CytoDyn Inc. (OTCMKTS:CYDY) Files An 8-K Entry into a Material Definitive Agreement

CytoDyn Inc. (OTCMKTS:CYDY) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

On January31, 2018, CytoDyn Inc. (the “Company”) entered into Subscription Agreements (the “Subscription Agreements”) with certain investors who owned convertible promissory notes of the Company (the “Convertible Notes”) for the sale by the Company of 12,062,728 shares (the “Common Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) in a registered direct offering (the “Offering”). The investors in the Offering also received warrants to purchase 7,718,010 shares of Common Stock (the “Warrants”). The securities were sold at a combined purchase price of $0.50 per share of Common Stock and related Warrants, allocated as described below, for aggregate gross proceeds to the Company of approximately $6.0million.

The Convertible Notes matured on January31, 2018, upon which date the Company became obligated to pay the principal amount of approximately $6.0 million on the Convertible Notes, plus accrued but unpaid interest of approximately $0.3million, for aggregate payment obligations at maturity of approximately $6.3million. The Common Shares and Warrants were issued in full satisfaction of approximately $6.0million of such payment obligations, with one holder of an aggregate of approximately $0.3million electing to be repaid in cash instead of participating in the Offering. As a result, all of the proceeds from the Offering were used to satisfy the Company’s payment obligations to the Convertible Notes.

The Warrants will be exercisable for a period of five years commencing on their issuance date, at an exercise price equal to $0.75 per share of Common Stock, subject to certain ownership limitations and adjustments as provided under the terms of the Warrants.

The number of shares of Common Stock underlying the Warrant issued to each investor was calculated as the difference between (x)the number of shares of Common Stock issued to each investor in this Offering in respect of the payment obligations relating solely to principal amounts on the Convertible Notes and (y)the number of shares of Common Stock underlying certain warrants originally issued to such investor in the original Convertible Notes offering. The effect was to bring each investor from 50% warrant coverage in the original offering of Convertible Notes, assuming conversion of the principal amount thereof at an original conversion price of $0.75 per share, to 50% warrant coverage after this Offering, assuming reinvestment of the principal amount on the Convertible Notes at $0.50 per share.

The Company is delivering the securities under the Subscription Agreements on or about January31, 2018. The securities sold in the Offering were offered to an effective shelf registration statement on FormS-3, which was initially filed with the Securities and Exchange Commission (the “SEC”) on August26, 2016 and was subsequently declared effective on September9, 2016 (File No.333-213349) (the “Registration Statement”), and the base prospectus dated as of September9, 2016 contained therein. The Company is filing a prospectus supplement with the SEC in connection with the sale of the securities.

The representations, warranties and covenants contained in the Subscription Agreements were made solely for the benefit of the parties to the Subscription Agreements. In addition, such representations, warranties and covenants (i)are intended as a way of allocating the risk between the parties to the Subscription Agreements and not as statements of fact, and (ii)may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the forms of the Subscription Agreements are included with this filing only to provide investors with information regarding the terms of transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Subscription Agreements, which subsequent information may or may not be fully reflected in public disclosures.

Paulson Investment Company, LLC (the “Placement Agent”) was engaged as a placement agent in the Offering, in exchange for a cash fee of approximately $164,000, in respect of investors purchasing an aggregate of 6,840,192 shares of Common Stock and related Warrants in this Offering whose participation was induced by the Placement Agent and not the Company.

The form of the Subscription Agreement is filed as Exhibit 10.1 to this Current Report onForm8-K.The form of Warrant is filed as Exhibit 4.1 to this Current Report on Form8-K.The foregoing summaries of the terms of these documents are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.

The legal opinion and consent of Lowenstein Sandler LLP relating to the securities are filed as Exhibit5.1 to this Current Report on Form8-K.

On January31, 2018, the Company reduced the exercise price of certain outstanding warrants covering an aggregate of 4,025,656 shares of common stock, which warrants were originally issued in connection with the initial issuances of the Convertible Notes between May31, 2017 and July28, 2017, from $1.00 per share to $0.75 per share. The warrants currently expire five years from their original issuance dates. The other terms and conditions of such warrants remained unchanged.

Item 1.01. Financial Statements and Exhibits.


Exhibit No.


4.1 Form of Warrant Agreement
5.1 Opinion of Lowenstein Sandler LLP
10.1 Form of Subscription Agreement
23.1 Consent of Lowenstein Sandler LLP (included in the opinion of Lowenstein Sandler LLP as Exhibit5.1)


CytoDyn Inc. Exhibit
EX-4.1 2 d458931dex41.htm EX-4.1 EX-4.1 Exhibit 4.1 COMMON STOCK PURCHASE WARRANT CYTODYN INC.   Warrant Shares: [        ] Initial Exercise Date: [        ] THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,…
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About CytoDyn Inc. (OTCMKTS:CYDY)

CytoDyn Inc. is a clinical-stage biotechnology company. The Company is focused on the clinical development and commercialization of humanized monoclonal antibodies to treat Human Immunodeficiency Virus (HIV) infection. The Company’s lead product candidate, PRO 140, belongs to a class of HIV therapies known as entry inhibitors that block HIV from entering into and infecting certain cells. The Company’s product pipeline also includes Cytolin and CytoFeline. Cytolin is a mouse monoclonal antibody developed to identify a specific type of immune cell called a cytotoxic T cell, or cytotoxic T lymphocyte (CTL). CytoFeline is an anti-lymphocyte function-associated antigen-1 (LFA-1) antibody for the treatment of Feline Immunodeficiency Virus (FIV) infection. PRO 140 blocks HIV from entering a cell by binding to a molecule called C-C chemokine receptor type 5 (CCR5). The Company has finished Phase II clinical trials for PRO 140 with demonstrated antiviral activity in man.

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