RISK
FACTORS
Any investment in our securities involves
a high degree of risk. Investors should carefully consider the risks described below and all of the information contained or incorporated
by reference in this prospectus before deciding whether to purchase our common stock. Our business, financial condition or results
of operations could be materially adversely affected by these risks if any of them actually occur. This prospectus also contains
forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere
in this prospectus.
Risks Related to Our Business
Our
ProNeura development programs are at very early stages and will require substantial additional resources that may not be available
to us.
To date, other than our work on Probuphine
in OUD, and our work on nalmefene, we have conducted only limited research and development activities assessing our ProNeura delivery
system’s applicability in other potential indications. While the nalmefene program is being funded in large part by NIDA,
we expect that the proceeds of this offering will only be sufficient to complete the proof of concept work on JT-09 and we will
require substantial additional funds to support further research and development activities, including the anticipated costs of
nonclinical studies and clinical trials, regulatory approvals and eventual commercialization of any therapeutic based on our ProNeura
platform technology. If we are unable to obtain substantial government grants or enter into third party collaborations to fund
our ProNeura programs, we will need to seek additional sources of financing, which may not be available on favorable terms, if
at all. If we do not succeed in obtaining the requisite funding for our ProNeura programs, we could be forced to discontinue product
development. Furthermore, funding arrangements with collaborative partners or others may require us to relinquish rights to technologies,
product candidates or products that we would otherwise seek to develop or commercialize ourselves or license rights to technologies,
product candidates or products on terms that are less favorable to us than might otherwise be available.
Our ability to successfully develop any
future product candidates based on our ProNeura drug delivery technology is subject to the risks of failure and delay inherent
in the development of new pharmaceutical products, including: delays in product development, clinical testing, or manufacturing;
unplanned expenditures in product development, clinical testing, or manufacturing; failure to receive regulatory approvals; emergence
of superior or equivalent products; inability to manufacture on our own, or through any others, product candidates on a commercial
scale; and failure to achieve market acceptance. Importantly, if the JT-09 initial proof of concept efforts are unsuccessful and
we discontinue this program, our future prospects could be materially adversely impacted. Because of these risks, our research
and development efforts may not result in any commercially viable products and our business, financial condition, and results of
operations could be materially harmed.
Clinical
trials required for new product candidates are expensive and time-consuming, and their outcome is uncertain.
Conducting clinical trials is a lengthy,
time-consuming, and expensive process. The length of time may vary substantially according to the type, complexity, novelty, and
intended use of the product candidate, and often can be several years or more per trial. Delays associated with products for which
we are directly conducting clinical trials may cause us to incur additional operating expenses. The commencement and rate of completion
of clinical trials may be delayed by many factors, including, for example:
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inability to manufacture sufficient quantities of qualified materials under cGMP, for use in clinical trials;
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slower than expected rates of patient recruitment;
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failure to recruit a sufficient number of patients; modification of clinical trial protocols;
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changes in regulatory requirements for clinical trials;
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the lack of effectiveness during clinical trials;
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the emergence of unforeseen safety issues;
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delays, suspension, or termination of the clinical trials due to the institutional review board responsible for overseeing
the study at a particular study site; and
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government or regulatory delays or “clinical holds” requiring suspension or termination of the trials.
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The results from early clinical trials
are not necessarily predictive of results obtained in later clinical trials. Accordingly, even if we obtain positive results from
early clinical trials, we may not achieve the same success in future clinical trials. Clinical trials may not demonstrate statistically
significant safety and effectiveness to obtain the requisite regulatory approvals for product candidates. The failure of clinical
trials to demonstrate safety and effectiveness for the desired indications could cause us to abandon a product candidate and could
delay development of other product candidates. Any delay in, or termination of, our clinical trials could materially harm our business,
financial condition, and results of operations.
The winding down of our commercial operations may be more
costly and time-consuming than we anticipate.
The cessation of our Probuphine
related commercial activities requires us to comply with FDA and state regulatory requirements, including those related to
notifications to various stakeholders and the continuation of adverse event reporting, as well as to address a number of
business considerations, such as termination of third-party agreements and transfer of manufacturing equipment. The costs and
timing associated with the wind down of our commercial operations may exceed our current estimates, requiring a reallocation
of proceeds that may limit what we can accomplish in our product development programs unless additional financing is procured
sooner than we currently anticipate.
We
face risks associated with third parties conducting preclinical studies and clinical trials of our products.
We depend on third-party laboratories and
medical institutions to conduct preclinical studies and clinical trials for our products and other third-party organizations to
perform data collection and analysis, all of which must maintain both good laboratory and good clinical practices. We also depend
upon third party manufacturers for the production of any products we may successfully develop to comply with cGMP of the FDA, which
are similarly outside our direct control. If third party laboratories and medical institutions conducting studies of our products
fail to maintain both good laboratory and clinical practices, the studies could be delayed or have to be repeated.
We
face risks associated with product liability lawsuits that could be brought against us.
The testing, manufacturing, marketing and
sale of human therapeutic products entail an inherent risk of product liability claims. We currently have a limited amount of product
liability insurance, which may not be sufficient to cover claims that may be made against us in the event that the use or misuse
of our product candidates causes, or merely appears to have caused, personal injury or death. In the event we are forced to expend
significant funds on defending product liability actions, and in the event those funds come from operating capital, we will be
required to reduce our business activities, which could lead to significant losses. Adequate insurance coverage may not be available
in the future on acceptable terms, if at all. If available, we may not be able to maintain any such insurance at sufficient levels
of coverage and any such insurance may not provide adequate protection against potential liabilities. Whether or not a product
liability insurance policy is obtained or maintained in the future, any claims against us, regardless of their merit, could severely
harm our financial condition, strain our management and other resources or destroy the prospects for commercialization of the product
which is the subject of any such claim.
We
may be unable to protect our patents and proprietary rights.
Our future success will depend to a significant
extent on our ability to:
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obtain and keep patent protection for our products, methods and technologies on a domestic and international basis;
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enforce our patents to prevent others from using our inventions;
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maintain and prevent others from using our trade secrets; and
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operate and commercialize products without infringing on the patents or proprietary rights of others.
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We cannot assure you that our patent rights
will afford any competitive advantages, and these rights may be challenged or circumvented by third parties. Further, patents may
not be issued on any of our pending patent applications in the U.S. or abroad. Because of the extensive time required for development,
testing and regulatory review of a potential product, it is possible that before a potential product can be commercialized, any
related patent may expire or remain in existence for only a short period following commercialization, reducing or eliminating any
advantage of the patent. If we sue others for infringing our patents, a court may determine that such patents are invalid or unenforceable.
Even if the validity of our patent rights is upheld by a court, a court may not prevent the alleged infringement of our patent
rights on the grounds that such activity is not covered by our patent claims.
In addition, third parties may sue us for
infringing their patents. In the event of a successful claim of infringement against us, we may be required to:
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pay substantial damages;
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stop using our technologies and methods;
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stop certain research and development efforts;
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develop non-infringing products or methods; and
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obtain one or more licenses from third parties.
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If required, we cannot assure you that
we will be able to obtain such licenses on acceptable terms, or at all. If we are sued for infringement, we could encounter substantial
delays in development, manufacture and commercialization of our product candidates. Any litigation, whether to enforce our patent
rights or to defend against allegations that we infringe third party rights, will be costly, time consuming, and may distract management
from other important tasks.
We also rely in our business on trade secrets,
know-how and other proprietary information. We seek to protect this information, in part, through the use of confidentiality agreements
with employees, consultants, advisors and others. Nonetheless, we cannot assure you that those agreements will provide adequate
protection for our trade secrets, know-how or other proprietary information and prevent their unauthorized use or disclosure. To
the extent that consultants, key employees or other third parties apply technological information independently developed by them
or by others to our proposed products, disputes may arise as to the proprietary rights to such information, which may not be resolved
in our favor.
We
must comply with extensive government regulations.
The research, development, manufacture,
labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of pharmaceutical products
are subject to an extensive regulatory approval process by the FDA in the U.S. and comparable health authorities in foreign markets.
The process of obtaining required regulatory approvals for drugs is lengthy, expensive and uncertain. Approval policies or regulations
may change, and the FDA and foreign authorities have substantial discretion in the pharmaceutical approval process, including the
ability to delay, limit or deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical
development of product candidates, regulatory approval is never guaranteed. Regulatory approval may entail limitations on the indicated
usage of a drug, which may reduce the drug’s market potential. Even if regulatory clearance is obtained, post-market evaluation
of the products, if required, could result in restrictions on a product’s marketing or withdrawal of the product from the
market, as well as possible civil and criminal sanctions. Of the large number of drugs in development, only a small percentage
successfully complete the regulatory approval process and are commercialized.
We
face intense competition.
With respect to our product development
programs, we face competition from numerous companies that currently market, or are developing, products for the treatment of the
diseases and disorders we have targeted, many of which have significantly greater research and development capabilities, experience
in obtaining regulatory approvals and manufacturing, marketing, financial and managerial resources than we have. We also compete
with universities and other research institutions in the development of products, technologies and processes, as well as the recruitment
of highly qualified personnel. Our competitors may succeed in developing technologies or products that are more effective than
the ones we have under development or that render our proposed products or technologies noncompetitive or obsolete. In addition,
our competitors may achieve product commercialization or patent protection earlier than we will.
We
depend on a small number of employees and consultants.
We are highly dependent on the services
of a limited number of personnel and the loss of one or more of such individuals could substantially impair our ongoing commercialization
efforts. We compete in our hiring efforts with other pharmaceutical and biotechnology companies and it may be difficult and could
take an extended period of time because of the limited number of individuals in our industry with the range of skills and experience
required and because of our limited resources.
In addition, we retain scientific and clinical
advisors and consultants to assist us in all aspects of our business. Competition to hire and retain consultants from a limited
pool is intense. Further, because these advisors are not our employees, they may have commitments to, or consulting or advisory
contracts with, other entities that may limit their availability to us, and typically they will not enter into non-compete agreements
with us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services.
In addition, our advisors may have arrangements with other companies to assist those companies in developing products or technologies
that may compete with ours.
We
face potential liability related to the privacy of health information we obtain from clinical trials sponsored by us or our collaborators,
from research institutions and our collaborators, and directly from individuals.
Numerous federal and state laws, including
state security breach notification laws, state health information privacy laws, and federal and state consumer protection laws,
govern the collection, use, and disclosure of personal information. In addition, most health care providers, including research
institutions from which we or our collaborators obtain patient health information, are subject to privacy and security regulations
promulgated under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information
Technology for Economic and Clinical Health Act. Although we are not directly subject to HIPAA, we could potentially be subject
to criminal penalties if we, our affiliates, or our agents knowingly obtain or disclose individually identifiable health information
maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.
We face risks related to health epidemics,
such as the current COVID-19 global pandemic, that could adversely affect our operations or financial results.
The spread of COVID-19, the novel coronavirus,
including restrictions on travel, “shelter in place” orders, and quarantine policies put into place by businesses and
state and local governments to mitigate its transmission, may have a material adverse effect on our business. While the duration
of the pandemic and its potential economic impact are difficult to predict, it already has caused significant disruption in the
healthcare industry and is likely to have continuing impacts as it continues. The travel restrictions, “shelter in place”
orders, quarantine policies, and general concerns about the spread of COVID-19 was a significant factor in our decision to wind
down our commercial operations because of the resulting disruptions in the delivery of healthcare to patients, our sales and marketing
efforts and REMS training activities, as well as the operations of the various parts of our supply and distribution chain. The
ultimate impact of the COVID-19 pandemic, or any other health epidemic, is highly uncertain and subject to change. We do not yet
know the full extent of potential impacts on our business, healthcare systems or the global economy as a whole. As the pandemic
continues, it may result in a sustained economic downturn that could affect our ability to access capital on reasonable terms,
or at all.
Risks Related to Our Financial Condition
and Need for Additional Capital
We have incurred net losses in almost
every year since our inception and we may never achieve or sustain profitability.
We have incurred net losses in almost every
year since our inception. Our financial statements have been prepared assuming that we will continue as a going concern. For the
years ended December 31, 2019 and 2018, we had net losses of approximately $16.5 million and $9.3 million, respectively, and
had net cash used in operating activities of approximately $15.4 million and $8.4 million, respectively. These net losses and negative
cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. We expect
to continue to incur net losses and negative operating cash flow for the foreseeable future as we wind down our commercial activities
and focus on development of ProNeura based products. The amount of future net losses will depend, in part, on the rate of future
growth of our expenses and our ability to obtain government or third party funding for our development programs. There can be no
assurance that we will ever achieve profitability.
We will require additional proceeds
to fund our product development programs.
We currently estimate that our
available cash and cash equivalents, including the approximately $2.5 million received from our September 2020
financing, will be sufficient to fund our operations into November 2020. We believe that the proceeds of this offering
will be sufficient to meet our obligations under the debt settlement agreement, wind down our commercial operations and fund our working capital
needs and product development efforts for more than 12 months. We will require additional funds to advance JT-09 beyond the proof of concept stage, if successful, which we expect to know by the end of the first quarter of 2021, and to fund any
of our ProNeura
development programs into the clinic and to complete the regulatory approval process necessary to commercialize any products
we might develop. While we are currently evaluating the alternatives available to us, including government grants and
third-party collaborations for one or more of our ProNeura programs, our efforts to address our liquidity requirements may
not be successful. There can be no assurance that any source of capital will be available to us on acceptable terms.
We have a limited number of authorized
shares of common stock available for issuance and will need to seek stockholder approval to amend our charter to either effect
an increase in our authorized shares of common stock or a reverse split. The issuance of additional securities if we obtain the
required amendment approval will cause investors to experience dilution
Following this offering, there will
only be minimal authorized but unissued or reserved shares of our common stock. We do not have a sufficient number of authorized
shares to permit exercise of the warrants or to undertake the additional equity financing that we will need to fund our product
development programs. We have agreed to seek stockholder approval of an amendment to our certificate of incorporation to effect
an increase in our authorized shares of common stock or a reverse split in an amount sufficient to permit the exercise in full
of the warrants offered hereby, which if approved will provide us with additional available shares. If we do not receive the requisite
stockholder approval to enable us to issue equity in the future, our operations will likely be materially adversely impacted.
There are risks associated with effecting a reverse split, including a decline in the market price of our common stock and the
possibility of certain stockholders owning “odd lots” of less than 100 shares, which may be more difficult to sell,
or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares.
In addition, because holders of our common stock have no preemptive rights to purchase or subscribe for any unissued stock of
our company, the availability of a greater number of authorized shares, whether as a result of a reverse split or an increase
in the authorized number, could result in additional dilution to our existing stockholders. Moreover, we may issue derivative
securities, including options and/or warrants, from time to time, to procure qualified personnel or for other business reasons.
The issuance of any such derivative securities, which is at the discretion of our board of directors, may further dilute the equity
ownership of our stockholders.
Our net operating losses and research
and development tax credits may not be available to reduce future federal and state income tax payments.
At December 31, 2019, we had federal
net operating loss and tax credit carryforwards of approximately $268.3 million and approximately $8.5 million, respectively,
and state net operating loss and tax credit carryforwards of approximately $108.2 million and approximately $9.1
million, respectively, available to offset future taxable income, if any. Current federal and state tax laws include substantial
restrictions on the utilization of net operating loss and tax credits in the event of an ownership change and we cannot assure
you that our net operating loss and tax carryforwards will continue to be available.
We received a loan under the Paycheck
Protection Program of the CARES Act, and all or a portion of the loan may not be forgivable.
On April 20, 2020, we received an
approximately $0.7 million PPP Loan pursuant to the Paycheck Protection Program of the CARES Act. The PPP Loan matures in April 2022
with an annual interest rate of 1.0%. The PPP Loan has a six month deferral of payments period and may be prepaid at any time without
penalty. The proceeds of the PPP Loan are to be used to retain workers and maintain payroll and make mortgage interest, lease and
utility payments. Under the CARES Act, we will be eligible to apply for forgiveness of all loan proceeds used to pay payroll costs,
rent, utilities and other qualifying expenses during the 24-week period following receipt of the loan, provided that we maintain
our number of employees and compensation within certain parameters during such period. Not more than 40% of the forgiven amount
may be for non-payroll costs. If the conditions outlined in the PPP loan program are adhered to by us, all or part of such loan
could be forgiven. However, we cannot provide any assurance that we will be eligible for loan forgiveness or that any amount of
the PPP loan will ultimately be forgiven by the SBA. Any forgiven amounts will not be included in our taxable income.
Risks Related to Our Common Stock
Our failure to meet the continued listing requirements
of Nasdaq could result in a delisting of our common stock.
On August 18, 2020, we received a notice from the Nasdaq
Capital Market, or Nasdaq, that because our stockholders’ equity is less than $2,500,000, we are no longer in compliance
with the minimum stockholders’ equity requirement for continued listing pursuant to Nasdaq Listing Rule 5550(b)(1).
The proceeds of this offering, together with the wind down of our commercial operations and settlement of our debt obligations,
will enable us to regain compliance with the minimum stockholders’ equity requirement; however, we may not be able to maintain
compliance with the minimum stockholders’ equity requirement for a sufficient period of time to satisfy Nasdaq. If we are
unable to demonstrate to Nasdaq’s satisfaction that we will be able to sustain compliance with this requirement, Nasdaq may
delist our common stock. In addition, even if we regain technical compliance with the stockholders’ equity requirement, we
will have to continue to meet other objective and subjective listing requirements to continue to be listed on the Nasdaq Capital
Market. There can be no assurance that we will be able to maintain compliance and meet Nasdaq’s minimum stockholders’
equity requirements.
In addition, on September 19,
2019, we received a letter from Nasdaq notifying us that the market price of our common stock has been below the $1.00 minimum
bid price requirement for continued listing and requiring us to regain compliance with the minimum bid price requirement within
180 days. On April 17, 2020, Nasdaq notified us that the 180-day period to regain compliance with the minimum bid price requirement
had been extended due to the global market impact caused by COVID-19. More specifically, Nasdaq has stated that the compliance
periods for any company previously notified about non-compliance are suspended effective April 16, 2020, until June 30,
2020. On July 1, 2020, companies received the balance of any pending compliance period exception to regain compliance as
a result of which we now have until November 30, 2020 to regain compliance with the minimum bid price rule. Our prior efforts
to obtain stockholder approval of a reverse stock split of our outstanding shares of common stock that would increase the closing
bid price of our common stock to above $1.00 were not successful. We intend to seek stockholder approval of a reverse split in
the range of one-for-15 and one-for-30 that we would have the effect of regaining compliance with the minimum bid price requirement
in addition to providing sufficient authorized shares for the exercise of the warrants offered hereby. There can be no assurance
that stockholders will approve such reverse split proposal in a timely manner or at all.
If our common stock is delisted, our common stock would likely
then trade only in the over-the-counter market. If our common stock were to trade on the over-the-counter market, selling our common
stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed,
and we could face significant material adverse consequences, including: a limited availability of market quotations for our securities;
reduced liquidity with respect to our securities; a determination that our shares are a “penny stock,” which will require
brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity
in the secondary trading market for our securities; a reduced amount of news and analyst coverage for our Company; and a decreased
ability to issue additional securities or obtain additional financing in the future. These factors could result in lower prices
and larger spreads in the bid and ask prices for our common stock and would substantially impair our ability to raise additional
funds and could result in a loss of institutional investor interest and fewer development opportunities for us.
In addition to the foregoing, if our common stock is delisted
from Nasdaq and it trades on the over-the-counter market, the application of the “penny stock” rules could adversely
affect the market price of our common stock and increase the transaction costs to sell those shares. The SEC has adopted regulations
which generally define a “penny stock” as an equity security that has a market price of less than $5.00 per share,
subject to specific exemptions. If our common stock is delisted from Nasdaq and it trades on the over-the-counter market at a price
of less than $5.00 per share, our common stock would be considered a penny stock. The SEC’s penny stock rules require
a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide
the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson
in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules generally require that before a transaction in a penny stock occurs, the broker-dealer
must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
agreement to the transaction. If applicable in the future, these rules may restrict the ability of brokers-dealers to sell
our common stock and may affect the ability of investors to sell their shares, until our common stock no longer is considered a
penny stock.
We have used almost all of our unreserved,
authorized shares.
After giving effect to this offering,
we will have used almost all of our unreserved authorized shares and will need stockholder approval to implement an increase
in our authorized shares of common stock or a reverse stock split. Our certificate of incorporation and the Delaware General
Corporation Law, or the DGCL, currently require the approval of stockholders holding not less than a majority of all
outstanding shares of capital stock entitled to vote in order to approve an increase in our authorized shares of common stock
or a reverse stock split. There are no assurances that stockholder approval will be obtained, in which event will be unable
to raise additional capital through the issuance of shares of common stock to fund our future operations.
The price of our common stock may
fluctuate significantly, and this may make it difficult for you to resell the common stock you want or at prices you find attractive.
The price of our common stock constantly changes. The price
of our common stock could fluctuate significantly for many reasons, including the following:
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results of our product development programs;
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future announcements concerning us, including our clinical and product development strategy, or
our competitors;
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regulatory developments;
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reports and recommendations of analysts and whether or not we meet the milestones and metrics set
forth in such reports;
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introduction of new products;
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fluctuations of investor interest in the pharmaceutical and healthcare sectors; and
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fluctuations in the economy, world political events or general market conditions.
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The stock markets have experienced extreme price and volume
fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations
often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry
fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international
currency fluctuations, may negatively impact the market price of shares of our common stock and could subject us to securities
class action litigation.
If securities or industry analysts
do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could
decline.
The trading market for our common stock
will depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any
control over these analysts. There can be no assurance that analysts will cover us or provide favorable coverage. If one or more
of the analysts who cover us downgrade our stock or change their opinion of our stock, our share price would likely decline. If
one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility
in the financial markets, which could cause our share price or trading volume to decline.
Provisions in our corporate charter
documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult
and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our certificate of incorporation
and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders
may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions
could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing
the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of
our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current
management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these
provisions provide that:
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the authorized number of directors can be changed only by resolution of our board of directors;
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our bylaws may be amended or repealed by our board of directors or our stockholders;
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stockholders may not call special meetings of the stockholders or fill vacancies on the board of
directors;
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our board of directors is authorized to issue, without stockholder approval, preferred stock, the
rights of which will be determined at the discretion of the board of directors and that, if issued, could operate as a “poison
pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors
does not approve;
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our stockholders do not have cumulative voting rights, and therefore our stockholders holding a
majority of the shares of common stock outstanding will be able to elect all of our directors; and
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our stockholders must comply with advance notice provisions to bring business before or nominate
directors for election at a stockholder meeting.
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Moreover, because we are incorporated in
Delaware, we are governed by the provisions of Section 203 of the DGCL which prohibits a person who owns in excess of 15%
of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction
in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in
a prescribed manner.
We have never paid any cash dividends
and have no plans to pay any cash dividends in the future.
Holders of shares of our common stock are
entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our
shares of our preferred or common stock and we do not expect to pay cash dividends in the foreseeable future. In addition, the
declaration and payment of cash dividends is restricted under the terms of our existing Loan Agreement. We intend to retain future
earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our preferred or common stock
may have will be in the form of appreciation, if any, in the market value of their shares of common stock.
Risks Related to this Offering
If
you purchase our securities in this offering, you may incur immediate and substantial dilution in the book value of your shares.
The public offering price per unit
may be substantially higher than the net tangible book value per share of our common stock immediately prior to the offering.
After giving effect to the assumed sale of 70,000,000 units in this offering, at an assumed public offering price of $0.1372 per
unit and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and
attributing no value to the warrants sold in this offering, purchasers of our common stock in this offering will incur immediate
dilution of $(0.0844) per share in the net tangible book value of the common stock they acquire. In the event that you exercise
your warrants, you may experience additional dilution to the extent that the exercise price of the warrants is higher than the
tangible book value per share of our common stock. For a further description of the dilution that investors in this offering may
experience, see “Dilution.” In addition, to the extent that outstanding stock options or warrants have been or may
be exercised or other shares issued, you may experience further dilution.
You will be unable to exercise the
warrants and they may have no value under certain circumstances.
We currently do not have
authorized shares available to permit exercise of the warrants. Therefore, the warrants will not be exercisable until we
obtain stockholder approval to effect an increase in our authorized shares of common stock or a reverse stock split in an
amount sufficient to permit exercise in full of the warrants. If we are unable to obtain such stockholder approval, the
warrants will have no value and will expire. In no event may the warrants be net cash settled. Our prior efforts to obtain
stockholder approval of a reverse split were not successful. Certain investors in this offering will enter into a lock-up and
voting agreement whereby each such investor will be subject to a lock-up period through the closing of this offering and will
vote all shares of common stock they beneficially own on the closing date of this offering with respect to any proposals
presented to the stockholders of the Company at the Company’s next meeting of its stockholders, including the contemplated reverse
split proposal. However, existing holders of common stock may have an incentive to vote against the proposal for an increase
in our authorized shares of common stock or a reverse stock split to prevent dilution in their interests by the shares
underlying the warrants. Furthermore, in the event that the price of a share of our common stock does not exceed the exercise
price of the warrants during their exercise period, the warrants may not have any value.
We have broad discretion in the use
of the net proceeds we receive from this offering and may not use them effectively.
Our management will have significant discretion
and flexibility in applying the net proceeds of this offering that are not allocated to payment of outstanding debt and other financial
obligations. You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not
have the opportunity, as part of your investment decision, to assess whether the net proceeds are being used appropriately. It
is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return for us. The failure
of our management to use such funds effectively could have a material adverse effect on our business, financial condition, operating
results and cash flow.
There is no public market for the
warrants to purchase shares of our common stock being offered in this offering.
There is no established public trading
market for the warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend
to apply to list the warrants on any national securities exchange or other nationally recognized trading system, including The
Nasdaq Capital Market. Without an active trading market, the liquidity of the warrants will be limited.
The warrants purchased in this offering
do not entitle the holder to any rights as common stockholders until the holder exercises the warrant for shares of our common
stock.
Until you acquire shares of our common
stock upon exercise of your warrants purchased in this offering, such warrants will not provide you any rights as a common stockholder,
except as set forth therein. Upon exercise of your warrants purchased in this offering, you will be entitled to exercise the rights
of a common stockholder only as to matters for which the record date occurs on or after the exercise date.
DILUTION
Purchasers of units in this offering
will experience an immediate dilution of the net tangible book value per share of our common stock. Our net tangible book value
as of June 30, 2020 was approximately $1.6 million, or approximately $0.0160 per share of our common stock. Net tangible
book value per share is equal to our total tangible assets less our total liabilities, divided by the number of shares of our
outstanding common stock. Dilution per share of common stock equals the difference between the amount paid by purchasers of common
stock in this offering (ascribing no value to the warrants) and the net tangible book value per share of our common stock immediately
after this offering.
After giving effect to the assumed
sale by us of 70,000,000 units in this offering at an assumed public offering price of $0.1372 per unit (the last reported
sale price of our common stock on Nasdaq on October 23, 2020), after deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by us and the allocation of $1.6 million to settle outstanding
indebtedness, our as adjusted net tangible book value as of June 30, 2020 would have been approximately $8.8 million, or
approximately $0.0528 per share. This represents an immediate increase in net tangible book value of approximately $0.0368
per share to existing stockholders and an immediate decrease in net tangible book value of approximately $0.0844 per share to
new investors purchasing shares of our common stock and related warrants in this offering, attributing none of the assumed
combined public offering price to the warrants offered hereby. The following table illustrates this per share
dilution:
Assumed combined public offering price per unit
|
|
|
|
|
|
$
|
0.1372
|
|
Net tangible book value per share as of June 30, 2020
|
|
$
|
0.0160
|
|
|
|
|
|
Increase in net tangible book value per share after this offering
|
|
|
0.0368
|
|
|
|
|
|
As adjusted net tangible book value per share after this offering
|
|
|
|
|
|
|
0.0528
|
|
Dilution per share to new investors
|
|
|
|
|
|
$
|
(0.0844
|
)
|
The information above is illustrative only and will change based
on actual pricing and other terms of this offering determined at pricing.
The above discussion and table is as of June 30, 2020 and
excludes, as of that date:
|
·
|
917,544 shares of our common stock issuable upon exercise of outstanding options with a weighted average exercise price of
$7.44 per share;
|
|
·
|
26,173,376 shares of our common stock issuable upon exercise of outstanding warrants with a weighted average exercise price
of $0.56 per share (inclusive of 8,700,000 warrants for which the underlying shares had not yet been authorized);
|
|
·
|
3,422,777 shares issuable upon conversion of a portion of our outstanding debt; and
|
|
·
|
842,054 additional shares of our common stock reserved for future issuance under our 2015 equity incentive plan.
|
The above discussion also does not reflect the sale of 19,440,000 shares of our common stock in a registered direct offering completed
in September 2020.
DESCRIPTION
OF SECURITIES WE are offering
As of the date of this prospectus, our
certificate of incorporation authorizes us to issue 225,000,000 shares of common stock, par value $0.001 per share, and 5,000,000
shares of preferred stock, par value $0.001 per share. The following description of our capital stock is not complete and is subject
to and qualified in its entirety by our certificate of incorporation, as amended, and bylaws, which are filed as exhibits to the
registration statement of which this prospectus is a part, and by the relevant provisions of the Delaware General Corporation Law.
Units
We are offering up to __ units, with each
unit consisting of one share of our common stock and a warrant to purchase one share of our common stock at an assumed public offering
price of $___ per unit. The shares of common stock and warrants are being sold in this offering only as part of the units. However,
the units will not be certificated and the common stock and warrants comprising such units are immediately separable. Upon issuance,
the shares of common stock and warrants may be transferred independent of one another, subject to applicable law and transfer restrictions.
Common Stock
Each holder of common stock is entitled
to one vote for each share of common stock held on all matters submitted to a vote of the stockholders, including the election
of directors. Our certificate of incorporation and bylaws do not provide for cumulative voting rights. Subject to preferences that
may be applicable to any then outstanding preferred stock, the holders of our outstanding shares of common stock are entitled to
receive dividends, if any, as may be declared from time to time by our board of directors out of legally available funds. In the
event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the net assets
legally available for distribution to stockholders after the payment of all of our debts and other liabilities, subject to the
satisfaction of any liquidation preference granted to the holders of any outstanding shares of preferred stock. Holders of our
common stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable
to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of our preferred stock that are outstanding or that we may designate
and issue in the future. All of our outstanding shares of common stock are fully paid and nonassessable.
Our common stock is currently listed on
The Nasdaq Capital Market under the trading symbol “TTNP.”
Warrants
The following summary of certain terms
and provisions of the warrants offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions
of the warrant, the form of which has been filed as an exhibit to the registration statement of which this prospectus is a part.
Prospective investors should carefully review the terms and provisions of the form of warrant for a complete description of the
terms and conditions of the warrants.
Pursuant to a warrant agency agreement
between us and Continental Stock Transfer & Trust Company, as warrant agent, the warrants will be issued in book-entry
form and shall initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf
of The Depository Trust Company, or DTC, and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed
by DTC.
Exercisability.
The warrants are exercisable on the date we file an amendment to our certificate of incorporation to reflect our
stockholders’ approval of an increase in our authorized shares of common stock or a reverse stock split in an amount
sufficient to permit the exercise in full of the warrants and will expire on the date that is five years after the
warrants become exercisable. The warrants will be exercisable, at the option of each holder, in whole or in part by
delivering to us a duly executed exercise notice. In no event may the warrants be net cash settled.
Stockholder
Approval. We have agreed to hold a stockholders meeting in order to seek stockholder approval for an
amendment to our certificate of incorporation to effect an increase in our authorized shares of common stock or a reverse
split of the common stock in an amount sufficient to permit the exercise in full of the warrants in accordance with their
terms. In the event that we are unable to obtain stockholder approval and effect an increase in our authorized shares of
common stock or effect a reverse split of our common stock, the warrants will not be exercisable and will have no value. In
no event may the warrants be net cash settled.
Exercise
Limitation. A holder will not have the right to exercise any portion of the warrant if the holder (together with its
affiliates) would beneficially own in excess of 9.99% of the number of shares of our common stock outstanding immediately
after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants. However,
any holder may increase or decrease such percentage, provided that any increase will not be effective until the 61st day after
such election.
Exercise
Price. The warrants will have an exercise price of $__ per share (___% of the per unit offering price), subject to
a one-time adjustment to the lowest daily VWAP of our common stock for the five days following the reverse split, if any, effected
to enable exercise of the warrants if such VWAP is lower than the initial exercise price; provided, however, in no event will
the exercise price be lower than $__. The exercise price is also subject to appropriate adjustment in the event of certain stock
dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock
and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Cashless
Exercise. If, at the time a holder exercises its warrant, there is no effective registration statement registering,
or the prospectus contained therein is not available for an issuance of the shares underlying the warrant to the holder, then
in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate
exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of
shares of common stock determined according to a formula set forth in the warrant.
Transferability.
Subject to applicable laws, the warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange
Listing. There is no established trading market for the warrants and we do not expect a market to develop. In addition,
we do not intend to apply for the listing of the warrants on any national securities exchange or other trading market. Without
an active trading market, the liquidity of the warrants will be limited.
Fundamental
Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for
us, and may exercise every right and power that we may exercise and will assume all of our obligations under the warrants with
the same effect as if such successor entity had been named in the warrant itself. If holders of our common stock are given a choice
as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same choice
as to the consideration it receives upon any exercise of the warrant following such fundamental transaction. Additionally, as more
fully described in the warrant, in the event of certain fundamental transactions, the holders of the warrants will be entitled
to receive consideration in an amount equal to the Black Scholes value of the warrants on the date of consummation of such transaction.
Rights
as a Stockholder. Except as otherwise provided in the warrants or by virtue of such holder’s ownership of shares
of our common stock, the holder of a warrant does not have the rights or privileges of a holder of our common stock, including
any voting rights, until the holder exercises the warrant.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange
Commission a registration statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus.
This prospectus, which is part of the registration statement, omits certain information, exhibits, schedules and undertakings set
forth in the registration statement. For further information pertaining to us and the securities offered hereby, reference is made
to the registration statement and the exhibits and schedules to the registration statement. Statements contained in this prospectus
as to the contents or provisions of any documents referred to in this prospectus are not necessarily complete, and in each instance
where a copy of the document has been filed as an exhibit to the registration statement, reference is made to the exhibit for a
more complete description of the matters involved.
You may read and copy all or any portion
of the registration statement without charge at the public reference room of the Securities and Exchange Commission at 100 F Street,
N.E., Washington, D.C. 20549. Copies of the registration statement may be obtained from the Securities and Exchange Commission
at prescribed rates from the public reference room of the Securities and Exchange Commission at such address. You may obtain information
regarding the operation of the public reference room by calling 1-800-SEC-0330. In addition, registration statements and certain
other filings made with the Securities and Exchange Commission electronically are publicly available through the Securities and
Exchange Commission’s website at www.sec.gov. The registration statement, including all exhibits and amendments to the registration
statement, has been filed electronically with the Securities and Exchange Commission. You may also read all or any portion of the
registration statement and certain other filings made with the Securities and Exchange Commission on our website at www.heatbio.com.
The information contained in, and that can be accessed through, our website is not incorporated into and is not part of this prospectus.
We are subject to the information and periodic
reporting requirements of the Exchange Act and, accordingly, are required to file annual reports containing financial statements
audited by an independent public accounting firm, quarterly reports containing unaudited financial data, current reports, proxy
statements and other information with the Securities and Exchange Commission. You will be able to inspect and copy such periodic
reports, proxy statements and other information at the Securities and Exchange Commission’s public reference room, the website
of the Securities and Exchange Commission referred to above, and our website at www.titanpharm.com. Except for the specific incorporated
reports and documents listed above, no information available on or through our website shall be deemed to be incorporated in this
prospectus or the registration statement of which it forms a part.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate
by reference” into this prospectus the information we file with it, which means that we can disclose important information
to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus,
and later information that we file with the SEC will automatically update and supersede some of this information. We incorporate
by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act, including filings made after the date of the initial registration statement, until we sell all of the shares
covered by this prospectus or the sale of shares by us pursuant to this prospectus is terminated. In no event, however, will any
of the information that we furnish to, pursuant to Item 2.02 or Item 7.01 of any Current Report on Form 8-K (including exhibits
related thereto) or other applicable SEC rules, rather than file with, the SEC be incorporated by reference or otherwise be included
herein, unless such information is expressly incorporated herein by a reference in such furnished Current Report on Form 8-K
or other furnished document. The documents we incorporate by reference are:
|
·
|
our
Annual Report on Form 10-K/A
for the year ended December 31, 2019, filed with the SEC on March 30, 2020;
|
|
·
|
our Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed with the
SEC on May 15, 2020; our Quarterly Report on Form 10-Q for the period ended June 30, 2020, filed with the SEC on
August 14, 2020;
|
|
·
|
our
Current Reports on Form 8-K filed with the SEC on April 24,
2020, June 25,
2020, June 29,
2020, July 16,
2020, August 5,
2020, August 12,
2020, August 13,
2020, August 20,
2020, September 1,
2020, September 14,
2020, September 18,
2020, September 24,
2020, October 15,
2020 and October 26, 2020;
|
|
·
|
our Definitive Proxy Statement, filed with the SEC on May 22, 2020;
|
|
·
|
the description of our common stock contained in our registration statement on Form 8-A (File
No. 001-13341) filed under the Exchange Act on October 8, 2015, including any amendment or reports filed for the purpose
of updating such descriptions.
|
Any statement contained in a document incorporated
or deemed to be incorporated by reference into this prospectus supplement will be deemed to be modified or superseded for purposes
of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any other subsequently
filed document that is deemed to be incorporated by reference into this prospectus supplement modifies or supersedes the statement.
Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus
supplement.
We will provide each person to whom a prospectus
is delivered a copy of all of the information that has been incorporated by reference in this prospectus but not delivered with
the prospectus. You may obtain copies of these filings, at no cost, through the “Investor Relations” section of our
website (www.titanpharm.com) and you may request a copy of these filings (other than an exhibit to any filing unless we have specifically
incorporated that exhibit by reference into the filing), at no cost, by writing or telephoning us at the following address:
400 Oyster Point Boulevard, Suite 505
South San Francisco, CA 94080
(650) 244-4990
Information on, or that can be accessed
through, our website is not incorporated into this prospectus or other securities filings and is not a part of these filings.
70,000,000 Units
|
|
|
|
|
|
|
PROSPECTUS
|
|
|
MAXIM GROUP LLC
|
|
|
|
, 2020
|
|
Through and including , 2020 (25 days after commencement of this offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.
|
PART II - INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution
We estimate that expenses in connection
with the distribution described in this registration statement (other than fees and commissions charged by the underwriters) will
be as set forth below. We will pay all of the expenses with respect to the distribution, and such amounts, with the exception of
the SEC registration fee and the Financial Industry Regulatory Authority, Inc., or FINRA, filing fee, are estimates.
SEC registration fee
|
|
$
|
1,248.40
|
|
FINRA filing fee
|
|
|
2,216.41
|
|
Legal fees and expenses
|
|
|
50,000.00
|
|
Accounting fees and expenses
|
|
|
25,000.00
|
|
Underwriters’ out-of-pocket expenses
|
|
|
50,000.00
|
|
Printing expenses
|
|
|
15,000.00
|
|
Other (including transfer agent
and registrar fees)
|
|
|
6,535.19
|
|
Total
|
|
$
|
150,000.00
|
|
Item 14. Indemnification of Directors
and Officers
Subsection (a) of Section 145
of the DGCL, empowers a corporation to indemnify any person who was or is
a party or who is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that
the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by
the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe the person’s conduct was unlawful.
Subsection (b) of Section 145
empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that
the person acted in any of the capacities set forth above, against expenses (including attorneys’ fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and
in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Section 145 further provides that
to the extent a director or officer of a corporation has been successful on the merits or otherwise in the defense of any action,
suit or proceeding referred to in subsections (a) and (b) of Section 145, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by
such person in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and the indemnification provided for by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of such person’s heirs, executors and administrators. Section 145 also empowers the corporation
to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any
such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify such person
against such liabilities under Section 145.
Section 102(b)(7) of the DGCL
provides that a corporation’s certificate of incorporation may contain a provision eliminating or limiting the personal liability
of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided
that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit.
Our certificate of incorporation
and our bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by the DGCL, which prohibits
our certificate of incorporation from limiting the liability of our directors for the following:
|
·
|
any breach of the director’s duty of loyalty to us or our stockholders;
|
|
·
|
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation
of law;
|
|
·
|
unlawful payment of dividends or unlawful stock repurchases or redemptions; or
|
|
·
|
any transaction from which the director derived an improper benefit.
|
Our certificate of incorporation provides
for indemnification of our directors and executive officers to the maximum extent permitted by the DGCL, and our bylaws provide
for indemnification of our directors and executive officers to the maximum extent permitted by the DGCL.
We have entered into indemnification agreements
with each of our current directors. These agreements will require us to indemnify these individuals to the fullest extent permitted
under Delaware law against liabilities that may arise by reason of their service to us and to advance expenses incurred as a result
of any proceeding against them as to which they could be indemnified. We also intend to enter into indemnification agreements with
our future directors and executive officers.
In any underwriting agreement we enter
into in connection with the sale of common stock and pre-funded warrants being registered hereby, the underwriters will agree to
indemnify, under certain conditions, us, our directors, our officers and persons who control us, within the meaning of the Securities
Act, against certain liabilities.
Item 15. Recent Sales of Unregistered
Securities
The following information sets forth certain
information with respect to all unregistered securities which we have sold during the last three years:
In June 2019, we issued 448,287 shares
of our common stock to L. Molteni & C. Dei Frattelli Alitti Società Di Esercizio S.P.A. upon the conversion of
a convertible loan at conversion price of $1.50 per share.
In August 2019, in connection with
a concurrent registered direct offering to a single institutional investor, we issued warrants to purchase 2,852,314 shares of
common stock at an exercise price of $1.07 per share, which warrants are exercisable for a period of five years commencing February 9,
2020. Maxim Group LLC acted as the placement agent in connection with the offering and received a cash fee of 7.0% of the gross
proceeds paid to us and reimbursement of certain out-of-pocket expenses.
In January 2020, in connection with
a concurrent registered direct offering to a few institutional investors, we issued warrants to purchase 8,700,000 shares of common
stock at an exercise price of $0.25 per share, which warrants are exercisable for a period of five years commencing September 18,
2020. Maxim Group LLC acted as the placement agent in connection with the offering and received a cash fee of 7.0% of the gross
proceeds paid to us and reimbursement of certain out-of-pocket expenses.
The offers, sales and issuances of the
securities described above were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the
Securities Act.
Item 16. Exhibits
Exhibit
No.
|
|
Description
|
1.1
|
|
Underwriting Agreement
between Titan Pharmaceuticals, Inc. and Maxim Group LLC*
|
3.1.1
|
|
Amended
and Restated Certificate of Incorporation of the Registrant, as amended (4)
|
3.1.2
|
|
Certificate
of Amendment to the Restated Certificate of Incorporation dated September 24, 2015 (6)
|
3.1.3
|
|
Certificate
of Amendment to the Restated Certificate of Incorporation dated January 23, 2019 (16)
|
3.1.4
|
|
Certificate
of Amendment to the Restated Certificate of Incorporation dated September 24, 2020 (16)
|
3.2
|
|
By-laws
of the Registrant (1)
|
4.1
|
|
Form
of Lender Warrant (8)
|
4.2
|
|
Form
of Rights Agreement Warrant (10)
|
4.3
|
|
Warrant
Agency Agreement between Titan Pharmaceuticals, Inc. and Continental Stock Transfer & Trust Company and Form of Offering
Warrant (15)
|
4.4
|
|
Representative’s
Purchase Warrant (15)
|
4.5
|
|
Form
of August 2019 Private Placement Warrant (17)
|
4.6
|
|
Class
B Warrant Agency Agreement dated October 16, 2019 between Titan Pharmaceuticals, Inc. and Maxim Group LLC Form of January
2020 Private Placement Warrant (18)
|
4.7
|
|
Form
of January 2020 Private Placement Warrant (19)
|
4.8
|
|
Form
of March 3, 2020 Warrant Amendment Agreement (23)
|
4.9
|
|
Description
of the Registrant’s Common Stock (23)
|
4.10
|
|
Warrant Agency Agreement between Titan Pharmaceuticals, Inc. and Continental Stock Transfer & Trust Company and
Form of Warrant
|
4.11
|
|
Form of Lock-Up and Voting Agreement
|
5.1
|
|
Opinion of Loeb & Loeb
LLP*
|
10.1
|
|
2001
Non-Qualified Employee Stock Option Plan (2)
|
10.2
|
|
2002
Stock Option Plan (3)
|
10.3
|
|
Titan
Pharmaceuticals, Inc. 2014 Incentive Plan (5)
|
10.4
|
|
Titan
Pharmaceuticals, Inc. Third Amended and Restated 2015 Omnibus Equity Incentive Plan(16)
|
10.5
|
|
Employment
Agreement between Titan Pharmaceuticals, Inc. and Sunil Bhonsle (7)
|
10.6
|
|
Employment
Agreement between Titan Pharmaceuticals, Inc. and Marc Rubin (7)
|
10.7
|
|
Venture
Loan and Security Agreement, dated July 27, 2017, by and between Titan Pharmaceuticals, Inc. and Horizon Technology Finance
Corporation (8)
|
10.8
|
|
Amendment
of Venture Loan and Security Agreement, dated February 2, 2018, by and between Titan Pharmaceuticals, Inc. and Horizon Technology
Finance Corporation (9)
|
10.9
|
|
Amended
and Restated Venture Loan and Security Agreement, dated March 21, 2018, by and between Titan Pharmaceuticals, Inc., Horizon
Technology Finance Corporation and L. Molteni & C. Dei Frattelli Alitti Società Di Esercizio S.P.A. (10)
|
10.10
±
|
|
Asset
Purchase, Supply and Support Agreement dated March 21, 2018, by and between Titan Pharmaceuticals, Inc. and L. Molteni &
C. Dei Frattelli Alitti Società Di Esercizio S.P.A. (10)
|
10.11
|
|
Rights
Agreement dated March 21, 2018, by and between Titan Pharmaceuticals, Inc. and L. Molteni & C. Dei Frattelli Alitti Società
Di Esercizio S.P.A. (10)
|
10.12
±
|
|
Termination
and Transition Services Agreement dated May 25, 2018 by and between Titan Pharmaceuticals, Inc. and Braeburn Pharmaceuticals,
Inc. (11)
|
10.13
±
|
|
Amendment
to Asset Purchase, Supply and Support Agreement dated August 3, 2018, by and between Titan Pharmaceuticals, Inc. and L. Molteni
& C. Dei Frattelli Alitti Società Di Esercizio S.P.A (12)
|
10.14
±
|
|
Distribution
and Sublicense Agreement dated February 1, 2016 as amended by agreement dated August 2, 2018 between Titan Pharmaceuticals,
Inc. and Knight Therapeutics Inc. (13)
|
10.15
|
|
Amendment
to lease for Registrant’s facility dated March 21, 2016 (13)
|
10.16
|
|
Unsecured
Convertible Loan Agreement dated September 18, 2018 (14)
|
10.17
|
|
Employment
Agreement between the Registrant and Katherine Beebe DeVarney (20)
|
10.18
|
|
Employment
Agreement between the Registrant and Dane Hallberg (20)
|
10.19
|
|
Securities
Purchase Agreement, dated August 7, 2019, by and between Titan Pharmaceuticals, Inc. and the investors named therein (17)
|
10.20
|
|
Securities
Purchase Agreement, dated January 7, 2020, by and between Titan Pharmaceuticals, Inc. and the investors named therein (19)
|
10.21
|
|
Placement
Agency Agreement, dated August 7, 2019, by and between Titan Pharmaceuticals, Inc. and Maxim Group LLC (17)
|
10.22
|
|
Placement
Agency Agreement, dated January 7, 2020, by and between Titan Pharmaceuticals, Inc. and Maxim Group LLC (19)
|
10.23
|
|
Amendment
dated September 10, 2019 to Amended and Restated Venture Loan and Security Agreement, dated March 21, 2018, by and between
Titan Pharmaceuticals, Inc., Horizon Technology Finance Corporation and L. Molteni & C. Dei Frattelli Alitti Società
Di Esercizio S.P.A. (21)
|
10.24
±
|
|
Amendment
No. 2 dated September 10, 2019 to Asset Purchase, Supply and Support Agreement by and between Titan Pharmaceuticals, Inc.
and L. Molteni & C. Dei Frattelli Alitti Società Di Esercizio S.P.A. (21)
|
10.25
|
|
Amendment
No. 2 dated March 12, 2020 to Amended and Restated Venture Loan and Security Agreement, dated March 21, 2018, by and between
Titan Pharmaceuticals, Inc., Horizon Technology Finance Corporation and L. Molteni & C. Dei Frattelli Alitti Società
Di Esercizio S.P.A. (22)
|
10.26
±±
|
|
Agreement
for Co-Promotion Partnership, dated June 23, 2020, by and between Titan Pharmaceuticals, Inc. and Indegene, Inc. (23)
|
10.27
|
|
Debt Settlement and Release Agreement by and between Titan Pharmaceuticals, Inc., Horizon Technology Finance Corporation
and L. Molteni & C. Dei Frattelli Alitti Società Di Esercizio S.P.A. (24)
|
14.1
|
|
Code
of Business Conduct and Ethics (5)
|
23.1
|
|
Consent of OUM &
Co., LLP, Independent Registered Public Accounting Firm
|
23.2
|
|
Consent of Loeb & Loeb LLP (contained in Exhibit
5.1)*
|
24.1
|
|
Power of Attorney (included on the signature page of this Registration
Statement)*
|
*
|
|
Previously filed.
|
±
|
|
Confidential treatment has been granted as to certain portions of this exhibit.
|
±±
|
|
Certain information has been omitted from this exhibit in reliance upon Item 601(b)(10) of Regulation S-K.
|
(1)
|
|
Incorporated by reference from the Registrant’s Registration Statement on Form S-3 (File No. 333-221126).
|
(2)
|
|
Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001.
|
(3)
|
|
Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002.
|
(4)
|
|
Incorporated by reference from the Registrant’s Registration Statement on Form 10 filed on January 14, 2010.
|
(5)
|
|
Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2013.
|
(6)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on September 28, 2015.
|
(7)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on April 3, 2019.
|
(8)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on July 27, 2017.
|
(9)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on February 7, 2018.
|
(10)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on March 26, 2018.
|
(11)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 30, 2018.
|
(12)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on August 3, 2018.
|
(13)
|
|
Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2018.
|
(14)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated September 20, 2018.
|
(15)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated September 25, 2018.
|
(16)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated January 25, 2019.
|
(17)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated August 8, 2019.
|
(18)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated October 18, 2019.
|
(19)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated January 7, 2020.
|
(20)
|
|
Incorporated by reference from the Registrant’s Annual Report on Form 10-K dated April 1, 2019.
|
(21)
|
|
Incorporated by reference from the Registrant’s Registration Statement on Form S-1 dated September 12, 2019.
|
(22)
|
|
Incorporated by reference from the Registrant’s Annual Report on Form 10-K dated March 30, 2020.
|
(23)
|
|
Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2020.
|
(24)
|
|
Incorporated by reference from the Registrant’s Current Report on Form 8-K dated October 26, 2020.
|
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby
undertakes:
(1) To file,
during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”);
(ii) To reflect
in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) To include
any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that Paragraphs (a)(1)(i),
(ii), and (iii) of this section do not apply if the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the
purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove
from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for
the purpose of determining liability under the Securities Act to any purchaser: If the registrant is subject to Rule 430C
(§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A
(§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such
first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first use.
(5) That, for
the purpose of determining liability under the Securities Act to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to
Rule 424 (§230.424 of this chapter);
(ii) Any free
writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii) The portion
of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other
communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) The undersigned registrant hereby
undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s
annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby
undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the
subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed
securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by
the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a
post-effective amendment will be filed to set forth the terms of such offering.
(d) Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(e) For the purpose of determining
any liability under the Securities Act, the registrant will treat the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
under Rule 424(b)(1), or (4), or 497(h) under the Securities Act as part of this registration statement as of the time
the Commission declared it effective.
(f) For the purpose of determining
any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.