We are offering 5,003 shares of
our Series X Convertible Preferred Stock (Series X Preferred Stock) and 1,200,000 shares of our common stock (and the common stock issuable from time to time upon conversion of the Series X Preferred Stock) pursuant to this prospectus
supplement and the accompanying prospectus. The Series X Preferred Stock and the common stock will be issued separately. The shares of Series X Preferred Stock and common stock are being sold directly to Biotechnology Value Fund, L.P.
(BVF) which is an existing stockholder of the Company, and certain entities affiliated with BVF, pursuant to a subscription agreement dated as of February 10, 2017.
Our common stock is listed on the NASDAQ Global Market under the symbol XOMA. On February 10, 2017, the last reported sale price for our
common stock on the NASDAQ Global Market was $4.03 per share. There is no established public trading market for the Series X Preferred Stock, and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Series
X Preferred Stock on any national securities exchange or other nationally recognized trading system.
Each share of Series X Preferred Stock is
convertible into 1,000 shares of our common stock at any time at the option of the holder provided that each holder will be prohibited from converting Series X Preferred Stock into our common stock if, as a result of such conversion, the holder,
together with its affiliates, would own more than a
pre-set
conversion blocker threshold, which will initially be set at 19.99% of the total number shares of our common stock then issued and outstanding. In
the event of our liquidation, dissolution or winding up, holders of our Series X Preferred Stock will participate pari passu with any distribution of proceeds to holders of our common stock. Shares of Series X Preferred Stock will
generally have no voting rights, except as required by law and except that the consent of the holders of the outstanding Series X Preferred Stock will be required to amend the terms of the Series X Preferred Stock and to approve certain corporate
actions.
The Series X Preferred Stock and common stock are being offered directly to investors without a placement agent or underwriter.
We are not paying underwriting discounts or commissions in connection with the offering. We estimate that the gross proceeds to us before expenses will be
approximately $25,000,000. We estimate the total expenses of this offering will be approximately $110,000.
Delivery of the Series X Preferred Stock and common stock is expected to be made on or about February 15, 2017.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement and the accompanying prospectus are part of the registration statement on Form
S-3
we filed
with the Commission under the Securities Act and do not contain all the information set forth or incorporated by reference in the registration statement. Whenever a reference is made in this prospectus supplement or the accompanying prospectus to
any of our contracts,
S-12
agreements or other documents, the reference may not be complete and you should refer to the exhibits that are a part of the registration statement or the exhibits to the reports or other
documents incorporated by reference into this prospectus supplement and the accompanying prospectus for a copy of such contract, agreement or other document. Because we are subject to the information and reporting requirements of the Exchange Act,
we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SECs website at http://www.sec.gov. You may also read and copy any
document we file at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the operation of the Public Reference Room.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This prospectus supplement is part of a registration statement on Form
S-3.
The Commission allows this filing to
incorporate by reference information that we previously have filed with the Commission. This means we can disclose important information to you by referring you to other documents that we have filed with the Commission. The information
that is incorporated by reference is considered part of this prospectus supplement, and information that we file later will automatically update and may supersede this information. For further information about our company and the securities being
offered, you should refer to the registration statement and the following documents that are incorporated by reference:
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our Annual Report on
Form 10-K
for the year ended December 31, 2015, filed with the Commission on March 9, 2016;
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our Quarterly Reports on Form
10-Q
for the quarterly periods ended March 31, 2016, June 30, 2016 and September 30, 2016 filed with the Commission May 4, 2016,
August 3, 2016 and November 11, 2016, respectively;
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our Current Reports on Form
8-K
filed with the Commission on March 18, 2016, March 22, 2016, May 23, 2016, September 2, 2016, September 19, 2016,
October 18, 2016, November 2, 2016, November 14, 2016, December 22, 2016, January 17, 2017 and February 13, 2017;
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the portions of our Definitive Proxy Statement on Schedule 14A filed with the Commission on April 8, 2016 that are incorporated by reference into our Annual Report on Form
10-K
for the fiscal year ended December 31, 2015; and
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the description of our capital stock included under the caption Description of Capital Stock in the prospectus dated December 16, 2011, which was filed on December 19, 2011, and is part of our
registration statement on Form
S-4/A
filed on December 13, 2011 (registration no.
333-177165),
including any amendment or report for the purpose of updating such
description.
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In addition, all documents filed by us under Sections 13(a), 13(a), 14 or 15(d) of the Exchange Act of 1934, as amended (the
Exchange Act) (excluding, unless otherwise provided in this prospectus or in the applicable document, documents not deemed filed with the SEC and information furnished pursuant to Item 2.02 and Item 7.01 on any Current Report
on Form
8-K
or certain exhibits furnished pursuant to Item 9.01 of Form
8-K),
after the date of this prospectus supplement but before the termination of the offering of
the common stock covered by this prospectus supplement, are hereby incorporated by reference herein. We have not authorized anyone to provide you with any different or additional information other than that contained in or incorporated by reference
into this prospectus supplement and the accompanying prospectus. We take no responsibility for, and can provide no assurance as to the reliability of, any information that others may provide.
Any statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus supplement or the accompanying prospectus
will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any other subsequently filed document that is deemed to be incorporated by reference
into this prospectus supplement modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.
The documents incorporated by reference into this prospectus supplement and the accompanying prospectus are available from us upon request. We will provide a
copy of any and all of the documents incorporated by reference (excluding exhibits, unless the exhibits are specifically incorporated), without charge, upon written or oral request. Requests for any of these documents should be directed to:
S-13
XOMA Corporation
2910 Seventh Street
Berkeley,
California 94710
(510)
204-7200
Attn: Chief Financial Officer
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ANNEX A
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this
Agreement
) is dated as of February 10, 2017 (the
Effective Date
),
among XOMA Corporation, a Delaware corporation (the
Company
), and each purchaser identified on the signature pages hereto (each, including its permitted successors and assigns, a
Purchaser
and collectively the
Purchasers
).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective
registration statement filed pursuant to the Securities Act (as defined below), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, shares of Series X
Preferred Stock and Common Stock (each as defined below), as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of
the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:
SECTION 1
DEFINITIONS
1.1
Definitions
. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings set forth
in this
Section
1.1
:
Affiliate
means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control with a Person (as such terms are used in and construed under Rule 405 of the Securities Act). With respect to a Purchaser, any investment fund or managed account that
is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.
Amended and Restated Certificate of Incorporation
means the Companys Amended and Restated Certificate of
Incorporation, as amended from time to time.
Closing
means the closing of the purchase and sale of the Securities on
the Closing Date pursuant to
Section
2.1
of this Agreement.
Closing Date
means the third
Trading Day after the date hereof.
Commission
means the U.S. Securities and Exchange Commission.
Common Stock
means the common stock of the Company, $0.0075 par value per share, and any other class of securities into
which such securities may hereafter be reclassified or changed into.
S-A-1
Common Stock Equivalents
means any securities of the Company or the
Subsidiaries which would entitle the holder thereof, pursuant to the terms of such securities, to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at
any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
Exchange Act
means the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder.
Exempt Issuance
means the issuance of (i) shares of Common Stock, options to purchase Common Stock and other
securities convertible into or exchangeable for Common Stock pursuant to any plan or agreement, the issuance of securities under which would be eligible to be registered on Form
S-8
under the Securities Act
(regardless of whether such issuance is actually registered on Form
S-8),
(ii) issuances to financial institutions, equipment lessors, licensees, licensors, vendors, service providers, landlords, brokers or
similar entities in connection with commercial credit arrangements, equipment financings, license or partnering arrangements, commercial services, commercial property lease transactions or similar transactions, the principal purpose of which is
other than the raising of capital through the sale of equity securities of the Company and the terms of which are approved by the Board of Directors, (iii) securities issued in connection with the exercise or conversion of any Common Stock
Equivalent that is outstanding as of the date of this Agreement or that is subsequently issued as an Exempt Issuance, and (iv) stock issued or issuable pursuant to any rights, agreements or Material Contracts outstanding as of the date of this
Agreement.
Fundamental Transaction
means (a) the Company effects any merger or consolidation of the Company with
or into another person whereby the Company is not the surviving entity, (b) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (c) any tender offer or exchange
offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange a material portion of the Companys shares of Common Stock for other securities, cash or property, or
(d) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property;
provided
,
however
, that for the purposes of clause (b) above, a Fundamental Transaction shall not include the Company entering into a license or other agreement that licenses or transfers any intellectual property in an arms
length negotiated transaction so long as the Company and its subsidiaries continue to have bona fide, substantial and continuing business operations and activities after such transfer, license or other agreement is entered into;
provided
,
further
, however, that a Fundamental Transaction shall not include a reverse stock split with respect to the Common Stock.
Indebtedness
means (a) any liabilities for borrowed money or amounts owed in excess of $250,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Companys balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (c) the present value of any lease payments in excess of $250,000
due under leases required to be capitalized in accordance with GAAP.
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Investment Company Act
means the Investment Company Act of 1940, as amended.
Lead Investor
means Biotechnology Value Fund, L.P.
Liens
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction
(other than, in the case of the Securities, restrictions provided in the Transaction Documents or as otherwise agreed or imposed by a Purchaser).
Material Adverse Effect
means any material adverse effect on (a) the enforceability of any Transaction Document,
(b) the results of operations, assets, business or financial condition of the Company and its Subsidiaries, taken as a whole, or (c) the Companys ability to perform in any material respect on a timely basis its obligations under any
Transaction Document to be performed as of the date of determination, other than any such change, effect, event or circumstance, including, without limitation, any change in the stock price or trading volume of the Common Stock, that resulted
directly or indirectly from (i) any change in the United States or foreign economies or securities or financial markets in general that does not have a disproportionate effect on the Company and its Subsidiaries, (ii) any change that
generally affects the industry in which the Company and its Subsidiaries operate that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, (iii) any change arising in connection with natural disasters,
hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such natural disasters, hostilities, acts of war, sabotage or terrorism or military actions existing as of the date hereof,
(iv) any action taken by the Purchaser, its Affiliates or its or their permitted successors and assigns with respect to the transactions contemplated by this Agreement, (v) the effect of any changes in applicable laws or accounting rules
that does not have a disproportionate effect on the Company and its Subsidiaries, taken as a whole, and (vi) any change resulting from compliance with the terms of this Agreement or the consummation of the transactions contemplated by this
Agreement.
Per Share Purchase Price
means $4.03 per share of Common Stock and $4,030 per share of Series X Preferred
Stock.
Person
means an individual or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
Proceeding
means any action, claim, suit, investigation or proceeding whether commenced or threatened.
Prospectus
means the final prospectus filed for the Registration Statement, including the documents incorporated by
reference in the Registration Statement, including the documents incorporated by reference in such final prospectus.
Prospectus
Supplement
means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is delivered by the Company to each Purchaser prior to the execution and delivery of this Agreement, including the documents
incorporated by reference therein, and that is filed with the Commission.
S-A-3
Registration Statement
means the effective registration statement on Form
S-3
(Commission File
No. 333-201882)
filed by the Company with the Commission pursuant to the Securities Act for the registration of the Securities, as such Registration
Statement may be amended and supplemented from time to time (including pursuant to Rule 462(b) of the Securities Act), including all documents filed as part thereof or incorporated by reference therein, and including all information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430B of the Securities Act.
Required Minimum
means, as of
any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable pursuant to the Transaction Documents, including all Underlying Shares, and without regard to any Blocker (as defined in
Section
4.7
).
Rule 144
means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.
Securities
means the shares of the Common Stock and Series X Preferred Stock issued hereunder.
Securities Act
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Series X Preferred Stock
means the Series X Convertible Preferred Stock of the Company, $0.05 par value per share, and any
other class of securities into which such securities may hereafter be reclassified, converted or changed into, including the Common Stock.
Series X Preferred Stock Certificate of Designation
means the Certificate of Designation of the Company, attached as
Exhibit A
to this Agreement, setting forth the rights preferences and privileges of the Series X Preferred Stock.
Short Sales
means all short sales as defined in Rule 200 of Regulation SHO of the Exchange Act, but shall be
deemed to not include the location and/or reservation of borrowable shares of Common Stock.
Subscription Amount
means,
as to each Purchaser, the aggregate amount to be paid for the Common Stock and Series X Preferred Stock, respectively, purchased hereunder as specified below such Purchasers name on the signature page of this Agreement and next to the heading
Subscription Amount, in United States dollars and in immediately available funds.
Trading Day
means a day
on which the Common Stock is traded on a Trading Market.
Trading Market
means the following markets or exchanges on
which (and if) the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT; The NASDAQ Capital Market; The NASDAQ Global Market; The NASDAQ Global Select Market; or the New York Stock Exchange.
S-A-4
Transaction Documents
means this Agreement, the Series X Preferred Stock
Certificate of Designation and any other documents or agreements executed and delivered to the Purchasers in connection with the transactions contemplated hereunder.
Underlying Shares
means the shares of Common Stock issued and issuable upon conversion or exercise of the Series X
Preferred Stock and any other shares of Common Stock issuable to the Purchasers in connection with or pursuant to the Transaction Documents.
SECTION 2
PURCHASE AND
SALE
2.1
Closing
. At the Closing, upon the terms set forth herein, the Company shall sell, and the Purchasers shall
purchase, in the aggregate, severally and not jointly: (a) $20,162,090, in the aggregate, of Series X Preferred Stock, with each Purchaser purchasing Series X Preferred Stock with an aggregate purchase price equal to such Purchasers applicable
Subscription Amount, and (b) $4,836,000, in the aggregate, of Common Stock, with each Purchaser purchasing Common Stock with an aggregate purchase price equal to such Purchasers applicable Subscription Amount. The aggregate number of
shares of Series X Preferred Stock sold hereunder shall be 5,003 and the aggregate number of shares of Common Stock sold hereunder shall be 1,200,000. Each Purchaser shall deliver to the Company via wire transfer or certified check immediately
available funds equal to its aggregate Subscription Amount and the Company shall deliver to each Purchaser its respective Securities as determined pursuant to
Section
2.2
of this Agreement and the other items set forth in
Section
2.2
of this Agreement deliverable at the Closing on the Closing Date. The Closing shall occur at 10:00 a.m. (Pacific Time) on the third Trading Day after the Effective Date, at the offices of Gibson,
Dunn & Crutcher, LLP, 555 Mission Street, Suite 3000, San Francisco, California or such other time and location as the parties shall mutually agree.
2.2
Deliveries; Closing Conditions
.
i. Prior to the Closing, the Company shall have adopted and filed with the Secretary of State of the State of Delaware the Series X Preferred
Stock Certificate of Designation, and the Series X Preferred Stock Certificate of Designation shall be in full force and effect.
ii. At
the Closing, the Company shall deliver or cause to be delivered to each Purchaser evidence that the number of Securities equal to such Purchasers Subscription Amount divided by the applicable Per Share Purchase Price have been recorded in the
name of such Purchaser as beneficial owner on the records of the Companys transfer agent, Wells Fargo Shareowner Services.
iii. At
the Closing, each Purchaser shall deliver or cause to be delivered to the Company such Purchasers Subscription Amount by wire transfer to the account as specified in writing by the Company.
S-A-5
iv. The respective obligations of the Company, on the one hand, and the Purchasers, on the other
hand, hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material
respects on the Closing Date of the representations and warranties contained herein (unless made as of a specified date therein) of the Company (with respect to the obligations of the Purchasers) and the Purchasers (with respect to the obligations
of the Company);
(ii) all obligations, covenants and agreements of the Company (with respect to the obligations of the Purchasers) and
the Purchasers (with respect to the obligations of the Company) required to be performed at or prior to the Closing Date shall have been performed in all material respects;
(iii) the delivery by the Company (with respect to the obligations of the Purchasers) and the Purchasers (with respect to the obligations of
the Company) of the items set forth in
Sections 2.2(ii)
and
2.2(iii)
of this Agreement;
(iv) there shall have been no
Material Adverse Effect with respect to the Company since the date hereof; and
(v) from the date hereof to the Closing Date, trading in
the Common Stock shall not have been suspended on the Companys principal U.S. Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades are reported by such service, on any U.S. Trading Market.
SECTION 3
REPRESENTATIONS AND WARRANTIES
3.1
Representations and Warranties of the Company
. Except as set forth in the SEC Reports, which shall qualify any representation
or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes the following representations and warranties set forth below to each Purchaser as of the date hereof and as of the Closing Date:
i.
Subsidiaries
. Each of the direct and indirect significant subsidiaries (each, a
Subsidiary
) of the
Company are set forth on Exhibit 21.1 to the Companys most recently filed Annual Report on Form
10-K
for the fiscal year ended December 31, 2015. Except as disclosed in the SEC Reports, the
Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, except for such Liens as would not reasonably be expected to result in a Material Adverse Effect, and all the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable
and free of preemptive and similar rights to subscribe for or purchase securities of the
Company.
S-A-6
ii.
Organization and Qualification
. The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have or reasonably be expected to result in a Material Adverse Effect and no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification except where the revocation, limitation or curtailment could not have or reasonably be expected to
result in a Material Adverse Effect.
iii.
Authorization; Enforcement
. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to
which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and except as contemplated by this Agreement, no
further corporate consent or action is required to be obtained by the Company, its Board of Directors or its shareholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the legally valid and binding obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors rights generally, (ii) as limited
by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
iv.
No Conflicts
. The execution, delivery and performance of the Transaction Documents to which it is a party by the Company, the
issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) after giving effect to the Required Approvals, conflict with or violate any provision of
the Companys or any Subsidiarys certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) after giving effect to the Required Approvals, conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected, except in the case of each of
clauses (ii)
and
(iii)
only, such as would not have or reasonably be expected to result in a Material Adverse Effect.
S-A-7
v.
Filings, Consents and Approvals
. Except as disclosed in the SEC Reports and except
where the failure to obtain any such consent, waiver, authorization or order, give any such notice or make any such filing or registration would not reasonably be expected to result in a Material Adverse Effect, the Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person or other entity of any kind, including, without
limitation, any Trading Market in connection with the execution, delivery and performance by the Company of the Transaction Documents, except for any filings required to be made under applicable federal and state securities laws and the listing
applications with respect to the listing of the Securities required pursuant to
Section
4.6
(collectively, the
Required Approvals
).
vi.
Issuance of the Securities
. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
non-assessable,
free and clear of all Liens imposed by the Company. The Securities are being issued pursuant to the Registration
Statement and the issuance of the Securities will be registered by the Company pursuant to the Securities Act. The Company has prepared and filed with the Commission in accordance with the provisions of the Securities Act the Registration
Statement. The Registration Statement is effective pursuant to the Securities Act and available for the issuance of the Securities thereunder and the Company has not received any written notice that the Commission has issued or intends to issue
a stop-order or other order with respect to the Registration Statement or the Prospectus or that the Commission otherwise has (i) suspended or withdrawn the effectiveness of the Registration Statement or (ii) issued any order preventing or
suspending the use of the Prospectus, in either case, either temporarily or permanently or intends or has threatened in writing to do so. The Plan of Distribution section of the Registration Statement permits the issuance of the
Securities hereunder. Upon receipt of the Securities, the Purchasers will have good and marketable title to such Securities, the Common Stock will be immediately freely tradable on each Trading Market, and upon issuance in compliance with the
terms of the Transaction Documents, the Underlying Shares will be immediately freely tradable on each Trading Market. At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at each
deemed effective date thereof pursuant to Rule 430B(f)(2) of the Securities Act, the Registration Statement and any amendments thereto complied and will comply in all material respects with the requirements of the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at
the time the Prospectus or any amendment or supplement thereto was issued and as of the Closing Date, complied and will comply in all material respects with the requirements of the Securities Act and did not and will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company meets all of the requirements for the use of a
registration statement on
Form S-3
(
Form
S-3
) pursuant to the Securities Act for the offering and sale of the Securities
S-A-8
contemplated by this Agreement, and the Commission has not notified the Company of any objection to the use of the form of the Registration Statement pursuant to Rule 401(g)(1) of the
Securities Act. The Registration Statement, as of its effective date, meets the requirements set forth in Rule 415(a)(1)(x) pursuant to the Securities Act. At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act) relating to any of the Securities, the Company was not and is not an Ineligible Issuer (as defined in Rule 405 of the
Securities Act). The offering of the Securities has been registered with the Commission on Form
S-3
pursuant to the Securities Act pursuant to the standards for Form
S-3
and the Securities are being offered pursuant to Rule 415 of the Securities Act.
vii.
Capitalization
. As of February 9, 2017, there were 6,320,882 shares of Common Stock issued and outstanding and no shares of
preferred stock outstanding. Except as disclosed in the SEC Reports, the Company has not issued any capital stock since its most recently filed periodic report pursuant to the Exchange Act, other than pursuant to a certain at the market sales
agreement with Cowen & Company, LLC, the exercise of stock options pursuant to the Companys equity incentive plans, the issuance of shares of Common Stock to employees, directors and consultants pursuant to the Companys equity
incentive plans and stock purchase plans, and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report pursuant to the Exchange Act. No Person has any right of
first refusal, preemptive right, right of participation or any similar right to participate in the transactions contemplated by the Transaction Documents. Except for various outstanding series of convertible debt, options and warrants described
in the SEC Reports, there are no outstanding series of convertible stock, options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person other than the Purchasers, and will not
result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such Securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and
non-assessable,
have been issued in compliance with all federal and state securities laws, and none of such outstanding shares were issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Other than the Required Approvals, no further approval or authorization after the date hereof of any shareholder, the Board of Directors of the Company or others is required for the issuance and sale of the
Securities. Except as disclosed in the SEC Reports or as contemplated by this Agreement or as otherwise agreed by a Purchaser, there are no shareholder agreements, voting agreements or other similar agreements with respect to the Companys
capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Companys shareholders.
viii.
SEC Reports; Financial Statements
. The Company has complied in all material respects with requirements to file all reports,
schedules, forms, statements and other documents required to be filed by it pursuant to the Securities Act and the Exchange Act, including, without limitation, pursuant to Section 13(a) or 15(d) thereof, for the two years
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preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the
SEC Reports
) on a timely basis or has received a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, the
rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to it, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC
Reports, together with the related notes and schedules thereto, comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission and all other applicable rules and regulations with respect
thereto as in effect at the time of filing. Such financial statements, together with the related notes and schedules, have been prepared in accordance with United States generally accepted accounting principles (
GAAP
) applied on a
consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to
normal, immaterial,
year-end
audit adjustments.
ix.
Material Changes; Undisclosed Events,
Liabilities or Developments
. Except as disclosed in the SEC Reports or as otherwise contemplated by this Agreement, since the date of the latest audited financial statements included within the SEC Reports, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Companys financial statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, and (iv) the Company has not issued any equity securities to any officer, director or Affiliate except pursuant to existing Company equity incentive and incentive
compensation plans. Except for the issuance of the Securities contemplated by this Agreement, or as set forth in the SEC Reports, or as otherwise disclosed to the Purchasers, no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made
that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.
x.
Litigation
. Except as disclosed in the SEC Reports, there is no Proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign)
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(collectively, an
Action
) which (i) adversely affects or challenges the legality, legal validity or enforceability of any of the Transaction Documents or the Securities or
(ii) would, if there were an unfavorable decision, reasonably be expected to result in a Material Adverse Effect. Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary, nor any director or officer thereof, is or
has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. Except as disclosed in the SEC Reports, there has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any Subsidiary pursuant to the Exchange Act or the Securities Act.
xi.
Labor Relations
. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company which would reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of
the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or
non-competition
agreement, or any
other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The
Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to
be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
xii.
Compliance
. Except as disclosed in the SEC Reports, neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or
(iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the
environment, except as disclosed herein and except in each case as would not reasonably be expected to have a Material Adverse Effect.
xiii.
Regulatory Permits
. Except as disclosed in the SEC Reports, (i) the Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such
permits would not have or reasonably be expected to result in a Material Adverse Effect (
Material Permits
), and (ii) neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
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xiv.
Title to Assets
. Except as disclosed in the SEC Reports, the Company and the
Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens which do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties or for taxes that are being contested in good faith and by appropriate
proceedings, and except for Liens which would not reasonably be expected to result in a Material Adverse Effect. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance.
xv.
Patents and Trademarks
. To its knowledge,
the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other similar intellectual property
rights currently owned by or licensed to them in connection with the business currently operated by them that are necessary for use in the conduct of their respective businesses as described in the SEC Reports, except where the failure to so have
would not reasonably be expected to have a Material Adverse Effect (collectively, the
Intellectual Property Rights
). Neither the Company nor any Subsidiary has received any written notice that any of the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person, except for such as would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights of the Company or any Subsidiaries.
xvi.
Insurance
. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. To the Companys knowledge, such
insurance contracts are accurate and complete. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business without a significant increase in cost, except for such renewals or failures to obtain similar coverage from similar insurers as would not reasonably be expected to have a Material
Adverse Effect or as affect the industry generally.
xvii.
Transactions With Affiliates and Employees
. None of the officers or
directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors) that is
required to be disclosed and is not disclosed in the SEC Reports, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
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knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, other than for
(i) payment of salary, consulting fees or financial advisory fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including restricted stock programs and
stock option agreements under any stock option plan of the Company.
xviii.
Sarbanes-Oxley
. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002, as amended, which are applicable to it as of the date hereof.
xix.
Certain Fees
. Other than as disclosed in the Prospectus Supplement, no brokerage or finders fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.
xx.
Investment Company
.
The Company is not, and immediately after receipt of payment for the Securities will not be, an investment company within the meaning of the Investment Company Act.
xxi.
Registration Rights
. No Person has any right to cause the Company to effect the registration pursuant to the Securities Act of
any securities of the Company, which rights will interfere with the transactions contemplated hereunder.
xxii.
Listing and Maintenance
Requirements
. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of
the Common Stock pursuant to the Exchange Act nor has the Company received any notification that the Commission is currently contemplating terminating such registration. The Company is currently in compliance with all applicable NASDAQ listing
and maintenance requirements and, except as disclosed in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from NASDAQ to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market.
xxiii.
Application of Takeover Protections
. The Company and its Board of
Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement), or other similar
anti-takeover
provision pursuant to the Amended and Restated Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers
as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights pursuant to the Transaction Documents, including without limitation, as a result of the Companys issuance of the Securities and the
Purchasers ownership of the Securities. All such anti-takeover provisions in effect as of the Effective Date are summarized generally in the Prospectus under the caption,
Description of Capital Stock Anti-Takeover Effects of
Our Charter Documents and Some Provisions of Delaware Law
.
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xxiv.
No Integrated Offering
. Assuming the accuracy of the Purchasers
representations and warranties set forth in
Section
3.2
of this Agreement, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales
of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company in a manner that would require shareholder approval pursuant to
the rules of any Trading Market on which any of the securities of the Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of any Trading Market.
xxv.
Indebtedness
. The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company
or any Subsidiary, or for which the Company or any Subsidiary has commitments. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness disclosed to the Purchasers except for any such default that would not have or
reasonably be expected to result in a Material Adverse Effect.
xxvi.
Tax Status
. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse Effect and except as disclosed in the SEC Reports, the Company and each Subsidiary have filed (or requested valid extensions thereof) all necessary federal, state and
foreign income and franchise tax returns (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and have paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.
xxvii.
Foreign Corrupt Practices.
Neither the Company, nor to the knowledge of the Company, any agent or other person acting on
behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign
or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
xxviii.
Accountants
. Ernst & Young LLP (i) to the knowledge of the Company, is an independent public accountant as
required by the Exchange Act and is an independent registered public accounting firm within the meaning of the Sarbanes-Oxley Act of 2002, as amended, as required by the rules of the Public Company Accounting Oversight Board and (ii) expressed
its opinion with respect to the audited financial statements and related schedules as of December 31, 2014 and 2015 and for fiscal years 2013, 2014 and 2015 included in the Companys Annual Report on Form
10-K
for the fiscal year ended December 31, 2015.
xxix.
Acknowledgment Regarding
Purchasers Purchase of Securities
. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arms length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a
S-A-14
financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers purchase of the Securities. The Company further
represents to each Purchaser that the Companys decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its
representatives.
xxx.
Regulation
M Compliance
. The Company has not, and to its knowledge no one acting on
its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the
Company.
xxxi.
Shell Company Status
. The Company is not, and has never been, an issuer identified in Rule 144(i)(1) of the
Securities Act.
xxxii.
Office of Foreign Assets Control
. Neither the Company nor any Subsidiary nor, to the Companys
knowledge, any director, officer, agent, employee or Affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.
xxxiii.
Money Laundering
. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the
Money Laundering Laws
), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary, threatened.
xxxiv.
Material Contracts
. All material contracts
as defined under Item 601(b)(10) of Regulation
S-K
that were required to be filed as exhibits to the SEC Reports under Item 601 of Regulation
S-K
(collectively, the
Material Contracts
) to which the Company is a party, or the property or assets of the Company is subject, have been filed as exhibits to the SEC Reports. All Material Contracts are legally valid and enforceable against the Company
in accordance with their respective terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law. The Company is not in breach of or default under any of the Material Contracts, and to the Companys knowledge, no other party to a Material Contract is in breach of or default under such Material Contract, except in each case, for
such breaches or defaults as would not reasonably be expected to have a Material Adverse Effect. The Company has not received a
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notice of termination or material modification nor is the Company otherwise aware of any threats to terminate or materially modify any of the Material Contracts.
Schedule
3.1(
ll
)
, previously provided to the Purchasers, sets forth a complete and accurate list of all material licenses, joint ventures and other partnership agreements to which the Company is a party and involving any drug or drug
candidate (the
Assets
).
xxxv.
Disclosure Controls and Procedures
. Except as disclosed in the SEC Reports,
the Company has established and maintains disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e)
and
15d-15(e))
that are effective in all
material respects to ensure that material information relating to the Company, including any consolidated Subsidiaries, is made known to its principal executive officer and principal financial officer by others within those entities. The
Companys certifying officers have evaluated the effectiveness of the Companys disclosure controls and procedures as of the end of the period covered by the most recently filed quarterly or annual periodic report under the Exchange Act
(such date, the
Evaluation Date
). The Company presented in its most recently filed quarterly or annual periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Companys internal control over financial reporting (as such term is defined in Exchange Act
Rules
13a-15(f)
and
15d-15(f))
or, to the Companys knowledge, in other factors that could significantly affect the Companys internal control over financial
reporting.
xxxvi.
Accounting Controls
. Except as disclosed in the SEC Reports, the Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with managements general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with managements general or specific authorization, and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
xxxvii.
Placement Agent
. The Company has taken no action that would give rise to any claim by any Person for brokerage commissions,
placement agents fees or similar payments relating to this Agreement or the transactions contemplated hereby.
xxxviii.
No
Disagreements with Accountants
. The Company is not presently under any Advisement (as defined below) from the independent registered public accounting firm presently employed by the Company and the Company is current with respect to any
fees owed to such firm that could affect the Companys ability to perform any of its obligations under this Agreement.
Advisement
means (i) the accountants having advised the Company that the internal controls
necessary for the Company to develop reliable financial statements do not exist, (ii) the accountants having advised the Company that information has come to the accountants attention that has led it to no longer be able to rely on
managements representations, or that has made it unwilling to be associated with the financial statements prepared by management, (iii) the accountants having advised the Company of the need to expand significantly the scope of its
audit, or (iv) the accountants having advised the Company that information has come to the accountants attention that it has concluded materially impacts the fairness or reliability of either:
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(A) a previously issued audit report or the underlying financial statements, or (B) the financial statements issued or to be issued covering the fiscal period(s) subsequent to the date of
the most recent financial statements covered by an audit report (including information that, unless resolved to the accountants satisfaction, would prevent it from rendering an unqualified audit report on those financial statements).
3.2
Representations, Warranties and Covenants of the Purchasers
. Each Purchaser, for itself and for no other Purchaser, hereby
represents, warrants and covenants as of the execution and delivery of this Agreement on the date first above written in this Agreement to the Company as follows:
i.
Organization; Authority
. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors rights generally,
(ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
ii.
No Intent to Take Over
. Such Purchaser is not a party to any voting agreements or similar arrangements with respect to the
Securities. Except as expressly disclosed in a Schedule 13D or Schedule 13G (or amendments thereto) filed by such Purchaser with the Commission with respect to the beneficial ownership of the Companys Common Stock, such Purchaser is not a
member of a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, voting or disposing of the Securities. Each Purchaser represents and warrants that it (i) is not, and has no present intention to
become, a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any Person as to how such Person, if serving as a director or if elected as a director of the Company, will act or vote
on any issue or question (a
Voting Commitment
) or (B) any Voting Commitment that could limit or interfere with such Persons ability to comply, if serving as or elected as a director of the Company, with such
Persons fiduciary duties under applicable law; (ii) is not, and has no present intention to become, a party to any agreement, arrangement or understanding with any Person other than the corporation with respect to any direct or indirect
compensation, reimbursement or indemnification in connection with service or action as a director of the Company. Such Purchaser has no present actual intent to seek to effect, or to assist others in effecting, a hostile acquisition of the Company.
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iii.
Short Sales and Confidentiality Prior to the Date Hereof
. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that such Purchaser first learned of the specific purchase and sale transaction being effected pursuant to this Agreement and ending immediately prior to the execution and
delivery hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchasers assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchasers assets, the representation set forth above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement and to its counsel, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with the transaction expressly contemplated by this Agreement (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall
constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.
iv.
Lock Up
. The Purchaser agrees that for 180 days following the Closing, neither the Purchaser nor any of its Affiliates shall offer,
sell, contract to sell, pledge, grant any option to purchase, make any Short Sale or otherwise dispose of in any manner, either directly or indirectly, any Securities purchased under this Agreement or any securities of the Company currently owned by
the Purchaser, other than transfers of securities between and among the Purchaser and any one or more of its Affiliates.
v.
No
Government Review
. Such Purchaser understands that no U.S. federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities purchased hereunder.
vi.
Beneficial Ownership
. Immediately following such Purchasers purchase of Securities hereunder, such Purchaser, together with
its Affiliates, will not beneficially own more than 19.99% of the Common Stock. For purposes hereof, beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage
ownership) shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
vii.
Interested Stockholders
. To the extent applicable, any Purchaser that is an Interested Stockholder (as such term is
defined in Section 203 of the General Corporation Law of the State of Delaware) represents and warrants that it has been an Interested Stockholder for at least three years prior to the date hereof.
viii.
Standstill
. The Purchaser agrees that during the 180 day period following the Closing, neither the Purchaser nor any of its
Affiliates shall take any of the following actions, provided that nothing herein shall interfere with the rights or duties of the BVF Designee to serve in his/her capacity as a member of the Board of Directors, and in such capacity, act in accord
with applicable fiduciary duties:
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(i) make any statement or proposal to any of the Companys stockholders regarding, or make
any public announcement, proposal or offer (including any solicitation of proxies as such terms are defined or used in Regulation 14A of the Exchange Act) with respect to, or otherwise solicit, seek or offer to effect
(including, for the avoidance of doubt, indirectly by means of communication with the press or media): (i) any business combination, merger, tender offer, exchange offer or similar transaction involving the Company or any of its subsidiaries,
(ii) any restructuring, recapitalization, liquidation or similar transaction involving the Company or any of its subsidiaries, or (iii) any acquisition of any of the Companys loans, debt securities, equity securities or all or
substantially all of the Companys assets, or rights or options to acquire interests in any of the foregoing;
(ii) instigate,
encourage or assist any third party (including forming a group, as defined in the Exchange Act, with any such third party) to do, or enter into any discussions or agreements with any third party with respect to, any of the actions set
forth in clause (i) above;
(iii) take any action which would reasonably be expected to require the Company or any of its Affiliates
to make a public announcement regarding any of the actions set forth in clause (i) above; or
(iv) acquire (or propose or agree to
acquire), of record or beneficially, by purchase or otherwise, any loans, equity securities or all or substantially all of the assets of the Company or any of its subsidiaries, or rights or options to acquire interests in any of the foregoing, but
excluding the acquisition of the Securities at the Closing and/or the conversion of any portion of the Series X Preferred Stock.
SECTION 4
OTHER
AGREEMENTS OF THE PARTIES
4.1
Integration
. After this transaction, the Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities such that the rules of the Trading Market would
require shareholder approval of this transaction prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.2
Securities Laws Disclosure; Publicity
. The Company shall: (a) issue a press release disclosing the material terms of the
transactions by no later than 8:30 a.m. (Eastern Time) the next Trading Day following the execution and delivery of this Agreement (the
Press Release
), and (b) by 5:30 p.m. (Eastern Time) on the fourth Trading Day following
the date hereof, file a Current Report on Form
8-K
disclosing the material terms of the transactions contemplated hereby and including the Transaction Documents as exhibits thereto (the
Form
8-K
). From and after the issuance of the Press Release, no Purchaser shall be in possession of any material,
non-public
information received from the Company, any of
its Subsidiaries or any of their respective officers, directors or employees that is not disclosed in the Press Release. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and, except as may be required by law,
S-A-19
neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or any Trading Market, without the prior written consent of such Purchaser, except (i) in the Press Release, (ii) the filing of this Agreement (including the signature pages hereto), the
Prospectus Supplement, the Press Release and the Form
8-K
with the Commission, and (iii) to the extent such disclosure is required by law or any Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure permitted under this sub clause (iii).
4.3
Non-Public
Information
. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it nor
any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material
non-public
information. Notwithstanding the
foregoing, to the extent the Company delivers any material,
non-public
information to a Purchaser without such Purchasers consent, the Company hereby covenants and agrees that such Purchaser shall not
have any duty of confidentiality with respect to, or a duty not to trade on the basis of, such material,
non-public
information. The Company understands and confirms that each Purchaser shall be relying
on the foregoing covenant in effecting transactions in securities of the Company.
4.4
Use of Proceeds
. The Company will use the
proceeds from the offering as described in the Prospectus Supplement.
4.5
Indemnification of Purchasers
. Subject to the
provisions of this
Section
4.5
, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling Persons
(each, a
Purchaser Party
) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable
attorneys fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser, or any of them or their respective Affiliates, by any shareholder of the Company who is not an Affiliate of such Purchaser or any governmental or
regulatory agency, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a material breach of such Purchasers representations, warranties or covenants of the Transaction Documents
or
S-A-20
any agreements or understandings such Purchaser may have with any such shareholder or any material violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to engage
separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the engagement thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate
counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Companys prior written consent, which shall not be unreasonably withheld or delayed
or (ii) to the extent, but only to the extent, that a loss, claim, damage or liability is attributable to any Purchaser Partys breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. To the extent that a Purchaser Party wishes to seek indemnification under this
Section
4.5
, such Purchaser Party must provide the Company with written notice asserting a
claim under this
Section
4.5
, with such notice to be provided within one year from the Closing. If a Purchaser Party fails to provide such written notice within this
one-year
period,
the Purchaser Party shall no longer be entitled to indemnification by the Company hereunder.
4.6
Reservation and Listing of
Securities
.
i. At all times from and after the Closing, the Company shall maintain a reserve from its duly authorized shares of Common
Stock for issuance pursuant to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents, but not less than the Required Minimum.
ii. If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum
on such date (such date, the
Authorized Share Failure
), then the Company shall promptly take all action necessary to increase the Companys authorized shares of Common Stock to an amount sufficient to allow the Company to
reserve and have available the Required Minimum as of such date. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than 90 days
after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders or conduct a consent solicitation for the approval of an increase in the number of authorized shares of Common Stock to have available the
Required Minimum
S-A-21
iii. The Company shall: (i) in the time and manner required by the principal Trading Market,
prepare and file with such Trading Market a Notification of Listing of Additional Shares (
LAS
) application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application,
(ii) provide to each Purchaser evidence of filing the LAS, (iii) use commercially reasonable efforts to maintain the listing of the Common Stock on a Trading Market, and (iv) receive written or oral confirmation from NASDAQ prior to
the Closing that it has completed its review of the LAS without raising any substantive objections to the offering and sale of the Securities. The Company further agrees that if the Company applies to have the Common Stock traded on any other
Trading Market, it will include in such application all of the Underlying Shares and will take such other action as is necessary to cause all of the Underlying Shares to be listed on such other Trading Market as promptly as possible. The
Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market, other than in connection with a Fundamental Transaction in which the Company is not the surviving entity or in which all
of the capital stock of the Company is acquired by an unaffiliated and unrelated Person, and will comply in all respects with the Companys reporting, filing and other obligations under the bylaws or rules of such Trading Market.
4.7
Appointment of Designee to Board of Directors
. Promptly after the Closing, the Board of Directors of the Company shall take such
actions as are necessary to appoint Matthew Perry (or another representative nominated by the Lead Investor and reasonably acceptable to the Company) (the
BVF Nominee
) to the Board of Directors of the Company and, subject to
confirmation of the BVF Nominees eligibility under NASDAQ rules to serve as a member of the Compensation Committee of the Board of Directors of the Company, appoint that BVF Nominee as a member of the Compensation Committee. The BVF
Nominees appointment shall be subject to reasonable confirmation that such nominee is not prohibited from such service pursuant to the applicable legal, regulatory and stock market requirements. For so long as the Lead Investor continues to
beneficially own in excess of 19.9% of the Companys outstanding Common Stock (with beneficial ownership to be determined without regard to conversion blockers, such as the Beneficial Ownership Limitation set forth in the Series X
Preferred Stock Certificate of Designation (a
Blocker
) as of the record date for such Annual Meeting of Stockholders ): (a) the Board of Directors of the Company shall consist of no more than seven members after the date of 2017
Annual Meeting of Stockholders, and (b), the Lead Investor shall have the right (but not the obligation) to nominate a single director for inclusion in the Companys proxy statement on Schedule 14A for use in soliciting proxies for each Annual
Meeting of Stockholders after the Effective Date, but only if the BVF Nominee is not already named in such proxy statement as a director nominee put forth by the Board of Directors for reelection at such meeting. Within 90 days following the
Closing, the Board of Directors shall undertake a review of its composition and compensation.
4.8
Preemptive Right
.
i. From the date hereof for so long as at least 50% of the authorized shares of the Series X Preferred Stock remain issued and outstanding,
upon any proposed issuance by the Company or any of its Subsidiaries of Common Stock, or Common Stock Equivalents for cash consideration, Indebtedness or a combination thereof, other than an Exempt Issuance (a
Subsequent
Financing
), the Purchasers shall have the right to participate in such Subsequent Financing up to its pro rata amount, calculated as its percentage equity ownership of the Companys outstanding equity (including the assumed conversion
of all outstanding Series X Preferred Stock into shares of Common Stock without regard to any Blockers) (the
Participation
S-A-22
Maximum
) on the same terms, conditions and price provided for in the Subsequent Financing (provided that if the Purchaser is limited or chooses to be limited in its ability to
purchase beyond a given level of beneficial ownership (e.g., due to applicable NASDAQ limits or due to a desire to stay below 10% beneficial ownership), then the Company shall instead offer the Purchaser the right to purchase a comparable security
with a Blocker and otherwise substantially similar economic rights and interests). Notwithstanding anything in this
Section
4.8
, in the event a Subsequent Financing is an offering registered under the Securities Act, the
Company shall offer the Purchasers the same right to participate in such registered offering (up to its pro rata amount) only when it is lawful for the Company to do so.
ii. Subject to compliance with any applicable laws, at least three Trading Days prior to the closing of the Subsequent Financing, the Company
shall deliver to the Purchasers a written notice of its intention to effect a Subsequent Financing
(
Pre-Notice
), which
Pre-Notice
shall inquire
with the Purchasers whether it wishes to review the details of such proposed financing (such additional notice, a
Subsequent Financing Notice
). Upon the request of the Purchasers, and only upon a request by the Purchasers, for a
Subsequent Financing Notice, the Company shall promptly, but no later than one Trading Day after such request, deliver a Subsequent Financing Notice to the Purchasers. The requesting Purchasers shall be deemed to have acknowledged that the
Subsequent Financing Notice may contain material
non-public
information. Subject to compliance with any applicable laws, the Subsequent Financing Notice shall describe in reasonable detail the proposed terms
of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating
thereto as an attachment.
iii. If a Purchaser wishes to participate in such Subsequent Financing, it must provide written notice to the
Company by not later than 5:30 p.m. (Pacific Time) on the second Trading Day after the Purchasers have received the Subsequent Financing Notice, that such Purchaser is willing to participate in the Subsequent Financing and the amount of such
Purchasers participation. If the Company receives no such notice from a given Purchaser as of such second Trading Day, that Purchaser shall be deemed to have notified the Company that it does not elect to participate and the Company may effect
the Subsequent Financing on the terms and with the Persons (including any participating Purchasers) set forth in the Subsequent Financing Notice.
iv. If by 5:30 p.m. (Pacific Time) on the second Trading Day after the Purchasers have received the Subsequent Financing Notice, the Company
has received written notification by one or more Purchasers of their willingness to participate in the Subsequent Financing (or to cause its designees to participate), then the Company shall effect the Subsequent Financing with such Purchaser(s) (in
the amount indicated in its notification up to the Participation Maximum) and, with respect to the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice, subject to compliance
with any applicable laws.
v. The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will
again have the right of participation set forth above in this Section 4.8, if the Subsequent Financing subject to the initial Subsequent Financing Notice is amended in any material respect or is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within 30 days after the date of the initial Subsequent Financing Notice.
S-A-23
vi. Notwithstanding anything to the contrary in this
Section
4.8
and
unless otherwise agreed to by the Purchasers, the Company shall either confirm in writing to the Purchasers that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the
securities in the Subsequent Financing, in either case in such a manner such that the Purchasers will not be in possession of any material,
non-public
information, by the third Business Day following delivery
of the Subsequent Financing Notice. If by such third Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by
the Purchasers, such transaction shall be deemed to have been abandoned and the Purchasers shall not be deemed to be in possession of any material,
non-public
information with respect to the Company or any of
its Subsidiaries.
4.9
Equity Plan Increase
. At the 2017 Annual Meeting of Stockholders, the Company will seek stockholder approval
of an increase in the available pool of shares of Common Stock available for grant under the Companys Amended and Restated 2010 Long Term Incentive and Stock Award Plan (the
2010 Plan
), with the aggregate number of shares
authorized for issuance under all equity plans currently or previously maintained by the Company (including the 2010 Plan) and all outstanding equity awards to equal, in total, approximately 12.5% of the total number of issued and outstanding shares
of Common Stock immediately after the Closing (calculated on a pro forma basis, and assuming the conversion of all Series X Preferred Stock, without giving effect to any Blockers). No new issuances of awards shall be made under the 2010 Plan between
the Effective Date and the Closing Date. Following the Closing Date, any new awards grants to the Companys principal executive officer or principal financial officer issued under the 2010 Plan shall be made solely in accordance with the
conditions set forth in
Section 4(b)
of the Series X Certificate of Designations.
SECTION 5
MISCELLANEOUS
5.1
Termination
. This Agreement may be terminated by any Purchaser, as to such Purchasers obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the
other parties, if the Closing has not been consummated within ten calendar days from the Effective Date through no fault of such Purchaser;
provided
,
however
, that no such termination will affect the right of any party to sue for any
breach by the other party (or parties).
5.2
Fees and Expenses
. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of
this Agreement;
provided, however
, that the Company shall pay the Purchasers reasonable and documented legal fees and expenses incurred in connection with the transactions contemplated by this Agreement (including any post-Closing
expenses) up to an aggregate amount of $100,000. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.
S-A-24
5.3
Entire Agreement
. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such subject matter, which the parties acknowledge
have been merged into such documents, exhibits and schedules;
provided
that the foregoing shall not have any effect on any agreements that a Purchaser has entered into with the Company or any of its Subsidiaries prior to the date hereof
with respect to any prior investment made by such Purchaser in the Company.
5.4
Notices
. Any and all notices or other
communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective upon actual receipt via mail, courier or confirmed email by the party to whom such notice is required to be
given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.5
Amendments; Waivers
. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Lead Investor or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default
or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.6
Headings
. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
5.7
Successors and Assigns
. This Agreement shall be binding upon and inure to
the benefit of the parties and their permitted successors and assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). The
Purchasers may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company (other than by merger).
5.8
No Third-Party Beneficiaries
. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in
Section
4.5
of this Agreement.
5.9
Governing Law
. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its
S-A-25
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the State of Delaware. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
5.10
Execution
. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need
not sign the same counterpart. In the event that any signature on this Agreement or any instrument pursuant to
Section
5.5
hereof is delivered by facsimile transmission or by
e-mail
delivery of a .pdf format data file, such signature shall create a legally valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or .pdf signature page were an original thereof.
5.11
Severability
. If any
term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including
any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.12
Rescission and Withdrawal
Right
. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights.
S-A-26
5.13
Replacement of Securities
. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity or bond, if requested. The applicant for a new certificate or instrument under
such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.14
Remedies
. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of
damages, each of the Purchasers and the Company will be entitled to specific performance pursuant to the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
5.15
Independent Nature of Purchasers
Obligations and Rights
. The obligations of each Purchaser under any
Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or
non-performance
of the obligations of any
other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents.
5.16
Construction
. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments
hereto.
5.17
WAIVER OF JURY TRIAL
. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
* * *
S-A-27
IN WITNESS WHEREOF, the parties hereto have caused this Subscription Agreement to be duly
executed by their respective authorized signatories as of the date first indicated above.
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XOMA CORPORATION
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Address for Notice:
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/s/ Jim
Neal
Name : Jim Neal
Title: Chief Operating Officer
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2910 Seventh Street
Berkeley, CA 94710
Facsimile:
Email :
Attention:
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With a copy to (which shall not constitute notice):
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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
PURCHASER SIGNATURE PAGES FOLLOW
S-A-28
IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Biotechnology Value Fund, L.P.
Signature of Authorized Signatory of Purchaser
: /s/ Mark Lampert
Name of Authorized Signatory: Mark Lampert
Title of Authorized
Signatory: President of BVF, Inc., itself GP of BVF Partners L.P., itself GP of Biotechnology Value Fund, L.P.
Address for Notice of Purchaser:
One Sansome Street, 30
th
Floor
San Francisco, CA 94104
Attention: Spike Loy
With a copy to (which shall not constitute notice):
Gibson, Dunn & Crutcher, LLP
555 Mission Street, Suite
3000
San Francisco, CA 94105
Attn: Ryan A. Murr
Address for delivery of Securities for Purchaser (if not same as address for notice):
The Depository Trust Company
570 Washington Blvd 5
th
floor
Jersey City, NJ
07310
Attention: BNY Mellon/Branch Deposit Department for
the account of 478898
Subscription Amount Common Stock: $2,249,396.89
Shares of Common Stock: 558,163
Subscription Amount Series X
Preferred Stock: $9,321,390.00
Shares of Series X Preferred Stock: 2,313
S-A-29
IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Biotechnology Value Fund II, L.P.
Signature of Authorized Signatory of Purchaser
: /s/ Mark Lampert
Name of Authorized Signatory: Mark Lampert
Title of Authorized
Signatory: President of BVF, Inc., itself GP of BVF Partners L.P., itself GP of Biotechnology Value Fund II, L.P.
Address for Notice of Purchaser:
One Sansome Street, 30
th
Floor
San Francisco, CA 94104
Attention: Spike Loy
With a copy to (which shall not constitute notice):
Gibson, Dunn & Crutcher, LLP
555 Mission Street, Suite
3000
San Francisco, CA 94105
Attn: Ryan A. Murr
Address for delivery of Securities for Purchaser (if not same as address for notice):
The Depository Trust Company
570 Washington Blvd 5
th
floor
Jersey City, NJ
07310
Attention: BNY Mellon/Branch Deposit Department for
the account of 478899
Subscription Amount Common Stock: $1,467,496.29
Shares of Common Stock: 364,143
Subscription Amount Series X
Preferred Stock: $6,069,180.00
Shares of Series X Preferred Stock: 1,506
S-A-30
IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Biotechnology Value Trading Fund OS, L.P.
Signature of Authorized Signatory of Purchaser
: /s/ Mark Lampert
Name of Authorized Signatory: Mark Lampert
Title of Authorized
Signatory: President of BVF, Inc., itself GP of BVF Partners L.P., itself Sole Member of BVF Partners OS, Ltd., itself GP of Biotechnology Value Trading Fund OS, L.P.
Address for Notice of Purchaser:
One Sansome Street, 30
th
Floor
San Francisco, CA 94104
Attention: Spike Loy
With a copy to (which shall not
constitute notice):
Gibson, Dunn & Crutcher, LLP
555 Mission Street, Suite 3000
San Francisco, CA 94105
Attn: Ryan A. Murr
Address for delivery of Securities for
Purchaser (if not same as address for notice):
The Depository Trust Company
570 Washington Blvd 5
th
floor
Jersey City, NJ 07310
Attention: BNY Mellon/Branch Deposit Department for the account of 478087
Subscription Amount Common Stock: $391,655.55
Shares of Common
Stock: 97,185
Subscription Amount Series X Preferred Stock: $1,660,360.00
Shares of Series X Preferred Stock: 412
S-A-31
IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: Investment 10, LLC
Signature of Authorized Signatory of Purchaser
: /s/ Mark Lampert
Name of Authorized Signatory: Mark Lampert
Title of Authorized
Signatory: President of BVF, Inc., itself GP of BVF Partners L.P., itself the investment advisor of Investment 10, LLC.
Address for Notice of Purchaser:
One Sansome Street, 30
th
Floor
San Francisco, CA 94104
Attention: Spike Loy
With a copy to (which shall not constitute notice):
Gibson, Dunn & Crutcher, LLP
555 Mission Street, Suite
3000
San Francisco, CA 94105
Attn: Ryan A. Murr
Address for delivery of Securities for Purchaser (if not same as address for notice):
The Depository Trust Company
570 Washington Blvd 5
th
floor
Jersey City, NJ
07310
Attention: BNY Mellon/Branch Deposit Department for
the account of Investment 10, LLC
Subscription Amount Common Stock: $230,781.98
Shares of Common Stock: 57,266
Subscription Amount Series X
Preferred Stock: $975,260.00
Shares of Series X Preferred Stock: 242
S-A-32
IN WITNESS WHEREOF, the undersigned have caused this Subscription Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: MSI BVF SPV, L.L.C.
Signature of Authorized Signatory of Purchaser
: /s/ Mark Lampert
Name of Authorized Signatory: Mark Lampert
Title of Authorized
Signatory: President of BVF, Inc., itself GP of BVF Partners L.P., itself
attorney-in-fact
for MSI BVF SPV, L.L.C.
Address for Notice of Purchaser:
One Sansome Street, 30
th
Floor
San Francisco, CA 94104
Attention: Spike Loy
With a copy to (which shall not
constitute notice):
Gibson, Dunn & Crutcher, LLP
555 Mission Street, Suite 3000
San Francisco, CA 94105
Attn: Ryan A. Murr
Address for delivery of Securities for
Purchaser (if not same as address for notice):
BNP Paribas Prime Brokerage
787 Seventh Avenue, 8
th
Floor
New York, NY 10019
Telephone: (212)
471-6836
Attention: Jose Nevarez
Subscription Amount Common Stock: $496,669.29
Shares of Common
Stock: 123,243
Subscription Amount Series X Preferred Stock: $2,135,900.00
Shares of Series X Preferred Stock: 530
S-A-33
PROSPECTUS
$300,000,000
Common Stock
Preferred Stock
Debt
Securities
Warrants
We may, from
time to time, offer and sell up to $300,000,000 of any combination of our common stock, preferred stock, debt securities or warrants described in this prospectus, either individually or in combination with other securities, at prices and on terms
described in one or more supplements to this prospectus. We may also offer common stock or preferred stock upon conversion of debt securities, common stock upon conversion of preferred stock, or common stock, preferred stock or debt securities upon
the exercise of warrants. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings.
This prospectus describes some of the general terms that may apply to an offering of our securities. The specific terms and any other
information relating to a specific offering will be set forth in a post-effective amendment to the registration statement of which this prospectus is a part, in a supplement to this prospectus, or in a free writing prospectus or may be set forth in
one or more documents incorporated by reference in this prospectus. You should read this prospectus, the information incorporated by reference in this prospectus and any applicable prospectus supplement or free writing prospectus carefully before
you invest.
Securities may be sold by us to or through underwriters or dealers, directly to purchasers or through agents designated from
time to time. For additional information on the methods of sale, you should refer to the section entitled Plan of Distribution in this prospectus and in the applicable prospectus supplement. If any underwriters are involved in the sale
of any securities with respect to which this prospectus is being delivered, the names of such underwriters and any applicable discounts or commissions and over-allotment options will be set forth in a prospectus supplement. The price to the public
of such securities and the net proceeds we expect to receive from such sale will also be set forth in a prospectus supplement.
Our common
stock is listed on the NASDAQ Global Market under the symbol XOMA On February 3, 2015, the last reported sale price of our common stock on the NASDAQ Global Market was $3.51 per share.
Investing in our securities involves a high degree of risk. You should review carefully the risks and uncertainties described under the
heading
Risk Factors
contained in the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the
documents that are incorporated by reference into this prospectus
.
This prospectus may not be used to
offer or sell any securities unless accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is February 13, 2015.
TABLE OF CONTENTS
You should rely only on the information contained in or incorporated by reference into this prospectus or any applicable prospectus supplement
or free writing prospectus. We have not authorized anyone to provide you with different information. We are not making an offer to sell or seeking an offer to buy securities under this prospectus or any applicable prospectus supplement or free
writing prospectus in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus, any applicable prospectus supplement or free writing prospectus and the documents incorporated by reference herein and
therein are accurate only as of their respective dates, regardless of the time of delivery of this prospectus or any sale of a security.
About this Prospectus
This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or SEC, using a
shelf registration process. Under this shelf registration statement, we may sell from time to time in one or more offerings up to a total dollar amount of $300,000,000 of common stock and preferred stock, various series of debt
securities and/or warrants to purchase any of such securities, either individually or in combination with other securities as described in this prospectus. Each time we sell any type or series of securities under this prospectus, we will provide a
prospectus supplement that will contain more specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings.
We may also add, update or change in a prospectus supplement or free writing prospectus any of the information contained in this prospectus or in documents we have incorporated by reference into this prospectus. This prospectus, together with any
applicable prospectus supplement or free writing prospectus and the documents incorporated by reference into this prospectus, include all material information relating to this offering. You should carefully read both this prospectus and any
applicable prospectus supplement and any related free writing prospectus together with the additional information described under Where You Can Find More Information before buying securities in this offering.
You should rely only on the information contained in, or incorporated by reference into, this prospectus and the applicable prospectus
supplement, along with the information contained in any free writing prospectuses we have authorized for use in connection with a specific offering. We have not authorized anyone to provide you with different or additional information. This
prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
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The information appearing in this prospectus, any applicable prospectus supplement and any
related free writing prospectus is accurate only as of the date on the front of the document and any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the time of
delivery of this prospectus, the applicable prospectus supplement or any related free writing prospectus, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the
actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as
exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the section entitled Where You Can Find More Information.
Unless otherwise specified or required by context, references in this prospectus to XOMA, the Company, we,
us and our refer to XOMA Corporation, a Delaware corporation and its consolidated subsidiaries, if any, unless otherwise specified.
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Summary
The following summary highlights information contained elsewhere in this prospectus or incorporated by reference herein and does not
contain all the information that may be important to purchasers of our securities. Prospective purchasers of our securities should review this entire prospectus carefully, including the risks of investing discussed under Risk Factors on
page 7, the financial statements and related notes, and the information to which we refer you and the information incorporated into this prospectus by reference, for a complete understanding of our business and this offering.
This prospectus and the information incorporated herein by reference include trademarks, service marks and trade names owned by us or other
companies. All trademarks, service marks and trade names included or incorporated by reference into this prospectus, any applicable prospectus supplement or any related free writing prospectus are the property of their respective owners.
XOMA CORPORATION
Overview
XOMA Corporation (XOMA), a Delaware corporation, discovers and develops innovative antibody-based therapeutics. Several of our
antibodies have unique properties due to their interaction at allosteric sites on specific protein rather than the orthosteric, or active sites. The compounds are designed to either enhance or diminish the proteins activity as desired. We
believe allosteric-modulating antibodies may be more selective or offer a safety advantage in certain disease indications when compared to more traditional modes of action.
Our lead drug candidate, gevokizumab, is a proprietary potent, humanized allosteric-modulating monoclonal antibody that binds to the
inflammatory cytokine interleukin-1 beta (IL-1 beta). We believe that by targeting IL-1 beta, gevokizumab has the potential to address the underlying inflammatory causes of a wide range of diseases that have been identified as having
unmet medical needs.
Together with our development partner, Les Laboratoires Servier (Servier), an independent French
pharmaceutical research company, we have initiated four pivotal clinical trials evaluating gevokizumab for the treatment of non-infectious intermediate, posterior or pan-uveitis (NIU) and Behçets disease uveitis. We are
responsible for all of the clinical study sites in the United States, and Servier is responsible for all of the clinical study sites outside of the United States. These studies are known as the EYEGUARD program, which includes EYEGUARD-A
(patients with active NIU), EYEGUARD-B (patients with Behçets disease uveitis outside of the United States), EYEGUARD-C (patients with a history of NIU currently controlled with systemic treatment), and EYEGUARD-US (patients with
Behçets disease uveitis being conducted at study centers in the United States).
Our strategy is to pursue
Behçets disease uveitis as our first indication for gevokizumab in the United States. Upon the successful completion of SERVIERs EYEGUARD-B study, we intend to meet with the U.S. Food and Drug Administration (FDA) to
review the Phase 3 EYEGUARD-B data together with the data from the two Behçets disease uveitis Phase 2 studies conducted independently by XOMA and Servier. We believe the seriousness of this disease and the small patient population
warrant consideration for approval based upon positive data from a single pivotal study. There is significant precedence for regulatory approval based upon a single study for indications of similar seriousness in patient populations. Should
EYEGUARD-B successfully demonstrate patients with Behçets disease uveitis receiving gevokizumab took longer to exacerbate than the placebo-treated patients during the tapering of administered steroids, we believe we will be in position
to begin the Biologics License Application (BLA) submission process.
In addition to the EYEGUARD studies, we are evaluating
gevokizumab in pyoderma gangrenosum (PG), a rare ulcerative skin disease that is a specific indication under the umbrella of diseases known as neutrophilic dermatosis. Patients experience painful expanding skin ulcers that have a
significant impact on their quality of life. The U.S. Department of Health and Human Services National Institutes of Healths Office of Rare Disease Research lists PG occurring in about one per 100,000 people. Claims data compiled
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over the past three years indicate the number of diagnosed PG patients in the U.S. ranges between 11,000 and 14,000 annually. Based upon what we believe are compelling data from our pilot study
in patients with PG, we initiated a Phase 3 clinical program in October 2014. The PG Phase 3 program includes two double-blind, placebo-controlled clinical studies, each of which is designed to enroll 58 patients with active PG to receive
gevokizumab 60 mg or placebo dosed subcutaneously once monthly, in addition to their current treatment regimen of low-dose corticosteroids and/or immunosuppressants. The primary endpoint is the complete closure of the PG target ulcer determined at
Day 126 and confirmation of complete closure a minimum of two weeks later on or after Day 140.
We and Servier also have an active
gevokizumab Proof-of-Concept (POC) development program to identify other illnesses for late-stage development.
Gevokizumab
has been generally well tolerated across all of our clinical studies. The most common adverse events were headache, pain, arthralgia, urinary tract infections, upper respiratory tract infections and pneumonia, and they were comparable between
gevokizumab and placebo.
Our proprietary pipeline includes classes of allosteric modulating antibodies that activate, sensitize or
deactivate the insulin receptor in vivo, which we have named XOMA Metabolism or XMet. Insulin is the major hormone for lowering blood glucose levels. Abnormal increases in insulin secretion can lead to profound hypoglycemia (low blood sugar), a
state that may result in significant morbidities including cerebral damage and epilepsy. In some instances, profound hypoglycemia can result in fatality. There are three programs in the XMet portfolio, XOMA 358, which is designed to deactivate the
insulin receptor, XMetA, which is designed to activate the insulin receptor, and XMetS, which is designed to sensitize the insulin receptor when in an insulin resistant state. These programs are highly novel as the antibodies bind to different sites
on the insulin receptor than currently marketed drugs.
XOMA 358 is a fully human monoclonal allosteric modulating antibody that binds to
insulin receptors and attenuates insulin action. It is designed to negatively modulate the insulin receptor and its downstream signaling capabilities. We launched clinical development activities for XOMA 358 in October 2014, with the first patient
dosed in our Phase 1 safety and tolerability study. We intend to investigate this compound as a novel treatment for non-drug-induced, endogenous hyperinsulinemic hypoglycemia (low blood glucose caused by excessive insulin produced by the body). A
therapy that safely and effectively mitigates insulin-induced hypoglycemia has the potential to address a significant unmet therapeutic need for certain rare medical conditions associated with hyperinsulinism.
We intend to retain full ownership of the XOMA 358, as it aligns with our focus to develop products for diseases with significant unmet
medical need and treated by the specialist prescriber. We intend to license XMetA and XMetS to a pharmaceutical company with expertise in developing and commercializing compounds for Types 1 and 2 diabetes. This portfolio of antibodies represents
potential new therapeutic approaches to the treatment of diabetes and several rare diseases that have insulin involvement.
Risks Associated with our
Business
Our business is subject to numerous risks, as described under the heading Risk Factors contained in the
applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the documents that are incorporated by reference into this prospectus.
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Company Information
We were incorporated in Delaware in 1981 and became a Bermuda exempted company in December 1998. Effective December 31, 2011, we changed
our jurisdiction of incorporation from Bermuda to Delaware and changed our name from XOMA Ltd. to XOMA Corporation.
Our principal
executive offices are located at 2910 Seventh Street, Berkeley, California 94710, and we maintain a registered office located at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. Our telephone number at our principal
executive offices is (510) 204-7200. Our website address is www.xoma.com. Information found on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus, and you should not consider it part of this
prospectus or part of any prospectus supplement. Our website address is included in this document as an inactive textual reference only.
NASDAQ Global
Market Listing
Our common stock is listed on The NASDAQ Global Market under the symbol XOMA.
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The Securities We May Offer
We may offer shares of our common stock and preferred stock, various series of debt securities and/or warrants to purchase any of such
securities, either individually or in combination with other securities, with a total value of up to $300,000,000 from time to time under this prospectus at prices and on terms to be determined at the time of any offering. This prospectus provides
you with a general description of the securities we may offer. Each time we offer a type or series of securities under this prospectus, we will provide a prospectus supplement that will describe the specific amounts, prices and other important terms
of the securities, including, to the extent applicable:
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original issue discount;
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rates and times of payment of interest or dividends;
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redemption, conversion, exercise, exchange or sinking fund terms;
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voting or other rights;
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conversion or exchange prices or rates and, if applicable, any provisions for changes to or adjustments in the conversion or exchange prices or rates and in the securities or other property receivable upon conversion or
exchange; and
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a discussion of material United States federal income tax considerations, if any.
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The
prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update or change information contained in this prospectus or in documents we have incorporated by reference. However, no
prospectus supplement or free writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness of the registration statement of which this prospectus is a part.
This prospectus may not be used to offer or sell securities unless it is accompanied by a prospectus supplement.
We may sell the securities directly to investors or to or through agents, underwriters or dealers. We, and our agents, underwriters or dealers
reserve the right to accept or reject all or part of any proposed purchase of securities. If we do offer securities to or through agents, underwriters or dealers, we will include in the applicable prospectus supplement:
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the names of those agents, underwriters or dealers;
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applicable fees, discounts and commissions to be paid to them;
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the net proceeds to us.
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Common Stock.
We may issue shares of our common stock from
time to time. Common stockholders are entitled to one vote per share for the election of directors and on all other matters that require common stockholder approval. Holders of our common stock are entitled to share in an equal amount per
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share in any dividends declared by our board of directors on the common stock and paid out of legally available assets. Subject to any preferential rights of any outstanding preferred stock, in
the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in the assets remaining after payment of liabilities and the liquidation preferences of any outstanding preferred stock. Our common
stock does not carry any preemptive rights enabling a holder to subscribe for, or receive shares of, any class of our common stock or any other securities convertible into shares of any class of our common stock, or any redemption rights.
Preferred Stock.
We may issue shares of our preferred stock from time to time, in one or more series. Our board of directors will
determine the designations, voting powers, preferences and rights of the preferred stock, as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, preemptive rights, terms of redemption or
repurchase, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series. Convertible preferred stock will be convertible into our common stock or exchangeable for other securities.
Conversion may be mandatory or at your option and would be at prescribed conversion rates.
If we sell any series of preferred stock under
this prospectus, we will fix the designations, voting powers, preferences and rights of such series of preferred stock, as well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to that series. We
will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of
preferred stock that we are offering before the issuance of the related series of preferred stock. We urge you to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the
series of preferred stock being offered, as well as the complete certificate of designation that contains the terms of the applicable series of preferred stock.
Debt Securities.
We may issue debt securities from time to time, in one or more series, as either senior or subordinated debt or as
senior or subordinated convertible debt. The senior debt securities will rank equally with any other unsecured and unsubordinated debt. The subordinated debt securities will be subordinate and junior in right of payment, to the extent and in the
manner described in the instrument governing the debt, to all of our senior indebtedness. Convertible debt securities will be convertible into or exchangeable for our common stock or other securities. Conversion may be mandatory or at your option
and would be at prescribed conversion rates.
Any debt securities issued under this prospectus will be issued under one or more documents
called indentures, which are contracts between us and a national banking association or other eligible party, as trustee. In this prospectus, we have summarized certain general features of the debt securities. We urge you, however, to read the
applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series of debt securities being offered, as well as the complete indentures that contain the terms of the debt securities.
Forms of indentures have been filed as exhibits to the registration statement of which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of the debt securities being offered will be filed as
exhibits to the registration statement of which this prospectus is a part or will be incorporated by reference from reports that we file with the SEC.
Warrants.
We may issue warrants for the purchase of common stock, preferred stock and/or debt securities in one or more series. We may
issue warrants independently or together with common stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities. In this prospectus, we have summarized certain general features of the
warrants. We urge you, however, to read the applicable prospectus supplement (and any free writing prospectus that we may authorize to be provided to you) related to the series of warrants being offered, as well as any warrant agreements and warrant
certificates that contain the terms of the warrants. We will file as exhibits to the registration statement
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of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, any forms of warrant agreements and forms of warrant certificates containing the terms
of the warrants being offered, and any supplemental warrant agreements and forms of warrant certificates containing the terms of the warrants being offered.
Any warrants issued under this prospectus may be evidenced by warrant certificates. Warrants also may be issued under an applicable warrant
agreement that we enter into with a warrant agent. We will indicate the name and address of the warrant agent, if applicable, in the prospectus supplement relating to the particular series of warrants being offered.
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