On February 19, 2021, Ayala Pharmaceuticals, Inc. (the "Company", "we", "us", and "our") reported that it entered into a Securities Purchase Agreement (the "Purchase Agreement") with the purchasers named therein (the "Investors") (Filing, 8-K, Ayala Pharmaceuticals, FEB 19, 2021, View Source [SID1234575365]).

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!

Pursuant to the Purchase Agreement, the Company agreed to sell (i) an aggregate of 333,333 shares of its common stock (the "Shares"), par value $0.01 per share (the "Common Stock"), together with warrants to purchase an aggregate of 116,666 shares of Common Stock with an exercise price of $18.10 per share (the "Common Warrants"), for an aggregate purchase price of $4,999,995.00 and (ii) pre-funded warrants to purchase an aggregate of 1,333,333 shares of Common Stock with an exercise price of $0.01 per share (the "Pre-Funded Warrants" and collectively with the Common Warrants, the "Warrants"), together with an aggregate of 466,666 Common Warrants, for an aggregate purchase price of $19,986,661.67 (collectively, the "Private Placement"). The closing of the Private Placement is expected to occur on or about February 23, 2021.

The exercise price and the number of shares of Common Stock issuable upon exercise of each Warrant are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Common Stock. In addition, in certain circumstances, upon a fundamental transaction, a holder of Common Warrants will be entitled to receive, upon exercise of the Common Warrants, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Warrants immediately prior to the fundamental transaction. The Pre-Funded Warrants will be automatically exercised on cashless basis upon the occurrence of a fundamental transaction. Each Common Warrant is exercisable from the date of issuance and has a term of three years and each Pre-Funded Warrant is exercisable from the date of issuance and has a term of ten years. Pursuant to the Purchase Agreement, the Company agreed to use reasonable best efforts to register the Shares and Warrants for resale by the Investors on a registration statement on Form S-3 promptly following the date such form is available for use by the Company, but in no event later than June 15, 2021.

The Company intends to use the net proceeds from the Private Placement to advance the development of AL102 for the treatment of desmoid tumors into a pivotal Phase 2/3 study, for product pipeline development and for general corporate purposes. Based on the Company’s current plans, it believes that its existing cash and cash equivalents and short-term restricted bank deposits, together with the expected net proceeds from the Private Placement, will be sufficient to fund its operating expenses and capital expenditure requirements into 2023.

The Private Placement is exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder, as a transaction by an issuer not involving a public offering. The Investors have represented to the Company that they are acquiring the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends will be affixed to the securities issued in this transaction.

The foregoing summaries of the Purchase Agreement and Warrants do not purport to be complete and are qualified in their entirety by reference to the Purchase Agreement and Forms of Warrants, which are filed as Exhibits 10.1, 4.1 and 4.2 to this Current Report on Form 8-K.