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EX-23 - CONSENTS OF EXPERTS AND COUNSEL - AzurRx BioPharma, Inc. | ex23-2.htm |
EX-5 - OPINION ON LEGALITY - AzurRx BioPharma, Inc. | ex5-1.htm |
As
filed with the Securities and Exchange Commission on January
13, 2020
Registration No.
333-235768
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1/A
(Amendment
No. 1)
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
AZURRX
BIOPHARMA, INC.
(Exact name of
registrant as specified in its charter)
Delaware
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2834
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46-4993860
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(State or Other
Jurisdiction of
Incorporation or
Organization)
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(Primary Standard
Industrial
Classification Code
Number)
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(I.R.S.
Employer
Identification
Number)
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760
Parkside Avenue
Downstate
Biotechnology Incubator, Suite 304
Brooklyn,
New York 11226
(646)
699-7855
(Address, including
zip code, and telephone number,
including area
code, of registrant’s principal executive
offices)
James
Sapirstein, President and Chief Executive Officer
AzurRx
BioPharma, Inc.
760
Parkside Avenue
Downstate
Biotechnology Incubator, Suite 304
Brooklyn,
New York 11226
(646)
699-7855
(Name, address,
including zip code, and telephone number,
including area
code, of agent for service)
Copies to
Daniel
W. Rumsey, Esq.
Jessica
R. Sudweeks, Esq.
Disclosure
Law Group, a Professional Corporation
655
West Broadway, Suite 870
San
Diego, CA 92101
Telephone:
(619) 272-7050
Facsimile:
(619) 330-2101
Approximate date of commencement of proposed
sale to the public: As soon as practicable after this
registration statement becomes effective.
If any of the
securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following
box. [X]
If this Form is
filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same
offering. ☐
If this Form is a
post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. ☐
If this Form is a
post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. ☐
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act:
Large accelerated filer
|
[
]
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Accelerated filer
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[
]
|
Non-accelerated
filer
|
[X]
|
Smaller reporting company
|
[X]
|
|
Emerging growth
company
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[X]
|
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
CALCULATION
OF REGISTRATION FEE
Title
of each class of
securities
to be registered
|
Amount
to
be
registered
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Proposed
maximum
offering
price per
share (1)
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Proposed
maximum
aggregate
offering
price
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Amount
of
registration
fee(2)
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Common stock, par value $0.0001 per
share
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8,880,760
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$1.30
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$11,544,988
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$1,498.54
|
(1)
Pursuant to Rule
457(c) of the Securities Act of 1933, as amended, calculated on the
basis of the average of the high and low prices per share of the
registrant’s common stock as reported by The Nasdaq Capital
Market on January 8, 2020.
(2)
$1,233.41
previously paid.
The
Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933
or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in
this preliminary prospectus is not complete and may be changed.
These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective.
This preliminary prospectus is not an offer to sell these
securities nor does it seek an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
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SUBJECT
TO COMPLETION
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DATED
JANUARY 13, 2020
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8,880,760
Shares of Common Stock
This prospectus
relates to the offer and sale of up to 8,880,760 shares of our
common stock by Lincoln Park Capital Fund, LLC, or Lincoln Park or
the selling stockholder.
The shares of
common stock being offered by the selling stockholder have been or
may be issued pursuant to a purchase agreement dated November 13,
2019 that we entered into with Lincoln Park. See The Lincoln Park Transaction on
page 13 of this prospectus for a description of that agreement
and Selling
Stockholder on page 12 of this prospectus for
additional information regarding Lincoln Park. The prices at which
Lincoln Park may sell the shares will be determined by the
prevailing market price for the shares or in negotiated
transactions.
We are not selling
any securities under this prospectus and will not receive any of
the proceeds from the sale of shares by the selling
stockholder.
The selling
stockholder may sell the shares of common stock described in this
prospectus in a number of different ways and at varying prices.
See Plan of
Distribution on page 17 of this prospectus for more
information about how the selling stockholder may sell the shares
of common stock being registered pursuant to this prospectus. The
selling stockholder is an “underwriter” within the
meaning of Section 2(a)(11) of the Securities Act of 1933, as
amended.
We will pay the
expenses incurred in registering the shares, including legal and
accounting fees. See Plan of
Distribution on page 17 of this
prospectus.
Our common stock is
currently listed on The Nasdaq Capital Market under the symbol
“AZRX”. On January 8, 2020, the last
reported sale price of our common stock on The Nasdaq Capital
Market was $1.20.
We are an
“emerging growth company” as defined in
Section 2(a) of the Securities Act of 1933, as amended, and we
have elected to comply with certain reduced public company
reporting requirements.
Investing in our securities involves risks. See “Risk
Factors” beginning on page 8 of this prospectus for a
discussion of the risks that you should consider in connection with
an investment 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 is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this
prospectus is
,
2020.
TABLE OF CONTENTS
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary does not contain all of the information
that you should consider before deciding to invest in our
securities. You should read this entire prospectus carefully,
including the “Risk Factors” section in this prospectus
and under similar captions in the documents incorporated by
reference into this prospectus. 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.
Our current product
pipeline consists of two therapeutic programs under development,
each of which are described below.
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 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 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, the Company initiated a multi-center Phase 2
OPTION study in the fourth quarter of 2018 in the United States and
Europe (the “OPTION
Study”). The Company targeted enrollment of 30 to 35
patients for the OPTION Study and dosed the first patients in
February 2019. In June 2019, the Company reached its enrollment
target for the study.
On September 25,
2019, the Company announced positive results from the OPTION Study.
Results showed that the primary efficacy endpoint of CFA was
comparable to the CFA in a prior phase two study in patients with
CP, while using the same dosage of MS1819-SD. The dosage used in
both studies was 2.2 grams per day, which was determined in
agreement with the FDA as a bridging dose. Although the study was
not powered for statistical significance, the data demonstrated
meaningful efficacy results, with approximately 50% of the patients
showing CFAs high enough to reach non-inferiority with standard
porcine enzyme replacement therapy (“PERT”). Additionally, coefficient
of nitrogen absorption (“CNA”) was comparable between the
MS1819-SD and PERT arms, 93% vs. 97%, respectively, in the Option
Study. This important finding confirms that protease
supplementation is not likely to be required with MS1819-SD
treatment. A total of 32 patients, ages 18 or older, completed the
OPTION Study. The Company recently met with the FDA to discuss a
Phase 2b or Phase 3 trial design exploring the use of higher doses
and/or enteric-coated capsules to ensure higher levels of MS1819-SD
in the duodenum. The new protocol is currently under review with
the FDA and a response is anticipated within the next 60
days.
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In addition
to the OPTION Study, in July 2019 the Company launched a Phase 2
multi-center clinical trial (the “Combination Trial”) in Hungary to
investigate MS1819-SD in combination with PERT, for CF patients who
suffer from severe EPI, but continue to experience clinical
symptoms of fat malabsorption despite taking the maximum daily dose
of PERTs. The Combination 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.
On October 15,
2019, the Company announced that it dosed the first patients in its
Combination Trial. This study is designed to investigate the
safety, tolerability and efficacy of escalating doses of MS1819-SD
(700 mg, 1120 mg and 2240 mg per day, respectively), in conjunction
with a stable dose of porcine PERTs, in order to increase the CFA
and relieve abdominal symptoms. A combination therapy of PERT and
MS1819-SD has the potential to: (i) correct macronutrient and
micronutrient maldigestion; (ii) eliminate abdominal symptoms
attributable to maldigestion; and (iii) sustain optimal nutritional
status on a normal diet in CF patients with severe EPI. Planned
enrollment is expected to include approximately 24 CF patients with
severe EPI, with study completion anticipated in 2020.
On October 17,
2019, the Company announced that the Cystic Fibrosis Foundation
Data Safety Monitoring Board has completed its review of the
Company’s final results of the OPTION Study and has found no
safety concerns for MS1819-SD, and that the group supports the
Company’s plan to proceed to a higher four-gram dose of
MS1819-SD in its next planned Phase 2 clinical trial.
b-Lactamase Program
Our
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, we have 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, we are focused on advancing
pre-clinical development of AZX1103. We are also currently
assessing our plans for the continuation of the development of
AZX1101.
We do not expect to
generate revenue from drug candidates that we develop until we
obtain approval for one or more of such drug candidates and
commercialize our product or enter into a collaborative agreement
with a third party. We do not have any products approved for sale
at the present and have never generated revenue from product
sale.
Recent Developments
Asset Purchase Agreement with Mayoly
On March 27, 2019,
the Company entered into an Asset Purchase Agreement with
Mayoly (the “Mayoly APA”), pursuant to which the
Company 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 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.
In accordance with
the Mayoly APA, the Company provided to Mayoly the following
consideration for the purchase of MS1819-SD:
(i)
the Company assumed certain of Mayoly’s liabilities with
respect to MS1819-SD;
(ii)
the Company forgave all amounts currently owed to AzurRx SAS by
Mayoly under the JDLA;
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(iii)
the Company agreed to pay, within 30 days after the execution of
the Mayoly APA, all amounts incurred by Mayoly for the maintenance
of patents related to MS1819-SD from January 1, 2019 through the
date of the Mayoly APA;
(iv)
the Company made an
initial payment to Mayoly of €800,000, which amount was paid
by the issuance of 400,481 shares of the Company’s common
stock at a price of $2.29 per share (the “Closing
Payment Shares”) and the
Company recognized $917,101 as part of stockholders’ equity;
and
(v)
the Company agreed to
pay to Mayoly an additional €1,500,000, payable in a mix of
cash and shares of the Company’s common stock as follows (the
“Milestone
Payments”): (y) on
December 31, 2019, a cash payment of €400,000 and 200,240
shares of common stock (the “2019
Escrow Shares”) and (z) on
December 31, 2020, a cash payment of €350,000 and 175,210
shares of common stock (the “2020
Escrow Shares” and, together
with the 2019 Escrow Shares, the “Escrow
Shares”) and the
Company recognized $823,858 as part of stockholders’ equity.
The Company paid €400,000 to
Mayoly on December 26, 2019, as required by the Mayoly
APA.
The Closing Payment
Shares and the Escrow Shares were all issued upon execution of the
Mayoly APA; provided, however,
per the terms of the Mayoly APA, the Escrow Shares will be held in
escrow until the applicable Milestone Payment date, at which time
the respective Escrow Shares will be released to
Mayoly.
April 2019 Registered Direct Public Offering
In April 2019, the
Company completed a public offering of 1,294,930 shares of its
common stock at a public offering price of $2.13 per share,
resulting in net proceeds of approximately $2,500,000, 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 the Company’s
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, the Company 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 the Company’s 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. 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. Also see Note 12. The Company 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.
May 2019 Registered Direct Public Offering
On May 9, 2019, the
Company completed a second public offering with Alexander Capital
of 1,227,167 shares of the Company’s common stock at a public
offering price of $2.35 per share, resulting in net proceeds of
approximately $2,550,000, 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 the Company’s
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, the Company
entered into a Selling Agent Agreement with Alexander Capital,
pursuant to which the Company (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, an amount equal to
3.0% of the aggregate number of shares of common stock sold in the
Offering. 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. Also see Note
12. 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.
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July 2019 Underwritten Public Offering
On July 17, 2019, we
entered into an underwriting agreement (the
“Underwriting
Agreement”) with H.C.
Wainwright & Co., LLC. (“Wainwright”)
as representatives of the several underwriters named therein (the
“Underwriters”),
relating to the issuance and sale of 5 million shares of our common
stock. Each share of common stock was sold at a public offering
price of $1.00 per share, resulting in gross proceeds to us of
$5,000,000, or net proceeds of approximately $4,500,000, after
deducting the underwriting discount, estimated legal fees and other
offering expenses payable by the Company (the
“July
2019 Public Offering”). In addition,
pursuant to the terms of the Underwriting Agreement, the Company
granted to the Underwriters a 30-day option to purchase up to an
additional 750,000 shares of common stock at the same public
offering price per share.
The July 2019 Public
Offering was conducted pursuant to our effective shelf registration
statement on Form S-3 (File No. 333-231954), filed with the
Securities and Exchange Commission (the “SEC”)
on June 5, 2019, and declared effective on June 25, 2019, including
the base prospectus dated June 4, 2019 included therein and the
related prospectus supplement filed on July 19,
2019.
In addition to the
underwriting discount received by the Underwriters, we also issued
unregistered common stock purchase warrants to Wainwright to
purchase up to 200,000 shares of common stock (the
“Wainwright
Warrants”). The
Wainwright Warrants are exercisable immediately upon issuance,
expire on July 17, 2024 and have an exercise price of $1.25 per
share.
Cyber-Related Fraud
On August 8, 2019,
management was advised that it was a victim of a cyber-related
fraud whereby a hacker impersonated one of the Company’s key
vendors to redirect payments, totaling $418,765. The Company,
including the Audit Committee, completed its investigation and is
reviewing all available avenues of recovery, including from the
Company’s financial institution to recover the payments. As
of September 30, 2019, the Company had recovered $50,858 from its
financial institution but management is unable to determine the
probability of recovering anything further from the cyber-related
fraud. Therefore, as of September 30, 2019, the Company recorded a
loss of $367,908 which is included in General and Administrative
(“G&A”)
expenses. As a result of the cyber-related fraud, the Company has
instituted additional controls and procedures and all employees
have now undergone cybersecurity training.
Amendment to Charter and Approved Reverse Stock Split
On December 19, 2019, at the Company’s
Annual Meeting of Stockholders (“Annual
Meeting”), the
Company’s stockholders approved an amendment to
the Company’s Amended and Restated Certificate of
Incorporation (the “Charter”) to increase the number
of authorized shares of common stock by 50,000,000 shares to
150,000,000 shares, and to authorize the Company’s Board of
Directors to effect a reverse stock split of both the issued and
outstanding and authorized shares of common stock of the Company,
at a specific ratio, ranging from one-for-two (1:2) to one-for-five
(1:5), any time prior to the one-year anniversary date of the
Annual Meeting, with the exact ratio to be determined by the Board
of Directors.
The
Company filed a Certificate of Amendment to its Charter with the
Secretary of State of the State of Delaware on December 20, 2019,
to increase the number of authorized shares of common stock to
150,000,000 shares.
December 2019 Convertible Note Offering
On December 20, 2019, the Company began an
offering of (i) Senior Convertible Promissory Notes (each a
“Note,” and together, the
“Notes”) in the principal amount of up to $8.0
million to certain accredited investors (the
“Investors”), and (ii) warrants
(“Warrants”) to purchase shares of the Company’s
common stock, each pursuant to Note Purchase Agreements entered
into by and between the Company and each of the Investors (the
“NPAs”) (the “Note
Offering”).
On December 20, 2019, December 24, 2019, December 30,
2019, December 31, 2019, January 2, 2020, and January 9, 2020, the
Company issued Notes to the Investors in the aggregate principal
amount of $6,904,000. Each Note matures on September 20, 2020,
accrues interest at a rate of 9% per annum, and is convertible, at
the option of the holder, into shares of the Company’s Common Stock at
a price of $0.97 per share (the “Conversion
Shares”). As additional
consideration for the execution of the NPA, each Investor also
received Warrants to purchase that number of shares of the
Company’s Common Stock equal to one-half of the Conversion
Shares issuable upon conversion of the Notes (the
“Warrant
Shares”). The Warrants
have an exercise price of $1.07 per share and expire five years
from the date of issuance. The Company and each Investor executed a
Registration Rights Agreement (the “RRA”), pursuant to which the Company agreed to
file a registration statement with the Securities and Exchange
Commission (“SEC”) no later than 30 days after the beginning
of the Note Offering, on behalf of Investors, to register the
Conversion Shares and Warrant
Shares.
In connection with the Note
Offering, ADEC Private Equity Investments, LLC
(“ADEC”), the
holder of certain Senior Convertible Notes issued under that
certain Note Purchase Agreement, dated as of February 14, 2019, in
the aggregate original principal amount of $2.0
million, consented to the
issuance of the Notes in the Note Offering in consideration for the
repayment, in full, of $554,153.42 remaining due under the terms of
the Senior Convertible Notes on or before January 2, 2020, net of
the payment to ADEC of $550,000 made by the Company on December 23,
2019 from proceeds from the issuance of the Notes and a payment of
$1.0 million on December 31, 2019, from the anticipated issuance of
additional Notes.
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Equity
Offering
On November
13, 2019 (the “Execution
Date”), we entered into a purchase agreement, dated as
of the Execution Date (the “Purchase Agreement”), and a
registration rights agreement, dated as of the Execution Date (the
“Registration Rights
Agreement”), with Lincoln Park Capital Fund, LLC
(“Lincoln
Park”), pursuant to which Lincoln Park has committed
to purchase up to $15,000,000 of the Company’s common stock.
Pursuant to the Registration Rights Agreement, the Company is
required to register the maximum number of shares of common stock
that have been or may be issued to Lincoln Park under the Purchase
Agreement and as shall be permitted to be registered in accordance
with applicable rules, regulations and interpretations of the SEC.
We have filed the registration statement with the SEC that includes
this prospectus to register for resale under the Securities Act of
1933, as amended, (the “Securities Act”), up to 8,880,760
shares of common stock, representing 33.33% of the issued and
outstanding shares of common stock on November 13,
2019.
Under the terms and
subject to the conditions of the Purchase Agreement, the Company
has the right, but not the obligation, to sell to Lincoln Park, and
Lincoln Park is obligated to purchase up to $15,000,000 of shares
of common stock. Such sales of common stock by the Company, if any,
will be subject to certain limitations, and may occur from time to
time, at the Company’s sole discretion, over the 30-month
period commencing on the date that a registration statement
covering the resale of shares of common stock that have been and
may be issued under the Purchase Agreement, which the Company
agreed to file with the SEC pursuant to the Registration Rights
Agreement, is declared effective by the SEC, a final prospectus in
connection therewith is filed and the other conditions set forth in
the Purchase Agreement are satisfied, all of which are outside the
control of Lincoln Park (such date on which all of such conditions
are satisfied, the “Commencement Date”). The Company
has 60 business days to file the registration statement. In
consideration for entering into the Purchase Agreement, we
previously issued to Lincoln Park 487,168 shares of common stock as
a commitment fee on November 13, 2019.
Thereafter, under
the Purchase Agreement, on any business day over the term of the
Purchase Agreement, the Company has the right, in its sole
discretion, to present Lincoln Park with a purchase notice (each, a
“Purchase
Notice”) directing Lincoln Park to purchase up to
150,000 shares per business day (the “Regular
Purchase”) (subject to adjustment for any
reorganization, recapitalization, non-cash dividend, stock split,
reverse stock split or other similar transaction as provided in the
Purchase Agreement). In each case, Lincoln Park’s maximum
commitment in any single Regular Purchase may not exceed
$1,000,000. The Purchase Agreement provides for a purchase price
per Purchase Share (the “Purchase Price”)
equal to the lesser of the lowest sale price of the Company’s
common stock on the purchase date; and the average of the three
lowest closing sale prices for the Company’s common stock
during the ten consecutive business days ending on the business day
immediately preceding the purchase date of such
shares.
In addition, on any
date on which the Company submits a Purchase Notice to Lincoln
Park, the Company also has the right, in its sole discretion, to
present Lincoln with an accelerated purchase notice (each, an
“Accelerated Purchase
Notice”) directing Lincoln Park to purchase an amount
of stock (the “Accelerated
Purchase”) equal to up to the lesser of (i) three
times the number of shares purchased pursuant to such Regular
Purchase; and (ii) 30% of the aggregate shares of the
Company’s common stock traded during all or, if certain
trading volume or market price thresholds specified in the Purchase
Agreement are crossed on the applicable Accelerated Purchase date,
the portion of the normal trading hours on the applicable
Accelerated Purchase date prior to such time that any one of such
thresholds is crossed (such period of time on the applicable
Accelerated Purchase Date, the “Accelerated Purchase Measurement
Period”), provided that Lincoln Park will not be
required to buy shares pursuant to an Accelerated Purchase Notice
that was received by Lincoln Park on any business day on which the
last closing trade price of the Company’s common stock on The
Nasdaq Capital Market (or alternative national exchange in
accordance with the Purchase Agreement) is below $0.25 per share.
The purchase price per share for each such Accelerated Purchase
will be equal to the lesser of 97% of the volume weighted average
price of the Company’s common stock during the applicable
Accelerated Purchase Measurement Period on the applicable
Accelerated Purchase date; and the closing sale price of the
Company’s common stock on the applicable Accelerated Purchase
Date.
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-5-
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The Company may
also direct Lincoln Park on any business day on which an
Accelerated Purchase has been completed and all of the shares to be
purchased thereunder have been properly delivered to Lincoln Park
in accordance with the Purchase Agreement, to purchase an amount of
stock (the “Additional
Accelerated Purchase”) equal to up to the lesser of
(i) three times the number of shares purchased pursuant to such
Regular Purchase; and (ii) 30% of the aggregate number of shares of
the Company’s common stock traded during a certain portion of
the normal trading hours on the applicable Additional Accelerated
Purchase date as determined in accordance with the Purchase
Agreement (such period of time on the applicable Additional
Accelerated Purchase date, the “Additional Accelerated Purchase Measurement
Period”), provided that the closing price of the
Company’s common stock on the business day immediately
preceding such business day is not below $0.25 (subject to
adjustment for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction as provided in the Purchase Agreement). Additional
Accelerated Purchases will be equal to the lower of 97% of the
volume weighted average price of the Company’s common stock
during the applicable Additional Accelerated Purchase Measurement
Period on the applicable Additional Accelerated Purchase date; and
the closing sale price of the Company’s common stock on the
applicable Additional Accelerated Purchase date.
As of November 13,
2019, there were 26,155,111 shares of our common stock issued and
outstanding immediately prior to the execution of the Purchase
Agreement, of which 23,504,132 shares were held by non-affiliates.
Although the Purchase Agreement provides that we may sell up to
$15,000,000 of our common stock to Lincoln Park, only 8,880,760
shares of our common stock are being offered under this prospectus,
which represents shares which may be issued to Lincoln Park in the
future under the Purchase Agreement, if and when we sell shares to
Lincoln Park under the Purchase Agreement. Depending on the market
prices of our common stock at the time we elect to issue and sell
shares to Lincoln Park under the Purchase Agreement, we may need to
register for resale under the Securities Act additional shares of
our common stock in order to receive aggregate gross proceeds equal
to the $15,000,000 total commitment available to us under the
Purchase Agreement. If all of the 8,880,760 shares offered by
Lincoln Park under this prospectus were issued and outstanding as
of the date hereof, such shares would represent approximately
25.2% of the total number of shares of our common
stock issued and outstanding and approximately 27.2%
of the total number of issued and outstanding shares held by
non-affiliates, in each case as of the date hereof. If we elect to
issue and sell more than the 8,880,760 shares offered under this
prospectus to Lincoln Park, which we have the right, but not the
obligation, to do, we must first register for resale under the
Securities Act any such additional shares, which could cause
additional substantial dilution to our stockholders. The number of
shares ultimately offered for resale by Lincoln Park is dependent
upon the number of shares we sell to Lincoln Park under the
Purchase Agreement.
Under applicable
rules of The Nasdaq Capital Market, in no event may we issue or
sell to Lincoln Park under the Purchase Agreement more than 19.99%
of the shares of our common stock outstanding immediately prior to
the execution of the Purchase Agreement (which is 5,231,022 shares
based on 26,155,111 shares issued and outstanding immediately prior
to the execution of the Purchase Agreement), which limitation we
refer to as the Exchange Cap, unless (i) we obtain stockholder
approval to issue shares of common stock in excess of the Exchange
Cap or (ii) the average of the closing prices of our common stock
on The Nasdaq Capital Market for the five business days immediately
preceding November 13, 2019 plus an incremental amount, such that
issuances and sales of our common stock to Lincoln Park under the
Purchase Agreement would be exempt from the Exchange Cap limitation
under applicable Nasdaq rules. In any event, the Purchase Agreement
specifically provides that we may not issue or sell any shares of
our common stock under the Purchase Agreement if such issuance or
sale would breach any applicable Nasdaq rules.
The Purchase
Agreement also prohibits us from directing Lincoln Park to purchase
any shares of common stock if those shares, when aggregated with
all other shares of our common stock then beneficially owned by
Lincoln Park and its affiliates, would result in Lincoln Park and
its affiliates having beneficial ownership, at any single point in
time, of more than 9.99% of the then total outstanding shares of
our common stock, as calculated pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act,
and Rule 13d-3 thereunder (the “Beneficial Ownership
Cap”).
Issuances of our
common stock in this offering will not affect the rights or
privileges of our existing stockholders, except that the economic
and voting interests of each of our existing stockholders will be
diluted as a result of any such issuance. Although the number of
shares of common stock that our existing stockholders own will not
decrease, the shares owned by our existing stockholders will
represent a smaller percentage of our total outstanding shares
after any such issuance to Lincoln Park.
As a result of the consummation of the Notes
Financing as discussed in December 2019 Convertible Note
Offering above in this
prospectus, which resulted in the issuance of Notes convertible
into approximately 7.1 million shares of our common stock, the
number of shares of common stock that we can issue to Lincoln Park
under the rules of the Nasdaq Capital Market on or
before July 2020 may be limited in the event the price of
our common stock declines below $0.70 per share unless we obtain stockholder approval of such
issuances.
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-6-
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The
Offering
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Shares
of common stock offered by the selling stockholders
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8,880,760 shares
consisting of:
●
487,168
commitment shares issued to Lincoln Park upon execution of the
Purchase Agreement; and
●
8,393,592 shares we
may sell to Lincoln Park under the Purchase Agreement from time to
time after the date of this prospectus.
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Shares
of common stock outstanding before this offering
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26,800,519
shares of common stock
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Shares
of common stock to be outstanding after giving effect to the
issuance of 8,880,760 shares under the Purchase Agreement
registered hereunder
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35,194,111
shares of common stock
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Use
of Proceeds
|
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We will receive no
proceeds from the sale of shares of common stock by Lincoln Park in
this offering. We may receive up to $15,000,000 aggregate gross
proceeds under the Purchase Agreement from any sales we make to
Lincoln Park pursuant to the Purchase Agreement after the date of
this prospectus.
Any proceeds that
we receive from sales to Lincoln Park under the Purchase Agreement
will be used 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 11 of this prospectus.
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Terms
of this Offering
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The selling
stockholders, including their transferees, donees, pledgees,
assignees and successors-in-interest, may sell, transfer or
otherwise dispose of any or all of the shares of common stock
offered by this prospectus from time to time on The Nasdaq Capital
Market or any other stock exchange, market or trading facility on
which the shares are traded or in private transactions. The shares
of common stock may be sold at fixed prices, at market prices
prevailing at the time of sale, at prices related to prevailing
market price or at negotiated prices.
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Nasdaq
Symbol
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Our common stock is
listed on The Nasdaq Capital Market under the symbol
“AZRX”.
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Risk
Factors
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Investing in our
securities involves significant risks. Before making a decision
whether to invest in our securities, please read the information
contained in or incorporated by reference under the heading
“Risk Factors”
in this prospectus, the documents we have incorporated by reference
herein, and under similar headings in other documents filed after
the date hereof and incorporated by reference into this prospectus.
See “Incorporation of
Certain Information by Reference” and
“Where You Can Find More
Information”.
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-7-
RISK
FACTORS
Investing in our
common stock involves a high degree of risk. Before deciding
whether to purchase our securities, including the shares of common
stock and warrants offered by this prospectus, 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 believe are immaterial
may also significantly impair our business operations. If any of
these risks occur, our business, results of operations or financial
condition and prospects could be harmed. In that event, the market
price of our common stock and the value of the warrants could
decline, and you could lose all or part of your
investment.
Risks
Related to this Offering
The number of shares that may be
issued to Lincoln Park under the terms of the Purchase Agreement
may be limited due to the requirements of the Nasdaq Capital
Market.
As a result of the issuance of certain Senior
Convertible Promissory Notes (“Notes”) in December 2019 and January 2020 in the
aggregate principal amount of approximately $6.9 million (the
“Notes
Financing”), which Notes
are convertible into approximately 7.1 million shares of our common
stock, the number of shares of common stock that we can issue to
Lincoln Park under the rules of the Nasdaq Capital Market on
or before July 2020 may be limited in the event
the price of our common stock declines below $0.70 per share
unless we obtain stockholder approval
of such issuances. In the event we do not obtain stockholder
approval, and the price of our common stock declines below $0.70
per share, the Company may be unable to issue shares of common
stock to Lincoln Park under the Purchase Agreement prior to July
2020.
A default in the Company’s ability to repay the Notes when
due and payable on September 20, 2020 in the principal amount of
approximately $6.9 million would have a material adverse effect on
our financial condition and therefore our ability to continue as a
going concern.
The Company issued certain Notes in the aggregate
principal amount of approximately $6.9 million in December 2019 and
January 2020, which become due and payable September 20,
2020. The Notes are convertible into shares of our common stock at $0.97 per
share. In the event all or a portion of the holders of such
Notes fail to convert such Notes into common stock of the Company
prior to the maturity date, and the Company is unable to refinance
or otherwise pay such Notes in full at maturity, such failure would
result in a default under the terms of the Notes. Such
default would have a material adverse effect on our financial
condition and therefore our ability to continue as a going
concern.
The sale or issuance of our common stock to Lincoln Park may cause
dilution and the sale of the shares of common stock acquired by
Lincoln Park, or the perception that such sales may occur, could
cause the price of our common stock to fall.
On November 13,
2019, we entered into the Purchase Agreement with Lincoln Park,
pursuant to which Lincoln Park has committed to purchase up to
$15,000,000 of our common stock. Upon the execution of the Purchase
Agreement, we issued 487,168 Commitment Shares to Lincoln Park as a
fee for its commitment to purchase shares of our common stock under
the Purchase Agreement. The remaining shares of our common stock
that may be issued under the Purchase Agreement may be sold by us
to Lincoln Park at our discretion from time to time over a 30-month
period commencing after the satisfaction of certain conditions set
forth in the Purchase Agreement, including that the SEC has
declared effective the registration statement that includes this
prospectus. The purchase price for the shares that we may sell to
Lincoln Park under the Purchase Agreement will fluctuate based on
the price of our common stock. Depending on market liquidity at the
time, sales of such shares may cause the trading price of our
common stock to fall.
We generally have
the right to control the timing and amount of any future sales of
our shares to Lincoln Park. Additional sales of our common stock,
if any, to Lincoln Park will depend upon market conditions and
other factors to be determined by us. We may ultimately decide to
sell to Lincoln Park all, some or none of the additional shares of
our common stock that may be available for us to sell pursuant to
the Purchase Agreement. If and when we do sell shares to Lincoln
Park, after Lincoln Park has acquired the shares, Lincoln Park may
resell all, some or none of those shares at any time or from time
to time in its discretion. Therefore, sales to Lincoln Park by us
could result in substantial dilution to the interests of other
holders of our common stock. Additionally, the sale of a
substantial number of shares of our common stock to Lincoln Park,
or the anticipation of such sales, could make it more difficult for
us to sell equity or equity-related securities in the future at a
time and at a price that we might otherwise wish to effect
sales.
We may require additional financing to sustain our operations and
without it we may not be able to continue operations.
We may direct
Lincoln Park to purchase up to $15,000,000 worth of shares of our
common stock under our agreement over a 30-month period generally
in amounts up to 150,000 shares of our common stock, which share
amount may be increased to include additional shares of our common
stock depending on the market price of our common stock at the time
of sale, and subject to a maximum limit of $1,000,000 per purchase,
on any such business day. Assuming a purchase price of
$1.30 per share (the average of the high and low
prices per share on January 8, 2020) and the purchase
by Lincoln Park of the balance of the 8,393,592 purchase shares,
proceeds to us would only be approximately $10.9
million.
The extent we rely
on Lincoln Park as a source of funding will depend on a number of
factors including, the prevailing market price of our common stock
and the extent to which we are able to secure working capital from
other sources. If obtaining sufficient funding from Lincoln Park
were to prove unavailable or prohibitively dilutive, we will need
to secure another source of funding in order to satisfy our working
capital needs. Even if we sell all $15,000,000 under the Purchase
Agreement to Lincoln Park, we may still need additional capital to
fully implement our business, operating and development plans.
Should the financing we require to sustain our working capital
needs be unavailable or prohibitively expensive when we require it,
the consequences could be a material adverse effect on our
business, operating results, financial condition and
prospects.
-8-
INCORPORATION 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 Quarterly
Report on Form 10-Q for the period ended June 30, 2019, filed on
August 13, 2019;
●
our Quarterly
Report on Form 10-Q for the period ended September 30, 2019, filed
on November 14, 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;
●
our Current Report
on Form 8-K, filed on July 10, 2019;
●
our Current Report
on Form 8-K, filed on July 22, 2019;
●
our Current Report
on Form 8-K, filed on September 25, 2019 (with respect to Item 8.01
and Exhibit 99.1 only);
●
our Current Report
on Form 8-K, filed on October 11, 2019;
●
our Current Report
on Form 8-K, filed on October 15, 2019;
●
our Current Report
on Form 8-K, filed on October 17, 2019;
●
our Current Report
on Form 8-K, filed on November 1, 2019;
●
our Current Report
on Form 8-K, filed on November 14, 2019;
●
our Current Report
on Form 8-K, filed on December 30, 2019;
●
our Current Report
on Form 8-K, filed on January 6, 2020;
●
our Current Report
on Form 8-K, filed on January 13, 2020;
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.
-9-
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus,
and any documents we incorporate by reference, contain certain
forward-looking statements that involve substantial risks and
uncertainties. All statements contained in this prospectus and any
documents we incorporate by reference, 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 September 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 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, as well as
certain information incorporated by reference into this 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 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.
-10-
USE OF PROCEEDS
This prospectus
relates to shares of our common stock that may be offered and sold
from time to time by Lincoln Park. We will receive no proceeds from
the sale of shares of common stock by Lincoln Park in this
offering. We may receive up to $15,000,000 aggregate gross proceeds
under the Purchase Agreement from any sales we make to Lincoln Park
pursuant to the Purchase Agreement after the date of this
prospectus. However, we may not be registering for sale or offering
for resale under the registration statement of which this
prospectus is a part all of the shares issuable pursuant to the
Purchase Agreement. As we are unable to predict the timing or
amount of potential issuances of all of the shares offered hereby
(other than the commitment shares), we have not allocated any
proceeds of such issuances to any particular purpose. Accordingly,
all such proceeds are expected to be used 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.
DIVIDEND
POLICY
We have never
declared or paid any cash dividends on our capital stock, and we do
not currently intend to pay any cash dividends on our common stock
for the foreseeable future. We expect to retain future earnings, if
any, to fund the development and growth of our business. Any future
determination to pay dividends on our common stock will be at the
discretion of our board of directors and will depend upon, among
other factors, our results of operations, financial condition,
capital requirements and any contractual restrictions.
-11-
SELLING STOCKHOLDER
This prospectus
relates to the resale by the selling stockholder, Lincoln Park, of
shares of common stock that have been or may be issued to Lincoln
Park pursuant to the Purchase Agreement. We are filing the
registration statement of which this prospectus forms a part
pursuant to the provisions of the Registration Rights Agreement,
which we entered into with Lincoln Park on November 13, 2019
concurrently with our execution of the Purchase Agreement, in which
we agreed to provide certain registration rights with respect to
sales by Lincoln Park of the shares of our common stock that have
been or may be issued to Lincoln Park under the Purchase
Agreement.
Lincoln Park, as
the selling stockholder, may, from time to time, offer and sell
pursuant to this prospectus any or all of the shares that we have
issued or may sell to Lincoln Park under the Purchase Agreement.
The selling stockholder may sell some, all or none of its shares.
We do not know how long the selling stockholder will hold the
shares before selling them, and we currently have no agreements,
arrangements or understandings with the selling stockholder
regarding the sale of any of the shares.
The following table
presents information regarding the selling stockholder and the
shares that it may offer and sell from time to time under this
prospectus. The table is prepared based on information supplied to
us by the selling stockholder, and reflects its holdings as of
January 8, 2020. Neither Lincoln Park nor any of its
affiliates has held a position or office, or had any other material
relationship, with us or any of our predecessors or affiliates.
Beneficial ownership is determined in accordance with Section 13(d)
of the Exchange Act and Rule 13d-3 thereunder.
Selling
Stockholder
|
Shares
Beneficially
Owned
Before this
Offering
|
Percentage
of
Outstanding
Shares
Beneficially
Owned
Before
this Offering
|
Shares
to be Sold in this Offering Assuming The
Company issues the Maximum Number of Shares
Under the Purchase Agreement
|
Percentage
of
Outstanding
Shares
Beneficially
Owned
After
this Offering
|
Lincoln Park
Capital Fund, LLC (1)
|
1,666,197(2)
|
4.99%(3)
|
8,880,760(4)
|
3.24%
|
(1)
|
Josh Scheinfeld and
Jonathan Cope, the Managing Members of Lincoln Park Capital, LLC,
are deemed to be beneficial owners of all of the shares of common
stock owned by Lincoln Park Capital Fund, LLC. Messrs. Cope and
Scheinfeld have shared voting and investment power over the shares
being offered under the prospectus filed with the SEC in connection
with the transactions contemplated under the Purchase Agreement.
Lincoln Park Capital, LLC is not a licensed broker dealer or an
affiliate of a licensed broker dealer.
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(2)
|
Represents (i) the
487,168 shares issued to Lincoln Park as Commitment Shares under
the Purchase Agreement and being registered under the registration
statement of which this prospectus is a part, (ii) 567,011 shares
issuable upon conversion of outstanding senior convertible notes,
and (iii) an aggregate of 612,018 shares, underlying warrants. The
567,011 shares issuable upon conversion of outstanding senior
convertible notes and the 612,018 shares underlying warrants that
are beneficially owned by Lincoln Park are subject to blocker
provisions which restrict the exercise or conversion of such
instruments if, as a result of such exercise or conversion, Lincoln
Park, the holder, together with its affiliates and any other person
whose beneficial ownership of Common Stock would be aggregated with
Lincoln Park for purposes of Section 13(d) of the Exchange Act,
would cause Lincoln Park to beneficially own in excess of 4.99% or
9.99% of our then issued and outstanding shares of Common Stock.
The senior convertible notes and warrants held by Lincoln Park were
previously acquired in one or more transactions not related to the
transactions contemplated by the Purchase Agreement, and the shares
issuable upon conversion of the outstanding senior convertible
notes and the shares underlying warrants are not being registered
under the registration statement of which this prospectus is a
part. In accordance with Rule 13d-3(d) under the Exchange Act, we
have excluded from the number of shares beneficially owned prior to
the offering all of the shares of common stock that Lincoln Park
may be required to purchase pursuant to the Purchase Agreement
because the issuance of such shares is solely at our discretion and
is subject to certain conditions, the satisfaction of all of which
are outside of Lincoln Park’s control, including the
registration statement of which this prospectus is a part becoming
and remaining effective. Furthermore, under the terms of the
Purchase Agreement, issuances and sales of shares of our common
stock to Lincoln Park are subject to certain limitations on the
amounts we may sell to Lincoln Park at any time, including the
Exchange Cap and the Beneficial Ownership Cap. See the description
under the heading “The Lincoln Park Transaction” for
more information about the Purchase Agreement.
|
|
|
(3)
|
Based on
26,800,519 outstanding shares of our common stock as
of January 8, 2020.
|
|
|
(4)
|
Although the
Purchase Agreement provides that we may sell up to $15,000,000 of
our common stock to Lincoln Park in addition to the 487,168 shares
that have already been issued to Lincoln Park, only 8,880,760
shares of our common stock are being offered under this prospectus
that may be sold by us to Lincoln Park at our discretion from time
to time over a 30-month period commencing after the date of the
Commencement. Depending on the price per share at which we sell our
common stock to Lincoln Park pursuant to the Purchase Agreement, we
may need to sell to Lincoln Park under the Purchase Agreement more
shares of our common stock than are offered under this prospectus
in order to receive aggregate gross proceeds equal to the
$15,000,000 total commitment available to us under the Purchase
Agreement. If we choose to do so, we must first register for resale
under the Securities Act such additional shares. The number of
shares ultimately offered for resale by Lincoln Park is dependent
upon the number of shares we sell to Lincoln Park under the
Purchase Agreement.
|
-12-
LINCOLN PARK TRANSACTION
General
On November 13,
2019, we entered into a Purchase Agreement and Registration Rights
Agreement with Lincoln Park. Pursuant to the terms of the Purchase
Agreement, Lincoln Park has agreed to purchase from us up to
$15,000,000 of our common stock from time to time during the term
of the Purchase Agreement, subject to certain
limitations.
We do not have the
right to commence any sales to Lincoln Park under the Purchase
Agreement until the Commencement has occurred. Thereafter, we may,
from time to time and at our sole discretion, on any single
business day, direct Lincoln Park to purchase shares of our common
stock in amounts up to 150,000 shares, which amounts may be
increased depending on the market price of our common stock at the
time of sale and subject to a maximum commitment by Lincoln Park of
$1,000,000 per single purchase (“Regular Purchases”). In addition, at our
discretion, Lincoln Park has committed to purchase other amounts
under an Accelerated Purchase (as defined below) and/or additional
amounts under an Additional Accelerated Purchase (as defined below)
under certain circumstances. The purchase price per share sold will
be based on the market price of our common stock immediately
preceding the time of sale as computed under the Purchase
Agreement. Lincoln Park may not assign or transfer its rights and
obligations under the Purchase Agreement.
Under applicable
rules of The Nasdaq Capital Market, in no event may we issue or
sell to Lincoln Park under the Purchase Agreement share of our
common stock in excess of the Exchange Cap (which is 5,231,022
shares, or 19.99% of the shares of our common stock outstanding
immediately prior to the execution of the Purchase Agreement),
unless (i) we obtain stockholder approval to issue shares of common
stock in excess of the Exchange Cap or (ii) the average price of
all applicable sales of our common stock to Lincoln Park under the
Purchase Agreement equals or exceeds the average of the closing
prices of our common stock on The Nasdaq Capital Market for the
five business days immediately preceding November 13, 2019 plus an
incremental amount, such that issuances and sales of our common
stock to Lincoln Park under the Purchase Agreement would be exempt
from the Exchange Cap limitation under applicable Nasdaq rules. In
any event, the Purchase Agreement specifically provides that we may
not issue or sell any shares of our common stock under the Purchase
Agreement if such issuance or sale would breach any applicable
rules Nasdaq rules.
The Purchase
Agreement also prohibits us from directing Lincoln Park to purchase
any shares of common stock if those shares, when aggregated with
all other shares of our common stock then beneficially owned by
Lincoln Park and its affiliates, would result in Lincoln Park
exceeding the Beneficial Ownership Cap.
Pursuant to
the Registration Rights Agreement, the Company is required to
register the maximum number of shares of common stock that have
been or may be issued to Lincoln Park under the Purchase Agreement
and as shall be permitted to be registered in accordance with
applicable rules, regulations and interpretations of the SEC. We
have filed the registration statement with the SEC that includes
this prospectus to register for resale under the Securities Act, up
to 8,880,760 shares of common stock, representing
approximately 34% of the issued and
outstanding shares of common stock on November 13,
2019.
Purchase
of Shares Under the Purchase Agreement
Under the terms and
subject to the conditions of the Purchase Agreement, the Company
has the right, but not the obligation, to sell to Lincoln Park, and
Lincoln Park is obligated to purchase up to $15,000,000 of shares
of common stock. Such sales of common stock by the Company, if any,
will be subject to certain limitations, and may occur from time to
time, at the Company’s sole discretion, over the 30-month
period commencing on the date that a registration statement
covering the resale of shares of common stock that have been and
may be issued under the Purchase Agreement, which the Company
agreed to file with the SEC pursuant to the Registration Rights
Agreement, is declared effective by the SEC and a final prospectus
in connection therewith is filed and the other conditions set forth
in the Purchase Agreement are satisfied, all of which are outside
the control of Lincoln Park (such date on which all of such
conditions are satisfied, the “Commencement Date”). The Company
has 60 business days to file the registration
statement.
Thereafter, under
the Purchase Agreement, on any business day over the term of the
Purchase Agreement, the Company has the right, in its sole
discretion, to present Lincoln Park with a purchase notice (each, a
“Purchase
Notice”) directing Lincoln Park to purchase up to
150,000 shares per business day (the “Regular Purchase”), (subject to
adjustment for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction as provided in the Purchase Agreement). In each case,
Lincoln Park’s maximum commitment in any single Regular
Purchase may not exceed $1,000,000. The Purchase Agreement provides
for a purchase price per Purchase Share (the “Purchase Price”) equal to the
lesser of:
●
the lowest sale
price of the Company’s common stock on the purchase date;
and
●
the average of the
three lowest closing sale prices for the Company’s common
stock during the ten consecutive business days ending on the
business day immediately preceding the purchase date of such
shares.
-13-
In addition, on any
date on which the Company submits a Purchase Notice to Lincoln
Park, the Company also has the right, in its sole discretion, to
present Lincoln with an accelerated purchase notice (each, an
“Accelerated Purchase
Notice”) directing Lincoln Park to purchase an amount
of stock (the “Accelerated
Purchase”) equal to up to the lesser of (i) three
times the number of shares purchased pursuant to such Regular
Purchase; and (ii) 30% of the aggregate shares of the
Company’s common stock traded during all or, if certain
trading volume or market price thresholds specified in the Purchase
Agreement are crossed on the applicable Accelerated Purchase date,
the portion of the normal trading hours on the applicable
Accelerated Purchase date prior to such time that any one of such
thresholds is crossed (such period of time on the applicable
Accelerated Purchase Date, the “Accelerated Purchase Measurement
Period”), provided that Lincoln Park will not be
required to buy shares pursuant to an Accelerated Purchase Notice
that was received by Lincoln Park on any business day on which the
last closing trade price of the Company’s common stock on The
Nasdaq Capital Market (or alternative national exchange in
accordance with the Purchase Agreement) is below $0.25 per share.
The purchase price per share for each such Accelerated Purchase
will be equal to the lesser of:
●
97% of the volume
weighted average price of the Company’s common stock during
the applicable Accelerated Purchase Measurement Period on the
applicable Accelerated Purchase date; and
●
the closing sale
price of the Company’s common stock on the applicable
Accelerated Purchase Date.
The Company may
also direct Lincoln Park on any business day on which an
Accelerated Purchase has been completed and all of the shares to be
purchased thereunder have been properly delivered to Lincoln Park
in accordance with the Purchase Agreement, to purchase an amount of
stock (the “Additional
Accelerated Purchase”) equal to up to the lesser of
(i) three times the number of shares purchased pursuant to such
Regular Purchase; and (ii) 30% of the aggregate number of shares of
the Company’s common stock traded during a certain portion of
the normal trading hours on the applicable Additional Accelerated
Purchase date as determined in accordance with the Purchase
Agreement (such period of time on the applicable Additional
Accelerated Purchase date, the “Additional Accelerated Purchase Measurement
Period”), provided that the closing price of the
Company’s common stock on the business day immediately
preceding such business day is not below $0.25 (subject to
adjustment for any reorganization, recapitalization, non-cash
dividend, stock split, reverse stock split or other similar
transaction as provided in the Purchase Agreement). Additional
Accelerated Purchases will be equal to the lower of:
●
97% of the volume
weighted average price of the Company’s common stock during
the applicable Additional Accelerated Purchase Measurement Period
on the applicable Additional Accelerated Purchase date;
and
●
the closing sale
price of the Company’s common stock on the applicable
Additional Accelerated Purchase date.
In the case of the
regular purchases, accelerated purchases and additional accelerated
purchases, the purchase price per share will be equitably adjusted
for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction occurring
during the business days used to compute the purchase
price.
Other than as
described above, there are no trading volume requirements or
restrictions under the Purchase Agreement, and we will control the
timing and amount of any sales of our common stock to Lincoln
Park.
Events
of Default
Events of default
under the Purchase Agreement include the following:
●
the effectiveness
of a registration statement registering the resale of the
Securities lapses for any reason (including, without limitation,
the issuance of a stop order or similar order) or such registration
statement (or the prospectus forming a part thereof) is unavailable
to the Investor for resale of any or all of the Securities to be
issued to the Investor under the Transaction Documents, and such
lapse or unavailability continues for a period of ten (10)
consecutive Business Days or for more than an aggregate of thirty
(30) Business Days in any 365-day period, but excluding a lapse or
unavailability where (i) the Company terminates a registration
statement after the Investor has confirmed in writing that all of
the Securities covered thereby have been resold or (ii) the Company
supersedes one registration statement with another registration
statement, including (without limitation) by terminating a prior
registration statement when it is effectively replaced with a new
registration statement covering Securities (provided in the case of
this clause (ii) that all of the Securities covered by the
superseded (or terminated) registration statement that have not
theretofore been resold are included in the superseding (or new)
registration statement);
-14-
●
the suspension of
the common stock from trading on the Principal Market for a period
of one (1) Business Day, provided that the Company may not direct
the Investor to purchase any shares of common stock during any such
suspension;
●
the delisting of
the common stock from The Nasdaq Capital Market, provided, however,
that the common stock is not immediately thereafter trading on the
New York Stock Exchange, The Nasdaq Global Market, The Nasdaq
Global Select Market, the NYSE American, the NYSE Arca, the OTC
Bulletin Board, the OTCQX operated by the OTC Markets Group, Inc.
or the OTCQB operated by the OTC Markets Group, Inc. (or nationally
recognized successor to any of the foregoing);
●
If at any time
after the Commencement Date, the Exchange Cap is exceeded unless
and until stockholder approval is obtained pursuant to the Purchase
Agreement. The Exchange Cap shall be deemed to be exceeded at such
time if, upon submission of a Regular Purchase Notice or
Accelerated Purchase Notice under this Agreement, the issuance of
such shares of common stock would exceed that number of shares of
common stock which the Company may issue under this Agreement
without breaching the Company’s obligations under the rules
or regulations of the Principal Market;
●
the failure for any
reason by the Transfer Agent to issue Purchase Shares to the
Investor within three (3) Business Days after the applicable
Purchase Date, Accelerated Purchase Date or Additional Accelerated
Purchase Date (as applicable) on which the Investor is entitled to
receive such Purchase Shares;
●
the Company
breaches any representation, warranty, covenant or other term or
condition under any Transaction Document if such breach has or
could have a Material Adverse Effect and except, in the case of a
breach of a covenant which is reasonably curable, only if such
breach continues for a period of at least five (5) Business
Days;
●
if any Person
commences a proceeding against the Company pursuant to or within
the meaning of any Bankruptcy Law;
●
if the Company is
at any time insolvent, or, pursuant to or within the meaning of any
Bankruptcy Law, (i) commences a voluntary case, (ii) consents to
the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or (iv) makes a general
assignment for the benefit of its creditors or is generally unable
to pay its debts as the same become due;
●
a court of
competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against the Company in an
involuntary case, (ii) appoints a Custodian of the Company or for
all or substantially all of its property, or (iii) orders the
liquidation of the Company or any Subsidiary; or
●
if at any time the
Company is not eligible to transfer its common stock electronically
as DWAC Shares.
Lincoln Park does
not have the right to terminate the Purchase Agreement upon any of
the events of default set forth above. During an event of default,
all of which are outside of Lincoln Park’s control, we may
not direct Lincoln Park to purchase any shares of our common stock
under the Purchase Agreement.
Our
Termination Rights
We have the
unconditional right, at any time, for any reason and without any
payment or liability to us, to give notice to Lincoln Park to
terminate the Purchase Agreement. In the event of bankruptcy
proceedings by or against us, the Purchase Agreement will
automatically terminate without action of any party.
No
Short-Selling or Hedging by Lincoln Park
Lincoln Park has
agreed that neither it nor any of its affiliates shall engage in
any direct or indirect short-selling or hedging of our common stock
during any time prior to the termination of the Purchase
Agreement.
Prohibitions
on Variable Rate Transactions
There are no
restrictions on future financings, rights of first refusal,
participation rights, penalties or liquidated damages in the
Purchase Agreement or Registration Rights Agreement other than a
prohibition on entering into a “Variable Rate
Transaction” as defined in the Purchase
Agreement.
-15-
Effect
of Performance of the Purchase Agreement on Our
Stockholders
All 8,880,760
shares registered in this offering which have been or may be issued
or sold by us to Lincoln Park under the Purchase Agreement are
expected to be freely tradable. It is anticipated that shares
registered in this offering will be sold over a period of up to
30-months commencing on the date that the registration statement
including this prospectus becomes effective. The sale by Lincoln
Park of a significant amount of shares registered in this offering
at any given time could cause the market price of our common stock
to decline and to be highly volatile. Sales of our common stock to
Lincoln Park, if any, will depend upon market conditions and other
factors to be determined by us. We may ultimately decide to sell to
Lincoln Park all, some or none of the additional shares of our
common stock that may be available for us to sell pursuant to the
Purchase Agreement. If and when we do sell shares to Lincoln Park,
after Lincoln Park has acquired the shares, Lincoln Park may resell
all, some or none of those shares at any time or from time to time
in its discretion. Therefore, sales to Lincoln Park by us under the
Purchase Agreement may result in substantial dilution to the
interests of other holders of our common stock. In addition, if we
sell a substantial number of shares to Lincoln Park under the
Purchase Agreement, or if investors expect that we will do so, the
actual sales of shares or the mere existence of our arrangement
with Lincoln Park may make it more difficult for us to sell equity
or equity-related securities in the future at a time and at a price
that we might otherwise wish to effect such sales. However, we have
the right to control the timing and amount of any additional sales
of our shares to Lincoln Park and the Purchase Agreement may be
terminated by us at any time at our discretion without any cost to
us.
Pursuant to the
terms of the Purchase Agreement, we have the right, but not the
obligation, to direct Lincoln Park to purchase up to $15,000,000 of
our common stock. Depending on the price per share at which we sell
our common stock to Lincoln Park pursuant to the Purchase
Agreement, we may need to sell to Lincoln Park under the Purchase
Agreement more shares of our common stock than are offered under
this prospectus in order to receive aggregate gross proceeds equal
to the $15,000,000 total commitment available to us under the
Purchase Agreement. If we choose to do so, we must first register
for resale under the Securities Act such additional shares of our
common stock, which could cause additional substantial dilution to
our stockholders. The number of shares ultimately offered for
resale by Lincoln Park under this prospectus is dependent upon the
number of shares we direct Lincoln Park to purchase under the
Purchase Agreement.
The Purchase
Agreement prohibits us from issuing or selling to Lincoln Park
under the Purchase Agreement (i) shares of our common stock in
excess of the Exchange Cap, unless we obtain stockholder approval
to issue shares in excess of the Exchange Cap or the average price
of all applicable sales of our common stock to Lincoln Park under
the Purchase Agreement equal or exceed the average of the closing
prices of our common stock on The Nasdaq Capital Market for the
five business days immediately preceding November 13, 2019 plus an
incremental amount, such that the transactions contemplated by the
Purchase Agreement are exempt from the Exchange Cap limitation
under applicable Nasdaq rules, and (ii) any shares of our common
stock if those shares, when aggregated with all other shares of our
common stock then beneficially owned by Lincoln Park and its
affiliates, would exceed the Beneficial Ownership Cap.
The following table
sets forth the amount of gross proceeds we would receive from
Lincoln Park from our sale of shares to Lincoln Park under the
Purchase Agreement at varying purchase prices:
Assumed
Average Purchase Price Per Share
|
Number
of Registered Shares to be Issued if Full
Purchase (1)
|
Percentage
of Outstanding Shares After Giving Effect to the Issuance to
Lincoln Park (2)
|
Proceeds
from the Sale of Shares to Lincoln Park Under the $15M Purchase
Agreement
|
$0.50
|
4,743,854
|
15.0%
|
$2,371,927
|
$1.00
|
8,393,592
|
23.8%
|
$8,393,592
|
$ 1.20(3)
|
8,393,592
|
23.8%
|
$ 10,072,310
|
$1.50
|
8,393,592
|
23.8%
|
$12,590,388
|
(1)
Includes the total
number of purchase shares which we would have sold under the
Purchase Agreement at the corresponding assumed purchase price per
share set forth in the adjacent column, which does not include the
487,168 commitment shares previously issued to Lincoln Park.
Although the Purchase Agreement provides that we may sell up to
$15,000,000 of our common stock to Lincoln Park, we are only
registering 8,880,760 shares (including the 487,168 commitment
shares previously issued to Lincoln Park) under this prospectus,
which may or may not cover all the shares we ultimately sell to
Lincoln Park under the Purchase Agreement, depending on the
purchase price per share. As a result, we have included in this
column only those shares that we are registering in this offering.
If we seek to issue shares of our common stock, including shares
from other transactions that may be aggregated with the
transactions contemplated by the Purchase Agreement under the
applicable rules of The Nasdaq Capital Market, in excess of
5,213,022 shares, or 19.99% of the total common stock outstanding
immediately prior to the execution of the Purchase Agreement unless
the average price per share exceeds the average of the closing
prices of our common stock on The Nasdaq Capital Market for the
five business days immediately preceding November 13, 2019 plus an
incremental amount, such that issuances and sales of our common
stock to Lincoln Park under the Purchase Agreement would be exempt
from the Exchange Cap limitation under applicable Nasdaq rules, we
may be required to seek stockholder approval to maintain compliance
with the rules of The Nasdaq Capital Market.
(2)
The denominator is
based on 26,800,519 shares outstanding as of
January 8, 2020, which includes (i) 487,168 commitment
shares issued to Lincoln Park upon the execution of the Purchase
Agreement and (ii) the number of shares set forth in the adjacent
column which we would have sold to Lincoln Park, assuming the
purchase price in the adjacent column. The numerator is based on
the number of shares issuable under the Purchase Agreement at the
corresponding assumed purchase price set forth in the adjacent
column.
(3)
The closing sale
price of our shares on January 8, 2020.
-16-
PLAN OF DISTRIBUTION
The common stock
offered by this prospectus is being offered by the selling
stockholder, Lincoln Park. The common stock may be sold or
distributed from time to time by the selling stockholder directly
to one or more purchasers or through brokers, dealers, or
underwriters who may act solely as agents at market prices
prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or at fixed prices, which may
be changed. The sale of the common stock offered by this prospectus
could be affected in one or more of the following
methods:
●
ordinary
brokers’ transactions;
●
transactions
involving cross or block trades;
●
through
brokers, dealers, or underwriters who may act solely as
agents;
●
“at the
market” into an existing market for the common
stock;
●
in
other ways not involving market makers or established business
markets, including direct sales to purchasers or sales effected
through agents;
●
in
privately negotiated transactions; or
●
any
combination of the foregoing.
In order to comply
with the securities laws of certain states, if applicable, the
shares may be sold only through registered or licensed brokers or
dealers. In addition, in certain states, the shares may not be sold
unless they have been registered or qualified for sale in the state
or an exemption from the state’s registration or
qualification requirement is available and complied
with.
Lincoln Park is an
“underwriter” within the meaning of Section 2(a)(11) of
the Securities Act.
Lincoln Park has
informed us that it intends to use an unaffiliated broker-dealer to
effectuate all sales, if any, of the common stock that it may
purchase from us pursuant to the Purchase Agreement. Such sales
will be made at prices and at terms then prevailing or at prices
related to the then current market price. Each such unaffiliated
broker-dealer will be an underwriter within the meaning of Section
2(a)(11) of the Securities Act. Lincoln Park has informed us that
each such broker-dealer will receive commissions from Lincoln Park
that will not exceed customary brokerage commissions.
Brokers, dealers,
underwriters or agents participating in the distribution of the
shares as agents may receive compensation in the form of
commissions, discounts, or concessions from the selling stockholder
and/or purchasers of the common stock for whom the broker-dealers
may act as agent. The compensation paid to a particular
broker-dealer may be less than or in excess of customary
commissions. Neither we nor Lincoln Park can presently estimate the
amount of compensation that any agent will receive.
We know of no
existing arrangements between Lincoln Park or any other
stockholder, broker, dealer, underwriter or agent relating to the
sale or distribution of the shares offered by this prospectus. At
the time a particular offer of shares is made, a prospectus
supplement, if required, will be distributed that will set forth
the names of any agents, underwriters or dealers and any
compensation from the selling stockholder, and any other required
information.
We will pay the
expenses incident to the registration, offering, and sale of the
shares to Lincoln Park. We have agreed to indemnify Lincoln Park
and certain other persons against certain liabilities in connection
with the offering of shares of common stock offered hereby,
including liabilities arising under the Securities Act or, if such
indemnity is unavailable, to contribute amounts required to be paid
in respect of such liabilities. Lincoln Park has agreed to
indemnify us against liabilities under the Securities Act that may
arise from certain written information furnished to us by Lincoln
Park specifically for use in this prospectus or, if such indemnity
is unavailable, to contribute amounts required to be paid in
respect of such liabilities.
Lincoln Park has
represented to us that at no time prior to the Purchase Agreement
has Lincoln Park or its agents, representatives or affiliates
engaged in or effected, in any manner whatsoever, directly or
indirectly, any short sale (as such term is defined in Rule 200 of
Regulation SHO of the Exchange Act) of our common stock or any
hedging transaction, which establishes a net short position with
respect to our common stock. Lincoln Park agreed that during the
term of the Purchase Agreement, it, its agents, representatives or
affiliates will not enter into or effect, directly or indirectly,
any of the foregoing transactions.
We have advised
Lincoln Park that it is required to comply with Regulation M
promulgated under the Exchange Act. With certain exceptions,
Regulation M precludes the selling stockholder, any affiliated
purchasers, and any broker-dealer or other person who participates
in the distribution from bidding for or purchasing, or attempting
to induce any person to bid for or purchase any security which is
the subject of the distribution until the entire distribution is
complete. Regulation M also prohibits any bids or purchases made in
order to stabilize the price of a security in connection with the
distribution of that security. All of the foregoing may affect the
marketability of the securities offered by this
prospectus.
This offering will
terminate on the earlier of (i) termination of the Purchase
Agreement or (ii) the date that all shares offered by this
prospectus have been sold by Lincoln Park.
Our common stock is
quoted on The Nasdaq Capital Market under the symbol
“AZRX”.
-17-
DESCRIPTION OF CAPITAL STOCK
The following summary of the rights of our capital stock is not
complete and is subject to and qualified in its entirety by
reference to our certificate of incorporation and bylaws, copies of
which are filed as exhibits to our Annual Report on Form 10-K for
the year ended December 31, 2018, filed with the SEC on April 1,
2019, which is incorporated by reference
herein.
General
Our certificate
of incorporation, as amended and restated on December 20, 2019 (our
“Charter”)
authorizes the issuance of up to 150,000,000 shares of common
stock, par value $0.0001 per share, and 10,000,000 shares of
preferred stock, par value $0.0001 per share.
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. A copy of our Charter is filed with
the SEC as an exhibit to our Current Report on Form 8-K filed on
December 30, 2019, and a copy of our amended and restated Bylaws is
filed with the SEC as an exhibit to our Annual Report on Form 10-K
for the year ended December 31, 2018, each of which is incorporated
by reference into the registration statement of which this
prospectus forms a part.
As January 9, 2020
there were 26,800,519 shares of our common stock issued and
outstanding, which were held by approximately 105 stockholders of
record, 762,667 shares of restricted stock units and restricted
stock subject to vesting and issuance, approximately 7,391,277
shares of common stock subject to outstanding warrants, 2,012,506
shares of common stock subject to outstanding stock options and
7,117,559 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.
Listing
Our common stock is
listed on The Nasdaq Capital Market under the symbol
“AZRX”.
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.
Anti-Takeover
Effects of Certain Provisions of Delaware Law and of the
Company’s 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.
-18-
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.
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.
-19-
DIRECTOR COMPENSATION
The following
section sets forth certain information regarding the nominees for
election as directors of the Company. There are no family
relationships between any of the directors and the Company’s
Named Executive Officers.
Director Nominee, Title
|
Age
|
Edward
J. Borkowski – Chair and Independent
Director
|
60
|
Charles
J. Casamento – Independent Director
|
74
|
Alastair
Riddell, MSc.,MDChB.,DSc. – Independent
Director
|
70
|
Vern
L. Schramm, Ph.D. – Independent Director
|
77
|
James
Sapirstein – President, Chief Executive Officer and
Non-Independent Director
|
58
|
Johan
M. (Thijs) Spoor – Non-Independent
Director
|
47
|
Edward J. Borkowski was appointed to
the Board in May 2015, and currently serves as its Chair. Mr.
Borkowski is a healthcare executive who has served as Executive
Vice President of MiMedx Group, Inc.
(NASDAQ: MDGX) until November 2019, but continues to serve as a
consultant for MiMedx Group, Inc. through March 2020. Mr. Borkowski
also served as a director for Co-Diagnostics, Inc. (NASDAQ: CODX)
from May 2017 to June 2019, as the Chief Financial
Officer of Aceto
Corporation (NASDAQ: ACET) from February 2018 to April 2018, and
has held several executive positions with
for Concordia
International, an international specialty pharmaceutical company,
between May
2015 to February 2018. Mr. Borkowski has
also served as Chief Financial Officer of Amerigen Pharmaceuticals,
a generic pharmaceutical company with a focus on oral, controlled
release products and as the Chief
Financial Officer and Executive Vice President of Mylan N.V. In
addition, Mr. Borkowski previously held the position of Chief
Financial Officer with Convatec, a global medical device company
focused on wound care and ostomy, and Carefusion, a global medical
device company for which he helped lead its spin-out from Cardinal
Health into an independent public company. Mr. Borkowski has also
served in senior financial positions at Pharmacia and American Home
Products (Wyeth). He started his career with Arthur Andersen &
Co. after receiving his MBA in accounting from Rutgers University
subsequent to having earned his degree in Economics and Political
Science from Allegheny College. Mr. Borkowski is currently a
Trustee and a member of the Executive Committee of Allegheny
College.
Mr.
Borkowski’s extensive healthcare and financial expertise,
together with his public company experience provides the Board and
management with valuable insight in the growth of the
Company’s business plan.
Charles J. Casamento was appointed to
the Board in March 2017. Since 2007, Mr. Casamento has been
executive director and principal of The Sage Group, a health care
advisory group. Prior to that, Mr. Casamento was president and
Chief Executive Officer of Osteologix, a startup company which he
oversaw going public, from October 2004 until April 2007. Mr.
Casamento was the founder of Questcor Pharmaceuticals where he was
President, Chief Executive Officer and Chair from 1999 through
2004. During his time at Questcor, the company acquired Acthar, a
product with sales that would eventually exceed $1.0 billion. Mr.
Casamento also served as President, Chief Executive Officer and
Chair of RiboGene Inc. until 1999 when RiboGene was merged another
company to form Questcor. He was also the Co-Founder, President and
Chief Executive Officer of Indevus (formerly Interneuron
Pharmaceuticals) and has held senior management positions at
Genzyme Corporation, where he was Senior Vice President, American
Hospital Supply, where he was Vice President of Business
Development for the Critical Care division, Johnson & Johnson,
Hoffmann-LaRoche and Sandoz. He currently serves on the Boards of
Directors of Relmada Therapeutics (OTCQB: RLMD) and Eton
Pharmaceuticals, and was previously a Director and Vice Chair of
the Catholic Medical Missions Board, a large not for profit
international organization. Mr. Casamento holds a bachelor's degree
in Pharmacy from Fordham University and an MBA from Iona
College.
Mr.
Casamento’s expertise and knowledge of the financial
community combined with his experience in the healthcare sector
makes him a valued member of the Board
Dr.
Alastair Riddell was
appointed to the Board in September 2015. Since June 2016, Dr.
Riddell has served as Chair of Nemesis Biosciences Ltd and Chair of
Feedback plc (LON: FDBK). He has also served as Chair of the South
West Academic Health Science network in the UK since January 2016.
Since his appointment in December 2015, Dr. Riddell he has served
as Non-Executive Director of Cristal Therapeutics in The
Netherlands. From September 2012 to February 2016, he served as
Chair of Definigen Ltd., and from November 2013 to September 2015
as Chair of Silence Therapeutics Ltd., and from October 2009 to
November 2012 as Chair of Procure Therapeutics. Between
2007 to 2009, Dr. Riddell served as the Chief Executive Officer of
Stem Cell Sciences plc. and between 2005 to 2007, served at
Paradigm Therapeutics Ltd. as the Chief Executive Officer. Between
1998 to 2005, Dr. Riddell also served as the Chief Executive
Officer of Pharmagene plc. Dr. Ridell began his career as a
doctor in general practice in a variety of hospital specialties and
holds both a Bachelor of Science and a Bachelor of Medical Sciences
degrees. He was recently awarded a Doctorate of Science, Honoris
Causa by Aston University.
Dr.
Riddell’s medical background coupled with his expertise in
the life sciences industry, directing all phases of clinical
trials, before moving to sales, marketing and general management,
makes him a well-qualified member of the Board.
-20-
Dr. Vern L.
Schramm was appointed to
the Board in October 2017. Dr. Schramm has served as Professor of
the Albert Einstein College of Medicine since 1987 and Chair of the
Department of Biochemistry from 1987 to 2015, and was awarded the
Ruth Merns Endowed Chair in Biochemistry. His fields of
interest include enzymatic transition state analysis, transition
state inhibitor design, biological targets for inhibitor design,
and mechanisms of N-ribosyltransferases. Dr. Schramm was elected to
the National Academy of Sciences in 2007, and served as the
Associate Editor for the Journal of the American
Chemical Society between
2003 to 2012. A frequent lecturer and presenter in topics related
to chemical biology, Dr. Schramm has been a consultant and advisor
to Pico Pharmaceuticals, Metabolon Inc., Sirtris Pharmaceuticals,
and BioCryst Pharmaceuticals. Dr. Schramm obtained his BS in
Bacteriology with an emphasis in chemistry from South Dakota State
College and holds a Master’s Degree in Nutrition with an
emphasis in biochemistry from Harvard University, a Ph.D. in
Mechanism of Enzyme Action from the Australian National University
and completed his postdoctoral training at NASA Ames Research
Center, Biological Sciences, with an NSF-NRC
fellowship.
Dr.
Schramm’s substantial experience in biochemistry and
expertise in the chemistry related to non-systemic biologics makes
him a respected member of the Board and an asset to the Company
specifically in the development of its product
candidates.
James
Sapirstein was appointed to the
Board on October 8, 2019 and as the Company’s President and
Chief Executive Officer effective that same day. Prior to joining
the Company, Mr. Sapirstein served as Chief Executive Officer and
as a director of ContraVir Pharmaceuticals, Inc. (now known as
Hepion Pharmaceuticals, Inc.) from March 2014 to October 2018.
Previously, Mr. Sapirstein was the Chief Executive Officer of
Alliqua Therapeutics from October 2012 to February 2014. He founded
and served as Chief Executive Officer of Tobira Therapeutics from
October 2006 to April 2011 and served as Executive Vice President,
Metabolic and Endocrinology for Serono Laboratories from June 2002
to May 2005. Mr. Sapirstein’s earlier career included a
number of senior level positions in the area of marketing and
commercialization, including as Global Marketing Lead for Viread
(tenofovir) while at Gilead Sciences and as Director of
International Marketing of the Infectious Disease Division at
Bristol Myers Squibb. Mr. Sapirstein is currently the Chair
Emeritus of BioNJ, the New Jersey affiliate of the Biotechnology
Innovation Organization, and also serves on the Emerging Companies
and Health Section Boards of the Biotechnology Innovation
Organization. Mr. Sapirstein received his bachelor’s degree
in pharmacy from Rutgers University and holds an MBA degree in
management from Fairleigh Dickinson
University.
Mr.
Sapirstein’s nearly 36 years of pharmaceutical industry
experience which spans areas such as drug development and
commercialization, including participation in 23 product launches,
six of which were global launches led by him makes him a valuable
asset to the Board and in his oversight and execution of the
Company’s business plan.
Johan M. (Thijs) Spoor was appointed to
the Board on May 14, 2014. He served as the Company's Chief
Executive Officer since January 2016 and President since April 2015
until his resignation as President and Chief Executive Officer
effective October 8, 2019. Mr Spoor continues to serve as a
director on the Company’s Board. From September 2010 until
December 2015, he was the Chief Executive Officer of FluoroPharma
Medical, Inc. (OTCQB: FPMI), during which time he also served as
Chair of the Board from June 2012 to December 2015. From December
2008 to February 2010, Mr. Spoor worked at Oliver Wyman as a
consultant to pharmaceutical and medical device companies. Prior to
that, Mr. Spoor was an equity research analyst at J.P. Morgan from
July 2007 to October 2008 and at Credit Suisse from November 2005
to July 2007, covering the biotechnology and medical device
industries. He holds a Pharmacy degree from the University of
Toronto as well as an MBA from Columbia
University.
Mr.
Spoor’s background in the pharmaceutical industry combined
with his historical knowledge of the daily operations of the
Company provides him with a broad familiarity of the range of
issues confronting the Company makes him a qualified member of the
Board.
-21-
Non-Executive Director Compensation
Currently,
each of the Company’s non-executive directors receive (i) an
annual retainer of $35,000 for their service on the Board which is
payable in either cash or shares of common stock in quarterly
installments, at the Company’s discretion; and (ii) an annual
grant of 30,000 shares of common stock. During the year ended
December 31, 2019, the Company elected to pay the annual retainer
to non-executive directors in cash.
The following table provides information regarding
compensation paid to non-employee directors for the year ended
December 31, 2019. Messrs. Sapirstein, Shenouda and Spoor did not
receive compensation for their service on the Board as employee
directors for the year ended December 31, 2019. Information
regarding executive compensation paid to Messrs. Sapirstein,
Shenouda and Spoor during 2019 is reflected in the Summary
Compensation table under “Executive
Compensation” of this
Proxy Statement.
Name
|
Fees Earned or Paid in Cash
|
Stock Awards(1)
|
Option Awards(1)
|
All Other Compensation
|
Total
|
Edward
J. Borkowski
|
$ 35,000
|
$ 43,350
|
$ 30,390
|
$ -
|
$ 108,740
|
Charles
J. Casamento
|
$ 35,000
|
$ 43,350
|
$ 30,390
|
$ -
|
$ 108,740
|
Alastair
Riddell
|
$ 35,000
|
$ 43,350
|
$ 30,390
|
$ -
|
$ 108,740
|
Vern
L. Schramm
|
$ 35,000
|
$ 43,350
|
$ 30,390
|
$ -
|
$ 108,740
|
(1)
|
Represents
the aggregate grant date fair value of shares of the
Company’s common stock issued to each of our non-employee
directors in 2019 as partial payment of fees payable for each
director’s service on the Board in 2019, calculated in
accordance with ASC Topic 718.
|
|
|
(2)
|
Represents
the aggregate grant date fair value of stock options issued to each
of our non-employee directors in 2019, calculated in accordance
with ASC Topic 718. As of December 31, 2019, Mr. Borkowski held a
total of 60,000 outstanding stock options, Mr. Casamento held a
total of 30,000 outstanding stock options, Dr. Riddell held a total
of 60,000 outstanding stock options, and Mr. Schramm held a total
of 30,000 outstanding stock options.
|
Compensation Committee Interlocks and Insider
Participation
None
of our executive officers currently serves, or has served during
the last three years, on the Compensation Committee of any other
entity that has one or more officers serving as a member of our
Board.
EXECUTIVE COMPENSATION
The following table
sets forth information as of the date of this prospectus regarding
the Company’s current executive officers as appointed by the
Board, each to serve in such position until their respective
successors have been duly appointed and qualified or until their
earlier death, resignation or removal from
office.
Executive Officer
|
|
Age
|
|
Title
|
James
Sapirstein
|
|
58
|
|
President,
Chief Executive Officer and Director
|
Daniel Schneiderman(1)
|
|
41
|
|
Chief
Financial Officer
|
James
E. Pennington
|
|
76
|
|
Chief
Medical Officer
|
(1)
Mr. Schneiderman
was appointed to serve as the Chief Financial Officer effective
January 2, 2020.
The Company’s
executive officers are appointed by and serve at the discretion of
the Board, subject to the terms of any employment agreements they
may have with the Company. The following is a brief description of
the qualifications and business experience of each of the
Company’s current executive officers.
-22-
James
Sapirstein. Please see Mr. Sapirstein’s biography
under the “Director Compensation” section of this
prospectus.
Dr. James E.
Pennington was appointed as Chief Medical Officer of the
Company in May 2018. Prior to joining
the Company, Dr. Pennington served as Senior Clinical Fellow from
2010 to 2018 and as Executive Vice President and Chief Medical
Officer from 2007 to 2010 at Anthera Pharmaceuticals, Inc. (NASDAQ:
ANTH). From 2004 to 2007, Dr. Pennington served as Executive Vice
President and Chief Medical Officer at CoTherix, Inc., and has held
various executive positions at a number of pharmaceutical
companies, including InterMune Inc., Shaman Pharmaceuticals and
Bayer Corporation. He has served on several editorial boards, and
has authored numerous original research publications and reviews.
Dr. Pennington is currently a Clinical Professor of Medicine with
the University of California San Francisco, where he has taught
since 1986. Prior to that, he was a professor at Harvard Medical
School. Dr. Pennington received a Bachelor of Arts from the
University of Oregon and a Doctor of Medicine from the University
of Oregon School of Medicine, and is Board Certified in internal
medicine and infectious diseases.
Daniel
Schneiderman was appointed as the
Company’s Chief Financial Officer effective January 2, 2020.
Prior to joining the Company, from November 2018 through December
2019, Mr. Schneiderman served as Chief Financial Officer of
Biophytis SA, and its U.S. subsidiary, Biophytis, Inc., a
European-based, clinical-stage biotechnology company focused on the
development of drug candidates for age-related diseases, with a
primary focus on neuromuscular diseases. From February 2012 through
August 2018, Mr. Schneiderman served as Vice President of Finance,
Controller and Secretary of MetaStat, Inc. (OTC: MTST), a publicly
traded biotechnology company with a focus on Rx/Dx precision
medicine solutions to treat patients with aggressive (metastatic)
cancer. Mr. Schneiderman holds a bachelor’s degree in
economics from Tulane University.
Summary
Compensation
The table set forth
below reflects certain information regarding the compensation paid or accrued during the years
ended December 31, 2019 and 2018 to our Chief Executive Officer and
our executive officers, other than our Chief Executive Officer, who
were serving as an executive officer as of December 31, 2019, and
whose annual compensation exceeded $100,000 during such year
(collectively the “Named Executive
Officers”).
As
previously reported on the Company’s Current Reports on Form
8-K filed on March 28, 2019 and November 1, 2019, Dr. Daniel Dupret
retired and resigned from his position as President of AzurRx SAS,
a wholly owned French subsidiary of the Company, effective July 1,
2019, and Mr. Maged Shenouda resigned from his position as Chief
Financial Officer of the Company effective November 30, 2019. Due
to the resignation of Mr. Spoor as President and Chief Executive
Officer effective October 8, 2019, Mr. Sapirstein was appointed as
President and Chief Executive Officer of the Company effective that
same day. Compensation paid to Dr. Dupret and Mr. Spoor during the
years ended December 31, 2019 and 2018 is reflected in the table
below.
Current Named Executive Officers(1)
|
Year
|
Salary
|
Bonus
|
Equity
Awards(5)
|
All Other
Compensation
|
Total
|
James
Sapirstein
|
2019
|
$ 102,444
|
$ -
|
$ 243,700
|
$ -
|
$ 346,104
|
President and Chief Executive Officer
|
2018
|
$ -
|
$ -
|
-(2)
|
$ -
|
-
|
James E.
Pennington
|
2019
|
$ 255,000
|
$ 75,000
|
$ 111,430
|
$ -
|
$ 441,430
|
Chief Medical Officer
|
2018
|
$ 148,718
|
$ -
|
$ 155,475(3)
|
$ -
|
$ 304,193
|
|
|
|
|
|
|
|
Former
Named Executive Officers
|
|
|
|
|
|
|
Johan
M. (Thijs) Spoor
|
2019
|
$ 340,177
|
$ 255,000
|
$ 151,950
|
$ -
|
$ 747,127
|
Former President and Chief Executive Officer
|
2018
|
$ 425,000
|
$ 212,500
|
$ 608,000(4)
|
$ -
|
$ 1,245,500
|
Maged Shenouda(3)
|
2019
|
$ 308,035
|
$ 100,000
|
$ 101,300
|
$ -
|
$ 509,335
|
Former Chief Financial Officer
|
2018
|
$ 296,666
|
$ 82,500
|
$ 207,300(4)
|
$ -
|
$ 586,466
|
Daniel
Dupret
|
2019
|
$ 151,393
|
$ -
|
$ -
|
$ -
|
$ -
|
Former Chief Scientific Officer
|
2018
|
$ 234,999
|
$ -
|
$ 169,980(4)
|
$ -
|
$ 404,979
|
(1)
|
Daniel
Schneiderman was appointed as Chief Financial Officer subsequent to
the year ended December 31, 2019, and therefore is excluded from
the table.
|
(2)
|
Mr.
Sapirstein received no compensation during this period or prior to
his appointments as the Company’s President and Chief
Executive Officer effective October 8, 2019.
|
(3)
|
Mr.
Shenouda’s employment with the Company as Chief Financial
Officer terminated effective November 30, 2019.
|
(4)
|
Represents
the grant date fair value of restricted stock and stock options
issued during the year ended December 31, 2018, calculated in
accordance with ASC Topic 718. The assumptions used in the
calculation of these amounts are included in Note 13 of the notes
to the consolidated financial statements contained in the
Company’s Annual Report, filed with the SEC on April 1,
2019.
|
(5)
|
All unvested shares of restricted stock and stock options subject to time and other performance based vesting conditions have been forfeited in connection with Mr. Spoor's resignation as the Company’s President and Chief Executive Officer. |
-23-
Employment Arrangements and Potential Payments upon Termination or
Change of Control
Sapirstein Employment
Agreement. Effective October 8,
2019, the Company entered into an employment agreement with Mr.
Sapirstein to serve as its President and Chief Executive Officer
for a term of three years, subject to further renewal upon
agreement of the parties. The employment agreement with Mr.
Sapirstein provides for a base salary of $450,000 per year. In
addition to the base salary, Mr. Sapirstein is eligible to receive
(i) a bonus of up to 40% of his base salary on an annual basis,
based on certain milestones that are yet to be determined; (ii) 1%
of net fees received by the Company upon entering into license
agreements with any third-party with respect to any product current
in development or upon the sale of all or substantially all assets
of the Company; (iii) a grant of 200,000 restricted shares of the
Company’s common stock which are subject to vest as follows
(a) 100,000 upon the first commercial sale of MS1819-SD in the
United States, and (b) 100,000 upon the total market capitalization
of the Company exceeding $1.0 billion for 20 consecutive trading
days; (iv) a grant of 300,000 10-year stock options to purchase
shares of the Company’s common stock which are subject to
vest as follows (a) 50,000 upon the Company initiating its next
Phase II clinical trial in the United States for MS1819-SD, (b)
50,000 upon the Company completing its next or subsequent Phase II
clinical trial in the United States for MS1819-SD, (c) 100,000 upon
the Company initiating a Phase III clinical trial in the United
States for MS1819-SD, and (d) 100,000 upon the Company initiating a
Phase I clinical trial in the United States for any product other
than MS1819-SD. Mr. Sapirstein is entitled to receive 20 days of
paid vacation, participate in full employee health benefits and
receive reimbursement for all reasonable expenses incurred in
connection with his service to the
Company.
In
the event that Mr. Sapirstein’s employment is terminated by
the Company for Cause, as defined in his employment agreement, or
by Mr. Sapirstein voluntarily, then will not be entitled to receive
any payments beyond amounts already earned, and any unvested equity
awards will terminate. In the event that Mr. Sapirstein’s
employment is terminated as a result of an Involuntary Termination
Other than for Cause, as defined in the Agreement, Mr. Sapirstein
will be entitled to receive the following compensation: (i)
severance in the form of continuation of his salary (at the Base
Salary rate in effect at the time of termination, but prior to any
reduction triggering Good Reason) for a period of 12 months
following the termination date; (ii) payment of Executive’s
premiums to cover COBRA for a period of 12 months following the
termination date; and (iii) a prorated annual
bonus.
Schneiderman Employment Agreement.
Effective January 2, 2020, the Company
entered into an employment agreement with Mr. Schneiderman to serve
as the Company’s Chief Financial Officer for a term of three
years, subject to further renewal upon agreement of the parties.
The employment agreement with Mr. Schneiderman provides for a base
salary of $285,000 per year. In addition to the base salary, Mr.
Schneiderman is eligible to receive (a) an annual milestone
cash bonus based on certain milestones that will be established by
the Company’s Board or the Compensation Committee, and (b) a
grant of stock options to purchase 335,006 shares of the
Company’s common stock with a strike price of $1.03 per
share, which shall vest in three equal portions on each anniversary
date of the Effective Date commencing on the first anniversary date
of the agreement. Mr.
Schneiderman is entitled to receive 20 days of paid vacation,
participate in full employee health benefits and receive
reimbursement for all reasonable expenses incurred in connection
with his service to the Company.
The
Company may terminate Mr. Schneiderman’s employment agreement
at any time, with or without Cause, as such term is defined in the
agreement. If the Company terminates the agreement without Cause,
or if the agreement is terminated due to a Change of Control, as
such term is defined in the agreement, Mr. Shenouda will be
entitled to (i) all salary owed through the date of termination;
(ii) any unpaid annual milestone bonus; (iii) severance in the
form of continuation of his salary for the greater of a period of
12 months following the termination date or the remaining term of
the employment agreement; (iv) payment of premiums to cover COBRA
for a period of 12 months following the termination date; (v) a
prorated annual bonus equal to the target annual milestone bonus,
if any, for the year of termination multiplied by the formula set
forth in the agreement; and (vi) immediate accelerated vesting of
any unvested options or other unvested
awards.
-24-
Pennington Employment
Agreement. Effective May 28,
2018, the Company entered into an employment agreement with Mr.
Pennington to serve as its Chief Medical Officer. The employment
agreement with Dr. Pennington provides for a base annual salary of
$250,000. In addition to his salary, Dr. Pennington is eligible to
receive an annual milestone bonus, awarded at the sole discretion
of the Board based on his attainment of certain financial, clinical
development, and/or business milestones established annually by the
Board or Compensation Committee. The employment agreement is
terminable by either party at any time. In the event of termination
by the Company other than for cause, Dr. Pennington is entitled to
three months’ severance payable over such period. In the
event of termination by the Company other than for cause in
connection with a Change of Control, Dr. Pennington will receive
six months’ severance payable over such
period.
On
June 28, 2018, Mr. Pennington was granted stock options to purchase
75,000 shares of the Company’s common stock, issuable
pursuant to the 2014 Plan, subject to vesting conditions as
follows: (i) 50% upon U.S. acceptance of an IND for MS1819-SD, and
(ii) 50% upon the first CF patient doses with MS1819-SD anywhere in
the world.
Shenouda Employment
Agreement. Mr. Shenouda served
as the Company’s Executive Vice-President of Corporate
Development and Chief Financial Officer pursuant to an employment
agreement dated September 26, 2017, until he resigned from the
Company effective November 30, 2019. Mr. Shenouda was eligible to
receive cash bonuses based on the achievement of certain financial,
clinical development, and/or business milestones, which milestones
were established annually by the Company’s Board or the
Compensation Committee. Mr. Shenouda’s employment agreement
also provided for the grant to Mr. Shenouda of stock options to
purchase 100,000 shares of the Company’s common
stock, and
he was granted additional stock options to purchase 100,000 shares
of the Company’s common stock on June 28, 2018, both grants
of which were issued pursuant to the 2014 Plan, and were fully
vested.
In
connection with Mr. Shenouda’s resignation as the
Company’s Chief Financial Officer effective November 30,
2019, he received no additional or severance compensation, and all
unvested equity awards granted under the 2014 Plan
terminated.
-25-
Spoor Employment
Agreement. Mr. Spoor served as
the Company’s President and Chief Executive Officer pursuant
to an employment agreement effective January 1, 2016, until he
resigned from the Company effective October 8, 2019. Mr. Spoor
continues to serve on the Company’s
Board.
Mr.
Spoor was eligible to receive annual milestone bonuses, awarded at
the sole discretion of the Board based on his attainment of certain
financial, clinical development, and/or business milestones
established annually by the Board or Compensation Committee. Mr.
Spoor’s employment agreement also provided for the issuance
to Mr. Spoor of 100,000 shares of restricted common stock on
February 3, 2017, which shares were subject to vesting as follows:
(i) 50,000 upon the first commercial sale in the United States of
MS1819-SD, and (ii) 50,000 upon our total market capitalization
exceeding $1.0 billion for 20 consecutive trading days. In
addition, Mr. Spoor was entitled to receive stock options issuable
under the terms of the 2014 Plan to purchase 380,000 shares of
common stock at a price per share equal to the closing price of the
Company’s common stock on the trading day immediately prior
to the date of issuance, of which options to purchase 100,000
shares were issued in the first quarter of
2017.
On
September 29, 2017, Mr. Spoor was granted 100,000 shares of
restricted common stock subject to vesting conditions as follows:
(i) 75% upon FDA acceptance of a U.S. IND application for
MS1819-SD, and (ii) 25% upon the Company completing a Phase IIa
clinical trial for MS1819-SD, in satisfaction of the
Company’s obligation to issue the additional 280,000 options
to Mr. Spoor described above, with an estimated fair value at the
grant date of $425,000. All of these shares vested and the $425,000
was expensed in 2018 due to the Company completing both milestones
listed above in 2018.
On
June 28, 2018, Mr. Spoor was granted 200,000 shares of restricted
common stock subject to vesting conditions as follows: (i) 50%
shall vest in three equal installments beginning one year from the
date of issuance, and (ii) the remaining 50% shall vest as follows:
one-third shall vest upon U.S. acceptance of IND for MS1819-SD,
one-third upon the first dosing of a CF patient with MS1819-SD
anywhere in the world, and the remaining one-third upon enrollment
of the first 30 patients in a CF trial. These restricted shares had
an estimated fair value at the grant date of $608,000 to be
expensed when the above milestones are probable. 16,667 of these
shares vested and $50,667 was expensed in 2018 due to being earned
over time in 2018. 33,333 of these shares vested and $101,332 was
expensed in 2018 due to the FDA acceptance of the Company’s
IND application for MS1819-SD in 2018.
On
September 29, 2017, Mr. Spoor was granted 100,000 shares of
restricted common stock subject to vesting conditions as follows:
(i) 75% upon FDA acceptance of a U.S. IND application for
MS1819-SD, and (ii) 25% upon the Company completing a Phase IIa
clinical trial for MS1819-SD, in satisfaction of the
Company’s obligation to issue the additional 280,000 options
to Mr. Spoor described above. All of these shares vested in 2018
upon the achievement of each of the required
milestones.
On
June 28, 2018, the Board approved a 2017 annual incentive bonus
pursuant to Mr. Spoor’s employment agreement in the amount of
$212,500, and he was granted 200,000 shares of restricted common
stock subject to vesting conditions as follows: (i) 50% vested in
three equal installments beginning one year from the date of
issuance, and (ii) the remaining 50% vested as follows: one-third
vested upon U.S. acceptance of IND for MS1819-SD, one-third upon
the first dosing of a CF patient with MS1819-SD anywhere in the
world, and the remaining one-third upon enrollment of the first 30
patients in a CF trial. 16,667 of these shares vested in 2018 due
to time vesting and 33,333 shares vested in 2018 due to the FDA
acceptance of the Company’s IND application for MS1819-SD in
2018.
In
connection with Mr. Spoor’s resignation as the
Company’s President and Chief Executive Officer effective
October 8, 2019, he received no additional or severance
compensation, and all unvested equity awards granted under the 2014
Plan terminated.
-26-
Outstanding
Equity Incentive Awards at Fiscal Year-End
The
following table sets forth information regarding unexercised
options, stock that has not vested and equity incentive awards held
by each of the Named Executive Officers outstanding as of
December 31, 2019 and 2018:
|
|
Option Awards
|
|
Stock Awards
|
|||||
Name
|
Grant Date
|
Number
of securities underlying unexercised options (#)
exercisable
|
Equity incentive plan awards: Number of underlying unexercised
unearned options (#)
|
Option exercise price
($)
|
Option expiration
date
|
Number of shares or units of stock that have not vested
(#)
|
Market value of shares or units of stock that have not vested
($)
|
Equity incentive plan awards: Number of Unearned shares, units or
other rights that have not vested (#)
|
Equity
incentive plan awards: Market or Payout value of unearned shares,
units or other rights that have not vested ($)
|
|
|
|
|
|
|
|
|
|
|
James
Sapirstein
|
10/8/2019
|
-
|
300,000
|
$ 0.56
|
10/7/2029
|
|
|
|
|
10/8/2019
|
|
|
|
|
-
|
-
|
200,000
|
112,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
E. Pennington
|
6/28/2018
|
75,000
|
-
|
$ 3.04
|
6/27/2023
|
|
|
|
|
6/13/2019
|
-
|
110,000
|
$ 1.70
|
6/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Named Executive Officers
|
|
|
|
|
|
|
|
|
|
Johan
(Thijs) Spoor
|
1/4/2016(1)
|
100,000
|
-
|
$ 1.00
|
1/4/2021
|
|
|
|
|
2/3/2017
|
100,000
|
-
|
$ 4.48
|
2/3/2027
|
|
|
|
|
|
2/3/2017(2)
|
-
|
-
|
-
|
|
|
|
|
|
|
9/29/2017(3)
|
-
|
-
|
-
|
|
100,000
|
425,000
|
200,000
|
-
|
|
6/28/2018
|
|
|
|
|
141,667
|
430,668
|
-
|
-
|
|
6/13/2019
|
|
150,000
|
$ 1.70
|
6/12/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maged
Shenouda
|
2/3/2017
|
30,000
|
-
|
$ 4.48
|
2/2/2027
|
|
|
|
|
9/26/2017(4)
|
100,000
|
-
|
$ 4.39
|
9/24/2027
|
|
|
|
|
|
6/28/2018
|
100,000
|
-
|
$ 3.04
|
6/27/2023
|
|
|
|
|
(1)
|
Represents
options to purchase shares of the Company’s common stock
issued to Mr. Spoor by a third party, prior to the Company’s
initial public offering in October 2016.
|
(2)
|
Represents
the
restricted stock award issued to Mr. Spoor on February 3, 2017
under the terms of his employment agreement, which shares will only
vest as follows: (i) 50,000 upon the first commercial sale in the
United States of MS1819, and (ii) 50,000 upon our total market
capitalization exceeding $1.0 billion for 20 consecutive trading
days. These remained unvested upon termination of Mr. Spoor’s
employment on October 8, 2019. The value reported for this award
was calculated using the closing price of the Company’s
common stock on September 29, 2017, as reported by NASDAQ, assuming
achievement if the maximum award amount.
|
(3)
|
Represents
the
restricted stock award issued to Mr. Spoor on February 3, 2017
under the terms of his employment agreement, which shares will only
vest as follows: (i) 50,000 upon the first commercial sale in the
United States of MS1819, and (ii) 50,000 upon our total market
capitalization exceeding $1.0 billion for 20 consecutive trading
days. These remained unvested upon termination of Mr. Spoor’s
employment on October 8, 2019. The value reported for this award
was calculated using the closing price of the Company’s
common stock on September 29, 2017, as reported by NASDAQ, assuming
achievement if the maximum award amount.
|
(4)
|
Represents stock options issued to Mr. Shenouda on
September 26, 2017, which options were subject to the following
vesting schedule so long as Mr. Shenouda was serving as either
Executive Vice-President of Corporate Development or as Chief
Financial Officer of the Company: (i) 75% upon FDA acceptance of a
U.S. IND application for MS1819-SD, and (ii) 25% upon the Company
completing a Phase IIa clinical trial for
MS1819-SD.
|
(5)
|
Represents
stock options issued to Dr. Dupret on August 24, 2017, which
options were subject to the following vesting schedule so long as
Dr. Dupret was serving as the Company’s Chief Scientific
Officer: (i) 75% upon FDA acceptance of a U.S. IND application for
MS1819-SD, and (ii) 25% upon the Company completing a Phase IIa
clinical trial for MS1819-SD.
|
-27-
Securities Authorized for Issuance Under Equity Compensation
Plans
The
following table provides information as of December 31, 2019
regarding equity compensation plans approved by our security
holders and equity compensation plans that have not been approved
by our security holders:
Plan category
|
|
Number of securities to be issued upon exercise of outstanding
options, warrants and rights
|
|
|
Weighted-average exercise price of outstanding options, warrants
and rights
|
|
|
Number of securities remaining available for future issuance under
equity compensation plans(1)
|
|
|||
Equity
compensation plans approved by security holders
|
|
|
2,187,500
|
|
|
$
|
2.30
|
|
|
|
701,792
|
|
Equity
compensation plans not approved by security
holders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
2,187,500
|
|
|
$
|
2.30
|
|
|
|
701,792
|
|
(1)
|
Excludes
securities reflected in first column, “Number of securities
to be issues upon exercise of outstanding options, warrants and
rights”.
|
Amended
and Restated 2014 Omnibus Equity Incentive Plan
The
Board and stockholders have adopted and approved the 2014 Plan,
which is a comprehensive incentive compensation plan under which we
can grant equity-based and other incentive awards to our officers,
employees, directors, consultants and advisers. The purpose of the
2014 Plan is to help us attract, motivate and retain such persons
with awards under the 2014 Plan and thereby enhance stockholder
value.
Administration.
The 2014 Plan is administered by the Compensation Committee of the
Board, which consists of three members of the Board, each of whom
is a “non-employee director” within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), an “outside
director” within the meaning of Section 162(m) of the
Internal Revenue Code (the “Code”). Among other things, the Compensation
Committee has complete discretion, subject to the express limits of
the 2014 Plan, to determine the directors, employees and
nonemployee consultants to be granted an award, the type of award
to be granted the terms and conditions of the award, the form of
payment to be made and/or the number of shares of common stock
subject to each award, the exercise price of each option and base
price of each stock appreciation right (“SAR”), the term of each award, the vesting
schedule for an award, whether to accelerate vesting, the value of
the common stock underlying the award, and the required
withholding, if any. The Compensation Committee may amend, modify
or terminate any outstanding award, provided that the
participant’s consent to such action is required if the
action would impair the participant’s rights or entitlements
with respect to that award. The Compensation Committee is also
authorized to construe the award agreements, and may prescribe
rules relating to the 2014 Plan. Notwithstanding the foregoing, the
Compensation Committee does not have any authority to grant or
modify an award under the 2014 Plan with terms or conditions that
would cause the grant, vesting or exercise thereof to be considered
nonqualified “deferred compensation” subject to Code
Section 409A.
Grant of Awards; Shares
Available for Awards. The 2014
Plan provides for the grant of stock options, SARs, performance
share awards, performance unit awards, distribution equivalent
right awards, restricted stock awards, restricted stock unit awards
and unrestricted stock awards to non-employee directors, officers,
employees and nonemployee consultants of the Company or its
affiliates. The aggregate number of shares of common stock that may
be issued under the 2014 Plan shall not exceed 10% of the issued
and outstanding shares of common stock on an as converted basis
(the “As Converted
Shares”), on a rolling
basis. For calculation purposes, the As Converted Shares shall
include all shares of common stock and all shares of common stock
issuable upon the conversion of outstanding preferred stock and
other convertible securities, but shall not include any shares of
common stock issuable upon the exercise of options, warrants and
other convertible securities issued pursuant to the 2014 Plan. The
number of authorized shares of common stock reserved for issuance
under the 2014 Plan shall automatically be increased concurrently
with our issuance of fully paid and non-assessable shares of As
Converted Shares. Shares shall be deemed to have been
issued under the 2014 Plan solely to the extent actually issued and
delivered pursuant to an award. If any award expires, is cancelled,
or terminates unexercised or is forfeited, the number of shares
subject thereto is again available for grant under the 2014
Plan.
The
number of shares of common stock for which awards may be granted
under the 2014 Plan to a participant who is an employee in any
calendar year is limited to 300,000 shares. Future new hires and
additional non-employee directors and/or consultants would be
eligible to participate in the 2014 Plan as well. The number of
stock options and/or shares of restricted stock to be granted to
executives and directors cannot be determined at this time as the
grant of stock options and/or shares of restricted stock is
dependent upon various factors such as hiring requirements and job
performance.
-28-
Stock
Options. The 2014 Plan provides
for either “incentive stock options”
(“ISOs”), which are intended to meet the
requirements for special federal income tax treatment under the
Code, or “nonqualified stock options”
(“NQSOs”). Stock options may be granted on such
terms and conditions as the Compensation Committee may
determine; provided,
however, that the per share
exercise price under a stock option may not be less than the fair
market value of a share of common stock on the date of grant and
the term of the stock option may not exceed 10 years (110% of such
value and five years in the case of an ISO granted to an employee
who owns (or is deemed to own) more than 10% of the total combined
voting power of all classes of the Company's capital stock or a
parent or subsidiary of the Company). ISOs may only be granted to
employees. In addition, the aggregate fair market value of common
stock covered by one or more ISOs (determined at the time of
grant), which are exercisable for the first time by an employee
during any calendar year may not exceed $100,000. Any excess is
treated as a NQSO.
Stock Appreciation
Rights. A SAR entitles the
participant, upon exercise, to receive an amount, in cash or stock
or a combination thereof, equal to the increase in the fair market
value of the underlying common stock between the date of grant and
the date of exercise. SARs may be granted in tandem with, or
independently of, stock options granted under the 2014 Plan. A SAR
granted in tandem with a stock option (i) is exercisable only at
such times, and to the extent, that the related stock option is
exercisable in accordance with the procedure for exercise of the
related stock option; (ii) terminates upon termination or exercise
of the related stock option (likewise, the common stock option
granted in tandem with a SAR terminates upon exercise of the SAR);
(iii) is transferable only with the related stock option; and (iv)
if the related stock option is an ISO, may be exercised only when
the value of the stock subject to the stock option exceeds the
exercise price of the stock option. A SAR that is not granted in
tandem with a stock option is exercisable at such times as the
Compensation Committee may specify.
Performance Shares and
Performance Unit Awards.
Performance share and performance unit awards entitle the
participant to receive cash or shares of common stock upon the
attainment of specified performance goals. In the case of
performance units, the right to acquire the units is denominated in
cash values.
Distribution Equivalent Right
Awards. A distribution
equivalent right award entitles the participant to receive
bookkeeping credits, cash payments and/or common stock
distributions equal in amount to the distributions that would have
been made to the participant had the participant held a specified
number of shares of common stock during the period the participant
held the distribution equivalent right. A distribution equivalent
right may be awarded as a component of another award under the 2014
Plan, where, if so awarded, such distribution equivalent right will
expire or be forfeited by the participant under the same conditions
as under such other award.
Restricted Stock Awards and
Restricted Stock Unit Awards. A
restricted stock award is a grant or sale of common stock to the
participant, subject to our right to repurchase all or part of the
shares at their purchase price (or to require forfeiture of such
shares if issued to the participant at no cost) in the event that
conditions specified by the Compensation Committee in the award are
not satisfied prior to the end of the time period during which the
shares subject to the award may be repurchased by or forfeited to
us. Restricted stock units entitle the participant to receive a
cash payment equal to the fair market value of a share of common
stock for each restricted stock unit subject to such restricted
stock unit award, if the participant satisfies the applicable
vesting requirement.
Unrestricted Stock
Awards. An unrestricted stock
award is a grant or sale of shares of our common stock to the
participant that is not subject to transfer, forfeiture or other
restrictions, in consideration for past services rendered to the
Company or an affiliate or for other valid
consideration.
Change-in-Control
Provisions. In connection with
the grant of an award, the Compensation Committee may provide that,
in the event of a change in control, such award will become fully
vested and immediately exercisable.
Amendment and
Termination. The Compensation
Committee may adopt, amend and rescind rules relating to the
administration of the 2014 Plan, and amend, suspend or terminate
the 2014 Plan, but no such amendment or termination will be made
that materially and adversely impairs the rights of any participant
with respect to any award received thereby under the 2014 Plan
without the participant’s consent, other than amendments that
are necessary to permit the granting of awards in compliance with
applicable laws.
-29-
Compensation Committee Interlocks and Insider
Participation
No
executive officers of the Company serve on the Compensation
Committee (or in a like capacity) for the Company or any other
entity.
Policy and Procedures Governing Related Party
Transactions
The
Board is committed to upholding the highest legal and ethical
conduct in fulfilling its responsibilities and recognizes that
related party transactions can present a heightened risk of
potential or actual conflicts of interest.
The
SEC rules define a related party transaction to include any
transaction, arrangement or relationship which: (i) we are a
participant; (ii) the amount involved exceeds $120,000; and (iii)
executive officer, director or director nominee, or any person who
is known to be the beneficial owner of more than 5% of our common
stock, or any person who is an immediate family member of an
executive officer, director or director nominee or beneficial owner
of more than 5% of our common stock had or will have a direct or
indirect material interest.
Although
we do not maintain a formal written procedure for the review and
approval of transactions with such related persons, it is our
policy for the disinterested members of our Board to review all
related party transactions on a case-by-case basis. To receive
approval, a related-party transaction must have a legitimate
business purpose for us and be on terms that are fair and
reasonable to us and our stockholders and as favorable to us and
our stockholders as would be available from non-related entities in
comparable transactions.
All
related party transactions must be disclosed in our applicable
filings with the SEC as required under SEC
rules.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, requires our officers, directors, and
persons who beneficially own more than 10% of our common stock to
file reports of ownership and changes in ownership with the SEC.
Officers, directors, and greater-than-ten-percent stockholders are
also required by the SEC to furnish us with copies of all Section
16(a) forms that they file.
Based solely upon a review of these forms that
were furnished to us, we believe that all reports required to be
filed by these individuals and persons under Section 16(a) were
filed during the year ended December 31, 2019 and that such filings
were timely, except for the
following:
●
|
Mr. Borkowski, a director, filed
two late Form 4s reporting an aggregate of four
transactions;
|
●
|
Mr. Casamento, a director, filed
a late Form 4 reporting one transaction;
|
●
|
Dr.
Dupret, the former Chief Scientific Officer, filed a late Form 4
reporting two transactions;
|
●
|
Dr.
Pennington, the Chief Medical Officer, filed a late Form 4
reporting one transaction;
|
●
|
Dr. Riddell, a director, filed a
late Form 4 reporting one transaction;
|
●
|
Mr.
Ross Jr., an individual who owns in excess of 10% of our common
stock, filed a late Form 4 reporting five transactions;
and
|
●
|
Dr. Schramm, a director, filed a
late Form 4 reporting one transaction.
|
-30-
LEGAL MATTERS
The validity of the
securities offered hereby will be passed upon for us by Disclosure
Law Group, a Professional Corporation, San Diego,
California.
EXPERTS
The audited
financial statements incorporated by reference in this prospectus
and elsewhere in the registration statement have been incorporated
by reference in reliance upon the report of Mazars USA LLP,
independent registered public accounting firm, upon the authority
of said firm as experts in accounting and auditing. The 2018 and
2017 audited annual consolidated financial statements of AzurRx
BioPharma, Inc., as of and for the years ended December 31, 2018
and 2017, have been audited by Mazars USA LLP, independent
registered public accounting firm. The audit report dated April 1,
2019 for the 2018 audited annual consolidated financial statements
includes an explanatory paragraph which states that certain
circumstances raise substantial doubt about our ability to continue
as a going concern.
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 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, www.azurrx.com/investors/regulatory-filings.
We have not
incorporated by reference into this prospectus the information on
our website, and you should not consider it to be a part of this
prospectus.
-31-
8,880,760
Shares
Common
Stock
PROSPECTUS
We have not
authorized any dealer, salesperson or other person to give any
information or to make any representations not contained in this
prospectus. You must not rely on any unauthorized information. This
prospectus is not an offer to sell these securities in any
jurisdiction where an offer or sale is not permitted.
,
2020
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution.
The following table
indicates the expenses to be incurred in connection with the
offering described in this registration statement, other than
underwriting discounts and commissions, all of which will be paid
by us. All amounts are estimated except the Securities and Exchange
Commission registration fee.
|
Amount
|
SEC Registration
Fee
|
$ 1,498.54
|
Legal Fees and
Expenses
|
$ 50,000
|
Accounting Fees and
Expenses
|
$ 35,000
|
Transfer Agent and
Registrar Fees and Expenses
|
$ 1,000
|
Miscellaneous
Expenses
|
$ 5,000
|
|
|
Total
Expenses
|
$92,500
|
Amended and Restated Bylaws
Pursuant to our
bylaws, our directors and officers will be indemnified to the
fullest extent allowed under the laws of the State of Delaware for
their actions in their capacity as our directors and
officers.
We must indemnify
any person made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (“Proceeding”) by reason of the
fact that he is or was a director, against judgments, penalties,
fines, settlements and reasonable expenses (including
attorney’s fees) (“Expenses”) actually and
reasonably incurred by him in connection with such Proceeding if:
(a) he conducted himself in good faith, and: (i) in the case of
conduct in his own official capacity with us, he reasonably
believed his conduct to be in our best interests, or (ii) in all
other cases, he reasonably believes his conduct to be at least not
opposed to our best interests; and (b) in the case of any criminal
Proceeding, he had no reasonable cause to believe his conduct was
unlawful.
We must indemnify
any person made a party to any Proceeding by or in the right of us,
by reason of the fact that he is or was a director, against
reasonable expenses actually incurred by him in connection with
such proceeding if he conducted himself in good faith, and: (a) in
the case of conduct in his official capacity with us, he reasonably
believed his conduct to be in our best interests; or (b) in all
other cases, he reasonably believed his conduct to be at least not
opposed to our best interests; provided that no such
indemnification may be made in respect of any proceeding in which
such person shall have been adjudged to be liable to
us.
No indemnification
will be made by unless authorized in the specific case after a
determination that indemnification of the director is permissible
in the circumstances because he has met the applicable standard of
conduct.
Reasonable expenses
incurred by a director who is party to a proceeding may be paid or
reimbursed by us in advance of the final disposition of such
Proceeding in certain cases.
We have the power
to purchase and maintain insurance on behalf of any person who is
or was our director, officer, employee, or agent or is or was
serving at our request as an officer, employee or agent of another
corporation, partnership, joint venture, trust, other enterprise,
or employee benefit plan against any liability asserted against him
and incurred by him in any such capacity or arising out of his
status as such, whether or not we would have the power to indemnify
him against such liability under the provisions of the amended and
restated bylaws.
II-1
Delaware Law
We are incorporated
under the laws of the State of Delaware. Section 145 of the
Delaware General Corporation Law provides that a Delaware
corporation may indemnify any persons who are, or are threatened to
be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an
officer, director, employee or agent of such corporation, or is or
was serving at the request of such person as an officer, director,
employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such person acted in good faith
and in a manner he or she reasonably believed to be in or not
opposed to the corporation’s best interests and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe that his or her conduct was illegal. A Delaware corporation
may indemnify any persons who are, or are threatened to be made, a
party to any threatened, pending or completed action or suit by or
in the right of the corporation by reason of the fact that such
person was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses
(including attorneys’ fees) actually and reasonably incurred
by such person in connection with the defense or settlement of such
action or suit provided such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the
corporation’s best interests except that no indemnification
is permitted without judicial approval if the officer or director
is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him or
her against the expenses which such officer or director has
actually and reasonably incurred. Our amended and restated
certificate of incorporation and amended and restated bylaws
provide for the indemnification of our directors and officers to
the fullest extent permitted under the Delaware General Corporation
Law.
Section 102(b)(7)
of the Delaware General Corporation Law permits a corporation to
provide in its certificate of incorporation that a director of the
corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary
duties as a director, except for liability for any:
●
transaction from
which the director derives an improper personal
benefit;
●
act or omission not
in good faith or that involves intentional misconduct or a knowing
violation of law;
●
unlawful payment of
dividends or redemption of shares; or
●
breach of a
director’s duty of loyalty to the corporation or its
stockholders.
Our amended and
restated certificate of incorporation and amended and restated
bylaws include such a provision. Expenses incurred by any officer
or director in defending any such action, suit or proceeding in
advance of its final disposition shall be paid by us upon delivery
to us of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be
indemnified by us.
Section 174 of the
Delaware General Corporation Law provides, among other things, that
a director who willfully or negligently approves of an unlawful
payment of dividends or an unlawful stock purchase or redemption
may be held liable for such actions. A director who was either
absent when the unlawful actions were approved, or dissented at the
time, may avoid liability by causing his or her dissent to such
actions to be entered in the books containing minutes of the
meetings of the board of directors at the time such action occurred
or immediately after such absent director receives notice of the
unlawful acts.
Indemnification Agreements
As permitted by the
Delaware General Corporation Law, we have entered, and intend to
continue to enter, into separate indemnification agreements with
each of our directors and executive officers, that require us to
indemnify such persons against any and all expenses (including
attorneys’ fees), witness fees, damages, judgments, fines,
settlements and other amounts incurred (including expenses of a
derivative action) in connection with any action, suit or
proceeding, whether actual or threatened, to which any such person
may be made a party by reason of the fact that such person is or
was a director, an officer or an employee of us or any of our
affiliated enterprises, provided that such person acted in good
faith and in a manner such person reasonably believed to be in or
not opposed to our best interests and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for
indemnification thereunder.
II-2
At present, there
is no pending litigation or proceeding involving any of our
directors or executive officers as to which indemnification is
required or permitted, and we are not aware of any threatened
litigation or preceding that may result in a claim for
indemnification.
We have an
insurance policy covering its officers and directors with respect
to certain liabilities, including liabilities arising under the
Securities Act or otherwise.
Insofar as
indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers or controlling persons,
we have been advised that in the opinion of the SEC this
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
Item
15. Recent Sales of Unregistered Securities
The information
below lists all of the securities sold by us during the past three
years which were not registered under the Securities Act and are
not otherwise described in the accompanying
prospectus:
●
On March 12, 2019,
we issued 27,102 shares of restricted stock to a consultant for
services provided.
●
On
March 27, 2019, we entered into an Asset Purchase Agreement with
Mayoly Spindler, a European pharmaceutical company ("Mayoly" ). As partial consideration
for this purchase, we issued to Mayoly an aggregate total of
775,931 unregistered shares of our common stock, of which 400,481
shares were issued to Mayoly on March 27, 2019 and the remaining
375,450 shares are currently being held in escrow and will be
released to Mayoly in the following installments: (i) 200,240
shares were released on December 31, 2019 and (ii) 175,210 shares
will be released on December 31, 2020.
●
On June 30, 2019,
we issued 13,379 shares of restricted stock to a consultant for
services provided.
●
On September 30,
2019, we issued 21,677 shares of restricted stock to a consultant
for services provided.
●
On December 31,
2019, we issued an aggregate of 128,403 shares of restricted stock
to consultants for services provided.
These securities
were issued pursuant to the exemption from registration provided by
Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule
506 of Regulation D promulgated thereunder, in reliance on the
recipient’s status as an “accredited investor” as
defined in Rule 501(a) of Regulation D, except for the restricted
stock grants which were issued pursuant to Rule 701 or Rule
506.
Item
16. Exhibits
Exhibit
No.
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Description
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Amended and Restated Certificate of
Incorporation of the Registrant (Incorporated by reference from
Exhibit 3.1 filed with Registration Statement on Form S-1, filed
July 13, 2016).
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Certificate of Amendment to
Certificate of Incorporation of the Registrant (Incorporated by
reference from Exhibit 3.1 filed with Current Report on Form 8-K,
filed December 30, 2019).
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Amended and Restated Bylaws of the
Registrant (Incorporated by reference from Exhibit 3.2 filed with
Registration Statement on Form S-1, filed July 13,
2016).
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Form of common
stock Certificate (Incorporated by reference from Exhibit 4.1 filed
with Amendment No 1. to Registration Statement on Form S-1, filed
July 29, 2016).
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Form of Investor
Warrant (Incorporated by reference from Exhibit 4.2 filed with
Registration Statement on Form S-1, filed July 13,
2016).
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Form of Underwriter
Warrant (Incorporated by reference from Exhibit 4.3 filed with
Amendment No 1. to Registration Statement on Form S-1, filed July
29, 2016).
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Form of Underwriter
Warrant (Incorporated by reference from Exhibit 4.1 filed with
Current Report on Form 8-K, filed May 4, 2018).
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Form of Selling
Agent Warrant (Incorporated by reference from Exhibit 4.1 filed
with Current Report on Form 8-K, filed April 3, 2019).
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Form of Selling
Agent Warrant (Incorporated by reference from Exhibit 4.1 filed
with Current Report on Form 8-K, filed May 14, 2019).
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Form of Underwriter
Warrant (Incorporated by reference from Exhibit 4.1 filed with
Current Report on Form 8-K, filed July 22, 2019).
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Opinion of
Disclosure Law Group, a Professional Corporation.
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Stock Purchase
Agreement dated May 21, 2014 between the Registrant, Protea
Biosciences Group, Inc. and its wholly-owned subsidiary, Protea
Biosciences, Inc (Incorporated by reference from Exhibit 10.1 filed
with Registration Statement on Form S-1, filed July 13,
2016).
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Amended and
Restated Joint Research and Development Agreement dated January 1,
2014 between the Registrant and Mayoly (Incorporated by reference
from Exhibit 10.2 filed with Registration Statement on Form S-1,
filed July 13, 2016).
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Amended and
Restated AzurRx BioPharma, Inc. 2014 Omnibus Equity Incentive Plan
(Incorporated by reference from Exhibit 10.3 filed with
Registration Statement on Form S-1, filed July 13,
2016).
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II-3
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Employment Agreement
between the Registrant and Mr. Spoor (Incorporated by reference
from Exhibit 10.4 filed with Registration Statement on Form S-1,
filed July 13, 2016).
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Securities Purchase
Agreement dated April 11, 2017 between the Registrant and Lincoln
Park Capital Fund, LLC (Incorporated by reference from Exhibit 10.1
filed with Current Report on Form 8-K, filed April 12,
2017).
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12% Senior Secured
Original Issue Discount Convertible Debenture between the
Registrant and Lincoln Park Capital Fund, LLC (Incorporated by
reference from Exhibit 10.2 filed with Current Report on Form 8-K,
filed April 12, 2017).
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Form of Series A
Warrant dated April 11, 2017 between the Registrant and Lincoln
Park Capital Fund, LLC (Incorporated by reference from Exhibit 10.3
filed with Current Report on Form 8-K, filed April 12,
2017).
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Registration Rights
Agreement dated April 11, 2017 between the Registrant and Lincoln
Park Capital Fund, LLC (Incorporated by reference from Exhibit 10.4
filed with Current Report on Form 8-K, filed April 12,
2017).
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Form of Securities
Purchase Agreement dated June 5, 2017 (Incorporated by reference
from Exhibit 10.1 filed with Current Report on Form 8-K, filed June
9, 2017).
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Form of
Registration Rights Agreement dated June 5, 2017 (Incorporated by
reference from Exhibit 10.2 filed with Current Report on Form 8-K,
filed April 12, 2017).
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Form of Series A
Warrant, dated June 5, 2017 (Incorporated by reference from Exhibit
10.3 filed with Current Report on Form 8-K, filed June 9,
2017).
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Form of Series A-1
Warrant, dated June 5, 2017 (Incorporated by reference from Exhibit
10.4 filed with Current Report on Form 8-K, filed June 9,
2017).
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Sublicense
Agreement dated August 7, 2017 by and between the Registrant and
TransChem, Inc. (Incorporated by reference from Exhibit 10.1 filed
with Current Report on Form 8-K, filed August 11,
2017).
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Employment
Agreement between the Registrant and Mr. Shenouda (Incorporated by
reference from Exhibit 10.1 filed with Current Report on Form 8-K,
filed October 2, 2017).
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Modification to 12%
Senior Secured Original Issue Discount Convertible Debenture, dated
November 10, 2017 (Incorporated by reference from Exhibit 10.1
filed with Quarterly Report on Form 10-Q, filed November 13,
2017).
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Form of Exercise
Letter (Incorporated by reference from Exhibit 10.1 filed with
Current Report on Form 8-K, filed January 5, 2018).
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Form of Partial
Exercise Letter (Incorporated by reference from Exhibit 10.2 filed
with Current Report on Form 8-K, filed January 5,
2018).
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Asset Sale and
Purchase Agreement, dated December 7, 2018, by and between Protea
Biosciences Group, Inc., Protea Biosciences, Inc. and AzurRx
Biopharma, Inc. (Incorporated by reference from Exhibit 10.1 filed
with Current Report on Form 8-K, filed December 13,
2018).
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Note Purchase
Agreement, dated February 14, 2019 (Incorporated by reference from
Exhibit 10.1 filed with Current Report on Form 8-K, filed February
20, 2019).
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Senior Convertible
Note A, dated February 14, 2019 (Incorporated by reference from
Exhibit 10.2 filed with Current Report on Form 8-K, filed February
20, 2019).
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Senior Convertible
Note B, dated February 14, 2019 (Incorporated by reference from
Exhibit 10.3 filed with Current Report on Form 8-K, filed February
20, 2019).
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Pledge Agreement,
dated February 14, 2019 (Incorporated by reference from Exhibit
10.4 filed with Current Report on Form 8-K, filed February 20,
2019).
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Warrant Amendment,
dated February 14, 2019 (Incorporated by reference from Exhibit
10.5 filed with Current Report on Form 8-K, filed February 20,
2019).
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Registration Rights
Agreement, dated February 14, 2019 (Incorporated by reference from
Exhibit 10.6 filed with Current Report on Form 8-K, filed February
20, 2019).
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Asset Purchase
Agreement, by and between AzurRx BioPharma, Inc., AzurRx BioPharma
SAS and Laboratories Mayoly Spindler SAS, dated March 27,
2019 (Incorporated by reference from Exhibit 10.25 filed with
Annual Report on Form 10-K, filed April 1, 2019).
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Patent License
Agreement, by and between AzurRx BioPharma, Inc. and Laboratories
Mayoly Spindler SAS, dated March 27, 2019 (Incorporated by
reference from Exhibit 10.26 filed with Annual Report on Form 10-K,
filed April 1, 2019).
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II-4
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Selling Agent
Agreement, by and between AzurRx BioPharma, Inc. and Alexander
Capital, L.P., dated April 1, 2019 (Incorporated by reference from
Exhibit 10.1 filed with Current Report on Form 8-K, filed April 3,
2019).
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Selling Agent
Agreement, by and between AzurRx BioPharma, Inc. and Alexander
Capital, L.P., dated May 9, 2019 (Incorporated by reference from
Exhibit 10.1 filed with Current Report on Form 8-K, filed May 14,
2019).
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Employment
Agreement between the Registrant and Mr. Sapirstein (Incorporated
by reference from Exhibit 10.1 filed with Current Report on Form
8-K, filed October 11, 2019).
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Securities Purchase
Agreement, dated November 13, 2019 (Incorporated by reference from
Exhibit 10.1 filed with Current Report on Form 8-K, filed November
14, 2019).
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Registration Rights
Agreement, dated November 13, 2019 (Incorporated by reference from
Exhibit 10.2 filed with Current Report on Form 8-K, filed November
14, 2019).
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Form of Note Purchase
Agreement (Incorporated by reference from Exhibit 10.1 filed
with Current Report on Form 8-K, filed December 30,
2019).
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Form of Senior Convertible
Promissory Note (Incorporated by reference from Exhibit 10.2 filed
with Current Report on Form 8-K, filed December 30,
2019).
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Form of Warrant (Incorporated by
reference from Exhibit 10.3 filed with Current Report on Form 8-K,
filed December 30, 2019).
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Form of Registration Rights
Agreement (Incorporated by reference from Exhibit 10.4 filed with
Current Report on Form 8-K, filed December 30,
2019).
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Employment
Agreement by and between AzurRx BioPharma, Inc. and Daniel
Schneiderman, dated January 1, 2020 (Incorporated by reference from
Exhibit 10.1 filed with Current Report on Form 8-K, filed January
6, 2020).
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Code of Ethics of
AzurRx BioPharma, Inc. Applicable To Directors, Officers And
Employees (Incorporated by reference from Exhibit 14.1 filed with
Registration Statement on Form S-1, filed July 13,
2016).
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Subsidiaries of the
Registrant (Incorporated by reference from Exhibit 21.1 filed with
Registration Statement on Form S-1, filed July 13,
2016).
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Consent of
Disclosure Law Group, a Professional Corporation (included in
Exhibit 5.1).
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Consent of
Independent Registered Public Accounting Firm – Mazars USA
LLP.
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Power of Attorney
(located on signature page).
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*
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Filed
herewith.
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+
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Confidential
treatment has been granted with respect to portions of this
exhibit.
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#
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Certain portions of
this exhibit (indicated by “[*****]”) have been omitted
as the Company has determined (i) the omitted information is not
material and (ii) the omitted information would likely cause harm
to the Company if publicly disclosed.
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Item
17. Undertakings
The undersigned
registrant hereby undertakes to provide to the underwriters at the
closing specified in the underwriting agreement certificates in
such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
Insofar as
indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned
registrant hereby undertakes:
(1)
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To file, during any
period in which offers or sales are being made, a post-effective
amendment to this registration statement:
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(i)
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To include any
prospectus required by Section 10(a)(3) of the Securities
Act;
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(ii)
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To reflect in the
prospectus any facts or events arising after the effective date of
the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price
set forth in the “Calculation of Registration Fee”
table in the effective registration statement;
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(iii)
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To include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration
statement;
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II-5
Provided, however,
that Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this
section do not apply if the registration statement is on Form S-1
and the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration
statement.
(2)
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That, for the
purpose of determining any liability under the Securities Act, each
such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
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(3)
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To remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination
of the offering.
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(4) That, for
the purpose of determining liability under the Securities Act to
any purchaser:
(i) Each
prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included
in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of
first use.
(b) The undersigned
registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the
registrant’s annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan’s annual
report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the
initial bona
fide offering thereof.
(c) Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions referenced in
Item 14 of this Registration Statement, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered
hereunder, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication
of such issue.
II-6
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-1 and has duly caused
this registration statement or amendment thereto to be signed on
its behalf by the undersigned, thereunto duly authorized, in
the City of Brooklyn, New York on January 13,
2020.
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AZURRX
BIOPHARMA, INC.
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January 13,
2020
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By:
/s/ James
Sapirstein
Name: James Sapirstein
Title: President and Chief Executive
Officer
(Principal Executive
Officer)
By: /s/
Daniel Schneiderman
Name: Daniel Schneiderman
Title: Chief Financial Officer
(Principal Accounting
Officer)
|
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the
following persons in the capacities and on the dates
indicated.
Signature
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Title
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Date
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|
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/s/
*
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President,
Chief Executive Officer and Director
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January 13,
2020
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James
Sapirstein
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(Principal Executive Officer)
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/s/ Daniel
Schneiderman
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Chief Financial
Officer
|
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January 13,
2020
|
Daniel
Schneiderman
|
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(Principal Accounting Officer)
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/s/
*
|
|
Chair
of the Board of Directors
|
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January 13,
2020
|
Edward
J. Borkowski
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/s/
*
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Director
|
|
January 13,
2020
|
Charles
Casamento
|
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/s/
*
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Director
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January 13,
2020
|
Alastair
Riddell
|
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|
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|
|
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/s/
*
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Director
|
|
January 13,
2020
|
Vern
Lee Schramm
|
|
|
|
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|
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/s/
*
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|
Director
|
|
January 13,
2020
|
Johan
(Thijs) M. Spoor
|
|
|
|
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*
/s/ James
Sapirstein
|
Attorney-in-fact
|
II-7