On February 23, 2023 Exact Sciences Corp. (Nasdaq: EXAS) (the "Company"), a leading provider of cancer screening and diagnostic tests, reported that on February 23, 2023 it entered into a privately negotiated exchange and purchase agreement (the "Agreement") with a holder of certain of the Company’s 0.3750% Convertible Senior Notes due 2027 (the "Existing 2027 Notes") and certain of its 0.3750% Convertible Senior Notes due 2028 (the "Existing 2028 Notes", and together with the "Existing 2027 Notes", the "Existing Notes") (Press release, Exact Sciences, FEB 23, 2023, View Source [SID1234627643]). Pursuant to the Agreement, the Company has agreed to issue to the holder $500,000,000 aggregate principal amount of a new series of 2.00% Convertible Senior Notes due 2030 (the "2030 Notes") in exchange for (i) $183,678,000 aggregate principal amount of the holder’s Existing 2027 Notes, (ii) $200,958,000 aggregate principal amount of the holder’s Existing 2028 Notes, and (iii) approximately $138,000,000 in cash. The closing of the transaction is expected to occur on March 1, 2023, subject to customary closing conditions.

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The 2030 Notes will mature on March 1, 2030 (the "Maturity Date"), unless earlier repurchased or converted. The 2030 Notes will be senior unsecured obligations of the Company and bear interest at a rate of 2.00% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2023.

Prior to September 1, 2029, the 2030 Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, until the close of business on the second scheduled trading day immediately preceding the Maturity Date. The 2030 Notes will be convertible into cash, shares of the Company’s common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of the Company’s common stock, at the Company’s election.

The Company may not redeem the 2030 Notes prior to the Maturity Date. If a "fundamental change" occurs prior to the Maturity Date, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2030 Notes at a repurchase price equal to 100% of the principal amount of the 2030 Notes to be repurchased plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

The conversion rate for the 2030 Notes is initially 12.3724 shares per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of approximately $80.825 per share of common stock representing a conversion premium of 25.00% over the last reported sale price of $64.66 per share of the Company’s common stock on the Nasdaq Stock Market on February 22, 2023. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, the 2030 Notes include a customary provision pursuant to which holders of the 2030 Notes who convert their 2030 Notes in connection with a "make-whole fundamental change", will, under certain circumstances, be entitled to an increase in the conversion rate.

XMS Capital Partners LLC acted as sole placement agent for the transaction.

K&L Gates LLP represented Exact Sciences Corporation and Kramer Levin Naftalis & Frankel LLP represented the placement agent in the transaction.

The offer and sale of the 2030 Notes and any shares of common stock issuable upon conversion of the 2030 Notes have not been registered under the Securities Act of 1933 or any other securities laws, and the 2030 Notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

On February 23, 2023 the Company amended and restated those two certain convertible promissory notes between the Company and Paseco ApS (the "Holder") dated February 6, 2020, each in the principal amount of $600,000 (the "February Notes") by entering into two amended and restated secured convertible promissory notes, each with an effective date of December 30, 2022 and each in the principal amount of $600,000 (the "Amended and Restated February Notes") (Filing, 8-K, Enochian BioSciences, FEB 23, 2023, View Source [SID1234627642]). The Amended and Restated February Notes extend the maturity date of the February Notes to February 28, 2024, secure the Company’s obligations under the February Notes pursuant to the Security Agreement (as defined below) and amend certain other terms.

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On February 16, 2023, the Company amended that certain promissory note dated March 30, 2020 in the principal amount of $5,000,000 between the Company and the Holder (the "March Note"). The amendment to the March Note, effective December 30, 2022 (the "Amendment to the March Note"), secures the Company’s obligations under the March Note pursuant to the Security Agreement (as defined below).

On February 16, 2023, the Company entered into a security agreement between the Company and the Holder, effective as of December 30, 2022 (the "Security Agreement") under which the Company pledged and granted the Holder a first priority security interest in and lien upon all of the Company’s wholly-owned assets as collateral security for the prompt payment in full of the principal amounts of the February Notes and the March Note when due. The Security Agreement contains customary representations, warranties and covenants of the parties thereto.

The foregoing is a brief description of the material terms of the Amended and Restated February Notes, the Amendment to the March Note and the Security Agreement, each of which is qualified in its entirety by reference to the full text thereof included as Exhibit 10.1, Exhibit 10.2, and Exhibit 10.3, respectively, to this Current Report on Form 8-K and each of which is incorporated herein by reference.

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On February 16, 2023, the Company received a notice (the "Notice") from The Nasdaq Stock Market LLC ("Nasdaq") stating that because the Company has not yet filed its Quarterly Report on Form 10-Q for the period ended December 31, 2022 (the "Form 10-Q"), the Company remains in non-compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of all required periodic financial reports with the Securities and Exchange Commission. As previously disclosed on Form 8-Ks filed with the Securities and Exchange Commission, on October 17, 2022 and November 23, 2022, respectively, the Company received notices from Nasdaq indicating that as a result of not having timely filed its Annual Report on Form 10-K for the period ended June 30, 2022 (the "Form 10-K") and its Quarterly Report on Form 10-Q for the period ended September 30, 2022, the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1).

The Notice has no immediate effect on the listing of the Company’s shares on Nasdaq. However, if the Company fails to timely regain compliance with the Nasdaq Listing Rule, the Company’s common stock will be subject to delisting from Nasdaq. As previously reported on Form 8-K, Nasdaq accepted the Company’s plan to regain compliance with Nasdaq Listing Rule 5250(c)(1) and therefore the Company has 180 calendar days from the due date of the Form 10-K, or April 11, 2023, to regain compliance

Item 7.01 Regulation FD Disclosure.

On February 23, 2023, the Company issued a press release disclosing its receipt of the Notice referenced above. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

This information is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By furnishing this information on this Current Report on Form 8-K, we make no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.

On February 23, 2023 Dynavax Technologies Corporation (Nasdaq: DVAX), a commercial-stage biopharmaceutical company developing and commercializing innovative vaccines, reported financial results for the fourth quarter and the full year ending December 2022 (Press release, Dynavax Technologies, FEB 23, 2023, View Source [SID1234627641]).

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"In 2022, our team exceeded our strategic goals, achieving record HEPLISAV-B revenue, advancing our clinical pipeline and delivering orders of CpG 1018 adjuvant for the equivalent of hundreds of millions of COVID-19 vaccine doses," said Ryan Spencer, Chief Executive Officer of Dynavax. "Following a year of successful execution on our strategy, we are excited for 2023 and look forward to continuing our trend of significant and sustainable annual HEPLISAV-B revenue growth and overall advancement of our business focused on protecting patients worldwide from infectious diseases."

2023 FINANCIAL GUIDANCE

Dynavax anticipates full-year 2023 revenue and operating expenses to be in the ranges below:

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HEPLISAV-B net product revenue between approximately $165 – $185 million
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Research and development expenses between approximately $55 – $70 million
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Selling, general and administrative expenses between approximately $135 – $155 million

BUSINESS UPDATES

HEPLISAV-B [Hepatitis B Vaccine (Recombinant), Adjuvanted]

HEPLISAV-B vaccine is the first and only adult hepatitis B vaccine approved in the U.S. and EU that enables series completion with only two doses in one month. Hepatitis B vaccination is universally recommended for adults aged 19-59 in the U.S.

•
HEPLISAV-B vaccine achieved record annual net product revenue of $125.9 million for 2022, compared to $61.9 million for 2021, representing annual growth of 104%.
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HEPLISAV-B market share in prioritized Integrated Delivery Networks (IDNs) and Clinics increased to approximately 47%, with total market share increasing to approximately 35%, up from approximately 33% and 25%, respectively, at the end of 2021.
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Dynavax believes it has begun to see a positive impact on HEPLISAV-B revenue from the expanded ACIP recommendation for adult hepatitis B vaccination which has the potential to expand the market to over $800 million by 2027 with HEPLISAV-B well-positioned to achieve a majority market-share.

CpG 1018 Adjuvant Supply for COVID-19 Vaccines

Dynavax has established a global portfolio of CpG 1018 adjuvant commercial supply agreements (CSAs) supporting the development of COVID-19 vaccines across a variety of vaccine platforms.

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CpG 1018 adjuvant achieved annual net product revenue of $587.7 million for 2022, up 57% compared to $375.2 million for 2021.
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•
Due to the successful execution on the pandemic commercial supply agreements and the resulting volume of partners’ overall stockpile, coupled with unknowns about the trajectory of the COVID-19 pandemic, Dynavax believes it will have minimal to as little as zero CpG 1018 adjuvant net product revenues in 2023.

Clinical Pipeline

Dynavax is advancing a pipeline of differentiated product candidates that leverage its CpG 1018 adjuvant, which has demonstrated its ability to enhance the immune response with a favorable tolerability profile in a wide range of clinical trials and real-world commercial use.

Tetanus, diphtheria and pertussis (Tdap) vaccine program:

•
In October, the Company presented adult and adolescent safety data from a Phase 1 clinical trial demonstrating the Tdap vaccine candidate was well tolerated without observed safety concerns. Immunogenicity in adults was consistent with the Company’s expectations and support its plan to continue advancement of this clinical program. These clinical results were presented at ID Week 2022.
•
Data from non-human primate challenge study is anticipated mid-2023.
•
The Company plans to initiate a human challenge study by the end of 2023.

Shingles vaccine program:

•
In January 2023, the Company reported top line results from the Phase 1 clinical trial designed to evaluate an investigational shingles vaccine, utilizing different regimens of CpG 1018 adjuvant.
•
The full Phase 1 data will be submitted for presentation at an upcoming medical meeting in the first half of 2023.
•
The Company plans to initiate a Phase 1/2 study in early 2024 to evaluate various dose levels of glycoprotein E (gE).

Plague vaccine candidate funded by the Defense Department (DoD):

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Part 1 of the Phase 2 clinical trial evaluating the immunogenicity, safety, and tolerability in adults of a plague (rF1V) vaccine candidate adjuvanted with CpG 1018 was successfully completed in January 2023.
•
Both CpG 1018 adjuvanted arms met the Part 1 primary endpoint and demonstrated a greater than two-fold increase in antibodies over the alum adjuvanted control arm after two doses.
•
The DoD has approved continuing to Part 2 using a bedside mix of CpG 1018 with the alum adjuvanted rF1V plague vaccine.

FOURTH QUARTER AND FULL YEAR FINANCIAL HIGHLIGHTS

Total Revenue.

•
Total revenue for the fourth quarter of 2022 was $184.5 million, compared to $195.1 million for the fourth quarter of 2021.
•
Total revenue for the full year 2022 was $722.7 million, compared to $439.4 million for the full year 2021.

Product Revenue, Net.

HEPLISAV-B

•
HEPLISAV-B vaccine product revenue, net was $34.9 million for the fourth quarter of 2022, compared to $17.2 million for the fourth quarter of 2021.
•
HEPLISAV-B vaccine product revenue, net was $125.9 million for the full year 2022, compared to $61.9 million for the full year 2021, representing annual growth of 104%.

CpG 1018 Adjuvant Supply for COVID-19 Vaccines

•
CpG 1018 adjuvant product revenue, net was $147.2 million in the fourth quarter of 2022, compared to $177.4 million in the fourth quarter of 2021.
•
CpG 1018 adjuvant product revenue, net was $587.7 million for the full year 2022, compared to $375.2 million for the full year 2021.
Cost of Sales – Product. Cost of sales – product for the fourth quarter of 2022 increased to $77.5 million, compared to $74.0 million for the fourth quarter of 2021. Full year 2022 cost of sales – product was $262.2 million compared to $173.6 million for the full year 2021. The increase was due to higher sales volume for HEPLISAV-B and CpG 1018 adjuvant in 2022.

Research and Development Expenses (R&D). R&D expenses for the fourth quarter of 2022 increased to $12.9 million, compared to $11.1 million for the fourth quarter of 2021. Full year 2022 R&D expenses were $46.6 million compared to $32.2 million for the full year 2021. The increase was primarily driven by continued investments in our product candidates utilizing CpG 1018 adjuvant through pre-clinical and clinical collaborations and additional discovery efforts.

Selling, General, and Administrative Expenses (SG&A). SG&A expenses for the fourth quarter of 2022 increased to $31.0 million, compared to $29.2 million for the fourth quarter of 2021. Full year 2022 SG&A expenses were $131.4 million compared to $100.2 million for the full year 2021. The increase was primarily driven by higher compensation and related personnel costs and an overall increase in targeted commercial and marketing efforts to increase market share and maximize the Centers for Disease Control and Prevention’s Advisory Committee of Immunization Practices (ACIP) universal recommendation.

Net Income. GAAP net income was $67.7 million, or $0.53 per share (basic) and $0.45 per share (diluted) in the fourth quarter of 2022, compared to GAAP net income of $99.8 million, or $0.80 per share (basic) and $0.55 per share (diluted) in the fourth quarter of 2021. GAAP net income was $293.2 million, or $2.32 per share (basic) and $1.97 per share (diluted) for the full year 2022, compared to GAAP net income was $76.7 million, or $0.62 per share (basic) and $0.57 per share (diluted) for the full year 2021.

Cash and Marketable Securities. Cash and marketable securities were $624.4 million as of December 31, 2022.

Conference Call and Webcast Information

Dynavax will host a conference call and live audio webcast on Thursday, February 23, 2023, at 4:30 p.m. (ET)/1:30 p.m. (PT). The live audio webcast may be accessed through the "Events & Presentations" page on the "Investors" section of the Company’s website at View Source A replay of the webcast will be available for 30 days following the live event.

To dial into the call, participants will need to register for the call using the caller registration link. It is recommended that participants dial into the conference call or log into the webcast approximately 10 minutes prior to the call.

Important U.S. Product Information
HEPLISAV-B is indicated for the prevention of infection caused by all known subtypes of hepatitis B virus in adults aged 18 years and older.

For full U.S. Prescribing Information for HEPLISAV-B, please visit the following website at View Source, and click the "Prescribing Information" link in the "Important Safety Information" section.

Important U.S. Safety Information (ISI)
Do not administer HEPLISAV-B to individuals with a history of a severe allergic reaction (e.g., anaphylaxis) after a previous dose of any hepatitis B vaccine or to any component of HEPLISAV-B, including yeast.

Appropriate medical treatment and supervision must be available to manage possible anaphylactic reactions following administration of HEPLISAV-B.

Immunocompromised persons, including individuals receiving immunosuppressant therapy, may have a diminished immune response to HEPLISAV-B.

Hepatitis B has a long incubation period. HEPLISAV-B may not prevent hepatitis B infection in individuals who have an unrecognized hepatitis B infection at the time of vaccine administration.

The most common patient-reported adverse reactions reported within 7 days of vaccination were injection site pain (23% to 39%), fatigue (11% to 17%), and headache (8% to 17%).

On February 23, 2023 Plus Therapeutics, Inc.(Nasdaq: PSTV) (the "Company"), a clinical-stage pharmaceutical company developing targeted radiotherapeutics with advanced platform technologies for central nervous system cancers, reported financial results for the fourth quarter and year ended December 31, 2022, and provided an overview of recent business highlights (Press release, Cytori Therapeutics, FEB 23, 2023, View Source [SID1234627640]).

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"During 2022, we made significant progess in our co-lead radiotherapeutic programs for recurrent glioblastoma (GBM) and LM. Furthermore, even during a turbulent time in the U.S. capital markets, we reached a new level of balance sheet stability to support our exciting and potentially game-changing targeted radiotherapeutic drug candidates," said Marc H. Hedrick M.D., President and Chief Executive Officer of Plus Therapeutics. "In 2023, we intend to build on the success of 2022 to simultaneously advance our active programs in GBM and LM and also broaden and diversify our drug development pipeline."

2022 AND 2023 HIGHLIGHTS AND MILESTONE ACHIEVEMENTS

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Completed multi-year program, including related U.S. Food and Drug Administration (FDA) interactions, to produce GMP rhenium (186Re) obisbemeda for Phase 2 clinical trials.
▪
Enrolled first patient in the Phase 2b clinical trial of rhenium (186Re) obisbemeda for recurrent GBM. Presented data from the ReSPECT-GBM Phase 1/2a dose escalation trial evaluating rhenium (186Re) obisbemeda in patients with recurrent GBM at the 27th Annual Scientific Meeting and Education Day of the Society for Neuro-Oncology (SNO).
▪
Awarded $17.6 million CPRIT grant to support Phase 1 and Phase 2 clinical development of rhenium (186Re) obisbemeda for LM.
▪
Completed enrollment in the second cohort of the ReSPECT-LM Phase 1 clinical trial of rhenium (186Re) obisbemeda for the treatment of LM.
▪
Presented initial clinical experience from the ReSPECT-LM Phase 1/2a dose escalation trial evaluating rhenium (186Re) obisbemeda in patients with LM at the 27thAnnual Scientific Meeting and Education Day of SNO.
▪
Engaged with the FDA on proposed Investigational New Drug (IND) application to treat pediatric patients with ependymoma and high-grade glioma.
▪
Licensed bioresorbable radio-embolic technology platform (186RNL-BAM) from the University of Texas and completed key manufacturing and preclinical human ex vivo and proof of concept activities as well as initial FDA interactions.
▪
Announced a comprehensive laboratory services agreement with Biocept to use the CNSide assay to evaluate response to treatment and treatment efficacy in the ReSPECT-LM clinical trial.
▪
Executed a variety of agreements and transactions to supplement the balance sheet and raised capital expected to be sufficient to fund expenses through 2025.

FULL YEAR 2022 FINANCIAL RESULTS

▪
The Company’s cash balance was $18.1 million at December 31, 2022, compared to $18.4 million at December 31, 2021. The Company believes that current cash on hand, anticipated funding from both the National Institutes of Health and CPRIT, and existing discretionary capital sources are sufficient to fund both its currently planned and anticipated overhead and development expenses through 2025.
▪
Grant revenue of $224,000 was recognized for full year 2022, which represents CPRIT’s initial share of the costs incurred for development of 186RNL for the treatment of patients with LM. During the fourth quarter of 2022, the Company received its first CPRIT grant funds of approximately $1.9 million.
▪
Total operating expenses for full year 2022 were $19.9 million, compared to total operating expenses of $12.5 million for full year 2021. The increase is due primarily to incremental CMC spend related to the development of GMP 186RNL drug and key regulatory consulting activities. In addition, to a lesser extent, the Company had a one-time forecasted increase in general corporate expenses together with litigation and legal expenses primarily related to resolving a legal dispute.
▪
Net loss for full year 2022 was $20.3 million, or $(0.77) per share, compared to a net loss of $13.4 million, or $(1.11) per share, for full year 2021.

UPCOMING EVENTS AND MILESTONES

During 2023, the Company expects to accomplish the following key business objectives:

•
Expand clinical sites and make enrollment progress of the ReSPECT-GBM Phase 2b trial to support enrollment completion by the end of 2024.
•
Publish ReSPECT-GBM Phase 1 data in a peer reviewed journal.
•
Present safety and efficacy data from ReSPECT-GBM Phase 1/2a dose escalation trial and ReSPECT-GBM Phase 2b dose expansion trial in the second half of 2023.
•
Complete enrollment in Phase 1/Part A of the ReSPECT-LM trial, expand the number of trial sites, and begin enrollment in Phase 1/Part B.
•
Present clinical safety and efficacy data of Phase 1/Part A of the ReSPECT-LM trial in the second half of 2023.
•
Explore potentially synergistic drug combination studies of locally delivered rhenium (186Re) obisbemeda and promising systemic therapies in relevant preclinical models of LM.
•
Finalize and submit an FDA IND application to treat pediatric patients with ependymoma and high-grade glioma and begin enrollment.
•
In conjunction with the FDA, finalize regulatory designation of 186RNL-BAM technology and complete key development activities.
•
Execute corporate partnerships to expand the business opportunities for Plus Therapeutics’ unique CNS oncology platform.
•
Submit multiple grants to secure non-dilutive capital to support expansion of the Company’s drug development pipeline.

FOURTH QUARTER AND FULL YEAR 2022 RESULTS CONFERENCE CALL

The Company will hold a conference call and live audio webcast at 5:00 p.m. Eastern Time today to discuss its financial results and provide a general business update.

A live webcast will be available at ir.plustherapeutics.com/events.

Participants may also pre-register any time before the call here. Once registration is completed, participants will be provided a dial-in number with a personalized conference code to access the call. Please dial in 15 minutes prior to the start time.

Following the live call, a replay will be available on the Company’s website under the ‘For Investor’section. The webcast will be available on the Company’s website for 90 days following the live call.

On February 23, 2023 Adhera Therapeutics, Inc. (the "Company") reported that it has entered into a Securities Purchase Agreement ("SPA") with two affiliate accredited investors pursuant to which the Company issued and sold the investor a non-convertible Original Issue Discount Senior Secured Promissory Note (a "Note") in the principal amount of $214,285.72and 339,722 Common Stock Purchase Warrants ("Warrants") for total gross proceeds of $150,000 The proceeds from these financings were used for working capital purposes (Filing, 8-K, Adhera Therapeutics, FEB 23, 2023, View Source [SID1234627637]).

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In connection with the January financing, the Company also agreed to increase the principal amount of prior Original Issue Discount Promissory Notes issued to the investors in May 2022 (the "Prior Notes") by 25%, from a total of $1,000,000 in principal to $1,250,000 in principal (not including accrued and unpaid interest). The Prior Notes rank pro rata with the new Notes with respect to interest payments. The terms of the Prior Notes are summarized in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2022 under "Part II. – Item 5. – Other Information," and a form of the Prior Notes is filed as Exhibit 10.4 thereto.

The Notes are due on the earlier of (i) the 12 month anniversary of the issuance date, and (ii) the date on which the Company completes a public offering for cash of common stock and/or common stock equivalents which results in the listing of the Company’s common stock on a "national securities exchange" as defined in the Securities Exchange Act of 1934 (a "Qualified Financing"), provided that unless there is an event of default, the Company may extend the maturity date by six months in its discretion. The Notes bear interest at 8% per annum, payable monthly, subject to an increase to 15% in case of an event of default as provided for therein. Furthermore, at any time before the 12 month anniversary of the date of issuance of a Note, the Company may, after providing written notice to the holder, prepay all of the then outstanding principal amount of the Note for cash in an amount equal to the sum of 105% of the then outstanding principal amount of the Note, accrued but unpaid interest and all liquidated damages and other amounts due in respect of the Note (if any).

The Notes may, at the discretion of the Company, be converted into shares of a new class of convertible preferred stock of the Company (the "Convertible Preferred Stock") on the closing date of the Qualified Financing. In the event of the conversion, the holder will receive a number of shares of Convertible Preferred Stock equal to the quotient obtained by dividing (i) the unpaid principal amount of this Note (together with any interest accrued but unpaid thereon) by (ii) the closing price of the securities issued in the Qualified Financing on the closing date of the Qualified Financing. Upon issuance, the conversion price of the Convertible Preferred Stock (the "Preferred Conversion Price") will be equal to the closing price of the securities issued in the Qualified Financing, subject to adjustment.

The Notes provide for certain customary events of default which include failure to maintain the required reserve of shares for the Warrants, a restatement of the financial statements of the Company resulting in a reduction to the stock price by an enumerated threshold, and certain other customary events of default, subject to certain exceptions and limitations. Upon an event of default, the Notes will become immediately due and payable at a 125% premium, which will be reduced to 100% if the event of default occurs while the Company’s common stock is listed on a national securities exchange.

The Notes contain customary restrictive covenants which apply for as long as at least 75% of the Notes remain outstanding, including covenants against incurring new indebtedness or liens, repurchasing shares of common stock or common stock equivalents, paying dividends or distributions on equity securities, and transactions with affiliates, subject to certain exceptions and limitations. In addition, the SPA imposes certain additional negative covenants and obligations on the Company, including a prohibition on filing a registration statement (other than on Form S-8) unless at least 30% of the Notes have been repaid as of such filing, a prohibition on incurring new indebtedness at any time while any Notes are outstanding, and a 90-day restriction against issuing shares of common stock or common stock equivalents, subject to certain exceptions and limitations.

Under the SPA, the Company also granted each investor the right to participate in future financings that are exempt from registration under the Securities Act of 1933 (the "Securities Act") in an amount equal to 15% of such financings, which right has a term equal to the earlier of (i) the 24 month anniversary of the SPA, and (ii) the date the Notes are no longer outstanding. The SPA also provides the investors with most-favored nations treatment, giving them the right to amend their securities if the Company issues securities with more favorable terms while the investor’s securities are outstanding, subject to certain exceptions and limitations.

The Warrants are exercisable for a period of five-years and six months from issuance at an exercise price of $0.82 per share, subject to certain limitations including beneficial ownership limitations, and subject to adjustment including downward adjustment upon a dilutive issuance of securities at a per-share price that is below the exercise price. Unless the holder’s sale of shares of common stock issuable upon exercise of the Warrants at prevailing market prices (not at a fixed price) is registered on an effective registration statement under the Securities Act, the Warrants may be exercised cashlessly.

The Company’s obligations under the Notes are secured by a lien on all assets of the Company and its subsidiaries pursuant to Security Agreements each dated the date of the respective SPA (the "Security Agreement").

The SPA requires a reserve of authorized but unissued shares equal to four times the number of shares issuable to the investors upon exercise of the Warrants, subject to reduction as the Warrants are exercised.

Aegis Capital Corp. (the "Placement Agent") served as placement agent in the financings and received a cash commission in the amount of 10% of the gross proceeds, or $30,000.

Under the SPA the Company reimbursed the investors a total of $15,000 out of the proceeds from the offerings for fees and expenses incurred in connection therewith.

Item 3.02 Unregistered Sale of Equity Securities.

The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02.

The issuances of the Notes and the Warrants described above are exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under of the Securities Act, as transactions by an issuer not involving any public offering.