On September 5, 2023, Cellectar Biosciences, Inc. (the "Company") reported to have entered into a securities purchase agreement (the "Purchase Agreement") with certain accredited investors (the "Investors"), pursuant to which the Company agreed to issue and sell, in a private placement (the "Offering"), (i) 1,225 shares of Series E-1 Convertible Voting Preferred Stock, par value $0.0001 per share (the "Series E-1 Preferred Stock"), (ii) Tranche A Warrants (the "Tranche A Warrants") to acquire shares of Series E-3 Convertible Voting Preferred Stock, par value $0.00001 per share (the "Series E-3 Preferred Stock") and (iii) Tranche B Warrants (the "Tranche B Warrants," together with the Tranche A Warrants, the "Warrants") to acquire shares of Series E-4 Convertible Voting Preferred Stock, par value $0.00001 per share (the "Series E-4 Preferred Stock" and together with the Series E-3 Preferred Stock, the "Warrant Shares") for an aggregate offering price of $24.5 million (Filing, 8-K, Cellectar Biosciences, SEP 5, 2023, View Source [SID1234635025]).

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Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Voting Preferred Stock, which is filed as Exhibit 3.1 to this Current Report on Form 8-K (the "Certificate of Designation"), each share of Series E-1 Preferred Stock is, subject to the Stockholder Approval (as defined below), automatically convertible into shares of common stock, par value $0.00001 per share, of the Company (the "Common Stock") and/or, if applicable, shares of Series E-2 Preferred Stock, par value $0.00001 per share, of the Company (the "Series E-2 Preferred Stock"), in lieu of Common Stock.

The aggregate exercise price of the Tranche A Warrants is approximately $44.1 million, exercisable for an aggregate of 2,205 shares of Series E-3 Preferred Stock commencing on the Exercisability Date (as defined in the Tranche A Warrant) until the earlier of (i) ten (10) trading days following the date of the Company’s public announcement of Positive Topline Data from its CLOVER-WaM Phase 2 pivotal study in patients with relapsed/refractory (r/r) and (ii) September 8, 2026.

The aggregate exercise price of the Tranche B Warrants is approximately $34.3 million, exercisable for an aggregate of 1,715 shares of Series E-4 Preferred Stock commencing on the Exercisability Date (as defined in the Form of Tranche B Warrant) until the earlier of (i) ten (10) Trading Days following the date of the Company’s public announcement of its receipt of written approval from the FDA of its New Drug Application for iopofosine I 131 and (ii) September 8, 2028.

Subject to the terms and limitations contained in the Certificate of Designation, the Series E-1 Preferred Stock issued in the Offering will not become convertible until the Company’s stockholders approve (i) the issuance of all Common Stock issuable upon conversion of the Series E Preferred Stock and (ii) the issuance of the Warrant Shares upon exercise of the Warrants (collectively, the "Stockholder Approval"). On the first (1st) Trading Day (as defined in the Certificate of Designation) following the announcement of the Stockholder Approval, each share of Series E-1 Preferred Stock shall automatically convert into Common Stock, at the conversion price of $1.82 per share, and/or, if applicable, shares of Series E-2 Preferred Stock, in lieu of Common Stock, in each case subject to the terms and limitations contained in the Certificate of Designation. Subject to the limitations set forth in the Certificate of Designation, at the option of the holder, each share of Series E-2 Preferred Stock, Series E-3 Preferred Stock or Series E-4 Preferred Stock shall be convertible into Common Stock, at the conversion price of $1.82 per share, $3.185 per share and $4.7775 per share, respectively, rounded down to the nearest whole share, and in each case subject to the terms and limitations contained in the Certificate of Designation.

The closing of the Offering took place on September 8, 2023. The gross proceeds of the Offering are estimated to be approximately $24.5 million, before deducting fees paid to the Placement Agent (as defined below) and financial advisors of the Offering and other estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the Offering for working capital purposes and general corporate purposes, subject to certain limitation described in the Purchase Agreement.

Pursuant to the Purchase Agreement, as soon as practicable following the filing of the Definitive Proxy Statement in connection with the Stockholder Approval (and in any event no later than seven (7) days thereafter), the Company shall file a registration statement on Form S-3 providing for the resale by the Investors of the Common Stock issuable upon conversion of the Registrable Shares (as defined in the Purchase Agreement) and to use commercially reasonable efforts to have the registration statement declared effective as soon as practicable following receipt of the Stockholder Approval (but no later than ten (10) days following the receipt of Stockholder Approval (or, in the event that the staff of the Securities and Exchange Commission reviews and has oral or written comments to such registration statement, within forty (40) days following the receipt of Stockholder Approval). The Company further agreed to take all steps necessary to keep such registration statement effective at all times until all Registrable Shares have been resold, or there remains no Registrable Shares.

The Purchase Agreement contains certain representations and warranties, covenants and indemnities customary for similar transactions. The representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties to the Purchase Agreement and may be subject to limitations agreed upon by the contracting parties.

Additionally, pursuant to the Purchase Agreement and subject to customary conditions, the Company shall appoint a director designated by the purchasers purchasing a majority of the securities being sold under the Purchase Agreement and an additional director designated by the purchasers purchasing a majority of the securities being sold under the Purchase Agreement if an existing director on the Company’s Board of Directors is not removed on or before the annual meeting of the Company immediately following this Offering.

The securities issued in the Offering have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and until so registered the securities may not be offered or sold absent registration or availability of an applicable exemption from registration. There is no established public trading market for the Series E-1 Preferred Stock, Series E-2 Preferred Stock, Warrants, or Warrant Shares and the Company does not intend to list such securities on any national securities exchange or nationally recognized trading system.

The Offering was conducted pursuant to a Placement Agency Agreement, dated September 7, 2023 (the "Placement Agency Agreement"), between the Company and Oppenheimer & Co. Inc. (the "Placement Agent"). The Placement Agent has no obligation to purchase any of the securities or to arrange for the purchase or sale of any specific number or dollar amount of securities. The Company has agreed to pay: (i) the Placement Agent and certain financial advisors a cash fee equal in total to an aggregate of 7.0% of the gross proceeds raised in the offering from sales of the Series E-1 Preferred Stock, (ii) the Placement Agent a cash fee equal in total to 3.0% of the gross proceeds raised in the offering from the exercise, if any, of the Tranche A Warrants and the Tranche B Warrants, and (iii) reimbursement for certain expenses, including counsel to the Placement Agent and counsel to investors, up to an aggregate of $212,500.

The form of each Tranche A Warrant, the Tranche B Warrant and the Purchase Agreement are filed as Exhibits 4.1, 4.2 and 10.1, respectively, to this Current Report on Form 8-K. The foregoing summaries of the terms of the Certificate of Designation, the Series E-1 Preferred Stock, the Series E-2 Preferred Stock, the Warrants and the Warrant Shares and the terms of the Purchase Agreement are subject to, and qualified in their entirety by, the full text of such documents, where applicable, which are incorporated herein by reference.