Friday, May 27, 2016

UPDATED: Additional Securities Of OpGen Due To Be Acquired By Merck Affiliate: Now 37.5% Holder

This post updates mine of Tuesday. In that post, I suggested that Merck would use this tech to lever its way into a continuance of the front running position Cubicin® holds, in hospitals (despite a generic threat starting at the end of June 2016). I still think all of that holds, but in view of the next paragraph, I think this investment is becoming an ever more important vehicle for Merck. Why? Well. . .

With news breaking yesterday that the US has seen its first completely antibiotic resistant (mutated) E. coli bacterial infection in a hospital in Pennsylvania, the urgency to find at least one additional line of last resort treatment -- in anti-bacterials just. . . flared orange. As of yesterday, we don't have one, apparently. Due to a naturally-occurring but evolutionary plasmid splice, it seems, the Pennsylvania case presented with colistin-resistant E. coli. Colistin was the last agent known to work when nothing else would.

And so, the pharma community is accelerating its efforts (and investments) aimed at finding something "beyond" colistin -- in order to stay one step ahead in the antibacterial mutated/evolutionary "arms race". From the just filed SEC Schedule 13D Amendment, then:

. . . .On May 18, 2016, the Issuer entered into an amended and restated securities purchase agreement (the “A&R Purchase Agreement”) with certain investors named therein, including the Purchaser which amended and restated the securities purchase agreement dated as of May 12, 2016 (the “Original Purchase Agreement”).

The A&R Purchase Agreement amended the Original Purchase Agreement to provide for the purchase, at the election of each Investor, of units (“Units”) consisting of (i) either (A) one share of the Issuer’s common stock, par value $0.01 per share (the “Common Stock”), or (B) one share of non-voting, convertible preferred stock par value $0.01 per share (the “Series A Convertible Preferred Stock”) and (ii) warrants to acquire 0.75 of one share of Common Stock (the “Warrants”).

Under the A&R Purchase Agreement, the Purchaser (i) acquired from the Issuer 1,200,000 shares of common stock and warrants to acquire 900,000 shares of common stock on May 19, 2016 and (ii) will acquire from the Issuer 2,734,427 shares of common stock and warrants to acquire 2,050,821 shares of common stock at a second closing under the A&R Purchase Agreement to occur within 60 days of May 19, 2016.

Pursuant to the A&R Purchase Agreement, the Issuer has agreed to provide certain mandatory registration rights and piggyback registration rights to the Investors in respect of the Shares and the Warrant Shares customary for this type of private placement. Specifically, the Company has agreed to file a registration statement on Form S-3 (or other registration statement, if the Issuer is not then eligible to use Form S-3) (the “Registration Statement”) within 60 days of execution of the A&R Purchase Agreement. The Issuer has agreed to keep the Registration Statement effective until all Shares have been sold by Investors or may be sold without restriction under Rule 144, promulgated under the Securities Act of 1933, as amended. In addition, to the extent that the Registration Statement is not available, the Investors will have piggyback registration rights with respect to a registration statement that the Issuer proposes to file (subject to certain exceptions). The Issuer will pay all fees and expenses incident to the registration rights provided to Investors.

In addition the A&R Purchase Agreement provides that, for a period of two years, Investors also have the right to participate on a pro rata basis in subsequent offerings of the Issuer (subject to certain exceptions). The A&R Purchase Agreement also provides that, for a period of 90 days from the date of the Securities Purchase Agreement, the Issuer is prohibited from issuing any Common Stock or securities convertible into common stock (subject to certain exceptions). In addition, the Issuer’s officers, directors and holders in excess of 5% of the Issuer’s outstanding Common Stock have agreed to enter into a lock-up agreement in connection with the Offering, which generally prohibits them from selling securities of the Issuer for a period of 90 days from the date of the A&R Purchase Agreement.

Common Stock Warrants

The Warrants will be exercisable at an exercise price of $1.3125 per share of common stock, will become exercisable 90 days after the date of issuance, and may be exercised for five years. The exercise price and the number of Warrant Shares will be adjusted to account for the subdivision or combination by the Issuer of outstanding shares of Common Stock. The exercise price may at anytime also be voluntarily reduced at the discretion of the Board of Directors of the Issuer. The Warrants may be exercised pursuant to a cashless exercise, but only if a registration statement covering the resale of the Warrant Shares that are the subject of an exercise notice is not available for the resale of such Warrant Shares. . . .

Well -- now you know. And my theory remains that this is a dove-tail deal, for the former Cubist franchises. Grinning ear to ear, here. . . g'evening. . . .

No comments: