Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-231954
Prospectus
Supplement No. 1
(To Prospectus
Dated June 4, 2019)
AZURRX
BIOPHARMA, INC.
5,000,000 Shares of Common Stock
We
are offering 5,000,000 shares of our common stock.
Our
common stock is presently traded on the Nasdaq Capital Market under
the symbol “AZRX.” On July 17, 2019, the last reported
sale price of our common stock was $1.05 per share.
As
of July 17, 2019, the aggregate market value of our voting and
non-voting common stock held by non-affiliates pursuant to General
Instruction I.B.6. of Form S-3 was $45,837,381 which was calculated
based on 21,103,794 outstanding shares of our voting and non-voting
common stock held by non-affiliates and at a price of $2.48 per
share, the closing sale price of our common stock reported on the
Nasdaq Capital Market on May 20, 2019. During the 12 calendar
months prior to and including the date of this prospectus
supplement (excluding this offering), we have sold approximately
$5.6 million worth of securities pursuant to General Instruction
I.B.6 of Form S-3. As a result, we are eligible to offer and sell
up to an aggregate of $9,635,556 of shares of our common stock
pursuant to General Instruction I.B.6. of Form S-3. Following this
offering, we will have sold securities with an aggregate market
value of $10,642,043 pursuant to General Instruction I.B.6. of Form
S-3 during the prior 12 calendar month period that ends on, and
includes, the date of this prospectus supplement.
An investment in our common stock involves a high degree of risk.
You should carefully consider the information under the heading
"Risk Factors" beginning on page S-7 of this prospectus
supplement and in the documents incorporated by reference into this
prospectus supplement before you invest in our
securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
|
|
Per
Share
|
Total
|
|
Public
offering price
|
$1.00
|
$5,000,000
|
|
Underwriting discounts and commissions
(1)
|
$0.07
|
$350,000
|
|
Proceeds,
before expenses, to us
|
$0.93
|
$4,650,000
|
____________
(1)
We have also
agreed to issue to H.C. Wainwright & Co., LLC
(“Wainwright”)
a five-year warrant to purchase up to 200,000 shares of our common
stock, an amount equal to 4% of the shares of common stock offered
pursuant to this prospectus supplement, with an exercise price
equal to 125% of the public offering price per share in this
offering. We have also agreed to reimburse Wainwright for certain
expenses. For additional information regarding Wainwright’s
compensation, see “Underwriting.”
We have granted the
underwriters a 30-day option to purchase up to 750,000 additional
shares of common stock from us at the public offering price, less
underwriting discounts and commissions. See “Underwriting” on page S-27 of
this prospectus supplement for a description of the option to
purchase additional shares of common
stock.
The
underwriters expect to deliver the shares offered hereby on or
about July 22, 2019.
___________________________
Sole Book-Running
Manager
H.C. Wainwright & Co.
Co-Manager
National Securities
Corporation
The
date of this prospectus supplement is July 17,
2019
Table of
Contents
|
|
Pages
|
|
Prospectus Supplement
|
|
|
|
|
|
S-1
|
|
|
S-2
|
|
|
S-6
|
|
|
S-7
|
|
|
S-23
|
|
|
S-24
|
|
|
S-25
|
|
|
S-26
|
|
|
S-27
|
|
|
S-30
|
|
|
S-30
|
|
|
S-30
|
|
|
S-31
|
|
|
|
|
|
Prospectus
|
|
|
|
|
|
1
|
|
|
2
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
9
|
|
|
12
|
|
|
13
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
17
|
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying
prospectus form a part of a registration statement on Form S-3 that
we filed with the Securities and Exchange Commission (the
“SEC”) utilizing a “shelf”
registration process. This document is in two parts. The first part
is the prospectus supplement, which describes the specific terms of
this offering. The second part, the accompanying prospectus,
provides more general information about the securities we may offer
from time to time, some of which may not apply to the securities
offered by this prospectus supplement. Generally, when we refer to
this prospectus, we are referring to both parts of this document
combined. Before you invest, you should carefully read this
prospectus supplement, the accompanying prospectus, all information
incorporated by reference herein and therein, and the additional
information described under “Where You Can Find More
Information” on page S-30
of this prospectus supplement. These documents contain information
you should consider when making your investment decision. This
prospectus supplement may add, update or change information
contained in the accompanying prospectus. To the extent that any
statement that we make in this prospectus supplement is
inconsistent with statements made in the accompanying prospectus or
any documents incorporated by reference therein, the statements
made in this prospectus supplement will be deemed to modify or
supersede those made in the accompanying prospectus and such
documents incorporated by reference therein.
Neither
we nor the underwriters have authorized any other person to provide
you with any information that is different. We are offering to
sell, and seeking offers to buy, our securities only in
jurisdictions where offers and sales are permitted. The
distribution of this prospectus supplement and the accompanying
prospectus and the offering of the securities in certain
jurisdictions may be restricted by law. Persons outside the United
States who come into possession of this prospectus supplement
and/or the accompanying prospectus must inform themselves about,
and observe any restrictions relating to, the offering of the
securities and the distribution of this prospectus supplement
and/or the accompanying prospectus outside the United States. This
prospectus supplement and the accompanying prospectus do not
constitute, and may not be used in connection with, an offer to
sell, or a solicitation of an offer to buy, any securities offered
by this prospectus supplement and the accompanying prospectus by
any person in any jurisdiction in which it is unlawful for such
person to make such an offer or solicitation.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in the accompanying
prospectus were made solely for the benefit of the parties to such
agreement, including, in some cases, for the purpose of allocating
risk among the parties to such agreements, and should not be deemed
to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of
the date when made. Accordingly, such representations, warranties
and covenants should not be relied on as accurately representing
the current state of our affairs.
Unless the context otherwise requires, references
in this prospectus supplement to “we”, “us” and “our” refer to AzurRx BioPharma,
Inc.
|
|
|
|
|
|
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights selected information about our company,
this offering and information appearing elsewhere in this
prospectus supplement, in the accompanying prospectus, in the
documents we incorporate by reference and in any free writing
prospectus that we have authorized for use in connection with this
offering. This summary is not complete and does not contain all the
information that you should consider before investing in our
securities. You should read this entire prospectus supplement and
the accompanying prospectus carefully, including the “Risk
Factors” contained in this prospectus supplement, the
accompanying prospectus and the financial statements and the notes
thereto incorporated by reference in this prospectus supplement and
the accompanying prospectus and any free writing prospectus that we
have authorized for use in connection with this offering, before
making an investment decision. This prospectus supplement may add
to, update or change information in the accompanying
prospectus. Unless otherwise stated, all information
contained in this prospectus supplement assumes or gives effect to
no exercise by the underwriters of their option to purchase
additional shares of common stock.
Overview
We
are engaged in the research and development of non-systemic
biologics for the treatment of patients with gastrointestinal
disorders. Non-systemic biologics are non-absorbable drugs that act
locally, i.e. the intestinal lumen, skin or mucosa, without
reaching an individual’s systemic circulation. Our current
product pipeline consists of two therapeutic proteins under
development:
MS1819-SD
MS1819-SD is a yeast derived recombinant lipase
for exocrine pancreatic insufficiency (“EPI”) associated with chronic pancreatitis
(“CP”) and cystic fibrosis
(“CF”). A lipase is an enzyme that breaks up fat
molecules. MS1819-SD is considered recombinant because it was
created from new combinations of genetic material in yeast called
Yarrowia lipolytica. In June 2018, we completed an open-label, dose
escalation Phase 2a trial of MS1819-SD in France, Australia, and
New Zealand to investigate both the safety of escalating doses of
MS1819-SD, and the efficacy of MS1819-SD through the analysis of
each patient’s coefficient of fat absorption
(“CFA”) and its change from baseline. A total of
11 CP patients with EPI were enrolled in the study and final data
showed a strong safety and efficacy profile. Although the study was
not powered for efficacy, in a pre-planned analysis, the highest
dose cohort of MS1819-SD showed statistically significant and
clinically meaningful increases in CFA compared to baseline with a
mean increase of 21.8% and a p value of p=0.002 on a per protocol
basis. Additionally, maximal absolute CFA response to treatment was
up to 57%, with an inverse relationship to baseline
CFA.
In October 2018, the U.S. Food and Drug
Administration (“FDA”) cleared our Investigational New Drug
(“IND”) application for MS1819-SD in patients
with EPI due to CF. In connection with the FDA’s clearance of
the IND, we initiated the multi-center Phase 2 OPTION study in the
fourth quarter of 2018 in the United States and Europe (the
“OPTION
Study”). We targeted
enrollment of 30 to 35 patients for the OPTION Study, and dosed the
first patients in February 2019. In June 2019, we reached our
enrollment target for the study. We expect to conclude and announce
topline results from the OPTION Study in the third quarter of
2019.
In addition to the OPTION Study, in July 2019 we
launched a Phase 2 multi-center clinical trial in Hungary to
investigate MS1819-SD in combination with standard porcine enzyme
replacement therapy (“PERT”), the digestive standard of
care for both CF and CP patients with EPI, for CF patients with that suffer from severe
EPI, but continue to experience clinical symptoms of
fat malabsorption despite taking the maximum daily dose
of PERTs. The Phase 2 study is designed to investigate the safety,
tolerability and efficacy of escalating doses of MS1819-SD, in
conjunction with a stable dose of PERTs, in order to increase CFA
and relieve abdominal symptoms. Planned enrollment is expected
to include approximately 24 CF patients with severe EPI, with study
completion anticipated in 2020.
|
|
|
|
|
|
|
|
|
|
|
|
b-Lactamase Program
The Company’s b-lactamase program focuses on
products with an enzymatic combination of bacterial origin for the
prevention of hospital-acquired infections and
antibiotic-associated diarrhea (“AAD”) by resistant bacterial strains induced by
parenteral administration of several antibiotic classes. Currently,
the Company has two compounds in pre-clinical development in this
program, AZX1101 and AZX1103. Both AZX1101 and AZX1103 are composed
of several distinct enzymes that break up individual classes of
antibiotic molecules. AZX1103 is a b-lactamase enzyme combination
that has shown positive pre-clinical activity, with degradation of
amoxicillin in the presence of clavulanic acid in the upper
gastrointestinal tract in the Gottingen minipig model. Currently,
the Company is focused on advancing pre-clinical development of
AZX1103. The Company is also currently assessing its plans for the
continuation of the development of AZX1101.
Recent Developments
Estimated Financial and Balance Sheet Data as of June 30,
2019
Below
is a summary of certain preliminary estimates regarding our
financial results for the quarter ended June 30, 2019. This
preliminary financial information is based upon our estimates and
is subject to completion of our financial closing procedures.
Moreover, this preliminary financial information has been prepared
solely on the basis of information that is currently available to,
and that is the responsibility of, management. Our independent
registered public accounting firm has not audited or reviewed, and
does not express an opinion with respect to, this information. This
preliminary financial information is not a comprehensive statement
of our financial results for the quarter ended June 30, 2019, and
remains subject to, among other things, the completion of our
financial closing procedures, final adjustments, completion of our
internal review and review by our independent registered public
accounting firm of our financial statements for the quarter ended
June 30, 2019, which may materially impact the results and
expectations set forth below.
We
estimate that for the six-month period ended June 30, 2019, we will
record a net loss of approximately $9.81 million, as compared to a
net loss of approximately $6.94 million for the six-month period
ended June 30, 2018. In addition, as of June 30, 2019, we had
approximately $1.31 million of cash and cash
equivalents.
April 2019 Public Offering of Common Stock
In April 2019, we completed a public offering of
1,294,930 shares of our common stock at a public offering price of
$2.13 per share, resulting net proceeds of approximately $2.5
million, after deducting the selling agent fee paid to Alexander
Capital, L.P. and other offering expenses payable by the Company
(the “April 2019 Public
Offering”). The April
2019 Public Offering was completed pursuant to our effective shelf
registration statement on Form S-3 (File No. 333-226065) and the
prospectus supplement filed on April 2, 2019.
In connection with the April 2019 Public Offering,
we entered into a Selling Agent Agreement with Alexander Capital,
L.P., pursuant to which we paid to Alexander Capital, L.P. (i) a
cash fee equal to 7% of the aggregate gross proceeds of the April
2019 Public Offering, and (ii) issued to Alexander Capital, L.P.
warrants to purchase 38,848 shares of our common stock (the
“April 2019 Selling Agent
Warrants”), an amount
equal to 3% of the aggregate number of shares of common stock sold
in the April 2019 Public Offering. We also reimbursed Alexander
Capital, L.P. for its expenses on a non-accountable basis in an
amount equal to 1% of the gross proceeds of the April 2019 Public
Offering and $50,000 for other accountable expenses. The April 2019
Selling Agent Warrants will become exercisable one year from the
date of issuance, expire on April 2, 2024 and have an exercise
price of $2.55 per share.
|
|
|
|
|
|
|
|
|
|
|
|
May 2019 Public Offering of Common Stock
On May 9, 2019, we completed a second public
offering with Alexander Capital of 1,227,167 shares of our common
stock at a public offering price of $2.35 per share, resulting net
proceeds of approximately $2.55 million, after deducting the
selling agent fee paid to Alexander Capital and other offering
expenses payable by the Company (the “May 2019 Public
Offering”). The May 2019
Public Offering was completed pursuant to our effective shelf
registration statement on Form S-3 (File No. 333-226065) and the
prospectus supplement filed on May 9, 2019.
In
connection with the May 2019 Public Offering, we entered into a
Selling Agent Agreement with Alexander Capital, pursuant to which
we (i) paid Alexander Capital a cash fee equal to 7.0% of the
aggregate gross proceeds of the May 2019 Public Offering, and (ii)
issued Alexander Capital warrants to purchase up to 36,815 shares
of common stock a number of shares of Common Stock equal to 3.0% of
the aggregate number of shares of Common Stock sold in the
Offering. The Company also agreed to reimburse Alexander Capital
for its expenses in connection with the Offering on a
non-accountable basis in an amount equal to 1.0% of the gross
proceeds of the Offering and up to $50,000 for other accountable
expenses.
On
May 13, 2019, the Company offered and sold a total of 1,227,167
shares of Common Stock in connection with the Offering at a public
offering price of $2.35 per share. As a result, the Company
received net proceeds of approximately $2.55 million, after
deducting the selling agent fee payable to Alexander Capital and
other Offering expenses payable by the Company. In connection with
the closing of the Offering and pursuant to the Selling Agent
Agreement, the Company issued warrants to Alexander Capital to
purchase up to 36,815 shares of common stock, an amount equal to 3%
of the aggregate number of shares of common stock sold in the May
2019 Public Offering. We also reimbursed Alexander Capital, L.P.
for its expenses on a non-accountable basis in an amount equal to
1% of the gross proceeds of the May 2019 Public Offering and
$50,000 for other accountable expenses. The May 2019 Selling Agent
Warrants will become exercisable one year from the date of
issuance, expire on May 9, 2024 and have an exercise price of $2.82
per share.
Asset Purchase Agreement with Mayoly
On March 27, 2019, we entered into an Asset
Purchase Agreement with Laboratoires Mayoly Spindler
SAS (“Mayoly”),
a European pharmaceutical company and our former development
partner for MS1819-SD (the “Mayoly APA”), pursuant to which we purchased all
rights, title and interest in and to MS1819-SD. Upon execution of
the Mayoly APA, the Joint Development and License Agreement (the
“JDLA”) previously executed by AzurRx SAS,
a company incorporated in October 2008
under the laws of France and our wholly-owned subsidiary
(“AzurRx SAS”) and
Mayoly was terminated. In addition, the Company granted to Mayoly
an exclusive, royalty-bearing right to revenue received from
commercialization of MS1819-SD within certain
territories.
Following the execution of the Mayoly APA, we
either own or license from the INRA pursuant to the Mayoly APA, all
issued patents covering the method for transformation
of Yarrowia
lipolytica, the sequence of the LIP2 enzyme and its production
process. Patent protection for MS1819-SD from granted patents
currently runs until at least June 15,
2026.
Risk Factors
Our business is subject to substantial risk.
Please carefully consider the section titled
“Risk
Factors” on page S-7 of
this prospectus supplement for a discussion of the factors you
should carefully consider before deciding to purchase securities
that may be offered by this prospectus.
Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business
operations. You should be able to bear a complete loss of your
investment.
Corporate Information
We were incorporated on
January 30, 2014 in the State of Delaware. In June 2014, we acquired 100% of the issued
and outstanding capital stock of AzurRx SAS. Our principal executive
offices are located at 760 Parkside Avenue, Downstate Biotechnology
Incubator, Suite 304, Brooklyn, NY 11226. Our telephone number is
(646) 699-7855. We maintain a website at www.azurrx.com. The
information contained on our website is not, and should not be
interpreted to be, a part of this prospectus supplement.
|
|
|
|
|
|
|
|
THE
OFFERING
|
|
||
|
|
|
|
|
|
|
|
Issuer
|
|
AzurRx
BioPharma, Inc.
|
|
|
|
|
|
|
|
|
|
Common
Stock Offered by Us
|
|
5,000,000
shares
of common stock (or 5,750,000 shares if the underwriters’
option to purchase additional shares of common stock is exercised
in full).
|
|
|
|
|
|
|
|
|
|
Common
Stock to be Outstanding Immediately After this
Offering
|
|
26,103,794
shares (or 26,853,794 shares if the underwriters’ option to
purchase additional shares of common stock is exercised in
full).
|
|
|
|
Option to Purchase
Additional Shares of Common Stock
|
|
We have granted the
underwriters in the offering an option to purchase up to 750,000
additional shares of common stock at the public offering price per
share of common stock set forth on the cover page hereto less the
underwriting discounts and commission. This option is exercisable,
in whole or in part, for a period of 30 days from the date of this
prospectus supplement.
|
|
|
|
Use
of Proceeds
|
|
We
estimate the net proceeds from this offering will be approximately
$4.47 million (or approximately $5.16 million if the option to
purchase additional shares of common stock is exercised in full),
after deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by us. We intend to use all
of the net proceeds from this offering for working capital and
general corporate purposes, including, without limitation,
development of our product candidates, and general and
administrative expenses.
See “Use of
Proceeds” on page
S-24.
|
|
|
|
|
|
|
|
|
|
Risk
Factors
|
|
Investing in our securities involves significant
risks. Please read the information contained in or incorporated by
reference under the heading “Risk
Factors” beginning on
page S-7 of this prospectus supplement, and under similar headings
in other documents filed after the date hereof and incorporated by
reference into this prospectus supplement and the accompanying
prospectus.
|
|
|
|
|
|
|
|
|
|
Nasdaq
Capital Market symbol
|
|
“AZRX.”
|
|
|
|
The
number of shares of our common stock that will be outstanding
immediately after the offering is based on 21,103,794 shares
outstanding as of July 16, 2019. Unless we specifically state
otherwise, the share information in this prospectus supplement
excludes:
●
1,887,500 shares
of common stock issuable upon the exercise of stock options as
of July 16, 2019 at a
weighted average exercise price of $2.58 per share;
●
416,000 shares
of granted, but unissued, shares of restricted stock;
●
3,188,378 shares
of common stock issuable upon exercise of outstanding warrants,
with a weighted average exercise price of $3.51 per
share;
●
5,717
shares of common stock reserved for future issuance under the
Amended and Restated 2014 Omnibus Equity Incentive Plan as
of July 16,
2019;
●
829,808 shares
of common stock issuable upon conversion of outstanding senior
convertible notes (the “Notes”) as of June 30, 2019;
and
●
200,000
shares of common stock issuable upon exercise of the common stock
purchase warrants to be issued to Wainwright, which equals 4% of
the shares of common stock offered and sold in this offering, at an
exercise price of $1.25 per share.
|
|
|
|
|
|
RISK FACTORS
An
investment in our securities involves a high degree of risk. You
should consider the risks, uncertainties and assumptions discussed
below, together with all of the other information contained or
incorporated by reference in this prospectus supplement and the
accompanying prospectus, including our Annual Report on Form 10-K
for the fiscal year ended December 31, 2018. It is not possible
to predict or identify all such risks. Consequently, we could also
be affected by additional factors that are not presently known to
us or that we currently consider to be immaterial to our
operations. The occurrence of any
of these known or unknown risks might cause you to lose all or part
of your investment in the offered securities.
Risks Related to Our Business and Industry
We are a development stage company and have a limited operating
history upon which to base an investment decision.
We
are a clinical development stage biopharmaceutical company. Since
inception, we have engaged primarily in research and development
activities, have not generated any revenue from product sales and
have incurred significant net losses. We have not demonstrated our
ability to perform the functions necessary for the successful
commercialization of any products. The successful commercialization
of any of our products will require us to perform a variety of
functions, including:
●
continuing
to undertake pre-clinical development and clinical
trials;
●
participating
in regulatory approval processes;
●
formulating
and manufacturing products; and
●
conducting
sales and marketing activities.
Our
operations to date have been limited to organizing and staffing,
acquiring, developing and securing the proprietary rights for, and
undertaking pre-clinical development and clinical trials of our
product candidates. These operations provide a limited basis for
our stockholders and prospective investors to assess our ability to
complete development of or commercialize any products and the
advisability of investing in our securities.
We
have incurred significant operating losses and negative cash flows
from operations since inception, had working capital at March 31,
2019 and December 31, 2018 of approximately ($2,953,000) and
$1,804,000, respectively, and had an accumulated deficit at March
31, 2019 and December 31, 2018 of approximately $52,178,000 and
$47,517,000, respectively. We are dependent on obtaining, and are
continuing to pursue, the necessary funding from outside sources,
including obtaining additional funding from this offering and other
future sales of securities in order to continue our operations.
Without adequate funding, we may not be able to meet our
obligations. We believe these conditions raise substantial doubt
about our ability to continue as a going concern.
Our product candidates are at an early stage of development and may
not be successfully developed or commercialized.
Our
three product candidates, MS1819-SD, AZX1101 and AZX1103, are in
the early stages of development and will require substantial
further capital expenditures, development, testing, and regulatory
clearances prior to commercialization. The development and
regulatory approval process take several years, and it is not
likely that any such products, even if successfully developed and
approved by the FDA or any comparable foreign regulatory authority,
would be commercially available for at least three to five years or
more. Of the large number of drugs in development, only a small
percentage successfully completes the regulatory approval process
and is commercialized. Accordingly, even if we are able to obtain
the requisite financing to fund our development programs, we cannot
assure you that our product candidates will be successfully
developed or commercialized. Our failure to develop, manufacture or
receive regulatory approval for or successfully commercialize any
of our product candidates, could result in the failure of our
business and a loss of all of your investment in our
company.
Any product candidates we advance into clinical development are
subject to extensive regulation, which can be costly and time
consuming, cause unanticipated delays or prevent the receipt of the
required approvals to commercialize our product
candidates.
The clinical development, manufacturing, labeling,
storage, record-keeping, advertising, promotion, import, export,
marketing and distribution of our product candidates are subject to
extensive regulation by the FDA in the United States and by
comparable health authorities in foreign markets, including Health
Canada’s Therapeutic Products Directorate
(“TPD”) and the European Medicines Agency
(“EMA”). In the United States, we are not
permitted to market our product candidates until we receive
approval of a New Drug Application (“NDA”) or Biologic License Application
(“BLA”) from the FDA. The process of obtaining
such approval is expensive, often takes many years and can vary
substantially based upon the type, complexity and novelty of the
products involved. In addition to the significant clinical testing
requirements, our ability to obtain marketing approval for these
products depends on obtaining the final results of required
non-clinical testing, including characterization of the
manufactured components of our product candidates and validation of
our manufacturing processes. The FDA may determine that our product
manufacturing processes, testing procedures or facilities are
insufficient to justify approval. Approval policies or regulations
may change and the FDA has substantial discretion in the
pharmaceutical approval process, including the ability to delay,
limit or deny approval of a product candidate for many reasons.
Despite the time and expense invested in clinical development of
product candidates, regulatory approval is never
guaranteed.
The
FDA, the TPD and/or the EMA can delay, limit or deny approval of a
product candidate for many reasons, including, but not limited
to:
●
disagreement
with the design or implementation of our clinical
trials;
●
failure
to demonstrate to their satisfaction that a product candidate is
safe and effective for any indication;
●
failure
to accept clinical data from trials which are conducted outside
their jurisdiction;
●
the
results of clinical trials may not meet the level of statistical
significance required for approval;
●
we
may be unable to demonstrate that a product candidate’s
clinical and other benefits outweigh its safety risks;
●
such
agencies may disagree with our interpretation of data from
preclinical studies or clinical trials;
●
failure
to approve the manufacturing processes or facilities of third-party
manufacturers with which we or our collaborators contract for
clinical and commercial supplies; or
●
changes
in the approval policies or regulations of such agencies may
significantly change in a manner rendering our clinical data
insufficient for approval.
Any
delay in obtaining, or inability to obtain, applicable regulatory
approvals would prevent us from commercializing our product
candidates.
If we encounter difficulties enrolling patients in our clinical
trials, our clinical development activities could be delayed or
otherwise adversely affected.
We
may experience difficulties in patient enrollment in our clinical
trials for a variety of reasons. The timely completion of
clinical trials in accordance with their protocols depends, among
other things, on our ability to enroll a sufficient number of
patients who remain in the trial until its conclusion. The
enrollment of patients depends on many factors,
including:
●
the
patient eligibility criteria defined in the protocol;
●
the
size of the patient population;
●
the
proximity and availability of clinical trial sites for prospective
patients;
●
the
design of the trial;
●
our
ability to recruit clinical trial investigators with the
appropriate competencies and experience;
●
our
ability to obtain and maintain patient consents; and
●
the
risk that patients enrolled in clinical trials will drop out of the
trials before completion.
Our
clinical trials will compete with other clinical trials for product
candidates that are in the same therapeutic areas as our product
candidates. This competition will reduce the number and types
of patients and qualified clinical investigators available to us,
because some patients who might have opted to enroll in our trials
may instead opt to enroll in a trial being conducted by one of our
competitors or clinical trial sites may not allow us to conduct our
clinical trial at such site if competing trials are already being
conducted there. Since the number of qualified clinical
investigators is limited, we expect to conduct some of our clinical
trials at the same clinical trial sites that some of our
competitors use, which will reduce the number of patients who are
available for our clinical trials in such clinical trial
site. We may also encounter difficulties finding a clinical
trial site at which to conduct our trials.
Delays
in patient enrollment may result in increased costs or may affect
the timing or outcome of our planned clinical trials, which could
prevent completion of these clinical trials and adversely affect
our ability to advance the development of our product
candidates.
Because the results of preclinical studies and early clinical
trials are not necessarily predictive of future results, any
product candidate we advance into clinical trials may not have
favorable results in later clinical trials, if any, or receive
regulatory approval.
Pharmaceutical
development has inherent risk. We will be required to demonstrate
through well-controlled clinical trials that our product candidates
are effective with a favorable benefit-risk profile for use in
their target indications before we can seek regulatory approvals
for their commercial sale. Our principal product candidate,
MS1819-SD, has only completed a Phase 2a clinical trial, while our
other products, AZX1101 and AZX1103, have only been tested in a
pre-clinical setting. Success in pre-clinical studies or early
clinical trials does not mean that later clinical trials will be
successful, as product candidates in later-stage clinical trials
may fail to demonstrate sufficient safety or efficacy despite
having progressed through initial clinical testing. We also may
need to conduct additional clinical trials that are not currently
anticipated. Companies frequently suffer significant setbacks in
advanced clinical trials, even after earlier clinical trials have
shown promising results.
Any product candidate we advance into clinical trials may cause
unacceptable adverse events or have other properties that may delay
or prevent their regulatory approval or commercialization or limit
their commercial potential.
Unacceptable
adverse events caused by any of our product candidates in clinical
trials could cause us or regulatory authorities to interrupt, delay
or halt clinical trials and could result in the denial of
regulatory approval by the FDA or other regulatory authorities for
any or all targeted indications and markets. This, in turn, could
prevent us from commercializing the affected product candidate and
generating revenues from its sale. We have not yet completed
testing of any of our product candidates for the treatment of the
indications for which we intend to seek product approval in humans,
and we currently do not know the extent of adverse events, if any,
that will be observed in patients who receive any of our product
candidates. If any of our product candidates cause
unacceptable adverse events in clinical trials, we may not be able
to obtain regulatory approval or commercialize such product or, if
such product candidate is approved for marketing, future adverse
events could cause us to withdraw such product from the
market.
Delays in the commencement or completion of our clinical trials
could result in increased costs and delay our ability to pursue
regulatory approval.
Although
we are conducting two Phase 2 clinical trials for MS1819-SD, and
currently anticipate completing the preclinical work necessary to
file an IND for AZX1103 by the end of 2019, the commencement of
clinical trials can be delayed for a variety of reasons, including
delays in:
●
obtaining
regulatory clearance to commence a clinical trial;
●
identifying,
recruiting and training suitable clinical
investigators;
●
reaching agreement on acceptable terms with
prospective clinical research organizations
(“ CROs”) and trial sites, the terms of which can
be subject to extensive negotiation, may be subject to modification
from time to time and may vary significantly among different CROs
and trial sites;
●
obtaining
sufficient quantities of a product candidate for use in clinical
trials;
●
obtaining Investigator Review Board
(“ IRB”) or ethics committee approval to conduct a
clinical trial at a prospective site;
●
identifying,
recruiting and enrolling patients to participate in a clinical
trial;
●
retaining
patients who have initiated a clinical trial but may withdraw due
to adverse events from the therapy, insufficient efficacy, fatigue
with the clinical trial process or personal issues;
and
●
availability
of funds.
Any
delays in the commencement of our clinical trials will delay our
ability to pursue regulatory approval for our product candidates.
In addition, many of the factors that cause, or lead to, a delay in
the commencement of clinical trials may also ultimately lead to the
denial of regulatory approval of a product candidate.
We may be required to suspend, repeat or terminate our clinical
trials if they are not conducted in accordance with regulatory
requirements, the results are negative or inconclusive or the
trials are not well designed.
Regulatory agencies, institutional review boards
(“IRBs”) or data safety monitoring boards may at
any time recommend the temporary or permanent discontinuation of
our clinical trials or request that we cease using investigators in
the clinical trials if they believe that the clinical trials are
not being conducted in accordance with applicable regulatory
requirements, or that they present an unacceptable safety risk to
participants. Clinical trials must be conducted in accordance
with current good clinical practices (“cGCPs”) or other applicable foreign government
guidelines governing the design, safety monitoring, quality
assurance and ethical considerations associated with clinical
studies. Clinical trials are subject to oversight by the FDA,
other foreign governmental agencies and IRBs at the study sites
where the clinical trials are conducted. In addition, clinical
trials must be conducted with product candidates produced in
accordance with applicable current good manufacturing practices
(“cGMPs”), which are the FDA’s regulations
governing the design, monitoring and control of manufacturing
processes and facilities. Clinical trials may be suspended by
the FDA, other foreign governmental agencies, or us for various
reasons, including:
●
deficiencies
in the conduct of the clinical trials, including failure to conduct
the clinical trial in accordance with regulatory requirements or
clinical protocols;
●
deficiencies
in the clinical trial operations or trial sites;
●
the
product candidate may have unforeseen adverse side
effects;
●
deficiencies
in the trial design necessary to demonstrate efficacy;
●
fatalities
or other adverse events arising during a clinical trial due to
medical problems that may not be related to clinical trial
treatments;
●
the
product candidate may not appear to be more effective than current
therapies; or
●
the
quality or stability of the product candidate may fall below
acceptable standards.
If
we elect or are forced to suspend or terminate a clinical trial of
any other of our product candidates, the commercial prospects for
that product will be harmed and our ability to generate product
revenue from that product may be delayed or
eliminated. Furthermore, any of these events could prevent us
or our partners from achieving or maintaining market acceptance of
the affected product and could substantially increase the costs of
commercializing our product candidates and impair our ability to
generate revenue from the commercialization of these products
either by us or by our collaboration partners.
Because we license some of our product candidates from third
parties, any dispute with our licensors or non-performance by us or
by our licensors may adversely affect our ability to develop and
commercialize the applicable product candidates.
Some
of our product candidates, including related intellectual property
rights, were licensed from third parties. Under the terms of our
license agreements, the licensors generally have the right to
terminate such agreements in the event of a material breach by us.
Our licenses require us to make annual, milestone or other payments
prior to commercialization of any product and our ability to make
these payments depends on our ability to generate cash in the
future. These agreements generally require us to use diligent and
reasonable efforts to develop and commercialize the product
candidate.
If
there is any conflict, dispute, disagreement or issue of
non-performance between us and our licensing partner regarding our
rights or obligations under the license agreement, including any
conflict, dispute or disagreement arising from our failure to
satisfy payment obligations under such agreement, our ability to
develop and commercialize the affected product candidate may be
adversely affected. Any loss of our rights under our license
agreements could delay or completely terminate our product
development efforts for the affected product
candidate.
We may form or seek strategic alliances or enter into additional
licensing arrangements in the future, and we may not realize the
benefits of such alliances or licensing arrangements.
From
time to time, we may form or seek strategic alliances, create joint
ventures or collaborations or enter into additional licensing
arrangements with third parties that we believe will complement or
augment our development and commercialization efforts with respect
to our product candidates and any future product candidates that we
may develop. Any of these relationships may require us to
incur non-recurring and other charges, increase our near and
long-term expenditures, issue securities that dilute our existing
stockholders or disrupt our management and business. These
relationships also may result in a delay in the development of our
product candidates if we become dependent upon the other party and
such other party does not prioritize the development of our product
candidates relative to its other development activities. In
addition, we face significant competition in seeking appropriate
strategic partners and the negotiation process is time-consuming
and complex. Moreover, we may not be successful in our efforts
to establish a strategic partnership or other alternative
arrangements for our product candidates because they may be deemed
to be at too early of a stage of development for collaborative
effort and third parties may not view our product candidates as
having the requisite potential to demonstrate safety and
efficacy. If we license products or businesses, we may not be
able to realize the benefit of such transactions if we are unable
to successfully integrate them with our existing operations and
company culture. We cannot be certain that, following a
strategic transaction or license, we will achieve the revenue or
specific net income that justifies such transaction. We rely
completely on third parties to manufacture our preclinical and
clinical pharmaceutical supplies and expect to continue to rely on
third parties to produce commercial supplies of any approved
product candidate, and our dependence on third party suppliers
could adversely impact our business.
S-10
We rely completely on third parties to manufacture our preclinical
and clinical pharmaceutical supplies and expect to continue to rely
on third parties to produce commercial supplies of any approved
product candidate, and our dependence on third party suppliers
could adversely impact our business.
The
proprietary yeast strain used to manufacture the active
pharmaceutical ingredient (“API”) MS1819-SD is located in a
storage facility maintained by Charles River Laboratories in
Malvern, Pennsylvania, and such manufacturing is conducted by DSM
Capua SPA in Italy. We are completely dependent on these third
parties for product supply and our MS1819-SD development programs
would be adversely affected by a significant interruption in our
ability to receive such materials. Furthermore, our
third-party suppliers will be required to maintain compliance with
cGMPs and will be subject to inspections by the FDA or comparable
regulatory authorities in other jurisdictions to confirm such
compliance. In the event that the FDA or such other authorities
determine that our third-party suppliers have not complied with
cGMP, our clinical trials could be terminated or subjected to a
clinical hold until such time as we are able to obtain appropriate
replacement material. Any delay, interruption or other issues
that arise in the manufacture, packaging, or storage of our
products as a result of a failure of the facilities or operations
of our third-party suppliers to pass any regulatory agency
inspection could significantly impair our ability to develop and
commercialize our products.
We
do not expect to have the resources or capacity to commercially
manufacture any of our proposed products, if approved, and will
likely continue to be dependent upon third party manufacturers. Our
dependence on third parties to manufacture and supply us with
clinical trial materials and any approved products may adversely
affect our ability to develop and commercialize our products on a
timely basis or at all.
We rely on third parties to conduct our clinical trials. If these
third parties do not meet our deadlines or otherwise conduct the
trials as required, our clinical development programs could be
delayed or unsuccessful and we may not be able to obtain regulatory
approval for or commercialize our product candidates when expected
or at all.
We
do not have the ability to conduct all aspects of our preclinical
testing or clinical trials ourselves. We use CROs to conduct our
planned clinical trials and will rely upon such CROs, as well as
medical institutions, clinical investigators and consultants, to
conduct our trials in accordance with our clinical protocols. Our
CROs, investigators and other third parties will play a significant
role in the conduct of these trials and the subsequent collection
and analysis of data from the clinical trials.
There
is no guarantee that any CROs, investigators and other third
parties upon which we rely for administration and conduct of our
clinical trials will devote adequate time and resources to such
trials or perform as contractually required. If any of these third
parties fail to meet expected deadlines, fail to adhere to our
clinical protocols or otherwise perform in a substandard manner,
our clinical trials may be extended, delayed or terminated. If any
of our clinical trial sites terminate for any reason, we may
experience the loss of follow-up information on patients enrolled
in our ongoing clinical trials unless we are able to transfer the
care of those patients to another qualified clinical trial site. In
addition, principal investigators for our clinical trials may serve
as scientific advisors or consultants to us from time to time and
receive cash or equity compensation in connection with such
services. If these relationships and any related compensation
result in perceived or actual conflicts of interest, the integrity
of the data generated at the applicable clinical trial site may be
jeopardized.
S-11
We will face intense competition and may not be able to compete
successfully.
We
operate in highly competitive segments of the biotechnology and
biopharmaceutical markets. We face competition from many different
sources, including commercial pharmaceutical and biotechnology
enterprises, academic institutions, government agencies, and
private and public research institutions. Our product candidates,
if successfully developed and approved, will compete with
established therapies, as well as new treatments that may be
introduced by our competitors. Many of our competitors have
significantly greater financial, product development, manufacturing
and marketing resources than us. Large pharmaceutical companies
have extensive experience in clinical testing and obtaining
regulatory approval for drugs. In addition, many universities and
private and public research institutes are active in cancer
research, some in direct competition with us. We also may compete
with these organizations to recruit management, scientists and
clinical development personnel. Smaller or early-stage companies
may also prove to be significant competitors, particularly through
collaborative arrangements with large and established companies.
New developments, including the development of other biological and
pharmaceutical technologies and methods of treating disease, occur
in the pharmaceutical and life sciences industries at a rapid pace.
Developments by competitors may render our product candidates
obsolete or noncompetitive. We will also face competition from
these third parties in recruiting and retaining qualified
personnel, establishing clinical trial sites and patient
registration for clinical trials and in identifying and
in-licensing new product candidates.
Our success will depend upon intellectual property, proprietary
technologies and regulatory market exclusivity periods, and we may
be unable to protect our intellectual property.
Our
success will depend, in large part, on obtaining and maintaining
patent protection and trade secret protection for our product
candidates and their formulations and uses, as well as successfully
defending these patents against third-party challenges. If we or
our licensors fail to appropriately prosecute and maintain patent
protection for our product candidates, our ability to develop and
commercialize these product candidates may be adversely affected
and we may not be able to prevent competitors from making, using
and selling competing products. This failure to properly protect
the intellectual property rights relating to these product
candidates could have a material adverse effect on our financial
condition and results of operations.
The
patent application process is subject to numerous risks and
uncertainties, and there can be no assurance that we or our
partners will be successful in protecting our product candidates by
obtaining and defending patents. These risks and uncertainties
include the following:
●
patent
applications may not result in any patents being
issued;
●
patents
that may be issued or in-licensed may be challenged, invalidated,
modified, revoked, circumvented, found to be unenforceable, or
otherwise may not provide any competitive advantage;
●
our
competitors, many of which have substantially greater resources
than we or our partners and many of which have made significant
investments in competing technologies, may seek, or may already
have obtained, patents that will limit, interfere with, or
eliminate our ability to make, use, and sell our potential
products;
●
there
may be significant pressure on the United States government and
other international governmental bodies to limit the scope of
patent protection both inside and outside the United States for
disease treatments that prove successful as a matter of public
policy regarding worldwide health concerns;
●
countries
other than the United States may have patent laws less favorable to
patentees than those upheld by United States courts, allowing
foreign competitors a better opportunity to create, develop, and
market competing products; and
●
we
may be involved in lawsuits to protect or enforce our patents or
the patents of our licensors, which could be expensive, time
consuming and unsuccessful.
S-12
In
addition to patents, we and our partners also rely on trade secrets
and proprietary know-how. Although we have taken steps to protect
our trade secrets and unpatented know-how, including entering into
confidentiality agreements with third parties, and confidential
information and inventions agreements with employees, consultants
and advisors, third parties may still obtain this information or
come upon this same or similar information independently. We may
become subject to claims that we or consultants, advisors or
independent contractors that we may engage to assist us in
developing our product candidates have wrongfully or inadvertently
disclosed to us or used trade secrets or other proprietary
information of their former employers or their other
clients.
We intend to rely on market exclusivity periods that may not be or
remain available to us.
We
intend to rely on our ability to obtain and maintain a regulatory
period of market exclusivity for any of our biologic product
candidates that are successfully developed and approved for
commercialization. Although this period in the United States is
currently 12 years from the date of marketing approval, reductions
to this period have been proposed. This exclusivity period in
Europe is currently 10 years from the date of marketing
approval by the EMA. Once any regulatory period of exclusivity
expires, depending on the status of our patent coverage and the
nature of the product, we may not be able to prevent others from
marketing products that are biosimilar to or interchangeable with
our products, which would materially adversely affect
us.
If we are unable to establish sales and marketing capabilities or
fail to enter into agreements with third parties to market,
distribute and sell any products we may successfully develop, we
may not be able to effectively market and sell any such products
and generate product revenue.
We
do not currently have the infrastructure for the sales, marketing
and distribution of any of our product candidates, and must build
this infrastructure or make arrangements with third parties to
perform these functions in order to commercialize any products that
we may successfully develop. The establishment and development of a
sales force, either by us or jointly with a partner, or the
establishment of a contract sales force to market any products we
may develop will be expensive and time-consuming and could delay
any product launch. If we, or our partners, are unable to establish
sales and marketing capability or any other non-technical
capabilities necessary to commercialize any products we may
successfully develop, we will need to contract with third parties
to market and sell such products. We may not be able to establish
arrangements with third-parties on acceptable terms, if at
all.
If any product candidate that we successfully develop does not
achieve broad market acceptance among physicians, patients,
healthcare payors and the medical community, the revenues that it
generates from their sales will be limited.
Even
if our product candidates receive regulatory approval, they may not
gain market acceptance among physicians, patients, healthcare
payors and the medical community. Coverage and reimbursement of our
product candidates by third-party payors, including government
payors, generally is also necessary for commercial success. The
degree of market acceptance of any approved products will depend on
a number of factors, including:
●
the
efficacy and safety as demonstrated in clinical
trials;
●
the
clinical indications for which the product is
approved;
●
acceptance
by physicians, major operators of hospitals and clinics and
patients of the product as a safe and effective
treatment;
●
acceptance
of the product by the target population;
●
the
potential and perceived advantages of product candidates over
alternative treatments;
●
the
safety of product candidates seen in a broader patient group,
including its use outside the approved indications;
●
the
cost of treatment in relation to alternative
treatments;
S-13
●
the
availability of adequate reimbursement and pricing by third parties
and government authorities;
●
relative
convenience and ease of administration;
●
the
prevalence and severity of adverse events;
●
the
effectiveness of our sales and marketing efforts; and
●
unfavorable
publicity relating to the product.
If
any product candidate is approved but does not achieve an adequate
level of acceptance by physicians, hospitals, healthcare payors and
patients, we may not generate sufficient revenue from these
products and may not become or remain profitable.
We may incur substantial product liability or indemnification
claims relating to the clinical testing of our product
candidates.
We
face an inherent risk of product liability exposure related to the
testing of our product candidates in human clinical trials, and
claims could be brought against us if use or misuse of one of our
product candidates causes, or merely appears to have caused,
personal injury or death. Although we have and intend to maintain
product liability insurance relating to our clinical trials, our
coverage may not be sufficient to cover claims that may be made
against us and we may be unable to maintain such insurance. Any
claims against us, regardless of their merit, could severely harm
our financial condition, strain our management and other resources
or destroy the prospects for commercialization of the product which
is the subject of any such claim. We are unable to predict if we
will be able to obtain or maintain product liability insurance for
any products that may be approved for marketing. Additionally, we
have entered into various agreements where we indemnify third
parties for certain claims relating to the testing and use of our
product candidates. These indemnification obligations may require
us to pay significant sums of money for claims that are covered by
these indemnifications.
If we fail to attract and retain key management and clinical
development personnel, we may be unable to successfully develop or
commercialize our product candidates.
We
are dependent on our management team and clinical development
personnel and our success will depend on their continued service,
as well as our ability to attract and retain highly qualified
personnel. In particular, the continued service of our senior
management team, including Johan M. (Thijs) Spoor, our President
and Chief Executive Officer, Maged Shenouda, our Chief Financial
Officer, and James Pennington, our Chief Medical Officer, is
critical to our success. The market for the services of qualified
personnel in the pharmaceutical industry is highly competitive. The
loss of service of any member of our senior management team or key
personnel could prevent, impair or delay the implementation of our
business plan, the successful conduct and completion of our planned
clinical trials and the commercialization of any product candidates
that we may successfully develop. We do not carry key man insurance
for any member of our senior management team.
We use biological materials and may use hazardous materials, and
any claims relating to improper handling, storage or disposal of
these materials could be time consuming or costly.
We
may use hazardous materials, including chemicals and biological
agents and compounds, that could be dangerous to human health and
safety or the environment. Our operations also produce hazardous
waste products. Federal, state and local laws and regulations
govern the use, generation, manufacture, storage, handling and
disposal of these materials and wastes. Compliance with applicable
environmental laws and regulations may be expensive, and current or
future environmental laws and regulations may impair our product
development efforts. In addition, we cannot entirely eliminate the
risk of accidental injury or contamination from these materials or
wastes. We do not carry specific biological or hazardous waste
insurance coverage and our property and casualty and general
liability insurance policies specifically exclude coverage for
damages and fines arising from biological or hazardous waste
exposure or contamination. Accordingly, in the event of
contamination or injury, we could be held liable for damages or
penalized with fines in an amount exceeding our resources, and our
clinical trials or regulatory approvals could be
suspended.
S-14
Although
we maintain workers’ compensation insurance to cover us for
costs and expenses we may incur due to injuries to our employees
resulting from the use of hazardous materials, this insurance may
not provide adequate coverage against potential liabilities. We do
not maintain insurance for environmental liability or toxic tort
claims that may be asserted against us in connection with our
storage or disposal of biological or hazardous
materials.
In
addition, we may incur substantial costs in order to comply with
current or future environmental, health and safety laws and
regulations. These current or future laws and regulations may
impair our research, development or production efforts. Failure to
comply with these laws and regulations also may result in
substantial fines, penalties or other sanctions.
If we or our partners are sued for infringing intellectual property
rights of third parties, it will be costly and time consuming, and
an unfavorable outcome in that litigation would have a material
adverse effect on our business.
Our
success also depends upon our ability and the ability of any of our
future collaborators to develop, manufacture, market and sell our
product candidates without infringing the proprietary rights of
third parties. Numerous United States and foreign issued patents
and pending patent applications, which are owned by third parties,
exist in the fields in which we are developing products, some of
which may be directed at claims that overlap with the subject
matter of our intellectual property. Because patent applications
can take many years to issue, there may be currently pending
applications, unknown to us, which may later result in issued
patents that our product candidates or proprietary technologies may
infringe. Similarly, there may be issued patents relevant to our
product candidates of which we are not aware.
There
is a substantial amount of litigation involving patent and other
intellectual property rights in the biotechnology and
biopharmaceutical industries generally. If a third party claims
that we or any of our licensors, suppliers or collaborators
infringe the third party’s intellectual property rights, we
may have to:
●
obtain
licenses, which may not be available on commercially reasonable
terms, if at all;
●
abandon
an infringing product candidate or redesign our products or
processes to avoid infringement;
●
pay
substantial damages, including the possibility of treble damages
and attorneys’ fees, if a court decides that the product or
proprietary technology at issue infringes on or violates the third
party’s rights;
●
pay
substantial royalties, fees and/or grant cross licenses to our
technology; and/or
●
defend litigation or administrative proceedings
which may be costly whether we win or lose, and which could result in a substantial diversion of
our financial and management resources.
Healthcare reform and restrictions on reimbursements may limit our
financial returns.
Our
ability or the ability of our collaborators to commercialize any of
our product candidates that we successfully develop may depend, in
part, on the extent to which government health administration
authorities, private health insurers and other organizations will
reimburse consumers for the cost of these products. These third
parties are increasingly challenging both the need for and the
price of new drug products. Significant uncertainty exists as to
the reimbursement status of newly approved therapeutics. Adequate
third-party reimbursement may not be available for our product
candidates to enable us or our collaborators to maintain price
levels sufficient to realize an appropriate return on their and our
investments in research and product development.
Changes in healthcare law and implementing regulations, including
government restrictions on pricing and reimbursement, as well as
healthcare policy and other healthcare payor cost-containment
initiatives, may negatively impact our ability to generate
revenues.
The potential pricing and reimbursement environment for our drug
product candidates and any future products may change in the future
and become more challenging due to, among other reasons, policies
advanced by the current or any new presidential administration,
federal agencies, healthcare legislation passed by Congress, or
fiscal challenges faced by all levels of government health
administration authorities.
S-15
If we or any of our independent contractors, consultants,
collaborators, manufacturers, vendors or service providers fail to
comply with healthcare laws and regulations, we or they could be
subject to enforcement actions, which could result in penalties and
affect our ability to develop, market and sell our product
candidates and may harm our reputation.
We
are subject to federal, state, and foreign healthcare laws and
regulations pertaining to fraud and abuse and patients’
rights. These laws and regulations include:
●
the
U.S. federal healthcare program anti-kickback law, which prohibits,
among other things, persons and entities from soliciting, receiving
or providing remuneration, directly or indirectly, to induce either
the referral of an individual for a healthcare item or service, or
the purchasing or ordering of an item or service, for which payment
may be made under a federal healthcare program such as Medicare or
Medicaid;
●
the
U.S. federal false claims and civil monetary penalties laws, which
prohibit, among other things, individuals or entities from
knowingly presenting or causing to be presented, claims for payment
by government funded programs such as Medicare or Medicaid that are
false or fraudulent, and which may apply to us by virtue of
statements and representations made to customers or third
parties;
●
the U.S. federal Health Insurance Portability and
Accountability Act (“HIPAA”), which prohibits, among other things,
executing a scheme to defraud healthcare
programs;
●
HIPAA,
as amended by the Health Information Technology for Economic and
Clinical Health Act (“HITECH”), imposes requirements
relating to the privacy, security, and transmission of individually
identifiable health information, and requires notification to
affected individuals and regulatory authorities of certain breaches
of security of individually identifiable health
information;
●
the
federal Physician Payment Sunshine Act, which requires certain
manufacturers of drugs, devices, biologics and medical supplies to
report annually to the Centers for Medicare & Medicaid Services
(“CMS”)
information related to payments and other transfers of value to
physicians, other healthcare providers and teaching hospitals, and
ownership and investment interests held by physicians and other
healthcare providers and their immediate family members, which is
published in a searchable form on an annual basis; and
●
state
laws comparable to each of the above federal laws, such as, for
example, anti-kickback and false claims laws that may be broader in
scope and also apply to commercial insurers and other non-federal
payors, requirements for mandatory corporate regulatory compliance
programs, and laws relating to patient data privacy and
security.
If
our operations are found to be in violation of any such health care
laws and regulations, we may be subject to penalties, including
administrative, civil and criminal penalties, monetary damages,
disgorgement, imprisonment, the curtailment or restructuring of our
operations, loss of eligibility to obtain approvals from the FDA,
or exclusion from participation in government contracting,
healthcare reimbursement or other government programs, including
Medicare and Medicaid, any of which could adversely affect our
financial results. Although effective compliance programs can
mitigate the risk of investigation and prosecution for violations
of these laws, these risks cannot be entirely eliminated. Any
action against us for an alleged or suspected violation could cause
us to incur significant legal expenses and could divert our
management’s attention from the operation of our business,
even if our defense is successful. In addition, achieving and
sustaining compliance with applicable laws and regulations may be
costly to us in terms of money, time and resources.
S-16
We will need to grow the size of our organization, and we may
experience difficulties in managing this growth.
As of March 31, 2019, we had twelve
employees. As our
development and commercialization plans and strategies develop, and
as we continue to transition into operating as a public company, we
expect to need additional managerial, operational, sales,
marketing, financial and other personnel. Future growth would
impose significant added responsibilities on members of management,
including:
●
identifying,
recruiting, integrating, maintaining and motivating additional
employees;
●
managing
our internal development efforts effectively, including the
clinical, FDA and international regulatory review process for our
product candidates, while complying with our contractual
obligations to contractors and other third parties;
and
●
improving
our operational, financial and management controls, reporting
systems and procedures.
Our
future financial performance and our ability to commercialize our
product candidates will depend, in part, on our ability to
effectively manage any future growth, and our management may also
have to divert a disproportionate amount of its attention away from
day-to-day activities in order to devote a substantial amount of
time to managing these growth activities.
We
currently rely, and for the foreseeable future will continue to
rely, in substantial part on certain independent organizations,
advisors and consultants to provide certain services, including
substantially all aspects of regulatory approval, clinical
management and manufacturing. There can be no assurance that
the services of independent organizations, advisors and consultants
will continue to be available to us on a timely basis when needed,
or that we can find qualified replacements. In addition, if we
are unable to effectively manage our outsourced activities or if
the quality or accuracy of the services provided by consultants is
compromised for any reason, our clinical trials may be extended,
delayed or terminated, and we may not be able to obtain regulatory
approval of our product candidates or otherwise advance our
business. There can be no assurance that we will be able to
manage our existing consultants or find other competent outside
contractors and consultants on economically reasonable terms, or at
all.
If
we are not able to effectively expand our organization by hiring
new employees and expanding our groups of consultants and
contractors, we may not be able to successfully implement the tasks
necessary to further develop and commercialize our product
candidates and, accordingly, may not achieve our research,
development and commercialization goals.
Risks Relating to our Finances, Capital Requirements and Other
Financial Matters
We are a development stage company with a history of operating
losses that are expected to continue and we are unable to predict
the extent of future losses, whether we will generate significant
revenues or whether we will achieve or sustain
profitability.
We
are a company in the development stage and our prospects must be
considered in light of the uncertainties, risks, expenses and
difficulties frequently encountered by companies in their early
stages of operations. We have generated operating losses since our
inception, including losses of approximately $4,603,644 and
$13,534,000 for the quarter ended March 31, 2019 and the year ended
December 31, 2018, respectively. We expect to make substantial
expenditures and incur increasing operating costs in the future and
our accumulated deficit will increase significantly as we expand
development and clinical trial activities for our product
candidates. Our losses have had, and are expected to continue to
have, an adverse impact on our working capital, total assets and
stockholders’ equity. Because of the risks and uncertainties
associated with product development, we are unable to predict the
extent of any future losses, whether we will ever generate
significant revenues or if we will ever achieve or sustain
profitability.
S-17
We
have incurred significant operating losses and negative cash flows
from operations since inception, had working capital at March 31,
2019 and December 31, 2018 of approximately ($2,953,000) and
$1,804,000, respectively, and had an accumulated deficit at March
31, 2019 and December 31, 2018 of approximately $52,178,000 and
$47,517,000, respectively. We are dependent on obtaining, and are
continuing to pursue, the necessary funding from outside sources,
including obtaining additional funding from this offering and other
future sales of securities in order to continue our operations.
Without adequate funding, we may not be able to meet our
obligations. We believe these conditions raise substantial doubt
about our ability to continue as a going concern.
We will need substantial additional funding and may be unable to
raise capital when needed, which would force us to delay, curtail
or eliminate one or more of our research and development programs
or commercialization efforts.
Our
operations have consumed substantial amounts of cash since
inception. During the quarter ended March 31, 2019 and the year
ended December 31, 2018, we incurred research and development
expenses of approximately $2,118,533 and $4,986,000, respectively.
We expect to continue to spend substantial amounts on product
development, including conducting clinical trials for our product
candidates and purchasing clinical trial materials from our
suppliers. We will require substantial additional funds to support
our continued research and development activities, as well as the
anticipated costs of preclinical studies and clinical trials,
regulatory approvals and potential commercialization. We could
spend our available financial resources much faster than we
currently expect.
Until
such time, if ever, as we can generate a sufficient amount of
product revenue and achieve profitability, we expect to seek to
finance future cash needs through equity or debt financings or
corporate collaboration and licensing arrangements. We currently
have no other commitments or agreements relating to any of these
types of transactions and we cannot be certain that additional
funding will be available on acceptable terms, or at all. If we are
unable to raise additional capital, we will have to delay, curtail
or eliminate one or more of our research and development
programs.
Raising additional funds by issuing securities or through licensing
or lending arrangements may cause dilution to our existing
stockholders, restrict our operations or require us to relinquish
proprietary rights.
To
the extent that we raise additional capital by issuing equity
securities, the share ownership of existing stockholders will be
diluted. Any future debt financing may involve covenants that
restrict our operations, including limitations on our ability to
incur liens or additional debt, pay dividends, redeem our stock,
make certain investments and engage in certain merger,
consolidation or asset sale transactions, among other restrictions.
In addition, if we raise additional funds through licensing
arrangements, it may be necessary to relinquish potentially
valuable rights to our product candidates or grant licenses on
terms that are not favorable to us.
We have certain convertible promissory notes outstanding, in the
total amount, including accrued interest, of $2,000,000. If we are
unable to pay the convertible promissory notes when due, or
otherwise restructure the convertible promissory notes, we will be
in default.
During
the quarter ended March 31, 2019, we issued two convertible
promissory notes in the aggregate principal amount of $2,000,000.
The two convertible promissory notes are due on the earlier to
occur of (i) the tenth business day following the receipt by AzurRx
SAS of the 2019 Tax Credit and 2020 Tax Credit, respectively, or
(ii) December 31, 2019 and December 31, 2020, respectively. In the
event we do not have the cash resources to pay the convertible
promissory notes when due, such notes will be in default. As a
result, our business, financial condition and future prospects
could be negatively impacted.
S-18
The preliminary financial data contained herein are based on
information existing as of the date hereof and there
can be no assurance that actual financial results will not differ,
potentially materially so.
The estimated financial results included herein are based on
information existing as of the date hereof. During the preparation
of our financial statements for the quarter ending June 30, 2019,
we may identify items that would require us to make adjustments,
which may be material to the estimates described above. This
preliminary financial data has been prepared by and is the
responsibility of our management. Mazars USA LLP has not audited,
reviewed, compiled or performed any procedures with respect to this
preliminary financial data, and accordingly, Mazars USA LLP does
not express an opinion or any other form of assurance with respect
thereto. Accordingly, there can be no assurance that the projected
results will be realized or that actual results will not be
significantly lower than projected.
Risks Associated with our Capital Stock
The limited public market for our securities may adversely affect
an investor’s ability to liquidate an investment in
us.
Although
our common stock is currently listed on the Nasdaq Capital Market,
there is limited trading activity. We can give no assurance
that an active market will develop, or if developed, that it will
be sustained. If an investor acquires shares of our common
stock, the investor may not be able to liquidate our shares should
there be a need or desire to do so.
The market price of our common stock may be volatile and may
fluctuate in a way that is disproportionate to our operating
performance.
Our
stock price may experience substantial volatility as a result of a
number of factors, including:
●
sales
or potential sales of substantial amounts of our common
stock;
●
delay
or failure in initiating or completing pre-clinical or clinical
trials or unsatisfactory results of these trials;
●
announcements
about us or about our competitors, including clinical trial
results, regulatory approvals or new product
introductions;
●
developments
concerning our licensors or product manufacturers;
●
litigation
and other developments relating to our patents or other proprietary
rights or those of our competitors;
●
conditions
in the pharmaceutical or biotechnology industries;
●
governmental
regulation and legislation;
●
variations
in our anticipated or actual operating results;
●
change
in securities analysts’ estimates of our performance, or our
failure to meet analysts’ expectations; foreign currency
values and fluctuations; and
●
overall
economic conditions.
Many
of these factors are beyond our control. The stock markets in
general, and the market for pharmaceutical and biotechnological
companies in particular, have historically experienced extreme
price and volume fluctuations. These fluctuations often have been
unrelated or disproportionate to the operating performance of these
companies. These broad market and industry factors could reduce the
market price of our common stock, regardless of our actual
operating performance.
S-19
We have never paid and do not intend to pay cash dividends. As
a result, capital appreciation, if any, will be your sole source of
gain.
We
have never paid cash dividends on any of our capital stock and we
currently intend to retain future earnings, if any, to fund the
development and growth of our business. In addition, the terms
of existing and future debt agreements may preclude us from paying
dividends. As a result, capital appreciation, if any, of our
common stock will be your sole source of gain for the foreseeable
future.
Provisions in our restated certificate of incorporation, our
restated by-laws and Delaware law might discourage, delay or
prevent a change in control of our company or changes in our
management and, therefore, depress the trading price of our common
stock.
Provisions
of our restated certificate of incorporation, our restated by-laws
and Delaware law may have the effect of deterring unsolicited
takeovers or delaying or preventing a change in control of our
company or changes in our management, including transactions in
which our stockholders might otherwise receive a premium for their
shares over then current market prices. In addition, these
provisions may limit the ability of stockholders to approve
transactions that they may deem to be in their best interests.
These provisions include:
●
the
inability of stockholders to call special meetings;
and
●
the
ability of our board of directors to designate the terms of and
issue new series of preferred stock without stockholder approval,
which could include the right to approve an acquisition or other
change in our control or could be used to institute a rights plan,
also known as a poison pill, that would work to dilute the stock
ownership of a potential hostile acquirer, likely preventing
acquisitions that have not been approved by our board of
directors.
In
addition, Section 203 of the Delaware General Corporation Law
prohibits a publicly-held Delaware corporation from engaging in a
business combination with an interested stockholder, generally a
person which together with its affiliates owns, or within the last
three years, has owned 15% of our voting stock, for a period of
three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination
is approved in a prescribed manner.
The
existence of the foregoing provisions and anti-takeover measures
could limit the price that investors might be willing to pay in the
future for shares of our common stock. They could also deter
potential acquirers of our company, thereby reducing the likelihood
that you could receive a premium for your common stock in an
acquisition.
We are eligible to be treated as an “emerging growth
company,” as defined in the JOBS Act, and we cannot be
certain if the reduced disclosure requirements applicable to
emerging growth companies will make our common stock less
attractive to investors.
We are an “emerging growth company,”
as defined in the Jumpstart Our Business Startups Act of 2012 (the
“JOBS
Act”). For as long as we
continue to be an emerging growth company, we may take advantage of
exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies,
including (i) not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act,
(ii) reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and
(iii) exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. We could be
an emerging growth company for up to five years, although
circumstances could cause us to lose that status earlier, including
if the market value of our common stock held by non-affiliates
exceeds $700.0 million as of any June 30 before that time
or if we have total annual gross revenue of $1.0 billion or more
during any fiscal year before that time, after which, in each case,
we would no longer be an emerging growth company as of the
following December 31 or, if we issue more than $1.0 billion in
non-convertible debt during any three-year period before that time,
we would cease to be an emerging growth company
immediately.
S-20
Under
the JOBS Act, emerging growth companies can also delay adopting new
or revised accounting standards until such time as those standards
apply to private companies. We have irrevocably elected not to
avail ourselves of this exemption from new or revised accounting
standards and, therefore, will be subject to the same new or
revised accounting standards as other public companies that are not
emerging growth companies.
If securities or industry analysts do not publish research or
reports about our business, if they adversely change their
recommendations regarding our shares or if our results of
operations do not meet their expectations, our share price and
trading volume could decline.
The
trading market for our shares is influenced by the research and
reports that industry or securities analysts publish about us or
our business. We do not have any control over these analysts. If
one or more of these analysts cease coverage of our company or fail
to publish reports on us regularly, we could lose visibility in the
financial markets, which in turn could cause our share price or
trading volume to decline. Moreover, if one or more of the analysts
who cover us downgrade our stock, or if our results of operations
do not meet their expectations, our share price could
decline.
Risks Related to this Offering
Our management team may invest or spend the proceeds of this
offering in ways with which you may not agree or in ways which may
not yield a significant return.
Our
management will have broad discretion over the use of proceeds from
this offering. We currently intend to use the net proceeds from the
sale of securities offered by this prospectus for general corporate
purposes, including research and development, working capital
and capital expenditures. We may use a portion of the net proceeds
to continue clinical development and testing of MS1819-SD and
advance our preclinical program for AZX1103. We may also use the
net proceeds from the sale of the securities under this
prospectus to in-license, acquire or invest in complementary
businesses, technologies, products or assets. However, our
management will have broad discretion in the application of the net
proceeds from this offering and could spend the proceeds in ways
that do not improve our results of operations or enhance the value
of our common stock. The failure by management to apply these funds
effectively could result in financial losses that could have a
material adverse effect on our business, cause the price of our
common stock to decline and delay the development of our product
candidates.
Purchasers in this offering will experience immediate and
substantial dilution in the book value of their
investment.
Because the public offering price per share is
substantially higher than the book value per share of our common
stock, you will suffer substantial dilution in the net tangible
book value of the common stock you purchase in this offering. After
giving effect to the sale by us of 5,000,000 shares of our common
stock at a public offering price of $1.00 per share, and after
deducting the underwriting discounts and commissions and estimated
offering expenses payable by us, you will suffer immediate and
substantial dilution of $0.59 per share in the net tangible book
value of the common stock you purchase in this offering.
To the
extent outstanding options, warrants or other derivative securities
are ultimately exercised or converted, or if we issue equity-based
awards to our employees under our Amended and Restated 2014 Omnibus
Equity Incentive Plan, there will be further dilution to investors
who purchase shares in this offering. In addition, if we issue
additional equity securities or derivative securities, investors
purchasing shares in this offering will experience additional
dilution. For a further description of the dilution that you will
experience immediately after this offering, see
“Dilution”
on page S-25.
Sales of a substantial number of shares of our common stock, or the
perception that such sales may occur, may adversely impact the
price of our common stock.
Sales
of a substantial number of shares of our common stock in the public
market could occur at any time. These sales, or the perception that
such sales may occur, may adversely impact the price of our common
stock, even if there is no relationship between such sales and the
performance of our business. As of July 16, 2019, we had 21,103,794
shares of common stock outstanding, as well as stock options to
purchase an aggregate of 1,887,500 shares of our common
stock at a weighted average exercise price of $2.58 per share,
416,000 shares of granted, but unissued restricted stock,
outstanding warrants to purchase up to an aggregate of
3,188,378 shares of our common stock at a weighted average
exercise price of $3.51 per share, and up to 829,808 shares of our
common stock issuable upon conversion of the Notes. The exercise of
such outstanding derivative securities may result in further
dilution of your investment.
S-21
CAUTIONARY NOTES
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement contains forward-looking statements that
involve substantial risks and uncertainties. All statements
contained in this prospectus supplement and the accompanying
prospectus, other than statements of historical facts, are
forward-looking statements including statements regarding our
strategy, future operations, future financial position, future
revenue, projected costs, prospects, plans, objectives of
management and expected market growth. These statements involve
known and unknown risks, uncertainties and other important factors
that may cause our actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
The
words “anticipate,” “believe,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “predict,”
“project,” “target,”
“potential,” “will,” “would,”
“could,” “should,” “continue,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. These forward-looking statements include,
among other things, statements about:
●
the
availability of capital to satisfy our working capital
requirements;
●
the
accuracy of our estimates regarding financial data as of June 30,
2019, as well as other estimates regarding expenses, future
revenues and capital requirements;
●
our
ability to continue operating as a going concern;
●
our
plans to develop and commercialize our principal product
candidates, consisting of MS1819-SD and AZX1103;
●
our
ability to initiate and complete our clinical trials and to advance
our principal product candidate into additional clinical trials,
including pivotal clinical trials, and successfully complete such
clinical trials;
●
regulatory
developments in the U.S. and foreign countries;
●
the
performance of our third-party contract manufacturer(s), contract
research organization(s) and other third-party non-clinical and
clinical development collaborators and regulatory service
providers;
●
our
ability to obtain and maintain intellectual property protection for
our core assets;
●
the
size of the potential markets for our product candidates and our
ability to serve those markets;
●
the
rate and degree of market acceptance of our product candidates for
any indication once approved;
●
the
success of competing products and product candidates in development
by others that are or become available for the indications that we
are pursuing;
●
the
loss of key scientific, clinical and nonclinical development,
and/or management personnel, internally or from one of our
third-party collaborators; and
●
other risks and uncertainties, including those
listed in the “ Risk
Factors ” section of
this prospectus supplement and the accompanying prospectus and
the documents incorporated
by reference herein.
These
forward-looking statements are only predictions and we may not
actually achieve the plans, intentions or expectations disclosed in
our forward-looking statements, so you should not place undue
reliance on our forward-looking statements. Actual results or
events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make.
We have based these forward-looking statements largely on our
current expectations and projections about future events and trends
that we believe may affect our business, financial condition and
operating results. We have included important factors in the
cautionary statements included in this prospectus supplement, as
well as certain information incorporated by reference into this
prospectus supplement and the accompanying prospectus, that could
cause actual future results or events to differ materially from the
forward-looking statements that we make. Our forward-looking
statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments
we may make.
You
should read this prospectus supplement and the accompanying
prospectus with the understanding that our actual future results
may be materially different from what we expect. We do not assume
any obligation to update any forward-looking statements whether as
a result of new information, future events or otherwise, except as
required by applicable law.
S-22
We
estimate that the net proceeds to us from
this offering will be approximately $4.465 million (or
approximately $5.162 million if the
underwriters’ option to purchase additional shares of common
stock is exercised in full), after deducting the underwriting
discounts and commissions and estimated offering expenses payable
by us.
We
currently intend to use the net proceeds from the sale of the
securities offered by this prospectus supplement primarily for
research and development expenses associated with continuing
clinical development and testing of MS1819-SD and advancing our
preclinical programs for AZX1103, and for other
working capital and capital expenditures.
The
table below reflects our current planned use of the net proceeds
from this offering. Each of these amounts is an estimate only, and
is subject to change at any time before or after closing of the
offering.
|
|
Amounts in
$000
|
|
|
|
|
Gross
proceeds
|
$5,000
|
|
Underwriting
discounts and commissions, and other expenses of the
offering
|
$535
|
|
Net
proceeds
|
$4,465
|
|
|
|
|
Research and
development
|
$2,000
|
|
|
|
|
General and
administrative, working capital and other general corporate
purposes
|
$2,465
|
The amount of what, and timing of when, we actually spend for these
purposes may vary significantly and will depend on a number of
factors, including our future revenue and expenses and the other
factors described in the section of this prospectus supplement
captioned “Risk
Factors”
and under the heading “Risk
Factors”
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2018. Pending other uses, we intend
to invest our proceeds from the offering in short-term investments
or hold them as cash. We cannot predict whether the proceeds
invested will yield a favorable return. Our management will have
broad discretion in the use of the net proceeds from this offering,
and investors will be relying on the judgment of our management
regarding the application of the net proceeds.
S-23
CAPITALIZATION
The
following table sets forth our cash and cash equivalents and
capitalization as of March 31, 2019:
●
on
an actual basis;
●
on
a pro forma basis giving effect to the issuance of shares of
common stock and the receipt of net proceeds from the April 2019
Public Offering and May 2019 Public Offering of approximately
$5,050,000; and
●
on
a pro forma, as adjusted basis giving effect to the sale and
issuance by us of 5,000,000 shares of common stock in this
offering, at a public offering price of $1.00 per share, and after
deducting underwriting discounts and commissions and estimated
offering expenses payable by us.
The pro forma and pro forma as adjusted
information below is illustrative only, and our capitalization
following the closing of this offering will be adjusted based on
the actual public offering price per share and other terms of this
offering determined at pricing as well as our actual expenses. You
should read this table together with “Management’s Discussion
and Analysis of Financial Condition and Results of
Operations” and our
financial statements and the related notes thereto appearing in our
Quarterly Report on Form 10-Q for the period ended March 31, 2019,
as filed with the SEC on May 15, 2019 and incorporated by reference
into this prospectus supplement and accompanying
prospectus.
|
As of March 31, 2019
(amounts in dollars and in thousands, except share and per share
amounts)
|
Actual
|
Pro forma
|
Pro Forma,
as
adjusted
|
|
Cash and cash equivalents
|
$413,858
|
$5,472,038
|
$9,937,038
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
Convertible preferred stock - Par value $0.0001 per share;
10,000,000 shares authorized and 0 shares issued and outstanding,
actual, pro forma and pro forma as adjusted
|
0
|
0
|
0
|
|
Common stock - Par value $0.0001 per share;
100,000,000 shares authorized; 18,537,958 shares issued and
outstanding, actual;21,060,055 shares issued and outstanding, pro
forma; 22,060,055 shares issued
and outstanding pro forma, as adjusted
|
$1,853
|
$2,105
|
$2,605
|
|
Additional paid-in capital
|
$56,134,666
|
$61,158,368
|
$(65,622,868)
|
|
Accumulated deficit and other comprehensive loss
|
$(53,423,194)
|
$(53,423,194)
|
$(53,423,194)
|
|
Total stockholders’
equity
|
$2,713,325
|
$7,737,279
|
$12,202,279
|
Common
stock outstanding in the table above excludes the following
shares as of March 31, 2019:
●
994,000 shares of
common stock issuable upon the exercise of stock options as
of March 31,
2019 at a weighted average exercise price of $3.58 per
share;
●
416,000 shares of
granted, but unissued, shares of restricted stock;
●
3,112,715 shares of
common stock issuable upon exercise of outstanding warrants, with a
weighted average exercise price of $4.83 per share;
●
635,067 shares of common stock reserved for
future issuance under the Amended and Restated 2014 Omnibus Equity
Incentive Plan as of March 31,
2019;
●
809,863
shares of common stock issuable upon conversion of the Notes as
of March 31, 2019; and
●
200,000
shares of common stock issuable upon exercise of the common stock
purchase warrants to be issued to Wainwright, which equals 4% of
the shares of common stock offered and sold in this offering, at an
exercise price of $1.25 per share.
S-24
DILUTION
If
you purchase shares of our common stock in this offering, you will
experience dilution to the extent of the difference between the
public offering price per share in this offering and our as
adjusted net tangible book value per share immediately after this
offering. Net tangible book value is total assets minus the sum of
liabilities and intangible assets. Net tangible book value per
share is net tangible book value divided by the total number of
shares of common stock outstanding. As of March 31, 2019, our net
tangible book value was approximately $1,312,000, or approximately
$0.07 per share.
Pro
forma net tangible book value per share represents our total
tangible assets less our total liabilities, divided by the number
of shares of common stock outstanding as of March 31, 2019, after
giving effect to the receipt of net proceeds from the April 2019
Public Offering and May 2019 Public Offering of approximately $5.0
million.
After
further giving effect to (i) the pro forma adjustment described
above, and (ii) the sale by us of 5,000,000 shares of common stock
in this offering at a public offering price of $1.00 per share, and
after deducting the underwriting discounts and commissions and
estimated offering expenses payable by us, our pro forma, as
adjusted net tangible book value as of March 31, 2019 would have
been approximately $10,801,000, or approximately $0.41 per share.
This amount represents an immediate increase in net tangible book
value of $0.11 per share to existing stockholders and an immediate
dilution in net tangible book value of $0.59 per share to
purchasers of our common stock in this
offering.
The
following table illustrates the dilution in net tangible book value
per share to new investors:
|
Public
offering price per share:
|
|
$1.00
|
|
Net
tangible book value per share as of March 31, 2019
|
$0.07
|
|
|
Pro
forma increase in net tangible book value per share attributable to
the April 2019 Public Offering and May 2019 Public
Offering
|
$0.23
|
|
|
Pro
forma net tangible book value per share as of March 31,
2019
|
$0.30
|
|
|
Increase
in pro forma, as adjusted, net tangible book value per share after
this offering
|
$0.11
|
|
|
|
|
|
|
Pro
forma, as adjusted net tangible book value per share after this
offering
|
|
$0.41
|
|
|
|
|
|
Dilution
in pro forma, as adjusted net tangible book value per share to new
investors in this offering
|
|
$0.59
|
If
the underwriters exercise their option
to purchase additional shares of common stock in full at the
public offering price of $1.00 per share, the pro forma net
tangible book value, as adjusted, after this offering would be
$0.43
per share of our common stock, representing an increase of pro
forma net tangible book value, as adjusted, of $0.13 per share to
our existing stockholders and an immediate dilution of
$0.57
per share to new investors purchasing shares in this
offering.
The
foregoing discussion and table do not take into account further
dilution to new investors that could occur upon the exercise of
outstanding options or warrants having a per share exercise price
less than the public offering price in this offering. To the extent
that we raise additional capital through the sale of equity or
convertible debt securities, the issuance of those securities could
result in further dilution to our stockholders.
The number of shares of our common stock that will
be outstanding immediately after the offering is based on
18,537,958
shares outstanding as of March 31,
2019 (actual), and excludes:
●
994,000 shares of
common stock issuable upon the exercise of stock options as
of March 31,
2019 at a weighted average exercise price of $3.58 per
share;
●
416,000 shares of
granted, but unissued, shares of restricted stock;
●
3,112,715 shares of
common stock issuable upon exercise of outstanding warrants, with a
weighted average exercise price of $4.83 per share;
●
635,067 shares of common stock reserved for
future issuance under the Amended and Restated 2014 Omnibus Equity
Incentive Plan as of March 31,
2019;
●
809,863
shares of common stock issuable upon conversion of the Notes as
of March 31, 2019; and
●
200,000
shares of common stock issuable upon exercise of the common stock
purchase warrants to be issued to Wainwright, which equals 4% of
the shares of common stock offered and sold in this offering, at an
exercise price of $1.25 per share.
S-25
DESCRIPTION OF SECURITIES WE ARE OFFERING
Common stock
The material terms and provisions of our common
stock are described under the caption “Description of our Capital
Stock” in the
accompanying prospectus beginning on page 7. As of July 17, 2019,
we had 21,103,794 shares of our common stock outstanding. Our
common stock is listed on the Nasdaq Capital Market under the
symbol “AZRX”.
S-26
UNDERWRITING
We have entered
into an underwriting agreement dated July 17, 2019 with the H.C.
Wainwright & Co., LLC (“Wainwright”). Wainwright is
acting as sole book-running manager of this offering and
representative of the underwriters.
The underwriting
agreement provides for the purchase of a specific number of shares
of common stock by the underwriters. Subject to the terms and
conditions of the underwriting agreement, the underwriters have
agreed to purchase the number of shares of common stock set forth
opposite its name below:
|
Underwriter
|
Number of Shares
|
|
H.C. Wainwright
& Co., LLC
|
4,390,000
|
|
National Securities
Corporation
|
610,000
|
|
Total
|
5,000,000
|
The underwriters
have agreed to purchase all of the shares offered by this
prospectus supplement if any are purchased. Under the underwriting
agreement, if an underwriter defaults in its commitment to purchase
shares, the underwriting agreement may be terminated, depending on
the circumstances.
The shares should
be ready for delivery on or about July 22, 2019 against payment in
immediately available funds.
July 22, 2019 is
the second business day following the date of this prospectus
supplement. The second day settlement may affect the trading of the
shares on the date of this prospectus supplement and in the days
prior to settlement. The underwriters are offering the shares
subject to various conditions and may reject all or part of any
order. The underwriters have advised us that they propose to offer
the shares directly to the public at the public offering price that
appears on the cover page of this prospectus supplement. In
addition, the underwriters may offer some of the shares to other
securities dealers at such price less a concession not in excess of
$0.045
per share. After the shares are released for sale to the public,
the underwriters may change the offering price and other selling
terms at various times.
We have granted to
the underwriters an option to purchase up to an additional 750,000
shares of common stock (up to 15% of the shares of common stock in this
offering) at the public offering price, less the underwriting
discount. The option is exercisable for 30 days from the date
of this prospectus supplement.
Underwriting Discounts, Commissions and Expenses
We have agreed to pay an underwriter discount equal to 7.0% of the
aggregate gross proceeds raised in this offering.
These amounts are shown assuming both no exercise and full exercise
of the option to purchase additional shares.
|
|
Total
(no exercise of option)
|
Total
(full
exercise of option)
|
||
|
|
Per Share
|
Amount
|
Per Share
|
Amount
|
|
Public offering
price
|
$1.00
|
$5,000,000
|
$1.00
|
$5,750,000
|
|
Underwriting
discounts and commissions
|
$0.07
|
$350,000
|
$0.07
|
$402,500
|
|
Proceeds, before
expenses, to us
|
$0.93
|
$4,650,000
|
$0.93
|
$5,347,500
|
We estimate that the
total expenses of the offering, excluding underwriting discounts
and commissions, will be approximately $185,000 and is payable by us.
We have agreed to pay to Wainwright $19,000 for its
non-accountable expenses, reimburse the expenses of
Wainwright,
including its legal fees, up to $100,000 in connection with this
offering, and pay $10,000 for the clearing expenses of
Wainwright in connection with this
offering. In accordance with FINRA Rule 5110, certain of these
expense payments are deemed underwriting compensation for this
offering.
S-27
Warrants
We have also agreed to issue warrants to
Wainwright, or its designees, to
purchase up to 200,000 shares of our common stock, which equals to
4% of the aggregate number of shares of common stock sold in this
offering. The warrants issuable to Wainwright will have a term of five years from the effective
date of the offering pursuant to this prospectus supplement and an
exercise price of $1.25 per share, which equals to 125% of the
public offering price per share in this offering. Pursuant to FINRA
Rule 5110(g), warrants issuable to Wainwright and any shares issued
upon exercise of such warrants shall not be sold, transferred,
assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put or call transaction that would
result in the effective economic disposition of the securities by
any person for a period of 180 days immediately following the date
of effectiveness or commencement of sales of this offering, except
the transfer of any security:
(i)
by
operation of law or by reason of our reorganization;
(ii)
to any
FINRA member firm participating in the offering and the officers or
partners thereof, if all securities so transferred remain subject
to the lock-up restriction set forth above for the remainder of the
time period;
(iii)
if the
aggregate amount of our securities held by Wainwright or related
persons do not exceed 1% of the securities being
offered;
(iv)
that is
beneficially owned on a pro-rata basis by all equity owners of an
investment fund, provided that no participating member manages or
otherwise directs investments by the fund and the participating
members in the aggregate do not own more than 10% of the equity in
the fund; or
(v)
the
exercise or conversion of any security, if all securities remain
subject to the lock-up restriction set forth above for the
remainder of the time period.
Lock-Up
Agreements
We, our officers
and directors have agreed to a 90 day “lock up” with
respect to shares of common stock and other of our securities that
they beneficially own, including securities that are convertible
into shares of common stock and securities that are exchangeable or
exercisable for shares of common stock. This means that, subject to
certain exceptions, for a period of 90 days following the date of
this prospectus supplement, we and such persons may not offer,
sell, pledge or otherwise dispose of these securities without the
prior written consent of Wainwright.
Discretionary Accounts
The underwriters do not intend to confirm sales of the shares to
any accounts over which it has discretionary
authority.
Right of First Refusal
In
addition, we have granted to Wainwright a right, subject to
certain conditions, to act as underwriter or placement agent with
respect to additional raises of funds by means of a public offering
or private placement of equity securities using an underwriter or
placement agent until December 31, 2019, subject to FINRA Rule
5110(f)(2)(D)(ii).
Other Relationships
The
underwriters and their respective affiliates may in the future
engage in investment banking and other commercial dealings in the
ordinary course of business with us or our affiliates. The
underwriters have received, or may in the future receive, customary
fees and commissions for these transactions.
S-28
Indemnification
We have agreed to
indemnify the underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
Determination
of Public Offering Price
The offering price
for the shares has been determined by us and the underwriters,
based on the following factors:
●
the
history and prospects for the industry in which we
compete;
●
our
past and present operations;
●
our
historical results of operations;
●
our
prospects for future business and earning potential;
●
our
management;
●
the
general condition of the securities markets at the time of this
offering;
●
the
recent market prices of securities of generally comparable
companies;
●
the
market capitalization and stages of development of other companies
which we and the underwriters believe to be comparable to us;
and
●
other
factors deemed to be relevant.
Nasdaq Capital Market Listing
Our
stock is currently traded on the Nasdaq Capital Market under the
symbol “AZRX.” On July 17, 2019, the last reported sale
price of our common stock was $1.05 per share.
Stabilization
Rules
of the SEC may limit the ability of the underwriters to bid for or
purchase shares before the distribution of the shares is completed.
However, the underwriter may engage in the following activities in
accordance with the rules:
●
Stabilizing
transactions – The underwriters may make bids or purchases
for the purpose of pegging, fixing or maintaining the price of the
shares, so long as stabilizing bids do not exceed a specified
maximum.
●
Syndicate
covering transactions – The underwriters may sell more shares
of our common stock in connection with this offering than the
number of shares than it has committed to purchase. This creates a
naked short position for the underwriter. The underwriter must
close out any naked short position by purchasing shares in the open
market. A naked short position is more likely to be created if the
underwriter is concerned that, in the open market after pricing,
there may be downward pressure on the price of the shares that
could adversely affect investors who purchase shares in this
offering.
●
Penalty
bids – If the underwriters purchase shares in the open market
in a stabilizing transaction or syndicate covering transaction, it
may reclaim a selling concession from selling group members who
sold those shares as part of this offering.
S-29
Similar
to other purchase transactions, the underwriters’ purchases
to cover the syndicate short sales or to stabilize the market price
of our common stock may have the effect of raising or maintaining
the market price of our common stock or preventing or mitigating a
decline in the market price of our common stock. As a result, the
price of the shares of our common stock may be higher than the
price that might otherwise exist in the open market. The imposition
of a penalty bid might also have an effect on the price of the
shares if it discourages resales of the shares.
Neither
we nor the underwriters makes any representation or prediction as
to the effect that the transactions described above may have on the
price of the shares. These transactions may occur on the Nasdaq
Capital Market or otherwise. If such transactions are commenced,
they may be discontinued without notice at any
time.
Electronic
Delivery of Prospectus Supplement
A prospectus
supplement in electronic format may be delivered to potential
investors by the underwriters participating in this offering. The
prospectus supplement in electronic format will be identical to the
paper version of such prospectus supplement. Other than the
prospectus supplement in electronic format, the information on any
underwriter’s web site and any information contained in any
other web site maintained by an underwriter is not part of the
prospectus supplement or the registration statement of which this
prospectus supplement forms a part.
LEGAL MATTERS
The
validity of the securities offered by this prospectus will be
passed upon by Disclosure Law Group, a Professional Corporation,
San Diego, California. Ellenoff Grossman & Schole LLP, New
York, New York, is acting as counsel for the underwriters in
connection with this offering.
EXPERTS
The
financial statements of the Company incorporated in this prospectus
by reference to the Annual Report on Form 10-K for the fiscal year
ended December 31, 2018 have been audited by Mazars USA LLP, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
We
are subject to the informational requirements of the Exchange Act
and in accordance therewith we file annual, quarterly, and other
reports, proxy statements and other information with the Commission
under the Exchange Act. Such reports, proxy statements and other
information, including the Registration Statement, and exhibits and
schedules thereto, are available to the public through the
Commission’s website at http://www.sec.gov.
We
make available free of charge on or through our website our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, as soon as reasonably practicable
after we electronically file such material with or otherwise
furnish it to the Commission.
We
have filed with the Commission a registration statement under the
Securities Act of 1933, as amended, relating to the offering of
these securities. The registration statement, including the
attached exhibits, contains additional relevant information about
us and the securities. This prospectus does not contain all of the
information set forth in the registration statement. You can obtain
a copy of the registration statement, at prescribed rates, from the
Commission at the address listed above, or for free at www.sec.gov.
The registration statement and the documents referred to below
under “Incorporation of
Certain Information By Reference” are also available
on our website,
https://www.azurrx.com/investors/regulatory-filings.
We
have not incorporated by reference into this prospectus supplement
the information on our website, and you should not consider it to
be a part of this prospectus supplement.
S-30
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
The
following documents filed by us with the SEC are incorporated by
reference in this prospectus:
●
our
Annual Report on Form 10-K for the year ended December 31, 2018,
filed on April 1, 2019;
●
Amendment
No. 1 to our Annual Report on Form 10-K for the year ended December
31, 2018, filed on April 30, 2019;
●
our
Quarterly Report on Form 10-Q for the period ended March 31, 2019,
filed on May 15, 2019;
●
our
Current Reports on Form 8-K, filed on February 20,
2019;
●
our
Current Report on Form 8-K, filed on March 28, 2019;
●
our
Current Report on Form 8-K, filed on April 3, 2019;
●
our
Current Report on Form 8-K, filed on April 11, 2019;
●
our
Current Report on Form 8-K, filed on April 24, 2019;
●
our
Current Report on Form 8-K, filed on May 14, 2019;
●
our
Current Report on Form 8-K, filed on May 20, 2019;
●
our
Current Report on Form 8-K, filed on May 23, 2019;
●
our
Current Report on Form 8-K, filed on June 7, 2019;
●
our
Current Report on Form 8-K, filed on July 9, 2019; and
●
the
description of our common stock which is registered under Section
12 of the Exchange Act, in our registration statement on Form 8-A,
filed on August 8, 2016, including any amendment or reports filed
for the purposes of updating this description.
We
also incorporate by reference all documents we file pursuant to
Section 13(a), 13(c), 14 or 15 of the Exchange Act (other than any
portions of filings that are furnished rather than filed pursuant
to Items 2.02 and 7.01 of a Current Report on Form 8-K) after the
date of the initial registration statement of which this prospectus
is a part and prior to effectiveness of such registration
statement. All documents we file in the future pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus and prior to the termination of the offering are
also incorporated by reference and are an important part of this
prospectus.
S-31
Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this registration statement to the
extent that a statement contained herein or in any other
subsequently filed document which also is or deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this registration statement.
We will provide to each person, including any beneficial owner, to
whom a prospectus is delivered, a copy of this prospectus
supplement and any or all of the information that has been
incorporated by reference in the prospectus supplement but not
delivered herewith. You may request a copy of these filings,
excluding the exhibits to such filings which we have not
specifically incorporated by reference in such filings, at no cost,
by writing to or calling us at:
AzurRx Biopharma, Inc.
760 Parkside Avenue
Downtown Biotechnology Incubator, Suite 304
Brooklyn, New York 11226
(646) 699-7855
Except
for the specific incorporated documents listed above, no
information available on or through our website shall be deemed to
be incorporated in this prospectus supplement or the accompanying
prospectus.
S-32
BASE
PROSPECTUS
$50,000,000
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
From
time to time, we may offer and sell, in one or more offerings, up
to $50,000,000 of any combination of the securities described in
this prospectus. We may also offer securities as may be issuable
upon conversion, repurchase, exchange or exercise of any securities
registered hereunder, including any applicable anti-dilution
provisions.
This prospectus provides a general description of the securities we
may offer from time to time. Each time we offer securities, we will
provide specific terms of the securities offered in a supplement to
this prospectus. We may also authorize one or more free writing
prospectuses to be provided to you in connection with an offering.
The prospectus supplement and any related free writing prospectus
may also add, update or change information contained in this
prospectus. You should carefully read this prospectus, the
applicable prospectus supplement and any related free writing
prospectus, as well as any documents incorporated by reference,
before you invest in any of the securities being
offered.
Our
common stock is listed on the Nasdaq Capital Market under the
ticker symbol “AZRX.” On June 4, 2019, the last
reported sale price per share of our common stock was $2.20 per
share.
We may offer and sell our securities to or through
one or more agents, underwriters, dealers or other third parties or
directly to one or more purchasers on a continuous or delayed
basis. If agents, underwriters or dealers are used to sell our
securities, we will name them and describe their compensation in a
prospectus supplement. The price to the public of our securities
and the net proceeds we expect to receive from the sale of such
securities will also be set forth in a prospectus supplement. For
additional information on the methods of sale, you should refer to
the section entitled “Plan of
Distribution” in this
prospectus.
As
of June 4, 2019, the aggregate market value of our outstanding
common stock held by non-affiliates was approximately $53.4
million, which was calculated in accordance with General
Instruction I.B.6 of Form S-3, based on 18,469,076 shares of
outstanding common stock held by non-affiliates, at a price per
share of $2.89, the closing sale price of our common stock reported
on the Nasdaq Capital Market on May 8, 2019.
Pursuant
to General Instruction I.B.6 of Form S-3, in no event will we sell
the securities described in this prospectus in a public primary
offering with a value exceeding more than one-third (1/3) of the
aggregate market value of our common stock held bynon-affiliates in
any twelve (12)-month period, so long as the aggregate market value
of our outstanding common stock held by non-affiliates remains
below $75.0 million. During the twelve (12) calendar months prior
to and including the date of this prospectus, we have offered and
sold $5,642,043 of securities pursuant to General Instruction I.B.6
of Form S-3. As a result, we are currently eligible to offer and
sell up to an aggregate of approximately $12.17 million of our
securities pursuant to General Instruction I.B.6. of Form
S-3.
Our business and investing in our securities involves significant
risks. You should review carefully the risks and uncertainties
referenced under the heading “Risk
Factors” on page 4 of
this prospectus, as well as those contained in the applicable
prospectus supplement and any related free writing prospectus, and
in the other documents that are incorporated by reference into this
prospectus or the applicable prospectus
supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is June 4, 2019
TABLE OF CONTENTS
|
|
|
|
|
PAGE
|
|
|
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
4
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
7
|
|
|
|
|
|
9
|
|
|
|
|
|
12
|
|
|
|
|
|
13
|
|
|
|
|
|
15
|
|
|
|
|
|
16
|
|
|
|
|
|
16
|
|
|
|
|
|
16
|
|
|
|
|
|
17
|
ABOUT THIS PROSPECTUS
This prospectus is part of a registration
statement filed with the Securities and Exchange Commission
(the “SEC”), using a “shelf” registration
process. Under this shelf registration process, we may sell
the securities described in this prospectus in one or more
offerings. This prospectus provides you with a general
description of the securities which may be offered. Each time
we offer securities for sale, we will provide a prospectus
supplement that contains information about the specific terms of
that offering. Any prospectus supplement may also add or update
information contained in this prospectus. You should read both
this prospectus and any prospectus supplement together with
additional information described below under
“Where You Can Find More
Information” and
“Incorporation of Certain
Information by Reference.”
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES
UNLESS IT IS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.
You
should rely only on the information contained or incorporated by
reference in this prospectus, and in any prospectus
supplement. We have not authorized any other person to provide
you with different information. If anyone provides you with
different or inconsistent information, you should not rely on
it. We are not making offers to sell or solicitations to buy
the securities described in this prospectus in any jurisdiction in
which an offer or solicitation is not authorized, or in which the
person making that offer or solicitation is not qualified to do so
or to anyone to whom it is unlawful to make an offer or
solicitation. You should not assume that the information in
this prospectus or any prospectus supplement, as well as the
information we file or previously filed with the SEC that we
incorporate by reference in this prospectus or any prospectus
supplement, is accurate as of any date other than its respective
date. 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 heading “Where You Can Find More
Information.”
COMPANY OVERVIEW
This summary highlights information contained elsewhere in this
prospectus. This summary does not contain all the information you
should consider before buying our securities. You should read the
following summary together with the more detailed information
appearing in this prospectus, including the section titled
“Risk Factors” on page 4, before deciding whether to
purchase our securities.
In this prospectus, unless otherwise stated or the context
otherwise requires, references to “AzurRx,”
“Company,” “we,” “us,”
“our,” or similar references mean AzurRx BioPharma,
Inc. and its subsidiaries on a consolidated basis. References to
“AzurRx BioPharma” refer to AzurRx BioPharma, Inc. on
an unconsolidated basis. References to “AzurRx SAS”
refer to AzurRx SAS, AzurRx BioPharma’s wholly-owned
subsidiary through which we conduct our European
operations.
Overview
We are engaged in the research and development of non-systemic
biologics for the treatment of patients with gastrointestinal
disorders. Non-systemic biologics are non-absorbable drugs that act
locally, i.e. the intestinal lumen, skin or mucosa, without
reaching an individual’s systemic circulation. The
Company’s current product pipeline consists of two
therapeutic proteins under development:
MS1819-SD
MS1819-SD is a yeast derived recombinant lipase
for exocrine pancreatic insufficiency (“EPI”)
associated with chronic pancreatitis (“CP”)
and cystic fibrosis (“CF”).
A lipase is an enzyme that breaks up fat molecules. MS1819-SD is
considered recombinant because it was created from new combinations
of genetic material in yeast called Yarrowia lipolytica. In June
2018, the Company completed an open-label, dose escalation Phase
IIa trial of MS1819-SD in France, Australia, and New Zealand to
investigate both the safety of escalating doses of MS1819-SD, and
the efficacy of MS1819-SD through the analysis of each
patient’s coefficient of fat absorption (“CFA”)
and its change from baseline. A total of 11 CP patients with EPI
were enrolled in the study and final data showed a strong safety
and efficacy profile. Although the study was not powered for
efficacy, in a pre-planned analysis, the highest dose cohort of
MS1819-SD showed statistically significant and clinically
meaningful increases in CFA compared to baseline with a mean
increase of 21.8% and a p value of p=0.002 on a per protocol basis.
Additionally, maximal absolute CFA response to treatment was up to
57%, with an inverse relationship to baseline CFA. In October 2018,
the U.S. Food and Drug Administration (“FDA”)
cleared the Company’s Investigational New Drug
(“IND”)
application for MS1819-SD in patients with EPI due to CF. In
connection with the FDA’s clearance of the IND, in the fourth
quarter of 2018 the Company initiated the multi-center Phase II
OPTION study in the United States and Europe (the
“OPTION
Study”), which the
Company expects will include approximately 30 patients. The Company
dosed the first patients in the OPTION Study in February 2019 and
reached 50% of its enrollment target for the OPTION Study in April
2019. The Company expects to conclude and announce topline results
from the OPTION Study in the summer of 2019.
b-Lactamase Program
The Company’s b-lactamase program focuses on
products with an enzymatic combination of bacterial origin for the
prevention of hospital-acquired infections and
antibiotic-associated diarrhea (“AAD”)
by resistant bacterial strains induced by parenteral administration
of several antibiotic classes. Currently, the Company has two
compounds in pre-clinical development in this program, AZX1101 and
AZX1103. Both AZX1101 and AZX1103 are composed of several distinct
enzymes that break up individual classes of antibiotic molecules.
AZX1103 is a b-lactamase enzyme combination that has shown positive
pre-clinical activity, with degradation of amoxicillin in the
presence of clavulanic acid in the upper gastrointestinal tract in
the Gottingen minipig model. Currently, the Company is focused on
advancing pre-clinical development of AZX1103. The Company is also
currently assessing its plans for the continuation of the
development of AZX1101.
Risk Factors
Our business is subject to substantial risk.
Please carefully consider the section titled
“Risk
Factors” on page 4 of
this prospectus for a discussion of the factors you should
carefully consider before deciding to purchase securities that may
be offered by this prospectus.
Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business
operations. You should be able to bear a complete loss of your
investment.
Corporate Information
We were incorporated on January 30, 2014 in the State of Delaware.
In June 2014, we acquired 100% of the issued and outstanding
capital stock of AzurRx SAS (formerly ProteaBio Europe SAS), a
company incorporated in October 2008 under the laws of France. Our
principal executive offices are located at 760 Parkside Avenue,
Downstate Biotechnology Incubator, Suite 304, Brooklyn, NY 11226.
Our telephone number is (646) 699-7855. We maintain a website at
www.azurrx.com. The information contained on our website is not,
and should not be interpreted to be, a part of this
prospectus.
RISK FACTORS
Investing in our securities involves a high degree
of risk. Before deciding whether to purchase any of our securities,
you should carefully consider the risks and uncertainties described
under “Risk
Factors” in our Annual
Report on Form 10-K for the fiscal year ended
December 31, 2018, any subsequent Quarterly Report on
Form 10-Q and our other filings with the SEC, all of which are
incorporated by reference herein. If any of these risks actually
occur, our business, financial condition and results of operations
could be materially and adversely affected and we may not be able
to achieve our goals, the value of our securities could decline and
you could lose some or all of your investment. Additional risks not
presently known to us or that we currently deem immaterial may also
impair our business operations. If any of these risks occur, the
trading price of our common stock could decline materially and you
could lose all or part of your investment.
CAUTIONARY NOTES REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by
reference herein contain forward-looking statements that involve
substantial risks and uncertainties. All statements, other than
statements of historical facts, contained in this
prospectus and the documents incorporated by reference herein,
including statements regarding our strategy, future operations, future
financial position, future revenue, projected costs, prospects,
plans, objectives of management and expected market growth, are
forward-looking statements. These statements involve known and
unknown risks, uncertainties and other important factors that may
cause our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements.
The
words “anticipate,” “believe,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “predict,”
“project,” “target,”
“potential,” “will,” “would,”
“could,” “should,” “continue,”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. These forward-looking statements include,
among other things, statements about:
●
the
availability of capital to satisfy our working capital
requirements;
●
the
accuracy of our estimates regarding expenses, future revenues and
capital requirements;
●
our
ability to continue operating as a going concern;
●
our
plans to develop and commercialize our principal product
candidates, consisting of MS1819-SD, AZX1103 and
AZX1101;
●
our
ability to initiate and complete our clinical trials and to advance
our principal product candidates into additional clinical trials,
including pivotal clinical trials, and successfully complete such
clinical trials;
●
regulatory
developments in the U.S. and foreign countries;
●
the
performance of our third-party contract manufacturer(s), contract
research organization(s) and other third-party non-clinical and
clinical development collaborators and regulatory service
providers;
●
our
ability to obtain and maintain intellectual property protection for
our core assets;
●
the
size of the potential markets for our product candidates and our
ability to serve those markets;
●
the
rate and degree of market acceptance of our product candidates for
any indication once approved;
●
the
success of competing products and product candidates in development
by others that are or become available for the indications that we
are pursuing;
●
the
loss of key scientific, clinical and nonclinical development,
and/or management personnel, internally or from one of our
third-party collaborators; and
●
other risks and uncertainties, including those
listed in the “ Risk Factors
” section of this prospectus and
the documents incorporated
by reference herein.
These forward-looking statements are only
predictions and we may not actually achieve the plans, intentions
or expectations disclosed in our forward-looking statements, so you
should not place undue reliance on our forward-looking statements.
Actual results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking
statements we make. We have based these forward-looking statements
largely on our current expectations and projections about future
events and trends that we believe may affect our business,
financial condition and operating results. We have included
important factors in the cautionary statements included in this
prospectus, particularly in the “Risk
Factors” section in this
prospectus and the documents incorporated by reference herein, that
we believe could cause actual results or events to differ
materially from the forward-looking statements that we
make. Our forward-looking
statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments
we may make.
You should read this prospectus, the documents incorporated by
reference herein and the documents that we have filed as exhibits
to the registration statement of which this prospectus is a part
completely and with the understanding that our actual future
results may be materially different from what we expect. We qualify
all of the forward-looking statements in this prospectus and the
documents incorporated by reference herein by these cautionary
statements. Except as required by law, we undertake no obligation
to publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise.
USE OF
PROCEEDS
Unless otherwise provided in the applicable
prospectus supplement, we intend to use the net proceeds from the
sale of the securities under this prospectus primarily
for research and development expenses associated with continuing
clinical development and testing of MS1819-SD, advancing our
preclinical programs for AZX1103 and for other working capital and
capital expenditures.
Pending
other uses, we intend to invest our proceeds from the offering in
short-term investments or hold them as cash. We cannot predict
whether the proceeds invested will yield a favorable return. Our
management will have broad discretion in the use of the net
proceeds from this offering, and investors will be relying on the
judgment of our management regarding the application of the net
proceeds
DESCRIPTION OF OUR CAPITAL
STOCK
General
Our amended and restated certificate of
incorporation (our “Charter”) authorizes the issuance of up to
100,000,000 shares of common stock, par value $0.0001 per share,
and 10,000,000 shares of preferred stock, par value $0.0001 per
share.
Transfer Agent
The
transfer agent and registrar for our common stock is Colonial Stock
Transfer, 66 Exchange Place, 1st Floor, Salt Lake City, Utah 84111,
Tel: (801) 355-5740.
Common Stock
This section describes the general terms of our common stock that
we may offer from time to time. For more detailed information, a
holder of our common stock should refer to our Charter and our
amended and restated Bylaws, copies of which are filed with the SEC
as exhibits to our Annual Report on Form 10-K for the year ended
December 31, 2018, which is incorporated by reference into the
registration statement of which this prospectus forms a
part.
As of June
4, 2019, there were 21,060,055 shares of our common stock issued
and outstanding, which were held by approximately 110 stockholders
of record, approximately 3,188,378 shares of common stock
subject to outstanding warrants, 994,000
shares of common stock subject to
outstanding stock options under our Amended and Restated 2014
Omnibus Equity Incentive Plan and 816,438 issuable upon conversion
of outstanding senior convertible notes. Each holder of common
stock is entitled to one vote for each share of common stock held
on all matters submitted to a vote of the stockholders, including
the election of directors. Our Charter and Bylaws do not provide
for cumulative voting rights.
Holders
of our common stock have no preemptive, conversion or subscription
rights, and there are no redemption or sinking fund provisions
applicable to the common stock. The rights, preferences and
privileges of the holders of common stock are subject to, and may
be adversely affected by, the rights of the holders of shares of
any series of our preferred stock that we may designate and issue
in the future.
Preferred Stock
This section describes the general terms and provisions of our
outstanding shares of preferred stock, as well as preferred stock
that we may offer from time to time. The applicable prospectus
supplement will describe the specific terms of the shares of
preferred stock offered through that prospectus supplement, which
may differ from the terms we describe below. We will file a
copy of the certificate of designation that contains the terms of
each new series of preferred stock with the SEC each time we issue
a new series of preferred stock, and these certificates of
designation will be incorporated by reference into the registration
statement of which this prospectus is a part. Each certificate of
designation will establish the number of shares included in a
designated series and fix the designation, powers, privileges,
preferences and rights of the shares of each series as well as any
applicable qualifications, limitations or restrictions. A holder of
our preferred stock should refer to the applicable certificate of
designation, our Charter and the applicable prospectus supplement
(and any related free writing prospectus that we may authorize to
be provided to you) for more specific information.
Our
Board of Directors has the authority, without action by our
stockholders to designate and issue up to 10,000,000 shares of
preferred stock in one or more series and to designate the rights,
preferences and privileges of each series, which may be greater
than the rights of our common stock. Currently, there are no shares
of our preferred stock that are issued or outstanding.
It
is not possible to state the actual effect of any future issuance
of shares of our preferred stock upon the rights of holders of our
common stock until our Board of Directors determines the specific
rights of the holders of our preferred stock. However, the effects
might include, among other things:
●
restricting
dividends on our common stock;
●
diluting
the voting power of our common stock;
●
impairing
the liquidation rights of our common stock; or
●
delaying
or preventing a change in control of our Company without further
action by our stockholders.
A
prospectus supplement will describe the terms of any series of
preferred stock being offered, including:
●
the
designation of the shares and the number of shares that constitute
the series;
●
the
dividend rate (or the method of calculation thereof), if any, on
the shares of the series and the priority as to payment of
dividends with respect to other classes or series of our capital
stock and the payment date of dividends;
●
the
dividend periods (or the method of calculation
thereof);
●
the
date from which dividends on the preferred stock shall accumulate,
if applicable;
●
the
voting rights of the shares;
●
the
liquidation preference and the priority as to payment of the
liquidation preference with respect to other classes or series of
our capital stock and any other rights of the shares of the series
upon our liquidation or winding-up;
●
whether
the preferred stock will rank senior or junior to or on a parity
with any other class or series of preferred
stock;
●
whether
or not and on what terms the shares of the series will be subject
to redemption or repurchase at our option;
●
whether
and on what terms the shares of the series will be convertible into
or exchangeable for other securities;
●
the
provision of a sinking fund, if any, for the preferred
stock;
●
whether
the shares of the series of preferred stock will be listed on a
securities exchange;
●
whether
interests in the preferred stock will be represented by depositary
shares;
●
the
transfer agent for the series of preferred
stock;
●
any
special United States federal income tax considerations applicable
to the series; and
●
any
other preferences and rights and any qualifications, limitations or
restrictions of the preferences and rights of the
series.
DESCRIPTION OF
WARRANTS
The following description, together with the additional information
we include in any applicable prospectus supplements or free writing
prospectus, summarizes the material terms and provisions of the
warrants that we may offer under this prospectus. Warrants may be
offered independently or together with common stock or preferred
stock offered by any prospectus supplement or free writing
prospectus, and may be attached to or separate from those
securities. While the terms we have summarized below will generally
apply to any future warrants we may offer under this prospectus, we
will describe the particular terms of any warrants that we may
offer in more detail in the applicable prospectus supplement or
free writing prospectus. The terms of any warrants we offer under a
prospectus supplement or free writing prospectus may differ from
the terms we describe below.
In
the event that we issue warrants, we will issue the warrants under
a warrant agreement, which we will enter into with a warrant agent
to be selected by us. Forms of these warrant agreements and forms
of the warrant certificates representing the warrants, and the
complete warrant agreements and forms of warrant certificates
containing the terms of the warrants 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. We use the term “warrant agreement”
to refer to any of these warrant agreements. We use the term
“warrant agent” to refer to the warrant agent under any
of these warrant agreements. The warrant agent will act solely as
an agent of ours in connection with the warrants and will not act
as an agent for the holders or beneficial owners of the
warrants.
The
following summaries of material provisions of the warrants and the
warrant agreements are subject to, and qualified in their entirety
by reference to, all the provisions of the warrant agreement
applicable to a particular series of warrants. We urge you to read
the applicable prospectus supplements or free writing prospectus
related to the warrants that we sell under this prospectus, as well
as the complete warrant agreements that contain the terms of the
warrants.
General
We
will describe in the applicable prospectus supplement or free
writing prospectus the terms relating to a series of warrants. If
warrants for the purchase of common stock or preferred stock are
offered, the prospectus supplement or free writing prospectus will
describe the following terms, to the extent
applicable:
●
the
offering price and the aggregate number of warrants
offered;
●
the
total number of shares that can be purchased if a holder of the
warrants exercises them and, in the case of warrants for preferred
stock, the designation, total number and terms of the series of
preferred stock that can be purchased upon exercise;
●
the
designation and terms of any series of preferred stock with which
the warrants are being offered and the number of warrants being
offered with each share of common stock or preferred
stock;
●
the
date on and after which the holder of the warrants can transfer
them separately from the related common stock;
●
the
number of shares of common stock or preferred stock that can be
purchased if a holder exercises the warrant and the price at which
such common stock or preferred stock may be purchased upon
exercise, including, if applicable, any provisions for changes to
or adjustments in the exercise price and in the securities or other
property receivable upon exercise;
●
the
terms of any rights to redeem or call, or accelerate the expiration
of, the warrants;
●
the
date on which the right to exercise the warrants begins and the
date on which that right expires;
●
federal
income tax consequences of holding or exercising the warrants;
and
●
any
other specific terms, preferences, rights or limitations of, or
restrictions on, the warrants.
Exercise of Warrants
Each
holder of a warrant is entitled to purchase the number of shares of
common stock or preferred stock, as the case may be, at the
exercise price described in the applicable prospectus supplement or
free writing prospectus. After the close of business on the day
when the right to exercise terminates (or a later date if we extend
the time for exercise), unexercised warrants will become
void.
A
holder of warrants may exercise them by following the general
procedure outlined below:
●
delivering
to the warrant agent the payment required by the applicable
prospectus supplement or free writing prospectus to purchase the
underlying security;
●
properly
completing and signing the reverse side of the warrant certificate
representing the warrants; and
●
delivering
the warrant certificate representing the warrants to the warrant
agent within five business days of the warrant agent receiving
payment of the exercise price.
If
you comply with the procedures described above, your warrants will
be considered to have been exercised when the warrant agent
receives payment of the exercise price, subject to the transfer
books for the securities issuable upon exercise of the warrant not
being closed on such date. After you have completed those
procedures and subject to the foregoing, we will, as soon as
practicable, issue and deliver to you the common stock or preferred
stock that you purchased upon exercise. If you exercise fewer than
all of the warrants represented by a warrant certificate, a new
warrant certificate will be issued to you for the unexercised
amount of warrants. Holders of warrants will be required to pay any
tax or governmental charge that may be imposed in connection with
transferring the underlying securities in connection with the
exercise of the warrants.
Amendments and Supplements to the Warrant Agreements
We
may amend or supplement a warrant agreement without the consent of
the holders of the applicable warrants to cure ambiguities in the
warrant agreement, to cure or correct a defective provision in the
warrant agreement, or to provide for other matters under the
warrant agreement that we and the warrant agent deem necessary or
desirable, so long as, in each case, such amendments or supplements
do not materially adversely affect the interests of the holders of
the warrants.
Warrant Adjustments
Unless
the applicable prospectus supplement or free writing prospectus
states otherwise, the exercise price of, and the number of
securities covered by, a common stock or a preferred stock warrant
will be adjusted proportionately if we subdivide or combine our
common stock or preferred stock, as applicable. In addition, unless
the prospectus supplement or free writing prospectus states
otherwise, if we, without receiving payment:
●
issue
capital stock or other securities convertible into or exchangeable
for common stock or preferred stock, or any rights to subscribe
for, purchase or otherwise acquire any of the foregoing, as a
dividend or distribution to holders of our common stock or
preferred stock;
●
pay
any cash to holders of our common stock or preferred stock other
than a cash dividend paid out of our current or retained earnings
or other than in accordance with the terms of the preferred
stock;
●
issue
any evidence of our indebtedness or rights to subscribe for or
purchase our indebtedness to holders of our common stock or
preferred stock; or
●
issue
common stock or preferred stock or additional stock or other
securities or property to holders of our common stock or preferred
stock by way of spinoff, split-up, reclassification, combination of
shares or similar corporate rearrangement,
then
the holders of common stock or preferred stock warrants will be
entitled to receive upon exercise of the warrants, in addition to
the securities otherwise receivable upon exercise of the warrants
and without paying any additional consideration, the amount of
stock and other securities and property such holders would have
been entitled to receive had they held the common stock or
preferred stock, as applicable, issuable under the warrants on the
dates on which holders of those securities received or became
entitled to receive such additional stock and other securities and
property.
-10-
Except
as stated above or as otherwise set forth in the applicable
prospectus supplement or free writing prospectus, the exercise
price and number of securities covered by a common stock or
preferred stock warrant, and the amounts of other securities or
property to be received, if any, upon exercise of such warrant,
will not be adjusted or provided for if we issue those securities
or any securities convertible into or exchangeable for those
securities, or securities carrying the right to purchase those
securities or securities convertible into or exchangeable for those
securities.
Holders
of common stock and preferred stock warrants may have additional
rights under the following circumstances:
●
certain
reclassifications, capital reorganizations or changes of the common
stock or preferred stock, as applicable;
●
certain
share exchanges, mergers, or similar transactions involving us and
which result in changes of the common stock or preferred stock, as
applicable; or
●
certain
sales or dispositions to another entity of all or substantially all
of our property and assets.
If
one of the above transactions occurs and holders of our common
stock or preferred stock are entitled to receive stock, securities
or other property with respect to or in exchange for their
securities, the holders of the common stock warrants and preferred
stock warrants then outstanding, as applicable, will be entitled to
receive, upon exercise of their warrants, the kind and amount of
shares of stock and other securities or property that they would
have received upon the applicable transaction if they had exercised
their warrants immediately before the transaction.
-11-
DESCRIPTION OF
UNITS
This section outlines some of the provisions of the units and the
unit agreements. This information may not be complete in all
respects and is qualified entirely by reference to the unit
agreement with respect to the units of any particular series. The
specific terms of any series of units will be described in the
applicable prospectus supplement or free writing prospectus. If so
described in a particular prospectus supplement or free writing
prospectus, the specific terms of any series of units may differ
from the general description of terms presented below.
As
specified in the applicable prospectus supplement, we may issue
units consisting of one or more shares of common stock, shares of
our preferred stock, warrants or any combination of such
securities.
The
applicable prospectus supplement will specify the following terms
of any units in respect of which this prospectus is being
delivered:
●
the
terms of the units and of any of the shares of common stock, shares
of preferred stock, or warrants comprising the units, including
whether and under what circumstances the securities comprising the
units may be traded separately;
●
a
description of the terms of any unit agreement governing the
units;
●
if
appropriate, a discussion of material U.S. federal income tax
considerations; and
●
a
description of the provisions for the payment, settlement, transfer
or exchange of the units.
-12-
DESCRIPTION OF
CERTAIN PROVISIONS OF DELAWARE
LAW AND
OUR CERTIFICATE OF INCORPORATION AND BYLAWS
Certain
provisions of Delaware law, our Charter and Bylaws discussed below
may have the effect of making more difficult or discouraging a
tender offer, proxy contest or other takeover attempt. These
provisions are expected to encourage persons seeking to acquire
control of our company to first negotiate with our Board of
Directors. We believe that the benefits of increasing our ability
to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure our company outweigh the
disadvantages of discouraging these proposals because negotiation
of these proposals could result in an improvement of their
terms.
Delaware Anti-Takeover
Law.
We
are subject to Section 203 of the Delaware General Corporation
Law. Section 203 generally prohibits a public Delaware
corporation from engaging in a “business combination”
with an “interested stockholder” for a period of three
years after the date of the transaction in which the person became
an interested stockholder, unless:
●
prior
to the date of the transaction, the Board of Directors of the
corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an
interested stockholder;
●
upon
consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding
specified shares; or
●
at
or subsequent to the date of the transaction, the business
combination is approved by the Board of Directors and authorized at
an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested
stockholder.
Section 203
defines a “business combination” to
include:
●
any
merger or consolidation involving the corporation and the
interested stockholder;
●
any
sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 10% or more of the assets of the corporation to or
with the interested stockholder;
●
subject
to exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the
interested stockholder;
●
subject
to exceptions, any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock of
any class or series of the corporation beneficially owned by the
interested stockholder; or
●
the
receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided
by or through the corporation.
-13-
In
general, Section 203 defines an “interested
stockholder” as any person that is:
●
the
owner of 15% or more of the outstanding voting stock of the
corporation;
●
an
affiliate or associate of the corporation who was the owner of 15%
or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the relevant date;
or
●
the
affiliates and associates of the above.
Under
specific circumstances, Section 203 makes it more difficult
for an “interested stockholder” to effect various
business combinations with a corporation for a three-year period,
although the stockholders may, by adopting an amendment to the
corporation’s certificate of incorporation or bylaws, elect
not to be governed by this section, effective 12 months after
adoption.
Our
Charter and Bylaws do not exclude us from the restrictions of
Section 203. We anticipate that the provisions of
Section 203 might encourage companies interested in acquiring
us to negotiate in advance with our Board of Directors since the
stockholder approval requirement would be avoided if a majority of
the directors then in office approve either the business
combination or the transaction that resulted in the stockholder
becoming an interested stockholder.
Charter and Bylaws.
Provisions
of our Charter and Bylaws may delay or discourage transactions
involving an actual or potential change of control or change in our
management, including transactions in which stockholders might
otherwise receive a premium for their shares, or transactions that
our stockholders might otherwise deem to be in their best
interests. Therefore, these provisions could adversely affect the
price of our common stock.
-14-
We
may sell the securities described in this prospectus to or through
underwriters or dealers, through agents, or directly to one or more
purchasers. A prospectus supplement or supplements (and any related
free writing prospectus that we may authorize to be provided to
you) will describe the terms of the offering of the securities,
including, to the extent applicable:
●
the
name or names of any underwriters or agents, if
applicable;
●
the
purchase price of the securities and the proceeds we will receive
from the sale;
●
any
over-allotment options under which underwriters may purchase
additional securities from us;
●
any
agency fees or underwriting discounts and other items constituting
agents’ or underwriters’ compensation;
●
any
public offering price;
●
any
discounts or concessions allowed or reallowed or paid to dealers;
and
●
any
securities exchange or market on which the securities may be
listed.
We
may also sell equity securities covered by this registration
statement in an “at the market offering” as defined in
Rule 415 under the Securities Act. Such offering may be made into
an existing trading market for such securities in transactions at
other than a fixed price, either:
●
On
or through the facilities of the Nasdaq Capital Market or any other
securities exchange or quotation or trading service on which such
securities may be listed, quoted or traded at the time of sale;
and/or
●
to
or through a market maker otherwise than on the Nasdaq Capital
Market or such other securities exchanges or quotation or trading
services.
Such
at-the-market offerings, if any, may be conducted by underwriters
acting as principal or agent.
Only
underwriters named in a prospectus supplement are underwriters of
the securities offered by the prospectus supplement.
If
underwriters are used in the sale, they will acquire the securities
for their own account and may resell the securities from time to
time in one or more transactions at a fixed public offering price
or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be
subject to the conditions set forth in the applicable underwriting
agreement. We may offer the securities to the public through
underwriting syndicates represented by managing underwriters or by
underwriters without a syndicate. Subject to certain conditions,
the underwriters will be obligated to purchase all of the
securities offered by the prospectus supplement. Any public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may change from time to time. We may
use underwriters with whom we have a material relationship. We will
describe in the prospectus supplement that names the underwriter,
the nature of any such relationship.
We
may sell securities directly or through agents we designate from
time to time. We will name any agent involved in the offering and
sale of securities, and we will describe any commissions we will
pay the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, our agent will act on a best-efforts
basis for the period of its appointment.
We
may authorize agents or underwriters to solicit offers by certain
types of institutional investors to purchase securities from us at
the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. We will describe the
conditions to these contracts and the commissions we must pay for
solicitation of these contracts in the prospectus
supplement.
We
may provide agents and underwriters with indemnification against
civil liabilities related to this offering, including liabilities
under the Securities Act, or contribution with respect to payments
that the agents or underwriters may make with respect to these
liabilities. Agents and underwriters may engage in transactions
with, or perform services for, us in the ordinary course of
business.
-15-
Any underwriter may engage in overallotment,
stabilizing transactions, short covering transactions and penalty
bids in accordance with Regulation M under the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”). Overallotment
involves sales in excess of the offering size, which create a short
position. Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not exceed a
specified maximum. Short covering transactions involve purchases of
the securities in the open market after the distribution is
completed to cover short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a dealer when the
securities originally sold by the dealer are purchased in a
covering transaction to cover short positions. Those activities may
cause the price of the securities to be higher than it would
otherwise be. If commenced, the underwriters may discontinue any of
the activities at any time.
Any
underwriters who are qualified market makers on the Nasdaq Capital
Market may engage in passive market making transactions in
accordance with Rule 103 of Regulation M during the business day
prior to the pricing of the offering, before the commencement of
offers or sales of the securities. Passive market makers must
comply with applicable volume and price limitations and must be
identified as passive market makers. In general, a passive market
maker must display its bid at a price not in excess of the highest
independent bid for such security; if all independent bids are
lowered below the passive market maker’s bid, however, the
passive market maker’s bid must then be lowered when certain
purchase limits are exceeded.
LEGAL MATTERS
Certain
legal matters in connection with this offering will be passed upon
for us by Disclosure Law Group, a Professional Corporation, of San
Diego, California.
EXPERTS
Mazars
USA LLP, our independent registered public accounting firm, has
audited our consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31,
2018, as set forth in their report, which is incorporated by
reference in this prospectus. The report for AzurRx BioPharma, Inc.
includes an explanatory paragraph about the existence of
substantial doubt concerning its ability to continue as a going
concern. Our financial statements are incorporated by reference in
reliance on Mazars USA LLP’s report, given on their authority
as experts in accounting and auditing.
We
are a public company and file annual, quarterly and special
reports, proxy statements and other information with the SEC. . Our
SEC filings are available, at no charge, to the public at the
SEC’s website at http://www.sec.gov.
-16-
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The
following documents filed by us with the SEC are incorporated by
reference in this prospectus:
●
our
Annual Report on Form 10-K for the year ended December 31, 2018,
filed on April 1, 2019;
●
our
Amendment No. 1 to our Annual Report on Form 10-K/A for the year
ended December 31, 2018, filed on April 30, 2019;
●
our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019,
filed on May 15, 2019;
●
our
Current Report on Form 8-K, filed on April 3, 2019;
●
our
Current Report on Form 8-K, filed on April 11, 2019;
●
our
Current Report on Form 8-K, filed on April 24, 2019;
●
our
Current Report on Form 8-K, filed May 7, 2019;
●
our
Current Report on Form 8-K, filed May 14, 2019;
●
our
Current Report on Form 8-K, filed on May 20, 2019;
●
our
Current Report on Form 8-K, filed on May 23, 2019; and
●
the
description of our common stock which is registered under Section
12 of the Exchange Act, in our registration statement on Form 8-A,
filed on August 8, 2016, including any amendment or reports filed
for the purposes of updating this description.
We
also incorporate by reference all documents we file pursuant to
Section 13(a), 13(c), 14 or 15 of the Exchange Act (other than any
portions of filings that are furnished rather than filed pursuant
to Items 2.02 and 7.01 of a Current Report on Form 8-K) after the
date of the initial registration statement of which this prospectus
is a part and prior to effectiveness of such registration
statement. All documents we file in the future pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus and prior to the termination of the offering are
also incorporated by reference and are an important part of this
prospectus.
Any
statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this registration statement to the
extent that a statement contained herein or in any other
subsequently filed document which also is or deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this registration statement.
We
will provide to each person, including any beneficial owner, to
whom a prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in the
prospectus but not delivered with the prospectus. You may request a
copy of these filings, excluding the exhibits to such filings which
we have not specifically incorporated by reference in such filings,
at no cost, by writing to or calling us at:
AzurRx
Biopharma, Inc.
760
Parkside Avenue
Downtown
Biotechnology Incubator, Suite 304
Brooklyn,
New York 11226
(646) 699-7855.
This
prospectus is part of a registration statement we filed with the
SEC. You should only rely on the information or representations
contained in this prospectus and any accompanying prospectus
supplement. We have not authorized anyone to provide information
other than that provided in this prospectus and any accompanying
prospectus supplement. We are not making an offer of the securities
in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any accompanying
prospectus supplement is accurate as of any date other than the
date on the front of the document.
-17-
5,000,000 Shares of Common Stock
AZURRX BIOPHARMA, INC.
_______________________________
Prospectus Supplement
_______________________________
Sole Book-Running Manager
H.C. Wainwright & Co.
Co-Manager
National Securities
Corporation
July 17,
2019