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Item 1.01.
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Entry into a Material Definitive Agreement.
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On May 14, 2020, we entered into a securities
purchase agreement with certain institutional investors and accredited investors for the sale by us of an aggregate of 7,058,824
shares of our common stock at a purchase price of $1.0625 per share. Concurrently with the sale of the shares, pursuant to the
securities purchase agreement, we also sold to the investors unregistered warrants to purchase up to an aggregate of 3,529,412
shares of our common stock. The aggregate gross proceeds for the sale of the shares and warrants were approximately $7.5 million.
Subject to certain ownership limitations, the warrants are exercisable immediately upon issuance at an exercise price equal to
$1.00 per share of common stock, subject to adjustments as provided under the terms of the warrants. The warrants are exercisable
for five and one-half years from the issuance date. We closed the sales of these securities on May 18, 2020.
The net proceeds to us from the transactions,
after deducting placement agent fees and expenses and the estimated offering expenses, were approximately $6.8 million,
excluding the proceeds, if any, from the exercise of the warrants. We intend to use the net proceeds from the offering for general
corporate purposes, including our Phase 3 clinical trial for Mino-Lok, our Phase 2b clinical trial of Halo-Lido cream, development
of Mino-Wrap and working capital and capital expenditures.
The shares of common stock (but not the warrants
or shares issuable upon exercise of the warrants) were offered and sold by us pursuant to an effective “shelf” registration
statement on Form S-3, which was originally filed with the Securities and Exchange Commission on November 9, 2017 and subsequently
declared effective on December 15, 2017 (File No. 333-221492). We have filed a prospectus supplement and the accompanying prospectus
in connection with the sale of the shares of common stock.
The warrants and the shares issuable upon
exercise of the warrants were sold and issued without registration under the Securities Act of 1933 (the “Securities
Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as transactions not involving a
public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on
similar exemptions under applicable state laws.
The representations, warranties and covenants
contained in the securities purchase agreement were made solely for the benefit of the parties to the securities purchase agreement.
In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties
to the securities purchase agreement and not as statements of fact, and (ii) may apply standards of materiality in a way that is
different from what may be viewed as material by stockholders of, or other investors in, our company. Accordingly, the form of
securities purchase agreement is included with this filing only to provide investors with information regarding the terms of the
transactions. Moreover, information concerning the subject matter of the representations and warranties may change after the date
of the securities purchase agreement, which subsequent information may or may not be fully reflected in public disclosures.
We previously entered into an engagement letter
with H.C. Wainwright & Co., LLC, dated February 14, 2020, pursuant to which Wainwright agreed to serve as exclusive placement
agent for the issuance and sale of the shares of common stock and warrants. We paid Wainwright an aggregate fee of $525,000, which
is equal to 7% of the gross proceeds received by us from the sale of the securities in the transactions. Pursuant to the engagement
letter, we also granted to Wainwright and its designees warrants to purchase up to an aggregate of 494,118 shares of common stock,
which represents 7% of the aggregate number of shares sold in the transactions. The placement agent warrants have substantially
the same terms as the investor warrants, except that the exercise price of the placement agent warrants is $1.3281 per share and
they are exercisable for five years from the date of the securities purchase agreement. The placement agent warrants and the shares
issuable upon exercise of the placement agent warrants are being issued in reliance on the exemption from registration provided
by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and in reliance on similar exemptions
under applicable state laws. We also paid Wainwright for non-accountable expenses of $85,000 and clearing expenses of $12,900.
The engagement letter has indemnity and other customary provisions for transactions of this nature.
The forms of the securities purchase agreement,
the investor warrant and the placement agent warrant, as well as the engagement letter are filed as Exhibits 10.1, 4.1, 4.2 and
10.2, respectively, to this Current Report on Form 8-K. The foregoing descriptions of the securities purchase agreement, the investor
warrant, the placement agent warrant and the engagement letter are not complete and are qualified in their entirety by reference
to Exhibits 10.1, 4.1, 4.2 and 10.2, respectively.