FIBROCELL SCIENCE, INC. (NASDAQ:FCSC) Files An 8-K Entry into a Material Definitive Agreement

FIBROCELL SCIENCE, INC. (NASDAQ:FCSC) Files An 8-K Entry into a Material Definitive Agreement

Story continues below

Item 1.01 Entry into a Material Definitive Agreement.

On March 7, 2017, Fibrocell Science, Inc., a Delaware corporation
(the Company), entered into a Securities Purchase Agreement (the
Purchase Agreement) with certain of its existing investors to
which the Company agreed to sell a total of 8,000 units (the
Units) for a purchase price of $1,000 per Unit, with each Unit
consisting of (i) one share of the Companys Series A Convertible
Preferred Stock (the Series A Preferred Stock), with an initial
stated value of $1,000 and is convertible into shares of the
Companys common stock, par value of $0.001 per share (Common
Stock), with a conversion price of $0.7757 (the Conversion
Shares), and (ii) a warrant to purchase 1,289 shares of Common
Stock (the “Warrant”) (collectively, the Offering). Each Warrant
will have an exercise price of $0.84591 per share, will be
exercisable six months after the date of issuance (the Initial
Exercise Date) and will expire five years from the date of
issuance.
After deducting the Companys estimated Offering expenses, the
Company expects the net proceeds from this Offering excluding the
proceeds, if any, from the exercise of the Warrants, will be
approximately $7.65 million.
While the Series A Preferred Stock and Warrants will be sold
together as a Unit, the Series A Preferred Stock and Warrants
will be issued separately. There is no established public trading
market for the Series A Preferred Stock or the Warrants, and the
Company does not expect any such market to develop. In addition,
the Company does not intend to apply for listing of the Series A
Preferred Stock or the Warrants on any national securities
exchange or other nationally recognized trading system.
The Offering is being made to a prospectus supplement dated and
filed with the Securities and Exchange Commission (SEC) on March
8, 2017 (the Prospectus Supplement) and an accompanying
prospectus dated February 9, 2016 (together with the Prospectus
Supplement, the Prospectus), which form part of the Companys
Registration Statement on Form S-3 declared effective by the SEC
on February 9, 2016 (File No. 333-209077) (the Registration
Statement). The Offering closed on March 8, 2017. The form of
Purchase Agreement contains customary representations,
warranties, and agreements by the Company. The Purchase Agreement
also contains customary prohibitions on certain Company payments,
the incurrence of certain senior and pari passu debt, certain
affiliate transactions and the incurrence of certain liens.
The representations, warranties and covenants contained in the
Purchase Agreement were made solely for the benefit of the
parties to the Purchase Agreement. In addition, such
representations, warranties and covenants (i) are intended as a
way of allocating the risk between the parties to the Purchase
Agreement 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 Purchase Agreement is 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 Purchase Agreement, which subsequent
information may or may not be fully reflected in public
disclosures.
The rights, preferences and privileges of the Series A Preferred
Stock shall be set forth in a Certificate of Designation of
Preferences, Rights and Limitations of Series A Convertible
Preferred Stock, as filed as Exhibit 3.1 to this Current Report
on Form 8-K (the Certificate of Designation). Each share of
Series A Preferred Stock has an initial stated value of $1,000
and is convertible into shares of Common Stock at a conversion
price of $0.7757 per share of Common Stock, subject to adjustment
for stock splits, stock dividends, stock combinations,
recapitalizations or similar events. Holders of the Series A
Preferred Stock will be entitled to receive cumulative dividends
at a rate per share of 4% per annum (with such dividend rate
increasing to 8% per annum on the five year anniversary of the
original issuance of the Series A Preferred Stock), with such
dividends compounded quarterly by increasing the stated value of
the Series A Preferred Stock in accordance with the terms of the
Certificate of Designation.
Shares of Series A Preferred Stock will generally have no voting
rights, except as required by law; provided, however, that
without the prior written consent of the holders of at least 70%
of the then outstanding shares of Series A Preferred Stock, the
Company may not: (i) alter or change adversely the powers,
preferences or rights given to the Series A Preferred Stock or
alter or amend the Certificate of Designation; (ii) amend the
Companys certificate of incorporation or other charter documents
in any manner that adversely affects any rights of a holder of
the Series A Preferred Stock; (iii) authorize or create any class
of stock ranking as to redemption, distribution of assets upon
liquidation or dividends senior to, or otherwise pari
passu>with, the Series A Preferred Stock; (iv) declare or make
any dividends other than dividend payments or other distributions
payable solely in the Common Stock; or (v) enter into any
agreement with respect to any of the foregoing.
Upon a liquidation, dissolution or winding up of the Company, the
holders of the Series A Preferred Stock are entitled to receive
out of the Companys assets, whether capital or surplus, an amount
equal to such holders then stated value for each
share of Series A Preferred Stock before any distribution to the
holders of the Common Stock, any class or series of preferred
stock and all other Common Stock equivalents other than those
securities which are explicitly senior or pari passu to the
Series A Preferred Stock in redemption, distribution of assets
upon a liquidation or dividends. If there are insufficient assets
to pay in full such amounts, then the available assets will be
ratably distributed to the holders of the Series A Preferred
Stock in accordance with the respective amounts that would be
payable on such shares if all amounts payable thereon were paid
in full.
Each Warrant shall be exercisable during the period commencing
after the Initial Exercise Date and ending on the fifth
anniversary of the date of issuance. The exercise price of the
Warrants is subject to adjustment for stock splits, stock
dividends, stock combinations, recapitalizations or similar
events.
The Certificate of Designation, form of Warrant and form of the
Purchase Agreement are attached hereto as Exhibit 3.1, Exhibit
4.1 and Exhibit 10.1, respectively, and incorporated herein by
reference. The foregoing description of the terms of the Purchase
Agreement and the Warrants and the rights, preferences and
privileges of the Series A Preferred Stock are qualified in their
entirety by reference to such exhibits.
The legal opinion of Hogan Lovells US LLP relating to the
legality of the issuance and sale of the Units is attached as
Exhibit 5.1 to this Current Report on Form 8-K.
Item 2.02 Results of Operations and Financial Condition.
On March 7, 2017, the Company disclosed in a preliminary
prospectus supplement preliminary financial data of (a) cash and
cash equivalents of approximately $17.5 million, (b) working
capital of $15 million, (c) tangible book value of $15.9 million,
(d) a net loss of $15.3 million, (e) an accumulated deficit of
$162.6 million, (f) total stockholders equity of $7.9 million and
(g) total shares of common stock outstanding of 44,058,626, each
as of December 31, 2016. In addition, the Company also disclosed
that, in connection with the wind-down of its azficel-T
operations, that it has incurred one-time termination costs in
connection with the reduction in workforce, which include
severance, benefits and related costs, totaling approximately
$0.3 million through December 31, 2016. Additionally, the Company
disclosed that it has incurred approximately $0.4 million and
$0.1 million, respectively, for inventory write-offs and asset
impairment charges for equipment used in its azficel-T operations
during 2016. The preliminary financial data included in the
Prospectus and this Current Report on Form 8-K have been prepared
by, and are the responsibility of, the Companys management. The
Companys independent registered public accounting firm,
PricewaterhouseCoopers LLP, has not audited, reviewed, compiled
or performed any procedures with respect to the preliminary data.
Accordingly, PricewaterhouseCoopers LLP does not express an
opinion or any other form of assurance with respect thereto.
The Companys actual results as of December 31, 2016 may differ
from the preliminary financial data due to the completion of its
closing procedures with respect to the fiscal year ended December
31, 2016, final adjustments and other developments that may arise
between now and the time the financial results for the fiscal
year are finalized.
Item 5.03 Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
In connection with the Offering described in Item 1.01, above,
which description is incorporated herein by reference, the
Company designated 8,000 shares of its authorized and unissued
preferred stock as Series A Preferred Stock and filed the
Certificate of Designation with the Secretary of State of
Delaware. The summary of the rights, preferences and privileges
of the Series A Preferred Stock described above under Item 1.01,
above, does not purport to be complete and is qualified in its
entirety by the full text of the Certificate of Designation,
which is attached hereto as Exhibit 3.1 and incorporated herein
by reference.
Item 8.01 Other Events.
Updated Risk Factors
On March 7, 2017, the Company disclosed in a preliminary
prospectus supplement the risk factors attached hereto as Exhibit
99.1 for the purpose of replacing the risk factor disclosures
contained in its prior public filings, including those discussed
under the caption Risk Factors in its Annual Report on Form 10-K
for the year ended December 31, 2015, which was filed with the
SEC on March 10, 2016, as revised or supplemented by the Companys
Quarterly Reports on Form 10-Q filed with the SEC since the
filing of its most recent Annual Report on Form 10-K.
Press Release
On March 7, 2017, the Company issued a press release regarding
the Offering described above under Item 1.01 of this Current
Report on Form 8-K. A copy of the press release is attached as
Exhibit 99.2 and is incorporated herein by reference.
Ratio of Earnings to Fixed Charges
For purposes of the Registration Statement, the computation of
the ratio of earnings to combined fixed charges and preference
stock dividends of the Company for the years ended December 31,
2016, December 31, 2015, December 31, 2014, December 31, 2013 and
December 31, 2012 is filed herewith as Exhibit 12.1 and is
incorporated by reference into this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
Description
3.1
Certificate of Designation of Preferences, Rights and
Limitations of Series A Convertible Preferred Stock
4.1
Form of Warrant
5.1
Opinion of Hogan Lovells US LLP
10.1
Form of Securities Purchase Agreement
12.1
Computation of Ratio of Earnings to Fixed Charges and
Preference Security Dividends
23.1
Consent of Hogan Lovells US LLP (included in Exhibit
5.1 hereto)
99.1
Updated Risk Factors
99.2
Press Release issued by Fibrocell Science, Inc. on
March 7, 2017


About FIBROCELL SCIENCE, INC. (NASDAQ:FCSC)

Fibrocell Science, Inc. is an autologous cell and gene therapy company. The Company is focused on discovering and developing localized therapies for diseases affecting the skin, connective tissue and joints. Its product candidate, azficel-T, is in development to treat patients suffering from vocal cord scarring that is either idiopathic or age-related. It is investigating the indication in a Phase II clinical trial. Its gene-therapy product candidate, FCX-007, is in pre-clinical development for the treatment of recessive dystrophic epidermolysis bullosa. Its gene-therapy product candidate, FCX-013, is in pre-clinical development for the treatment of linear scleroderma. Its product, LAVIV (azficel-T), is indicated for the improvement of the appearance of moderate to severe nasolabial fold wrinkles in adults. A third gene-therapy program is focused on the treatment of arthritis. Its product, LAVIV (azficel-T), is focused on improving the appearance of nasolabial fold wrinkles in adults.

FIBROCELL SCIENCE, INC. (NASDAQ:FCSC) Recent Trading Information

FIBROCELL SCIENCE, INC. (NASDAQ:FCSC) closed its last trading session up +0.055 at 0.840 with 1,247,662 shares trading hands.

An ad to help with our costs