On June 25, 2021, Moleculin Biotech, Inc. ("Moleculin" or "Company"), repored that it entered into an At Market Issuance Sales Agreement (the "Agreement") with Oppenheimer & Co. Inc. (the "Agent") (Filing, 8-K, Moleculin, JUN 25, 2021, View Source [SID1234584385]). Pursuant to the terms of the Agreement, the Company may sell from time to time through the Agent shares of the Company’s common stock, par value $0.001 per share ("Common Stock"), with an aggregate sales price of up to $50.0 million (the "Shares") .
Any sales of Shares pursuant to the Agreement will be made under the Company’s effective "shelf" registration statement (the "Registration Statement") on Form S-3 (File No. 333-256627), which became effective on June 11, 2021, and the related prospectus supplement and the accompanying prospectus, as filed with the Securities and Exchange Commission (the "SEC") on June 25, 2021.
Under the Agreement, the Company may sell Shares through the Agent by any method that is deemed an "at the market offering" as defined in Rule 415 under the Securities Act of 1933, as amended (the "Securities Act").
Sales of the Shares, if any, may be made at market prices prevailing at the time of sale, subject to such other terms as may be agreed upon at the time of sale, including a minimum sales price that may be stipulated by the Company’s Board of Directors or a duly authorized committee thereof. The Company or the Agent, under certain circumstances and upon notice to the other, may suspend the offering of the Shares under the Agreement. The offering of the Shares pursuant to the Agreement will terminate upon the sale of Shares in an aggregate offering amount equal to $50.0 million, or sooner if either the Company or the Agent terminate the Agreement pursuant to its terms.
The Company will pay a commission to the Agent of 3.0% of the gross proceeds of the sale of the Shares sold under the Agreement and reimburse the Agent for certain expenses. The Company has also provided the Agent with customary indemnification rights. The Company is not obligated to make any sales of Common Stock under the Agreement.
The foregoing description of the Agreement is not complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Agreement is also incorporated by reference into the Registration Statement.
A copy of the opinion of Schiff Hardin LLP relating to the legality of the shares of Common Stock issuable under the Agreement is filed as Exhibit 5.1 to this Current Report on Form 8-K and is also incorporated by reference into the Registration Statement.
The above disclosure shall not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein, nor shall there be any offer, solicitation, or sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Lincoln Park Capital Agreement
On June 25, 2021, the Company entered into a purchase agreement (the "Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which Lincoln Park has committed to purchase up to $20.0 million of shares (the "Purchase Shares") of Common Stock. Concurrently with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which it agreed to take certain actions relating to the registration under the Securities Act of the offer and sale of the total amount of Common Stock issuable and available for issuance and sale as Shares (defined below) under the Purchase Agreement (the "Registration Rights Agreement").
Offers and sales of Common Stock pursuant to the Purchase Agreement are being made under the Registration Statement on Form S-3 (File No. 333-256627), which became effective on June 11, 2021, and the prospectus supplement related thereto and the accompanying prospectus, as filed with the Securities and Exchange Commission (the "SEC") on June 25, 2021.
Beginning on the Commencement Date (as defined below) and thereafter, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (a "Regular Purchase Notice"), directing Lincoln Park to purchase up to 75,000 Purchase Shares (the "Regular Purchase Amount") (a "Regular Purchase"). The Regular Purchase Amount may be increased to up to 100,000 shares if the closing sale price of the Common Stock is not below $4.00 per share, and to up to 150,000 shares if the closing sale price of the Common Stock is not below $5.00 per share. The Company and Lincoln Park may mutually agree to increase the Regular Purchase Amount.
The Purchase Agreement provides for a purchase price per Purchase Share for each Regular Purchase (the "Purchase Price") equal to the lesser of:
• the lowest sale price of the Common Stock on the Nasdaq Capital Market on the purchase date of such shares; and
• the average of the three lowest closing sale prices for the Common Stock on the Nasdaq Capital Market during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares.
The purchase price of Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases and the minimum closing sale price for a Regular Purchase will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price.
The Company issued 107,788 shares of Common Stock to Lincoln Park as a commitment fee in connection with entering into the Purchase Agreement and may issue an additional 53,893 shares pro-rata when and if Lincoln Park purchases (at the Company’s discretion) the $20,000,000 aggregate commitment (the "Commitment Shares" and together with the Purchase Shares, the "Shares").
The aggregate number of Shares that the Company can issue to Lincoln Park under the Purchase Agreement may in no case exceed 5,686,041 Shares (subject to proportional adjustments for stock splits, reverse stock splits and similar events as described above), which number of Shares is equal to 19.99% of the outstanding shares of Common Stock immediately prior to the execution of the Purchase Agreement (the "Exchange Cap"), unless (i) stockholder approval is obtained to issue shares of Common Stock in excess of the Exchange Cap, in which case the Exchange Cap will no longer apply, or (ii) the average price of all sales of Purchase Shares to Lincoln Park under the Purchase Agreement equals or exceeds the lower of (i) the Nasdaq official closing price immediately preceding the execution of the Purchase Agreement or (ii) the arithmetic average of the five Nasdaq official closing prices for the Common Stock immediately preceding the execution of the Purchase Agreement, plus an incremental amount to take into account the issuance of the Commitment Shares to Lincoln Park under the Purchase Agreement, such that the transactions contemplated by the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules. In any event, the Purchase Agreement specifically provides that we may not issue or sell any shares of our Common Stock under the Purchase Agreement if such issuance or sale would breach any applicable rules or regulations of the Nasdaq.
The Purchase Agreement contains customary representations, warranties, covenants, closing conditions and indemnification and termination provisions. Sales under the Purchase Agreement may commence only after certain conditions have been satisfied (the date on which all requisite conditions have been satisfied, the "Commencement Date"), which conditions include the delivery to Lincoln Park of a prospectus supplement covering the shares of Common Stock issued or sold by the Company to Lincoln Park under the Purchase Agreement, the filing with The Nasdaq Stock Market of a Listing of Additional Shares notification with respect to the Shares and Nasdaq having raised no objection to the consummation of transactions contemplated under the Purchase Agreement, and the receipt by Lincoln Park of a customary opinion of counsel and other certificates and closing documents.
The Purchase Agreement may be terminated by the Company at any time, at its sole discretion, without any cost or penalty, by giving one business day notice to Lincoln Park to terminate the Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Common Stock. Although the Company has agreed to reimburse Lincoln Park for a limited portion of the fees it incurred in connection with the Purchase Agreement, the Company did not pay any additional amounts to reimburse or otherwise compensate Lincoln Park in connection with the transaction, other than the issuance of the Commitment Shares.
There are no limitations on use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s ability to enter into variable rate transactions described in the Purchase Agreement), rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Company may deliver Purchase Notices under the Purchase Agreement, subject to market conditions, and in light of its capital needs from time to time and under the limitations contained in the Purchase Agreement. Any proceeds that the Company receives under the Purchase Agreement are expected to be used for working capital and general corporate purposes.
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!