Item 1.01 Entry into a Material Definitive Agreement.
Private Placement and Securities Purchase Agreement
On May 21, 2021, Larimar Therapeutics, Inc. (the “Company” or “Larimar”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”) for the sale by the Company in a private placement (the “Private Placement”) of 4,479,192 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and pre-funded warrants to purchase an aggregate of 2,616,856 shares of the Company’s Common Stock (the “Pre-Funded Warrants”) for a price of $13.43 per share of Common Stock and $13.42 per share of Common Stock underlying each Pre-Funded Warrant.
The Pre-Funded Warrants will be immediately exercisable at an exercise price of $0.01 per share of Common Stock underlying each such warrant and will be exercisable indefinitely. The Purchasers may exercise the Pre-Funded Warrants on a cashless basis. The Pre-Funded Warrants to be issued in the Private Placement will provide that a holder of Pre-Funded Warrants will not have the right to exercise any portion of its Pre-Funded Warrants if such holder, together with its affiliates, would beneficially own in excess of 4.985% or 9.99%, at the holder’s election, of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to such exercise.
The Private Placement is expected to close on or about May 25, 2021. The aggregate gross proceeds for the issuance and sale of the Shares and Pre-Funded Warrants are expected to be $95.3 million, before deducting estimated offering expenses payable by the Company and the $0.01 per share exercise price of the Pre-Funded Warrants. The Company intends to use the net proceeds from the Private Placement to support the clinical development of CTI-1601, for additional research and development and for working capital and general corporate purposes.
The Private Placement is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act. The Shares and Pre-Funded Warrants were offered without any general solicitation by the Company or its representatives.
The Shares, the Pre-Funded Warrants and the shares of Common Stock underlying the Pre-Funded Warrants (the “Warrant Shares” and, together with the Shares and the Pre-Funded Warrants, the “Securities”) sold and issued in the Private Placement are not registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the “SEC”) or an applicable exemption from the registration requirements.
Registration Rights Agreement
Upon the closing of the Private Placement, the Company will enter into a registration rights agreement (the “Registration Rights Agreement”) with certain of the Purchasers. Pursuant to the Registration Rights Agreement, the Company will provide the Purchasers with certain registration rights that will require the Company to file a registration statement on Form S-3 (the “Registration Statement”) with the SEC within 30 days following the Closing (the “Registration Deadline”) to register the Shares and the Warrant Shares. If the Company fails to meet the Registration Deadline or maintain the effectiveness of the Registration Statement for the required effectiveness period, subject to certain permitted exceptions, the Company will be required to pay liquidated damages to the Purchasers. The Company also agreed, among other things, to indemnify the selling holders under the Registration Statement from certain liabilities and to pay all fees and expenses incident to the Company’s performance of or compliance with the Registration Rights Agreement.
Amended and Restated Registration Rights Agreement
Upon the closing of the Private Placement, the Company will enter into an amended and restated registration rights agreement (the “A&R Registration Rights Agreement”), which will amend and restate the Company’s registration rights agreement, dated as of June 8, 2020 (the “Original Registration Rights Agreement”), by and among the Company and the investors party thereto. The Original Registration Rights Agreement will be amended and restated to provide that the securities purchased by Deerfield Private Design Fund III, L.P., Deerfield Private Design Fund IV, L.P. and Deerfield Healthcare Innovations Fund, L.P (the “Deerfield Funds”) in the Private Placement will constitute “Registrable Securities” under the A&R Registration Rights Agreement, and provide the Deerfield Funds with similar rights with respect to such securities as those rights contained in the Original Registration Rights Agreement.
The foregoing descriptions of the Purchase Agreement, Registration Rights Agreement, Amended Registration Rights Agreement and Pre-Funded Warrants do not purport to be complete and are qualified in their entirety by reference to the full text of the Purchase Agreement, Registration Rights Agreement, Amended Registration Rights Agreement and Form of Pre-Funded Warrant, which are filed hereto as Exhibits 10.1, 10.2, 10.3 and 4.1, respectively, and are incorporated herein by reference.
