Item 1.01
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Entry into a Material Definitive Agreement
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Warrant Amendment
On January 27, 2020, Outlook Therapeutics,
Inc. (the “Company”) entered into an agreement (the “Warrant Amendment”) to amend the exercise price of
its outstanding Warrants to Purchase Common Stock dated as of October 31, 2017, May 14, 2018, and June 8, 2018 (each a “Warrant”
and collectively, the “Warrants”) to acquire an aggregate 4,657,852 shares of the Company’s common stock, par
value $0.01 per share the (“Common Stock”), all of which are held by BioLexis Pte. Ltd. (formerly known as GMS Tenshi
Holdings Pte. Limited) (“BioLexis”), the Company’s controlling stockholder. As previously disclosed, the Warrants
were issued to BioLexis in private placements that were exempt from the registration requirements pursuant to Rule Regulation D
and Section 4(a)(2) of the Securities Act of 1933, as amended (“the Securities Act”).
Pursuant to the Warrant Amendment, the
exercise price of the Warrants was reduced to $0.232 per share and BioLexis agreed to promptly exercise the Warrants for cash,
and in any event, within five business days. On January 29, 2020, BioLexis exercised the Warrants in full for cash payment of approximately
$1.1 million, and the Company issued BioLexis 4,657,852 shares of Common Stock in accordance with the amended terms. Prior to Amendment,
the Warrants had exercise prices ranging from $7.20 to $7.80 per share (as adjusted to reflect the Company’s March 2019 reverse
stock split).
The foregoing description of the Warrant
Amendment is a summary of the material terms of such agreement, does not purport to be complete and is qualified in its entirety
by reference to the full text of the Warrant Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated
by reference herein.
Agreement to Amend Series A-1 Convertible
Preferred
On January 27, 2020, the Company entered
into an agreement with BioLexis (the “Series A-1 Amendment Agreement”), whereby the Company agreed to seek stockholder
approval of the Certificate of Amendment of the Certificate of Designation of the Series A-1 Preferred Convertible Preferred Stock,
par value $0.01 per share (the “Series A-1 Preferred”), and the issuance of Common Stock pursuant to such amended terms,
and BioLexis agreed to promptly convert its shares of Series A-1 Preferred pursuant to such amended terms, and in any event, within
five business days of stockholder approval thereof. As previously disclosed, BioLexis originally acquired the shares of Series
A-1 Preferred in a transaction exempt from the registration requirements pursuant to Section 3(a)(9) and Section 4(a)(2) under
the Securities Act.
As proposed in the Certificate of Amendment
of the Certificate of Designation of the Series A-1 Preferred, the effective conversion rate will be increased from the current
$18.89797 per share to $431.03447263 per share, which, if approved, would result in 29,358,621 shares issuable upon conversion
of the 68,112 shares of Series A-1 Preferred outstanding (rather than 1,287,178) (or an effective conversion rate of $0.232 per
share). The proposed terms also clarify that while the Series A-1 Preferred vote on an as-converted basis, they will use
a modified conversion rate of $111.982082867 per share, resulting in approximately 112 votes per share (or an effective price per
share of $0.893, the “Minimum Price” on January 27, 2020) in order to comply with applicable Nasdaq rules, an increase
over the current approximately 19 votes per share.
The foregoing
description of the Series A-1 Amendment Agreement is a summary of the material terms of such agreement does not purport
to be complete and is qualified in its entirety by reference to the full text of the Series A-1 Amendment Agreement, which is filed
as Exhibit 10.2 to this Current Report on Form 8-K and incorporated by reference herein.
Transactions with MTTR LLC
On January 27, 2020, the Company and MTTR
LLC (“MTTR”) entered into a termination agreement and mutual release (the “Termination Agreement”) to terminate
the strategic partnership agreement for the Company’s ONS-5010 product candidate by and between the Company and MTTR. Pursuant
to the Termination Agreement, the Company agreed (x) to issue to the four principals of MTTR (who include two of the Company’s
named executive officers, Messrs. Dagnon and Evanson), an aggregate of 7,244,739 shares of Common Stock, subject to stockholder
approval, (y) to enter into consulting agreements with each of the four principals setting forth the terms of his respective compensation
arrangement, and (z) to pay MTTR a one-time settlement fee of $110,000, upon effectiveness of the Termination Agreement. The Termination
Agreement is effective upon stockholder approval of the share issuance.
As contemplated by the Termination Agreement,
on January 27, 2020, the Company also entered into consulting agreements directly with each of the four principals of MTTR setting
forth the terms of his respective compensation arrangement, as well as providing for certain transfer restrictions and repurchase
rights applicable to the shares of our common stock to be issued pursuant thereto (each a “Consulting Agreement” and
together, the “Consulting Agreements”). The Consulting Agreements are effective upon stockholder approval of the share
issuances contemplated thereby.
The Consulting Agreements with each of
Messrs. Dagnon and Evanson provide for the payment of a monthly fee for services during the term of each agreement ($25,000 for
20 hours per week), and the issuance of 1,207,457 shares to each of Messrs. Dagnon and Evanson, subject to stockholder approval.
The Company also agreed to issue, subject to stockholder approval, an aggregate of 4,829,825 shares to the other two principals
of MTTR, Dr. Mark Humayun and Mr. Tony Moses. All of the shares to be issued to the MTTR principals, including Messrs. Dagnon
and Evanson are subject to lock-up restrictions such that they may not be sold until the earlier of (i) six months following FDA
approval of ONS-5010, (ii) the date the Company publicly announces not to pursue development of ONS-5010, (iii) a “Change
of Control” as defined therein or (iv) January 2025, subject to limited exceptions, including a pro rata exception
if BioLexis disposes of any of its shares to an unaffiliated third party for consideration. The Company also has the right
to repurchase such shares for $0.01 per share if the consultant terminates his agreement other than for good reason (as defined
therein), or the Company terminates the agreement for cause (as defined therein). The repurchase right also lapses in tiered
percentages (15%-40%) tied to completion of enrollment of the Company’s NORSE 2 clinical trial of ONS-5010 by certain dates.
It also lapses as to 50% or 100% of the shares if the Company enters into agreements pertaining to ONS-5010 that meet certain value
thresholds or the Company’s share price meets certain predefined targets. The repurchase right also lapses as to 100% of
the shares upon the earliest to occur of (i) filing of the biologics license application for ONS-5010, (ii) termination of the
agreement by the consultant for good reason (as defined therein) or by the Company other than for cause (as defined therein), (iii)
in the event of disability (as defined therein), or (iv) upon a “Change of Control” as defined therein.
The Company intends to rely on the exemption
from registration requirements provided in Section 4(a)(2) of the Securities Act for the issuance of the Common Stock to the MTTR
principals.
The foregoing
descriptions of the Termination Agreement and the Consulting Agreements are summaries of the material terms of such agreements,
do not purport to be complete and are qualified in their entirety by reference to the full text of the Termination Agreement and
the Consulting Agreements with Messrs. Dagnon and Evanson, which are filed as Exhibits 10.3, 10.4, and 10.5, respectively, to this
Current Report on Form 8-K and are incorporated by reference herein.
Amendment to the Senior Notes
On December 20, 2019, the Company issued
senior secured convertible notes having an aggregate principal amount and accrued interest of $7.3 million (the “Notes”)
pursuant to an Exchange Agreement dated December 20, 2019. The Notes are convertible into shares of Common Stock beginning April
1, 2020, at a conversion price per share equal to 90% multiplied by the average of the two lowest closing bid prices during the
20 trading days immediately preceding the applicable conversion. On January 29, 2020 the Company entered into a global amendment
of the Notes (the “Notes Amendment”) to provide that any such conversion is subject to a floor price of $0.232, which
is 20% of the “Minimum Price” (as defined in the Nasdaq Listing Rules) on December 20, 2019 under applicable Nasdaq
rules. The Company also agreed that if the conversion price does not exceed the floor price for 20 consecutive trading days, then
the Company is required to make a cash redemption equal to $350,000; but no more than once per calendar month, and no trading day
shall be counted in more than one 20 consecutive trading day period.
The foregoing description of the Notes
Amendment is a summary of the material terms of such agreement, does not purport to be complete and is qualified in its entirety
by reference to the full text of the Notes Amendment, which is filed as Exhibit 10.6 to this Current Report on Form 8-K and incorporated
by reference herein.