Item 1.01 Entry into a Material Definitive Agreement.
On June 16, 2023, Clene Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Canaccord Genuity LLC (“Canaccord”) as underwriter, pursuant to which the Company agreed to issue and sell, in an equity offering (the “Offering”), an aggregate of (i) 50,000,000 shares of its common stock, par value $0.0001 per share (“Common Stock”), (ii) warrants to purchase up to 50,000,000 shares of Common Stock at an exercise price of $1.10 per whole share of Common Stock (the “Tranche A Warrants”), and (iii) warrants to purchase up to 50,000,000 shares of Common Stock at an exercise price of $1.50 per whole share of Common Stock (the “Tranche B Warrants,” and collectively with the Tranche A Warrants, the “Warrants”). The shares of common stock and Warrants will be sold in units, with each unit consisting of one share of Common Stock, one Tranche A Warrant, and one Tranche B Warrant. Each unit will be sold at a public offering price of $0.80 per unit. The shares of Common Stock and the accompanying Warrants will be issued separately but can only be purchased together in the Offering. Canaccord is acting as the sole bookrunner in the Offering and Maxim Group LLC and EF Hutton, division of Benchmark Investments, LLC, are acting as co-managers in the Offering.
The Tranche A Warrants will be exercisable immediately, in whole or in part, and will expire on the earlier of (i) sixty (60) days following the date of the Company’s public announcement that the filing of a New Drug Application (“NDA”) for CNM-Au8 has been accepted by the U.S. Food and Drug Administration (“FDA”), which announcement shall be made promptly after receipt of such NDA acceptance (or, if such date is not a business day, then the next business day following such date), or (ii) June 16, 2026. The Tranche B Warrants will be exercisable immediately, in whole or in part, and will expire on the earlier of (i) sixty (60) days following the date of the Company’s public announcement that an NDA for CNM-Au8 has been approved by the FDA, which announcement shall be made promptly after receipt of such NDA approval (or, if such date is not a business day, then the next business day following such date), or (ii) June 16, 2030. The Warrants shall not be exercisable to the extent that after giving effect to such issuance as set forth on the applicable notice of exercise, the holder would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of Warrant shares issuable upon the holder’s exercise of the Warrants (the “Maximum Percentage”). The holder, upon notice to the Company, may from time to time increase or decrease the Maximum Percentage to any other percentage (not in excess of 19.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of Warrant shares issuable upon exercise of the Warrants by the holder if exceeding that limit would result in a change in control under Nasdaq Listing Rule 5635(b) or any successor rule). Any increase in the Maximum Percentage shall not be effective until the 61st day after such notice is delivered to the Company.
The Company estimates the net proceeds from the Offering will be approximately $37,400,000, after deducting estimated underwriting discounts and commissions and offering expenses payable by the Company, and excluding the proceeds, if any, from the exercise of the Warrants issued pursuant to the Offering. The Company cannot predict when or if the Warrants will be exercised, and it is possible the Warrants may expire and/or never be exercised. The underwriters will receive underwriting discounts and commissions equal to 6% of the aggregate gross proceeds from the Offering, and the Company estimates to incur offering expenses of approximately $200,000. Any proceeds that the Company receives from the Offering are expected to be used for expenses primarily related to general corporate purposes, including to fund the clinical development of the Company’s lead drug candidate, CNM-Au8, including for conducting the Company’s on-going and planned clinical trials, potential future commercialization efforts, and future regulatory activities including preparation of regulatory filings; and for additional early-stage research and development activities, business development activities, working capital and other general corporate purposes. The closing of the Offering is expected to occur on June 21, 2023, subject to the satisfaction of customary closing conditions.
The Underwriting Agreement contains customary representations, warranties, covenants and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the underwriters, including for liabilities under the Securities Act of 1933 (the “Securities Act”), as amended, and other obligations of the parties and termination provisions.
The foregoing description of the Underwriting Agreement, Tranche A Warrants, and Tranche B Warrants do not purport to be complete and are qualified in their entirety by reference to the text of the Underwriting Agreement, Form of Tranche A Warrant, and Form of Tranche B Warrant, which are filed as Exhibit 1.1, Exhibit 4.1, and Exhibit 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The Offering is being made pursuant to the Company’s registration statement on Form S-3 (file number 333-264299) (the “Registration Statement”), filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2022 and declared effective on April 26, 2022, a related registration statement pursuant to Rule 462(b) (file number 333-272692), filed with the SEC and effective on June 16, 2023, and the Company’s prospectus supplement relating to this transaction, which is expected to be filed with the SEC on June 16, 2023, that forms part of the Registration Statement.
In addition, Canaccord is the Sales Agent under the Company’s Equity Distribution Agreement, dated April 14, 2022.
A copy of the legal opinion of Holland & Knight LLP, relating to the validity of the shares in connection with the Offering is filed as Exhibit 5.1 to this Current Report on Form 8-K and is incorporated herein by reference.
This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any offer, solicitation or sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.