Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) entered into two underwriting agreements (each, an “Underwriting Agreement”) with Cowen and Company, LLC and Wells Fargo Securities, LLC (collectively, the “Underwriters”) for separate, concurrent offerings of the Company’s securities, which together are expected to result in gross proceeds to the Company of approximately $25.0 million, excluding any exercise by the Underwriters of their 30-day option to purchase additional shares of Common Stock.
The first Underwriting Agreement relates to the offering and sale of 4,935,500 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at a price to the public of $3.85 per share (the “Common Stock Offering”). Pursuant to the first Underwriting Agreement, the Underwriters have agreed to purchase the shares of Common Stock from the Company at a price of $3.619 per share. In addition, the Company has granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 740,325 shares of Common Stock at a purchase price of $3.619 per share.
The second Underwriting Agreement relates to the offering and sale of 1,558 shares of the Company’s Series C Convertible Preferred Stock, par value $0.0001 per share (the “Series C Stock”) at a price to the public of $3,850.00 per share (the “Series C Offering”). Pursuant to the second Underwriting Agreement, the Underwriters have agreed to purchase the Series C Stock from the Company at a price of $3,619.00 per share.
The rights, preferences and privileges of the Series C Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (the “Certificate of Designation of Series C Convertible Preferred Stock”), which the Company filed with the Delaware Secretary of State on October 19, 2016. Each share of Series C Stock is convertible into 1,000 shares of the Company’s Common Stock at any time at the holder’s option. The holder, however, will be prohibited from converting shares of Series C Stock into shares of Common Stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.98% of the total number of shares of the Company’s Common Stock then issued and outstanding. In the event of the Company’s liquidation, dissolution, or winding up, holders of Series C Stock will receive a payment equal to $0.0001 per share of Series C Stock before any proceeds are distributed to the holders of Common Stock. Shares of Series C Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series C Stock will be required to amend the terms of the Series C Stock. Shares of the Series C Stock will not be entitled to receive any dividends, unless and until specifically declared by the Company’s board of directors, and will rank:
- senior to all of the Company’s Common Stock;
- senior to all of the Company’s authorized but unissued Series A Preferred Stock;
- senior to any class or series of the Company’s capital stock hereafter created specifically ranking by its terms junior to the Series C Stock;
- on parity with all of the Company’s Series B Preferred Stock;
- on parity with any class or series of the Company’s capital stock hereafter created specifically ranking by its terms on parity with the Series C Stock;
- junior to any class or series of the Company’s capital stock hereafter created specifically ranking by its terms senior to the Series C Stock;
in each case, as to distributions of assets upon the Company’s liquidation, dissolution or winding up whether voluntarily or involuntarily.
Each of the Common Stock Offering and the Series C Offering is being made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195779), including the prospectus dated June 10, 2014 contained therein, as the same has been supplemented.
The sale of shares of Common Stock and Series C Stock is expected to close on October 24, 2016. Each Underwriting Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in each Underwriting Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. Subject to certain exceptions, the Company and all of the Company’s directors and executive officers also agreed to not sell or transfer any common stock of the Company for 60 days after October 19, 2016 without first obtaining the consent of the Underwriters.