FWIW - The Lincoln Park Transaction section of the Prospectus Supplement from Form 424B5 filed by AVXL yesterday:
LINCOLN PARK TRANSACTION
On February 3, 2023, we entered into the Purchase Agreement with Lincoln Park. In connection with the Purchase Agreement, on February 3, 2023, we also entered into a registration rights agreement (the “Registration Rights Agreement”) with Lincoln Park, pursuant to which we agreed to take specified actions to maintain the registration of the shares of our common stock subject to the offering described in this prospectus supplement and accompanying prospectus. Pursuant to the terms of the Purchase Agreement, Lincoln Park has agreed to purchase from us up to $150,000,000 of shares of our common stock (subject to certain limitations) from time to time at our discretion during the term of the Purchase Agreement. Pursuant to the terms of the Purchase Agreement and Registration Rights Agreement, we have filed with the SEC this prospectus supplement regarding the sale under the Securities Act of the shares issuable to Lincoln Park under the Purchase Agreement.
We may, from time to time and at our sole discretion, direct Lincoln Park to purchase shares of our common stock upon the satisfaction of certain conditions set forth in the Purchase Agreement at a purchase price per share based on the market price of our common stock at 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 Nasdaq, in no event may we issue or sell to Lincoln Park under the Purchase Agreement shares of our common stock in excess of 15,606,426 shares (including the Commitment Shares), which represents 19.99% of the shares of our common stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless (i) we obtain stockholder approval to issue shares of our 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 official closing price of our common stock on the Nasdaq Capital Market immediately preceding the date of the Purchase Agreement, plus an incremental amount to account for the issuance of the Additional Commitment Shares, as calculated in accordance with 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 or regulations of Nasdaq.
The Purchase Agreement also prohibits us from directing Lincoln Park to purchase 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, would result in Lincoln Park beneficially owning more than 4.99% of our outstanding shares of common stock.
Pursuant to the terms of the RRA, which requires us to register the Purchase Shares and Commitment Shares in order to sell Purchase Shares to Lincoln Park under the Purchase Agreement, we are filing this prospectus supplement to cover (i) the offer and sale of up to $150,000,000 of shares of our common stock, (ii) the issuance of 75,000 Initial Commitment Shares, and (iii) the issuance of up to 75,000 Additional Commitment Shares to be issued pro-rata to Lincoln Park if and when we direct Lincoln Park to purchase available shares of common stock under the Purchase Agreement.
Purchase of Shares Under the Purchase Agreement
Under the Purchase Agreement, we may, from time to time until February 3, 2026, in our sole discretion and subject to certain conditions outside of Lincoln Park’s control, direct Lincoln Park to purchase up to 200,000 shares (the “Regular Purchase Share Limit”) of our common stock on any business day (each such purchase, a “Regular Purchase”); provided that we may mutually agree with Lincoln Park to increase the Regular Purchase Share Limit to up to 2,000,000 shares and to make multiple purchases in a given day. Additionally, all such share and dollar amounts shall be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction as provided in the Purchase Agreement, and in no event shall Lincoln Park purchase more than $4,000,000 worth of our common stock pursuant to a Regular Purchase on any single business day, provided that the parties may mutually agree to increase such limit to an amount greater than $4,000,000. The purchase price per share for each such Regular Purchase will be equal to the lower of:
? the lowest sale price for our common stock on the purchase date of such shares; or
? the arithmetic average of the three lowest closing sale prices for our common stock during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares.
S-10
In addition to Regular Purchases as described above, we may also direct Lincoln Park, on any business day on which we have properly submitted a Regular Purchase notice directing Lincoln Park to purchase not less than 50,000 shares of our common stock, to purchase an additional amount of our common stock (each such purchase, an “Accelerated Purchase”) not to exceed the lesser of:
? 30% of the aggregate shares of our common stock traded during normal trading hours on the purchase date; and
? 1000% of the number of Purchase Shares purchased pursuant to the corresponding Regular Purchase.
The purchase price per share for each such Accelerated Purchase will be equal to the lower of 96% of:
? the volume weighted average price during (i) the entire trading day on the purchase date, if the volume of shares of our common stock traded on the purchase date has not exceeded a volume maximum calculated in accordance with the Purchase Agreement, or (ii) the portion of the trading day of the purchase date (calculated starting at the beginning of normal trading hours) until such time at which the volume of shares of our common stock traded has exceeded such volume maximum; or
? the closing sale price of our common stock on the purchase date.
In the event we have properly submitted an Accelerated Purchase Notice to Lincoln Park to purchase shares of our common stock in the full amount available for an Accelerated Purchase, on the date of such Accelerated Purchase (which is the business day following the corresponding Regular Purchase), we may also direct Lincoln Park to purchase an additional amount of our common stock under the same terms set forth above for an Accelerated Purchase (an “Additional Accelerated Purchase”).
In the case of Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases, the purchase price per share will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as set forth in the Purchase Agreement. Other than as set forth 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.
Upon the filing of this prospectus supplement, we issued to Lincoln Park 75,000 Commitment Shares and we are obligated to issue up to an additional 75,000 shares of common stock to Lincoln Park pro-rata in connection with the sale of Purchase Shares to Lincoln Park under the Purchase Agreement, in each case as consideration for Lincoln Park’s irrevocable commitment to purchase shares of our common stock at our direction under the Purchase Agreement.
Suspension Events
Suspension events under the Purchase Agreement include the following:
? the effectiveness of the registration statement of which this prospectus forms a part, or any other registration statement registering securities under the Purchase Agreement, lapses for any reason (including, without limitation, the issuance of a stop order), or any required prospectus supplement and accompanying prospectus are unavailable for the sale by Lincoln Park of our common stock offered hereby, and such lapse or unavailability continues for a period of 10 consecutive business days or for more than an aggregate of 30 business days in any 365-day period;
? suspension by our principal market of our common stock from trading on the Nasdaq Capital Market for a period of three consecutive business days;
? 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, he NASDAQ Global Select Market, the NYSE American, the NYSE Arca or the OTC Bulletin Board, OTCQX or OTCQB operated by the OTC Markets Group, Inc. (or nationally recognized successor to any of the foregoing);
S-11
? our transfer agent’s failure for three business days to issue to Lincoln Park shares of our common stock which Lincoln Park is entitled to receive under the Purchase Agreement;
? any breach of the representations or warranties or covenants contained in the Purchase Agreement or any related agreement which has or which could have a material adverse effect on us subject to a cure period of five business days;
? any voluntary or involuntary participation or threatened participation in insolvency or bankruptcy proceedings by or against us; and
? if at any time we are not eligible to transfer our common stock electronically as DWAC shares or a material adverse change in our business, financial condition, operations or prospects has occurred.
Lincoln Park does not have the right to terminate the Purchase Agreement upon any of the suspension events set forth above. During a suspension event, all of which are outside of Lincoln Park’s control, shares of our common stock cannot be sold by us or purchased by Lincoln Park 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.
Amount of Potential Proceeds to be Received under the Purchase Agreement
Assumed Average Purchase Price Per Share Number of Registered Shares to be Issued if Full Purchase(1)(2) Percentage of Outstanding Shares Issued After Giving Effect to the Issuance to Lincoln Park(3) Proceeds from the Sale of Shares Under the Purchase Agreement Registered in this Offering
$ 8.00 15,469,547 16.7 % $ 123,756,376
$ 10.00 15,000,000 16.2 % $ 150,000,000
$ 11.26 (4) 13,321,492 14.7 % $ 150,000,000
$ 13.00 11,538,462 13.0 % $ 150,000,000
$ 15.00 10,000,000 11.5 % $ 150,000,000
_______________
(1) Includes the total number of Purchase Shares which we would have sold under the Purchase Agreement at the corresponding assumed purchase price set forth in the adjacent column, up to the additional aggregate purchase price of $150,000,000. Excludes the 75,000 Initial Commitment Shares issued to Lincoln Park upon entering into the Purchase Agreement, and the 75,000 Additional Commitment Shares issuable in connection with sales of Purchase Shares to Lincoln Park.
S-12
(2) The Purchase Agreement prohibits us from issuing or selling (including the Commitment Shares) to Lincoln Park under the Purchase Agreement (A) any shares of our common stock in excess of the Exchange Cap unless (i) we obtain stockholder approval to issue shares of our 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 official closing price of our common stock on the Nasdaq Capital Market immediately preceding the date of the Purchase Agreement, plus an incremental amount to account for the issuance of the Additional Commitment Shares, as calculated in accordance with Nasdaq rules, and (B) 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 Limitation.
(3) The denominator is based on 78,032,135 shares outstanding as of February 3, 2023, adjusted to include the issuance of (i) the 75,000 Commitment Shares issued to Lincoln Park upon the filing of this prospectus supplement, and (ii) the number of shares of common stock (including Additional Commitment Shares) which we would have sold and issued to Lincoln Park, assuming the purchase price in the adjacent column. The numerator is based on the number of Purchase Shares set forth in the adjacent column which we would have sold under the Purchase Agreement at the corresponding assumed purchase price set forth in the adjacent column.
(4) The closing price of our common stock on February 3, 2023.
