Item 1.01 Entry into a Material Definitive Agreement.
On June 9, 2021, Progenity, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) for a private placement (the “Private Placement”) with certain institutional and accredited investors (each, a “Purchaser” and collectively, the “Purchasers”). Pursuant to the Securities Purchase Agreement, the Purchasers have agreed to purchase an aggregate of 16,194,332 units (the “Units”) representing (i) 16,194,332 shares of the Company’s common stock, par value $0.001 per share (the “Shares”) (or pre-funded warrants in lieu thereof (the “Pre-Funded Warrants”)), and (ii) warrants to purchase up to 16,194,332 shares of common stock (the “Warrants”). The purchase price for each Unit is $2.47, for an aggregate purchase price of approximately $40 million. The Private Placement closed on June 14, 2021.
The Warrants are immediately exercisable at an exercise price of $2.84 per share, subject to adjustments as provided under the terms of the Warrants, and expire on the fifth anniversary of the date of issuance. If exercised for cash, the Warrants would result in additional gross proceeds to the Company of approximately $46 million.
The Securities Purchase Agreement provides that the Company will register the resale of the Shares and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and the Warrants. The Company is required to prepare and file a registration statement with the Securities and Exchange Commission no later than July 14, 2021, and to use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable, subject to certain specified penalties if timely effectiveness is not achieved.
The securities to be issued to the Purchasers under the Securities Purchase Agreement were issued pursuant to an exemption from registration under Rule 506 of Regulation D, which is promulgated under the Securities Act of 1933 (the “Securities Act”). The Company relied on this exemption from registration based in part on representations made by the Purchasers.
Piper Sandler & Co. served as lead placement agent and Raymond James & Associates, Inc. acted as co-placement agent in connection with the Private Placement and the Company has agreed to pay customary placement fees and reimburse certain expenses of the placement agents.
The sale of the securities pursuant to the Securities Purchase Agreement has not been registered under the Securities Act or any state securities laws. The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Neither this Current Report on Form 8-K, nor the exhibits attached hereto, is an offer to sell or the solicitation of an offer to buy the securities described herein.
The Company intends to use the net proceeds from the Private Placement, including any proceeds resulting from a cash exercise of the Warrants, to support its operations, to invest in its molecular testing research and development program, to invest in research and development with respect to its precision medicine platform, and for working capital and general corporate purposes.
The foregoing descriptions of the Securities Purchase Agreement, the Pre-Funded Warrants and the Warrants are not complete and are qualified in their entirety by references to the full text of the Securities Purchase Agreement, the Pre-Funded Warrants and the Warrants, which are filed as exhibits to this report and are incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained above under Item 1.01 is hereby incorporated by reference in response to this Item 3.02 of Form 8-K.
