On December 23, 2022 Outlook Therapeutics, Inc. (Nasdaq: OTLK) (the "Company"), a biopharmaceutical company working to develop and launch the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, reported that it has entered into a Securities Purchase Agreement ("SPA") with an accredited investor (the "lender"), and pursuant to the SPA, issued the lender an unsecured convertible promissory note (the "Note") with a face amount of $31,820,000 (Press release, Outlook Therapeutics, DEC 23, 2022, View Source [SID1234625574]). The closing of the financing is expected to occur on December 28, 2022, subject to satisfaction of closing conditions, including the receipt of at least $25.0 million of equity financing. The proceeds from the Note and a previously announced equity financing, which remains subject to satisfaction of customary closing conditions, are expected to provide funding through the anticipated U.S. Food and Drug Administration approval of ONS-5010 expected in the third calendar quarter of 2023.
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The Note will bear interest at the annual rate of 9.5%, matures on January 1, 2024 and is convertible into the Company’s common stock beginning on April 1, 2023 at an initial conversion price of $2.00 per share. The Company has the right to convert all or any portion of the outstanding balance under the Note into shares of common stock at a conversion price of $2.00 per share if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the Company’s common stock on Nasdaq equals or exceeds $2.50 per share for a period of 30 consecutive trading days. The SPA and the Note contain customary covenants and events of default, including instances in which the lender may increase the principal amount of the Note and in which the conversion price may be lowered.
A Current Report on Form 8-K summarizing the terms of the SPA and the Note has been filed with the U.S. Securities and Exchange Commission (the "SEC"), and this press release is subject to the further detail provided in the Form 8-K.
Net proceeds of the Note are expected to be approximately $30 million after original issue discount and after deducting the Lender’s transaction costs covered by the Company in connection with the issuance. Outlook Therapeutics intends to use a portion of the proceeds to repay the outstanding balance of approximately $11.9 million on the Company’s existing convertible note with the lender, and the remaining net proceeds for working capital and general corporate purposes, including in support of its ONS-5010 development program.
Brookline Capital Markets, a division of Arcadia Securities, LLC acted as financial advisor to Outlook Therapeutics.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
The offer and sale of the Note has not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.