Sun BioPharma, Inc. (OTCMKTS:SNBP) Files An 8-K Unregistered Sales of Equity SecuritiesItem 3.02
Unregistered Sales of Equity Securities.
Securities Purchase Agreement
As previously announced, Sun BioPharma, Inc. (the “Company”) is party to a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”), dated February 20, 2018. On May16, 2018, the Company completed an additional closing (the “Additional Closing”) to which it sold an additional 216,000 Units (each consisting of one share of common stock and a warrant to purchase an additional share of common stock) for gross cash proceeds of $1,080,000. The purchase price for each Unit remained $5.00 and the warrants are exercisable for a period of three years from the date of issuance at an exercise price of $5.00.
The Purchase Agreement provides for multiple closings that would allow for the sale of up to an aggregate of 2,000,000 Units, the maximum amount authorized by the Company’s Board of Directors. Through the Additional Closing, the Company has received a total of $2,341,000 in gross cash proceeds in connection with the sale of 468,200 Units under the Purchase Agreement.
The foregoing descriptions of the Purchase Agreement and the Warrants are qualified by reference to the full text of the Purchase Agreement and the Form of Warrant, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K.
The additional Units were issued in the Additional Closing to a limited number of persons who were “accredited investors” or “sophisticated investors,” as those terms are defined in Rule 501 of Regulation D of the U.S. Securities and Exchange Commission (“SEC”), without the use of any general solicitations or advertising to market or otherwise offer the securities for sale.
Conversion of Promissory Notes
Because the Additional Closing resulted in the Company having received gross proceeds exceeding $2million, it also constituted a “qualified financing” under our approximately $3.1 million aggregate principal amount of convertible promissory notes (the “2017 Notes”) then outstanding.
In accordance with the “alternate conversion” provision of the 2017 Notes, the holders of approximately $2,745,000 aggregate principal amount of 2017 Notes elected to apply $2.9million of principal and accrued but unpaid interest toward the purchase of an aggregate of 646,279 Units at a price equal to $4.50 per Unit.
Under the mandatory conversion provisions of the 2017 Notes, the remaining 2017 Notes converted $0.3million of principal and accrued but unpaid interest into a total of 104,463 shares of the Company’s common stock at a rate of $3.35 per share.
The additional Units and/or shares of common stock were issued in exchange for cancellation of the 2017 Notes in reliance on the exemption from registration set forth in Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act’) as securities exchanged by an issuer with existing security holders where no commission or other remuneration is paid or given directly or indirectly by the issuer for soliciting such exchange.
None of the Units, shares or warrants issued or issuable in the transactions described in this Item 3.02 have been registered under the Securities Act or applicable state securities laws and none may be offered or sold in the United States absent registration under the Securities Act, or an exemption from such registration requirements.
Item 9.01 Financial Statements and Exhibits.
About Sun BioPharma, Inc. (OTCMKTS:SNBP)
Sun BioPharma, Inc., formerly Cimarron Medical, Inc., is a clinical stage drug development company. The Company is a biopharmaceutical company focused on developing therapies for pancreatic diseases. It is engaged in the commercial development of a polyamine analogue for pancreatic cancer and for a second indication in chronic pancreatitis. The Company’s products include SBP-101, SBP-102 and SBP-103. Its SBP-101 is a polyamine compound and exhibits specificity for the exocrine pancreas, with therapeutic potential for both pancreatic cancer and pancreatitis indications. It develops SBP-101 for the treatment of patients with pancreatic ductal adenocarcinoma. The SBP-102 product is in non-clinical feasibility evaluation for the treatment of patients with pancreatitis. The SBP-103 product is in non-clinical exploratory evaluation. The Company has enrolled first patient in its Phase I clinical trial of SBP-101 in patients with previously treated pancreatic cancer.