On December 30, 2022, GT Biopharma, Inc. (the "Company") signed a purchase agreement (the "Purchase Agreement") with an institutional investor (the "Purchaser") for the issuance and sale, in a registered direct offering (the "Offering"), of 3,600,000 shares of the Company’s common stock, par value $0.001 per share (the "Shares"), pre-funded warrants to purchase up to 2,900,000 shares of the Company’s common stock (the "Pre-Funded Warrants"), and warrants to purchase up to an aggregate of 6,500,000 shares of the Company’s common stock (the "Common Warrants") (Filing, 8-K, GT Biopharma, JAN 4, 2023, View Source [SID1234625802]). The Common Warrants have an exercise price equal to $1.00, will be exercisable commencing six months following issuance, and will have a term of exercise equal to five years following the initial exercise date. The Pre-Funded Warrants have an exercise price of $0.0001 per Share, are immediately exercisable and can be exercised at any time after their original issuance until such Pre-Funded Warrants are exercised in full. The Shares and Common Warrants were sold at an offering price of $1.00 per Share and accompanying Common Warrant and the Pre-Funded Warrants and Common Warrants were sold at an offering price of $0.9999 per Pre-Funded Warrant and accompanying Common Warrant.
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The offering of the Shares, the Common Warrants, the Pre-Funded Warrants, the Shares that are issuable from time to time upon exercise of the Common Warrants and the Shares that are issuable from time to time upon exercise of the Pre-Funded Warrants (the "Offering") was made pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-267870) (the "Form S-3") initially filed with the Securities and Exchange Commission (the "Commission") on October 13, 2022, and declared effective by the Commission on October 20, 2022.
H.C. Wainwright & Co., LLC ("Wainwright") acted as the Company’s exclusive placement agent in connection with the Offering. In connection with the Offering, the Company agreed to pay Wainwright a cash fee equal to $390,000, $35,000 for legal fees and expenses and up to $15,950 for clearing expenses. In addition, the Company has agreed to grant placement agent warrants to Wainwright to purchase up to 390,000 shares of Common Stock (the "Placement Agent Warrants"). The terms of the Placement Agent Warrants are substantially the same as the terms of the Common Warrants, except the Placement Agent Warrants will have an exercise price of $1.25 per share and will expire five years from the commencement of sales of the Offering.
Wainwright did not purchase or sell any of the Shares, the Common Warrants or the Pre-Funded Warrants and was not required to arrange the purchase or sale of any specific number of securities or dollar amount. The gross proceeds to the Company from the Offering were $6.5 million, before deducting placement agent fees and other offering expenses. The Company anticipates using the net proceeds from the Offering for general corporate purposes.
Pursuant to the Purchase Agreement, the Company agreed for a period of 60 days following the closing of the Offering not to issue, enter into an agreement to issue or announce the issuance or proposed issuance of the shares or any other securities convertible into, or exercisable or exchangeable for, shares. Such restriction does not apply to, in addition to certain customary exceptions, certain securities issuances, the issuance by the Company of equity or debt securities pursuant to acquisitions or strategic transactions approved by a majority of the Company’s disinterested directors, where not for the purpose of raising capital, or certain other compensatory issuances. The Company has also agreed for a period of one year following the closing date of the Offering not to (i) issue or agree to issue equity or debt securities convertible into, or exercisable or exchangeable for, shares at a conversion price, exercise price or exchange price which floats with the trading price of the shares or which may be adjusted after issuance upon the occurrence of certain events or (ii) enter into any agreement, including an equity line of credit, whereby the Company may issue securities at a future-determined price, subject to certain exceptions.
The Purchase Agreement contains customary representations and warranties, agreements and obligations, conditions to closing and termination provisions.
The foregoing descriptions of the Common Warrants, the Pre-Funded Warrants, the Placement Agent Warrants and the Purchase Agreement are qualified in their entirety by reference to the full text of the forms thereof, which are attached as Exhibits 4.1, 4.2, 4.3 and 10.1 hereto and incorporated by reference herein. A copy of the legal opinion and consent of Baker & McKenzie LLP, New York counsel to the Company, relating to the validity of the issuance and sale of the Shares, the Pre-Funded Warrants and Common Warrants is attached as Exhibit 5.1 hereto. A copy of the press release announcing the Offering and the Company’s entry into the Purchase Agreement is attached as Exhibit 99.1 hereto.