to purchase common stock in lieu thereof) at a price of $0.94 per share and accompanying Warrant (or $0.9399 per Pre-Funded Warrant and accompanying Warrant). The price per Pre-Funded Warrant and accompanying Warrant represents the price of $0.94 per share and accompanying Warrant to be sold in the Private Placement, minus the $0.0001 per share exercise price of each such Pre-Funded Warrant. The exercise price of the Warrants is $1.034 per share, or if exercised for a Pre-Funded Warrant in lieu thereof, $1.0339 per Pre-Funded Warrant (representing the Warrant exercise price of $1.034 per share minus the $0.0001 per share exercise price of each such Pre-Funded Warrant). The Warrants are exercisable beginning six months after the closing date of the Private Placement and prior to five years after the closing date of the Private Placement. The Pre-Funded Warrants are exercisable at any time after their original issuance and will not expire.
The Warrants and Pre-Funded Warrants to be issued in the Private Placement will provide that a holder of Warrants or Pre-Funded Warrants will not have the right to exercise any portion of its Warrants or Pre-Funded Warrants if such holder, together with its affiliates, would beneficially own in excess of either 4.99%,9.99% or 19.99%, as selected by the holder of such Warrants or Pre-Funded Warrants, of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that each holder may increase or decrease the Beneficial Ownership Limitation by giving notice to the Company; but not to any percentage in excess of 19.99%.
The Private Placement is expected to close substantially concurrently with the Merger (as defined herein) (the “Closing Date”), subject to the satisfaction of specified customary closing conditions and contingent upon, among other things, the closing of the Merger. The Company expects to receive aggregate gross proceeds from the Private Placement of approximately $130 million, before deducting estimated offering expenses payable by the Company not inclusive of any exercise of the Warrants. The Company expects the net proceeds from the Private Placement to be used to advance the Company’s clinical development pipeline, business development activities, working capital and for general corporate purposes.
On and after the Closing Date, the Company has agreed that each of Flagship and Baker Brothers will have the right (1) to nominate a member to the Board, subject to the approval by the Board (each, an “Investor Designee”), and (2) at any time when its Investor Designee is not a member of the Board, to designate one individual to attend all meetings of the Board in a non-voting observer capacity.
New and existing investors in the Private Placement led by a life sciences-focused investment fund also include Flagship (founding investor of the Company), Avidity Partners, Deep Track Capital, Bain Capital Life Sciences, Invus, Samsara BioCapital, Adage Capital Partners LP, Ally Bridge Group, Cowen Healthcare Investments, as well as other investors. Samsara BioCapital is an affiliate of the Company with a representative on the Board.