UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On April 18, 2023, Phio Pharmaceuticals Corp. (the “Company”) entered into a securities purchase agreement with certain institutional and accredited investors (the “Purchase Agreement”) relating to the registered direct offering and sale of 353,983 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at a purchase price of $5.65 per share (the “Offering”).
In a concurrent private placement, the Company also issued to such institutional and accredited investors unregistered long-term warrants to purchase up to 353,983 shares of Common Stock (the “Series A Warrants”) and unregistered short-term warrants to purchase up to 353,983 shares of Common Stock (the “Series B Warrants”, together with the Series A Warrants, the “Warrants”), together exercisable for an aggregate of up to 707,966 shares of Common Stock (the “Warrant Shares”). Pursuant to the terms of the Purchase Agreement, for each share of Common Stock issued in this offering, an accompanying Series A Warrant and Series B Warrant was issued to the purchaser thereof, respectively. Each Series A Warrant is exercisable for one Warrant Share at an exercise price of $5.40 per share, will be immediately exercisable and will expire five and one-half years from the date of issuance. Each Series B Warrant will be exercisable for one Warrant Share at an exercise price of $5.40 per share, will be immediately exercisable and will expire eighteen months from the date of issuance. The Warrants were offered and sold at a purchase price of $0.125 per underlying warrant share, which purchase price is included in the offering price per share of Common Stock issued in this Offering (the “Private Placement”). The net proceeds to the Company from the Offering and the Private Placement is approximately $1.65 million, after deducting fees and expenses. Neither the Warrants, nor the Warrant Shares, have been registered under the Securities Act of 1933, as amended.
Pursuant to an engagement letter, dated as of January 20, 2023 (the “Engagement Letter”), between the Company and H.C. Wainwright & Co., LLC, or the placement agent, the Company agreed to pay the placement agent a total cash fee equal to 7.5% of the gross proceeds received in the Offering and the Private Placement. The Company also agreed to pay the placement agent in connection with the Offering and the Private Placement a management fee equal to 1.0% of the gross proceeds raised in the Offering and Private Placement, $60,000 for non-accountable expenses, and $15,950 for clearing fees. In addition, the Company agreed to issue to the placement agent, or its designees, warrants to purchase up to 26,549 shares of Common Stock (the “Placement Agent Warrants”), which represents 7.5% of the aggregate number of shares of Common Stock sold in the Offering. The Placement Agent Warrants have substantially the same terms as the Series A Warrants, except that the Placement Agent Warrants have an exercise price equal to $7.0625, or 125% of the offering price per share of Common Stock sold in the Offering, and will be exercisable for five years from the commencement of sales pursuant to the Offering.
Pursuant to the terms of the Purchase Agreement and the Engagement Letter, the Company has agreed to register for resale the Warrant Shares issuable upon exercise of the Warrants sold in the Private Placement and the shares of Common Stock issuable upon exercise of the Placement Agent Warrants.
The Offering and Private Placement closed on April 20, 2023.
Pursuant to the terms of the Purchase Agreement, the Company is prohibited from entering into any agreement to issue or announcing the issuance or proposed issuance of any shares of Common Stock or securities convertible or exercisable into Common Stock for a period commencing on April 20, 2023 and expiring 30 days from the closing date of the Offering. Furthermore, the Company is also prohibited from entering into any agreement to issue Common Stock or Common Stock Equivalent (as defined in the Purchase Agreement) involving a Variable Rate Transaction (as defined in the Purchase Agreement), subject to certain exceptions, for a period commencing on April 18, 2023 and expiring one year from the closing date of the Offering.
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If a Fundamental Transaction (as defined in the Warrants and Placement Agent Warrants) occurs, then the successor entity will succeed to, and be substituted for the Company, and may exercise every right and power that we may exercise and will assume all of the Company’s obligations under the Warrants and the Placement Agent Warrants with the same effect as if such successor entity had been named in the Warrants and the Placement Agent Warrants itself. If holders of shares of Common Stock are given a choice as to the securities, cash or property to be received in such a Fundamental Transaction, then the holder shall be given the same choice as to the consideration it would receive upon any exercise of the Warrants and the Placement Agent Warrants following such a Fundamental Transaction. Additionally, as more fully described in the Warrants and the Placement Agent Warrants, in the event of certain Fundamental Transactions, the holders of Private Warrants will be entitled to receive consideration in an amount equal to the Black Scholes value of the Private Warrants on the date of consummation of such Fundamental Transaction.
The 353,983 shares of Common Stock sold in the Offering (but not the Warrants or the Warrant Shares) were offered and sold pursuant to a prospectus, dated April 18, 2023, in connection with a takedown from the Company’s shelf registration statement on Form S-3 (File No. 333-256100), which registration statement was filed on May 13, 2021 and declared effective on May 21, 2021. A copy of the opinion of Hogan Lovells US LLP relating to the validity of the securities issued in the Offering is filed herewith as Exhibit 5.1.
The Warrants, the Warrant Shares, the Placement Agent Warrants and the shares of Common Stock issuable thereunder were sold and issued without registration under the Securities Act of 1933, as amended (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.
Warrant Amendment Agreement
Pursuant to warrant amendment agreements (the “Warrant Amendment Agreements”) with the institutional and accredited investors participating in the Offering and the Private Placement in connection with the Offering and effective upon the closing of the Offering and Private Placement, the Company agreed to amend certain existing warrants to purchase up to an aggregate of 191,619 shares of Common Stock that were previously issued in April 2018 through January 2021 at exercise prices ranging from $26.52 to $2,079.00, such that each of the amended warrants will have an exercise price of $5.40 per share, at an additional offering price of $0.125 per amended warrant. The Company received $23,952 as the gross consideration in connection with the Warrant Amendment Agreements.
The foregoing descriptions of the Purchase Agreement, the Series A Warrants, the Series B Warrants and the Warrant Amendment Agreements are not complete and are qualified in their entirety by references to the full text of the Purchase Agreement and the Warrants, which are filed as exhibits 10.1, 4.1, 4.2 and 4.3, respectively, to this report and are incorporated by reference herein.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosures in Item 1.01 of this Form 8-K regarding the Warrants, and Warrant Shares, the Placement Agent Warrants and the shares of Common Stock issuable thereunder are incorporated by reference into this Item 3.02.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Number | Description | |
| 4.1 | Form of Series A Common Stock Warrant, dated April 20, 2023. | |
| 4.2 | Form of Series B Common Stock Warrant, dated April 20, 2023. | |
| 4.3 | Form of Existing Warrant Amendment, dated April 18, 2023. | |
| 5.1 | Opinion of Hogan Lovells US LLP. | |
| 10.1 | Form of Securities Purchase Agreement, dated April 18, 2023, by and between the Company and each of the Purchasers signatory thereto. | |
| 23.1 | Consent of Hogan Lovells US LLP (contained in Exhibit 5.1). | |
| 99.1 | Press Release issued by the Company on April 18, 2023. | |
| 99.2 | Press Release issued by the Company on April 20, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PHIO PHARMACEUTICALS CORP. | |||||
| Date: April 20, 2023 | By: | /s/ Robert Bitterman | |||
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Name: Robert Bitterman Title: President & Chief Executive Officer | |||||
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