aibioSalarius Pharmaceuticals (now Decoy Therapeutics) signs equity line for up to $10 million
Tickers DCOY
Salarius Pharmaceuticals agreed on December 12, 2024 to let C/M Capital Master Fund, LP purchase up to $10 million of its common stock over 36 months, once a resale registration is effective. The 8-K names no placement agent or counsel, and it gives the company's Nasdaq symbol as SLRX.
Key facts
- Company
- Decoy Therapeutics Inc. (NASDAQ: DCOY)
- News type
- Financings
- Primary source
- Decoy Therapeutics Inc. 8-K (2024-12-13)
Salarius Pharmaceuticals, Inc. said in a Form 8-K dated December 12, 2024 that it had entered into a securities purchase agreement with C/M Capital Master Fund, LP on that day. Under the agreement, the company has the right, but not the obligation, to sell up to the lesser of $10 million of newly issued common stock and the Exchange Cap, described below, to the fund, subject to the agreement's restrictions and conditions. The fund is obligated to purchase the shares the company directs. The company's common stock is listed on The Nasdaq Capital Market under the symbol SLRX.
The 8-K names no placement agent, underwriter, financial advisor or counsel for the agreement. The purchaser represented that it is an accredited investor, and the shares are sold under Section 4(a)(2) of the Securities Act and Rule 506(b).
When sales can start
The company cannot begin sales until the Commencement Date, which falls after the SEC declares effective a registration statement covering resale of the securities and the final prospectus is filed. Under a registration rights agreement signed the same day, the company agreed to file a Form S-1 covering that resale within 30 calendar days. Once sales begin, the purchaser has no right to require sales. The company decides when and how much to sell over the 36 months after the Commencement Date.
The 8-K says the company may direct a fixed purchase on any business day after the previous day's closing price was at least $1.00. A fixed purchase may not exceed $200,000, and it is priced at the lesser of 95% of the five-day volume weighted average price and the prior day's closing price. VWAP purchases, priced at 95% of the lesser of the prior close and the day's VWAP, can be added on the same day, within the agreement's limits.
The agreement caps any single day's VWAP purchases at $2,500,000 unless the fund waives the limit. There is no upper limit on the price the fund must pay, but the price is discounted by at least 5% under the formula.
Dilution limits and fees
As consideration for the fund signing, Salarius agreed to issue it commitment shares with each purchase, equal to 1% of the shares actually sold in that sale.
The company cannot issue shares under the agreement beyond 19.99% of the shares outstanding before the agreement was signed, unless stockholders approve the issuance or the average price paid for all shares issued under the agreement, including commitment shares, is at or above a minimum set by reference to the Nasdaq closing price on December 11, 2024 and the five business days before December 12, 2024. The fund may not hold more than 4.99% of the outstanding common stock at any time, though it may raise that limit to 9.99% on 61 days' written notice to the company. The 8-K says the holding limit can never exceed 19.99% of the shares outstanding after the agreement's issuances.
If the company issues other securities within a set period after a purchase at a lower price, the price for the affected purchases is cut to the new issue price.
Exit terms and what the filing leaves out
The company may end the agreement at any time on one business day's notice, at no cost or penalty. During a suspension event, the company may not start a purchase until the default is cured, and the purchaser cannot end the agreement during that event. The agreement ends automatically if either side enters bankruptcy proceedings.
The company expects to use any proceeds for working capital and general corporate purposes. The 8-K says net proceeds will depend on how often and at what prices the company sells to the fund, so the amount actually raised is not fixed. The filing gives no cash balance, no net loss and no going concern language, so the agreement's value to the company cannot be measured from the document alone.
The full agreements are filed as exhibits 10.1 and 10.2. The 8-K is signed by Mark J. Rosenblum, executive vice president and chief financial officer.