Item 1.01. Entry into a Material Definitive Agreement.
On December 19, 2018, Soleno Therapeutics, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Abingworth Bioventures VII LP, Oracle Investment Management, entities associated with Jack W. Schuler and Ernest Mario (the Chairman of our Board of Directors), and certain other institutional and accredited investors (the “Investors”), pursuant to which the Company has agreed to issue and sell to the Investors in a private placement (the “Private Placement”), up to 10,272,375 units (the “Units”). The Company expects the Private Placement to close on or about December 21, 2018. Each Unit consists of one (1) share of the Company’s common stock, par value $0.001 per share (“Common Stock”), and a warrant to purchase 0.05 shares of Common Stock (each, a “Warrant” and, collectively, the “Warrants”), at a price per Unit of $1.60625 (the “Purchase Price”) for aggregate gross proceeds of approximately $16,500,000. The Purchase Price consists of $1.60 per share of Common Stock, which is equal to the per share closing price of the Common Stock of the Company on December 18, 2018, the date immediately preceding the signing of the Purchase Agreement, and $0.00625 for each Warrant. The exercise price of the Warrants is $2.00 per share. The Company expects the net proceeds from the Private Placement to be approximately $16,146,740, after deducting offering expenses. The Company intends to use the net proceeds from the Private Placement for clinical trial expenses and working capital or other general corporate purposes.
In connection with the Private Placement, the Company will grant registration rights to the Investors, pursuant to which, among other things, the Company will prepare and file with the Securities and Exchange Commission (the “SEC”) a registration statement to register for resale the shares of Common Stock sold in the Private Placement and the shares of Common Stock underlying the Warrants. Roth Capital Partners, LLC (“Roth”) has acted as the Company’s sole placement agent for the Private Placement.
The Purchase Agreement contains customary representations, warranties and covenants made solely for the benefit of the parties to the Purchase Agreement. The Purchase Agreement is incorporated herein by reference, but only to provide information regarding the terms of the Purchase Agreement and not to provide with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with the SEC.
The foregoing description of the material terms of the Purchase Agreement and the Warrants is qualified in its entirety by reference to the full text of the Purchase Agreement and form of Warrant, which are filed as Exhibit 10.1 and Exhibit 4.1, respectively, to this Current Report on Form8-K and incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
Pursuant to the Private Placement described in Item 1.01 of this Current Report on Form8-K, which description is incorporated by reference into this Item 3.02 in its entirety, the Company will sell the Shares to an “accredited investor,” as that term is defined in the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act and corresponding provisions of state securities or “blue sky” laws. The Investors represented that they are acquiring the Shares for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Shares have not been registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
Neither this Current Report on Form8-K nor any exhibit attached hereto is an offer to sell or the solicitation of an offer to buy shares of Common Stock or other securities of the Company.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(a) Resignation of Director
On December 17, 2018, Rajen Dalal submitted his resignation as a director from the Board of Directors (the “Board”) of the Company, as well as from the Audit Committee of the Board of Directors (the “Audit Committee”) and the Nominating and Corporate Governance Committee of the Board of Directors (the “Nominating Committee”) effective January 1, 2019. The resignation of Mr. Dalal was not the result of any disagreement with the Company relating to the Company’s operations, policies or practices.
