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NASDAQ false UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2025
Equillium, Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
2223 Avenida de la Playa
Suite 105
La Jolla CA
(Address of Principal Executive Offices)
(Zip Code)
Registrant's Telephone Number, Including Area Code:
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $0.0001 per share
EQ
The Nasdaq Capital Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement
On August 3, 2025, Equillium, Inc. (“Equillium” or the “Company”) entered into Amendment No. 1 (the “Amendment”) to the Open Market Sale Agreement SM , dated October 8, 2023, by and between the Company and Jefferies LLC (the “ATM Agreement”), pursuant to which Jefferies LLC was replaced by LifeSci Capital LLC as the sales agent under the ATM Agreement.
The foregoing description of the material terms of the Amendment is not complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. For purposes of the Prospectus dated January 18, 2023, supplemented by the Prospectus Supplements dated October 5, 2023 and February 23, 2024, to the Registration Statement on Form S-3 (Registration No. 333-269153), all references to Jefferies LLC shall now refer to LifeSci Capital LLC.
Item 2.02. Results of Operations and Financial Condition
On August 4, 2025, the Company issued a press release (the “Press Release”) announcing the Company had cash and cash equivalents totaling approximately $11.5 million as of June 30, 2025. A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.
The preliminary results set forth above are unaudited, are based on management's initial review of the Company's results for the quarter ended June 30, 2025, and are subject to revision based upon the Company's quarter-end closing procedures. Actual results may differ from the preliminary unaudited results following the completion of quarter-end closing procedures, final adjustments or other developments arising between now and the time that the Company's financial results are finalized. In addition, the preliminary unaudited results are not a comprehensive statement of the Company's financial results for the quarter ended June 30, 2025, should not be viewed as a substitute for full, unaudited financial statements for the quarter ended June 30, 2025, and are not necessarily indicative of the Company's results for any future period.
Item 7.01. Regulation FD Disclosure
As referenced above, on August 4, 2025, the Company issued the Press Release, which also announced the Company's strategic expansion to integrate a cryptocurrency treasury reserve strategy as part of its broader financial growth objectives and provided an update on its development plans and cash runway. A copy of the Press Release is furnished as Exhibit 99.1 to this Form 8-K.
The information in Items 2.02 and 7.01 of this Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 8.01. Other Events
The Company has amended its investment policy to authorize the purchase of cryptocurrency as a treasury reserve strategy. As of the filing of this Current Report on Form 8-K, the Company has not purchased any cryptocurrency in furtherance of this strategy, but it intends to actively pursue opportunities to give effect to this strategy and expects to provide updates on this strategy during the third quarter of 2025. In parallel with the addition of the cryptocurrency treasury strategy, the Company will continue to pursue its biotech mission to advance life-changing therapeutics towards patients with the goal of preparing, subject to raising additional capital, EQ504, its novel aryl hydrocarbon receptor modulator, for clinical development. In anticipation of implementing the Company's new cryptocurrency treasury strategy, the Company is supplementing the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, and as supplemented by the Company's subsequent periodic filings. A copy of the additional risk factors is attached as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
Additionally, the Company announced in the Press Release that based on implemented and ongoing operating changes to decrease the Company's expenditures and to conserve cash, Equillium expects that its current cash and cash equivalents will enable the Company to fund its operations into the fourth quarter of 2025, based on certain assumptions and estimates that may prove to be inaccurate.
Statements contained in this Current Report on Form 8-K regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “could”, “continue”, “expect”, “estimate”, “may”, “plan”, “outlook”, “future”, “potential” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters.
These statements include, but are not limited to, statements regarding the implementation of Equillium's cryptocurrency treasury reserve strategy and the potential value the strategy may create for stockholders; Equillium's plans and timeline for providing an update on its cryptocurrency treasury reserve strategy; Equillium's expectation that its cash and cash equivalents are sufficient to fund its operations into the fourth quarter of 2025; and Equillum's plans and strategies with respect to EQ504. Because such statements are subject to risks and uncertainties, many of which are outside of Equillium's control, actual results may differ materially from those expressed or implied by such forward-looking statements. Risks that contribute to the uncertain nature of the forward-looking statements include: Equillium's ability to execute its plans and strategies; Equillium's ability to continue as a going concern; Equillium will need to raise additional capital, which may not be available on acceptable terms or at all, to give effect to its cryptocurrency treasury reserve strategy, advance the development of EQ504 or any other product candidate, and to continue as a going concern; risks related to Equillium's new cryptocurrency treasury reserve strategy, including, among others, the volatility of cryptocurrency, Equillium's ability to hire or engage qualified individuals to assist with implementing its strategy, the risk that Equillium's stock price may be highly correlated to the price of digital assets that it holds, if any, the risks relating to the significant legal, commercial, regulatory and technical uncertainty regarding digital assets generally, and the risks relating to the treatment of crypto assets for U.S. tax purposes; the risk that Equillium may never acquire crypto assets; the risk that the reported financial results will differ from the estimates provided in this Current Report on Form 8-K; risks related to performing clinical and pre-clinical studies; whether the results from clinical and pre-clinical studies will validate and support the safety and efficacy of Equillium's product candidates; changes in the competitive landscape; and potential litigation or other disputes. These and other risks and uncertainties are described more fully under the caption “Risk Factors” and elsewhere in Equillium's filings and reports, including Exhibit 99.2 to this Current Report on Form 8-K, which may be accessed for free by visiting the Securities and Exchange Commission's website and on Equillium's website under the heading “Investors.” Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. All forward-looking statements contained in this Current Report on Form 8-K speak only as of the date on which they were made. Equillium undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit
Number
Description
Open Market Sales Agreement, dated October 5, 2023, as amended August 3, 2025, by and between the Company and LifeSci Capital LLC.
Press Release, dated August 4, 2025.
Updated Risk Factors for Cryptocurrency Treasury Reserve Strategy
Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EQUILLIUM, INC.
Date: August 4, 2025
By:
/s/ Bruce D. Steel
Bruce D. Steel
President and Chief Executive Officer
Exhibit 10.1
OPEN MARKET SALE AGREEMENT SM
October 5, 2023
JEFFERIES LLC
520 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
Equillium, Inc., a
Delaware corporation (the “ Company ”), proposes, subject to the terms and conditions stated herein, to issue and sell from time to time through Jefferies LLC, as sales agent and/or principal (the “ Agent ”), shares of
the Company's common stock, par value $0.0001 per share (the “ Common Shares ”), on the terms set forth in this agreement (this “ Agreement ”).
Section 1. DEFINITIONS
(a) Certain Definitions . For purposes of this Agreement, capitalized terms used herein and not otherwise defined shall have the following respective meanings:
“ Agency Period ” means the period commencing on the date of this Agreement and expiring on the earliest to occur of
(x) the date on which the Agent shall have placed the Maximum Program Amount pursuant to this Agreement and (y) the date this Agreement is terminated pursuant to Section
“ Commission ” means the U.S. Securities and Exchange Commission.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission
thereunder.
“ Floor Price ” means the minimum price set by the Company in the Issuance Notice below which the Agent shall
not sell Shares during the applicable period set forth in the Issuance Notice, which may be adjusted by the Company at any time during the period set forth in the Issuance Notice by delivering written notice of such change to the Agent and which in
no event shall be less than $1.00 without the prior written consent of the Agent, which may be withheld in the Agent's sole discretion.
“ Issuance Amount ” means the aggregate Sales Price of the Shares to be sold by the Agent pursuant to any Issuance Notice.
“ Issuance Notice ” means a written notice delivered to the Agent by the Company in accordance with this Agreement in the form
attached hereto as Exhibit A that is executed by its Chief Executive Officer, President or Chief Financial Officer.
SM
“Open Market Sale Agreement” is a service mark of Jefferies LLC
“ Issuance Notice Date ” means any Trading Day during the Agency Period that
an Issuance Notice is delivered pursuant to Section 3(b)(i)
“ Issuance Price ” means the Sales
Price less the Selling Commission.
“ Maximum Program Amount ” means Common Shares with an aggregate Sales Price of the
lesser of (a) the number or dollar amount of Common Shares registered under the effective Registration Statement (as defined below) pursuant to which the offering is being made, (b) the number of authorized but unissued Common Shares (less
Common Shares issuable upon exercise, conversion or exchange of any outstanding securities of the Company or otherwise reserved from the Company's authorized capital stock), (c) the number or dollar amount of Common Shares permitted to be sold
under Form S-3 (including General Instruction I.B.6 thereof, if applicable), or (d) the number or dollar amount of Common Shares for which the Company has filed a Prospectus (as defined below).
“ Person ” means an individual or a corporation, partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental authority or other entity of any kind.
“ Principal Market ”
means the Nasdaq Global Market, Nasdaq Capital Market or such other national securities exchange on which the Common Shares, including any Shares, are then listed.
“ Sales Price ” means the actual sale execution price of each Share placed by the Agent pursuant to this Agreement.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder.
“ Selling Commission ” means three percent (3.0%) of the gross proceeds of Shares sold pursuant to this Agreement, or as
otherwise agreed between the Company and the Agent with respect to any Shares sold pursuant to this Agreement.
“ Settlement
Date ” means the second business day following each Trading Day during the period set forth in the Issuance Notice on which Shares are sold pursuant to this Agreement, when the Company shall deliver to the Agent the amount of Shares sold on
such Trading Day and the Agent shall deliver to the Company the Issuance Price received on such sales.
“ Shares ” shall
mean the Company's Common Shares issued or issuable pursuant to this Agreement.
“ Trading Day ” means any day on
which the Principal Market is open for trading.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to, and agrees with, the Agent that as of (1) the date of this Agreement, (2) each Issuance
Notice Date, (3) each Settlement Date, (4) each Triggering Event Date (as defined below) and (5) as of each Time of Sale (as defined below) (each of the times referenced above is referred to herein as a “ Representation
Date ”), except as may be disclosed in the Prospectus (including any documents incorporated by reference therein and any supplements thereto) on or before a Representation Date:
(a) Registration Statement . The Company prepared and filed with the Commission a
shelf registration statement on Form S-3 (File No. 333-269153) that contains a base prospectus. Such registration statement registers the issuance and
sale by the Company of the Shares under the Securities Act. The Company may file one or more additional registration statements from time to time that will contain a base prospectus and related prospectus or prospectus supplement, if applicable,
with respect to the Shares. Except where the context otherwise requires, such registration statement(s), including any information deemed to be a part thereof pursuant to Rule 430B under the Securities Act, including all financial statements,
exhibits and schedules thereto and all documents incorporated or deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3 under the Securities Act as from time to time amended or
supplemented, is herein referred to as the “ Registration Statement ,” and the prospectus constituting a part of such registration statement(s), together with any prospectus supplement filed with the Commission pursuant to Rule 424(b)
under the Securities Act relating to a particular issuance of the Shares, including all documents incorporated or deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3 under the
Securities Act, in each case, as from time to time amended or supplemented, is referred to herein as the “ Prospectus ,” except that if any revised prospectus is provided to the Agent by the Company for use in connection with the
offering of the Shares that is not required to be filed by the Company pursuant to Rule 424(b) under the Securities Act, the term “ Prospectus ” shall refer to such revised prospectus from and after the time it is first provided to
the Agent for such use. The Registration Statement at the time it originally became effective is herein called the “ Original Registration Statement .” As used in this Agreement, the terms “amendment” or
“supplement” when applied to the Registration Statement or the Prospectus shall be deemed to include the filing by the Company with the Commission of any document under the Exchange Act after the date hereof that is or is deemed to be
incorporated therein by reference.
All references in this Agreement to financial statements and schedules and other information which is
“contained,” “included” or “stated” in the Registration Statement or the Prospectus (and all other references of like import) shall be deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in or otherwise deemed under the Securities Act to be a part of or included in the Registration Statement or the Prospectus, as the case may be, as of any specified date; and all
references in this Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include, without limitation, the filing of any document under the Exchange Act which is or is deemed to be
incorporated by reference in or otherwise deemed under the Securities Act to be a part of or included in the Registration Statement or the Prospectus, as the case may be, as of any specified date.
At the time the Registration Statement was or will be originally declared effective and at the time the Company's most recent annual
report on Form 10-K was filed with the Commission, if later, the Company met the then-applicable requirements for use of Form S-3 under the Securities Act.
During the Agency Period, each time the Company files an annual report on Form 10-K the Company will meet the then-applicable requirements for use of Form S-3 under the
Securities Act.
(b) Compliance with Registration Requirements . The Original Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the Commission under the Securities Act. The Company has complied to the Commission's satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best
knowledge of the Company, are contemplated or threatened by the Commission.
The
Prospectus, when filed, complied in all material respects with the Securities Act and, if filed with the Commission through its Electronic Data Gathering, Analysis and Retrieval system (“ EDGAR ”) (except as may be permitted by Regulation S-T under the Securities Act), was identical to the copy thereof delivered to the Agent for use in connection with the issuance and sale of the Shares. Each of the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective amendment thereto, at the time it became effective and at each Representation Date, complied and will comply in all material respects with the Securities Act and did not and will not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. As of the date of this Agreement, the Prospectus and any Free Writing
Prospectus (as defined below) considered together (collectively, the “ Time of Sale Information ”) did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The Prospectus, as amended or supplemented, as of its date and at each Representation Date, did not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the three immediately preceding sentences do not
apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in
conformity with information relating to the Agent furnished to the Company in writing by the Agent expressly for use therein, it being understood and agreed that the only such information furnished by the Agent to the Company consists of the
information described in Section below. There are no contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed
as required. The Registration Statement and the offer and sale of the Shares as contemplated hereby meet the requirements of Rule 415 under the Securities Act and comply in all material respects with said rule.
(c) Ineligible Issuer Status . The Company is not an “ineligible issuer” in connection with the offering of the Shares pursuant
to Rules 164, 405 and 433 under the Securities Act. Any Free Writing Prospectus that the Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements
of the Securities Act. Each Free Writing Prospectus that the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Company complies or will
comply in all material respects with the requirements of Rule 433 under the Securities Act, including timely filing with the Commission or retention where required and legending, and each such Free Writing Prospectus, as of its issue date and at
each Representation Date did not, does not and will not include any information that conflicted, conflicts with or will conflict with the information contained in the Registration Statement or the Prospectus, including any document incorporated by
reference therein. Except for the Free Writing Prospectuses, if any, and electronic road shows, if any, furnished to you before first use, the Company has not prepared, used or referred to, and will not, without your prior written consent, prepare,
use or refer to, any Free Writing Prospectus.
(d) This Agreement . This Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(e) Authorization of the Shares . The Shares have been duly authorized for issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company against payment therefor pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and the issuance and sale of the Shares is not subject to any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase the Shares.
(f) No Applicable Registration or Other Similar Rights . There are no
persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as have been duly waived.
(g) No Material Adverse Change . Except as otherwise disclosed in the Registration Statement and the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement and the Prospectus: (i) there has been no material adverse change, or any development that would reasonably be expected to result in a material adverse change, in
(A) the condition, financial or otherwise, or in the earnings, business, properties, operations, assets, liabilities or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries,
considered as one entity or (B) the ability of the Company to consummate the transactions contemplated by this Agreement or perform its obligations hereunder (any such change being referred to herein as a “ Material Adverse
Change ”); (ii) the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, including without limitation any losses or interference with its
business from fire, explosion, flood, earthquakes, accident or other calamity, whether or not covered by insurance, or from any strike, labor dispute or court or governmental action, order or decree, that are material, individually or in the
aggregate, to the Company and its subsidiaries, considered as one entity, and have not, entered into any material transactions not in the ordinary course of business; and (iii) there has not been any material decrease in the capital stock or
any material increase in any short-term or long-term indebtedness of the Company or its subsidiaries and there has been no dividend or distribution of any kind declared, paid or made by the Company, or, except for dividends paid to the Company or
other subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company or any of its subsidiaries of any class of capital stock, except for repurchases made pursuant to the Company's share
repurchase program announced on August 2, 2023 (the “ Company Repurchase Program ”).
(h) Independent Accountants . KPMG LLP, which has expressed its opinion with respect
to the financial statements (which term as used in this Agreement includes the related notes thereto) filed with the Commission as a part of the Registration Statement and the Prospectus, is (i) an independent registered public accounting firm
as required by the Securities Act, the Exchange Act, and the rules of the Public Company Accounting Oversight Board (“ PCAOB ”), (ii) in compliance with the applicable requirements relating to the qualification of accountants under
Rule of Regulation S-X under the Securities Act and (iii) a registered public accounting firm as defined by the PCAOB whose registration has not been suspended
or revoked and who has not requested such registration to be withdrawn.
(i) Financial Statements . The financial statements filed
with the Commission as a part of the Registration Statement and the Prospectus present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of the dates indicated and the results of their
operations, changes in stockholders' equity and cash flows for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States applied on a
consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included in the Registration Statement or the Prospectus. To
the Company's knowledge, no person who has been suspended or barred from being associated with a registered public accounting firm, or who has failed to comply with any sanction pursuant to Rule 5300 promulgated by the PCAOB, has participated
in or otherwise aided the preparation of, or audited, the financial statements, supporting schedules or other financial data filed with the Commission as a part of the Registration Statement and the Prospectus.
(j) Company s Accounting System . The Company and each of its subsidiaries make and keep, in all material respects,
accurate books and records and maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles as applied in the United States and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(k) Disclosure Controls and Procedures; Deficiencies in or Changes to Internal Control Over Financial
Reporting . Except as described in the Registration Statement and the Prospectus, the Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act), which (i) are designed to ensure that material information relating to the Company is made known to the Company's principal executive officer and its principal financial
officer, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; and (ii) are effective in all material respects to perform the functions for which they were established. Since the end
of the Company's most recent audited fiscal year, there have been no significant deficiencies or material weaknesses in the Company's internal control over financial reporting (whether or not remediated) and no change in the Company's
internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. The Company is not aware of any change in its internal control over
financial reporting that has occurred during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
(l) Incorporation and Good Standing of the Company . The Company has been duly
incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus and to enter into and perform its obligations under this Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in the State of
California and each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where a failure to be so qualified or in good standing would not reasonably
be expected individually or in the aggregate to result in a Material Adverse Change.
(m) Incorporation and Good Standing of the
Company s Subsidiaries. Each subsidiary of the Company has been duly incorporated or organized, as the case may be, and is validly existing as a corporation, partnership or limited liability company, as applicable, in good
standing under the laws of the jurisdiction of its incorporation or organization and has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and the
Prospectus and is duly qualified as a foreign corporation, partnership or limited liability company, as applicable, to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where a failure to be so qualified or in good standing would not reasonably be expected individually or in the aggregate to result in a Material Adverse Change. All of the issued
and outstanding capital stock or other equity or ownership interests of each subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or adverse claim. The Company does not own control, directly or indirectly, any corporation, association or other entity other than (i) the subsidiaries listed on Exhibit 21.1 to the
Company's most recent annual report on Form 10-K and (ii) such other entities omitted from Exhibit 21.1 which, when such omitted entities are considered in the aggregate as a single subsidiary, would
not constitute a “significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X.
(n) Capitalization and Other Capital Stock Matters . The authorized, issued and outstanding capital stock of the Company is as set forth
in the Registration Statement and the Prospectus (other than for (1) subsequent issuances, if any, pursuant to employee benefit plans described in the Prospectus, or upon the exercise of outstanding options or warrants, in each case described
in the Registration Statement and the Prospectus or (2) repurchases made pursuant to the Company Repurchase Program). The Common Shares (including the Shares, when issued pursuant to the terms of this Agreement) conform in all material respects
to the description thereof contained in the Prospectus. All of the issued and outstanding Common Shares have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with all applicable federal and
state securities laws. None of the outstanding Common Shares was issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those described in the Registration Statement and the
Prospectus. The descriptions of the Company's stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Registration Statement and the Prospectus accurately and fairly
present, in all material respects, the information required to be shown with respect to such plans, arrangements, options and rights.
(o) Stock Exchange Listing . The Common Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed on the Principal Market and the Company has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Shares under the Exchange Act or delisting the Common Shares from the Principal Market, nor, except as otherwise disclosed in the Registration Statement and the Prospectus, has the Company received any notification
that the Commission or the Principal Market is contemplating terminating such registration or listing. Except as otherwise disclosed in the Registration Statement and the Prospectus, to the Company's knowledge it is in compliance with all
listing requirements of the Principal Market.
(p) Non-Contravention of Existing Instruments; No
Further Authorizations or Approvals Required . Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws, partnership agreement or operating agreement or similar
organizational documents, as applicable, or is in default (or, with the giving of notice or lapse of time, would be in default) (“ Default ”) under any indenture, loan, credit agreement, note, lease, license agreement, contract,
franchise or other instrument (including, without limitation, any pledge agreement, security agreement, mortgage or other instrument or agreement evidencing, guaranteeing, securing or relating to indebtedness) to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which any of its or its subsidiaries' properties or assets are subject (each, an “ Existing Instrument ”), except for such Defaults as would reasonably not
be expected, individually or in the aggregate, to result in a Material Adverse Change. The Company's execution, delivery and performance of this Agreement, consummation of the transactions contemplated hereby and by the Registration Statement
and the Prospectus and the issuance and sale of the Shares (including the use of proceeds from the sale of the Shares as described in the Registration Statement and the Prospectus under the caption “Use of Proceeds”) (i) have been
duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter or by-laws, partnership agreement or operating agreement or similar organizational
documents, as applicable, of the Company or any subsidiary, as applicable, (ii) will not conflict with or constitute a breach of, or Default or a Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except as would not reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Change, and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or any subsidiary, except as would not
reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or
agency, is required for the Company's execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Registration Statement and the Prospectus, except such as have been obtained or made
by the Company and are in full force and
effect under the Securities Act and such as may be required under applicable state securities or blue sky laws or FINRA. As used herein, a “ Debt Repayment Triggering Event ” means
any event or condition which gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
(q) Compliance
with Laws Except as otherwise disclosed in the Prospectus, the Company and its subsidiaries have been and are in compliance with all applicable laws, rules and regulations, except where failure to be so in compliance would not reasonably
be expected, individually or in the aggregate, to result in a Material Adverse Change.
(r) No Material Actions or Proceedings .
Except as otherwise disclosed in the Prospectus, there is no action, suit, proceeding, inquiry or investigation brought by or before any governmental entity now pending or, to the knowledge of the Company, threatened, against or affecting the
Company or any of its subsidiaries, which if determined adversely to the Company or any of its subsidiaries would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change or materially or adversely affect the
consummation of the transactions contemplated hereby or the performance by the Company of its obligations hereunder; and the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries are a party or of
which any of their properties or assets is the subject, if determined adversely to the Company or such subsidiary, would not reasonably be expected to result in a Material Adverse Change. Except as otherwise disclosed in the Prospectus, no material
labor dispute with the employees of the Company or any of its subsidiaries, or with the employees of any principal supplier, manufacturer, customer or contractor of the Company, exists or, to the knowledge of the Company, is threatened or imminent.
(s) Intellectual Property Rights . Except as otherwise disclosed in the Prospectus, the Company and its subsidiaries own, or have
obtained licenses for, the inventions, patent applications, patents, trademarks, trade names, service names, copyrights, trade secrets and other intellectual property described in the Registration Statement and the Prospectus as being owned or
licensed by them or, to the Company's knowledge, which are necessary for the conduct of their businesses as currently conducted or as currently proposed to be conducted in the Registration Statement and the Prospectus (collectively,
“ Intellectual Property ”); and to the Company's knowledge, any such licenses are valid and enforceable. Except as otherwise disclosed in the Prospectus, to the Company's knowledge: (i) there are no third parties who
have rights to any Intellectual Property, except for customary reversionary rights of third-party licensors with respect to Intellectual Property that is disclosed in the Registration Statement and the Prospectus as licensed to the Company or any of
its subsidiaries, and the Company and its subsidiaries have taken all reasonable steps necessary to secure their interests in the Intellectual Property from their employees and contractors; (ii) there is no infringement by third parties of any
Intellectual Property; (iii) the Company and its subsidiaries are not infringing the intellectual property rights of third parties; (iv) the Company is the sole owner of the Intellectual Property owned by it; and (v) no employee of
the Company or any of its subsidiaries is in or has been in violation of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee's
employment with the Company or any of its subsidiaries. Except as otherwise disclosed in the Prospectus, there is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others: (A) challenging the Company's rights in or to any Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such action, suit, proceeding or claim;
(B) challenging the validity, enforceability or scope of any Intellectual Property, and the Company is unaware of any facts which would form a reasonable basis for any such action, suit, proceeding or claim; or (C) asserting that the
Company or any of its subsidiaries infringes or otherwise violates, or would, upon the commercialization of any product or service described in the Registration Statement or the Prospectus as under development, infringe, misappropriate or violate,
any patent, trademark, trade name, service name, copyright, trade secret or other proprietary rights of others, and the Company is unaware of any facts which would form a reasonable basis for any such action, suit, proceeding or claim. The Company
and its subsidiaries have complied with the terms of each agreement pursuant to which Intellectual Property has been licensed to the Company or any subsidiary, and all such agreements are in full force and effect. The drug candidates described in
the Registration Statement and the Prospectus as under development by the Company or any subsidiary fall within the scope of the claims of one or more patents or patent applications owned by, or exclusively licensed to, the Company or subsidiary.
(t) Patents and Patent Applications All patents and patent applications owned by, or licensed to the Company
or any subsidiary, have, to the Company's knowledge, been duly and properly filed and maintained; to the Company's knowledge, the parties prosecuting such applications have complied with their duty of candor and disclosure to the U.S.
Patent and Trademark Office (the “ USPTO ”) in connection with such applications; and the Company is not aware of any facts required to be disclosed to the USPTO that were not disclosed to the USPTO and which would preclude the grant
of a patent in connection with any such application or could form the basis of a finding of invalidity with respect to any patents that have issued with respect to such applications.
(u) Regulatory Matters; Products and Product Candidates . Except as otherwise disclosed in the Prospectus, the Company: (i) has
operated and currently operates its business in compliance in all material respects with applicable provisions of the Health Care Laws (as defined below) of the Food and Drug Administration (“ FDA ”), the Department of Health and
Human Services and any comparable foreign or other regulatory authority to which they are subject (collectively, the “ Applicable Regulatory Authorities ”) applicable to the ownership, testing, development, manufacture, packaging,
processing, use, distribution, storage, import, export or disposal of any of the Company's product candidates or any product manufactured or distributed by the Company; (ii) has not received any FDA Form 483, written notice of adverse
finding, warning letter, untitled letter or other correspondence or written notice from any court or arbitrator or governmental or regulatory authority alleging or asserting non-compliance with (A) any
Health Care Laws or (B) or any licenses, certificates, approvals, clearances, exemptions, authorizations, permits and supplements or amendments thereto required by any such Health Care Laws (“ Regulatory Authorizations ”); (iii)
possesses all Regulatory Authorizations required to conduct its business as currently conducted and such Regulatory Authorizations are valid and in full force and effect and the Company is not in violation, in any material respect, of any term of
any such Regulatory Authorizations; (iv) has not received notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from the Applicable Regulatory
Authorities or any other third party alleging that any product operation or activity is in material violation of any Health Care Laws or Regulatory Authorizations and has no knowledge that the
Applicable Regulatory Authorities or any other third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (v) has not received notice that any of the Applicable Regulatory Authorities has
taken, is taking or intends to take action to limit, suspend, modify or revoke any material Regulatory Authorizations and has no knowledge that any of the Applicable Regulatory Authorities is considering such action; (vi) has filed, obtained,
maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Health Care Laws or Regulatory Authorizations and that all such reports, documents,
forms, notices, applications, records, claims, submissions and supplements or amendments were materially complete and correct on the date filed (or were materially corrected or supplemented by a subsequent submission); (vii) is not a party to or
have any ongoing reporting obligations pursuant to any corporate integrity agreements, deferred prosecution agreements, monitoring agreements, consent decrees, settlement orders, plans of correction or similar agreements with or imposed by any
Applicable Regulatory Authority; and (viii) has not been and, to the Company's knowledge, its employees, officers and directors, have not been excluded, suspended or debarred from participation in any government health care program or
human clinical research or, to the knowledge of the Company, is subject to a governmental inquiry, investigation, proceeding, or other similar action that could reasonably be expected to result in debarment, suspension, or exclusion.
(v) Health Care Laws Defined The term “ Health Care Laws ” means Title XVIII of the Social Security
Act, 42 U.S.C. §§ 1395-1395hhh (the Medicare statute); Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396v (the Medicaid statute); the Federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b); the civil False Claims Act, 31 U.S.C. §§ 3729 et seq.; the criminal False Claims Act 42 U.S.C. 1320a-7b(a); any criminal laws relating to health
care fraud and abuse, including but not limited to 18 U.S.C. Sections 286 and 287 and the health care fraud criminal provisions under the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d et seq.,
(“ HIPAA ”); the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the Physician Payments Sunshine Act, 42 U.S.C. § 1320a-7h; the Exclusion
Laws, 42 U.S.C. § 1320a-7; HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, 42 U.S.C. §§ 17921 et seq.; the Federal Food, Drug, and Cosmetic Act, 21
U.S.C. §§ 301 et seq.; the Public Health Service Act, 42 U.S.C. §§ 201 et seq.; the regulations promulgated pursuant to such laws; and any similar federal, state and local laws and regulations.
(w) Regulatory Matters: Manufacturing . To the Company's knowledge, the manufacturing facilities and operations of its suppliers are
operated in compliance in all material respects with all applicable statutes, rules, regulations and policies of the Applicable Regulatory Authorities.
(x) Regulatory Matters: Clinical Trials . Except as otherwise disclosed in the Prospectus, none of the Company's or any
subsidiaries' product candidates have received marketing approval from any Applicable Regulatory Authority. All clinical and pre-clinical studies and trials conducted by or on behalf of or sponsored by
the Company, or in which the Company has participated, with respect to the Company's product candidates, including any such studies and trials that are described in the Registration Statement and the Prospectus, or the results of which are
referred to in the Registration Statement and the Prospectus, as applicable
(collectively, “ Company Trials ”), and to the Company's knowledge, all clinical and pre-clinical studies and trials conducted by
Biocon SA or Biocon Limited with respect to the Company's product candidates which are described in the Registration Statement and the Prospectus (collectively, “ Biocon Trials ”), were, and if still pending are, being conducted
in all material respects in accordance with all applicable Health Care Laws of the Applicable Regulatory Authorities and current Good Clinical Practices, standard medical and scientific research procedures and any applicable rules, regulations and
policies of the jurisdiction in which such trials and studies are being conducted; the descriptions in the Registration Statement and the Prospectus of the results of any Company Trials and any Biocon Trials are accurate and complete descriptions in
all material respects and fairly present the data derived therefrom; the Company has no knowledge of any other studies or trials not described in the Registration Statement and the Prospectus, the results of which are inconsistent with or call into
question the results described or referred to in the Registration Statement and the Prospectus; the Company has operated at all times and is currently in compliance in all material respects with all applicable Health Care Laws of the Applicable
Regulatory Authorities; the Company has not received, nor does the Company have knowledge after due inquiry that any of its collaboration partners have received any written notices, correspondence or other communications from the Applicable
Regulatory Authorities or any other governmental entity requiring or threatening the termination, material modification or suspension of Company Trials, other than ordinary course communications with respect to modifications in connection with the
design and implementation of such studies or trials, and, to the Company's knowledge, there are no reasonable grounds for the same. No investigational new drug application or comparable submission filed by or on behalf of the Company with the
FDA has been terminated or suspended by the FDA or any other Applicable Regulatory Authority. The Company has obtained (or caused to be obtained) informed consent by or on behalf of each human subject who participated in a Company Trial. In using or
disclosing patient information received by the Company in connection with a Company Trial, the Company has complied in all material respects with all applicable laws and regulatory rules or requirements, including, without limitation, HIPAA and the
rules and regulations thereunder. To the Company's knowledge, none of the Company Trials involved any investigator who has been disqualified as a clinical investigator or has been found by the FDA to have engaged in scientific misconduct.
(y) All Necessary Permits, etc . Except as otherwise disclosed in the Prospectus, the Company and each subsidiary possess such valid and
current certificates, authorizations or permits required by state, federal or foreign regulatory agencies or bodies to conduct their business as currently conducted and as described in the Registration Statement and the Prospectus
(“ Permits ”), except where failure to so possess would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change. Neither the Company nor any of its subsidiaries is in violation of, or in
default under, any of the Permits or has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit, except as would
not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change.
(z) Title to Properties .
Except as otherwise disclosed in the Prospectus, the Company and each of its subsidiaries has good and marketable title to all of the real and personal property and other assets reflected as owned in the financial statements referred to in
Section 2(i) above (or elsewhere in the Registration Statement or the Prospectus), in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse claims and other defects,
except where failure to so possess would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change. The real property, improvements, equipment and
personal property held under lease by the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made or proposed to be made of such real property,
improvements, equipment or personal property by the Company or such subsidiary.
(aa) Tax Law Compliance . The Company and its
consolidated subsidiaries have filed all necessary federal, state and foreign income and franchise tax returns or have properly requested extensions thereof and have paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them except as may be being contested in good faith and by appropriate proceedings, except as would not reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Change. The Company has made adequate charges, accruals and reserves, in conformity with generally accepted accounting principals, in the applicable financial statements referred to in Section 2(i) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company or any of its consolidated subsidiaries has not been finally determined.
(bb) Insurance . Except as otherwise disclosed in the Prospectus, each of the Company and its subsidiaries is insured by recognized,
financially sound and reputable institutions with policies in such amounts and with such deductibles and covering such risks as are generally deemed adequate and customary for their businesses including, but not limited to, policies covering real
and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism and earthquakes and policies covering the Company and its subsidiaries for product liability claims and clinical trial
liability claims. The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected to result in a Material Adverse Change. Neither of the Company nor any subsidiary has been denied any insurance coverage
which it has sought or for which it has applied, except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change.
(cc) Compliance with Environmental Laws . Except as described in the Prospectus and would not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Change: (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, “ Hazardous Materials ”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively,
“ Environmental Laws ”); (ii) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements; (iii) there are no pending or, to the Company's knowledge, threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries; and (iv) to the Company's knowledge, there are no events
or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws.
(dd) ERISA Compliance .
Except as otherwise disclosed in the Prospectus, the Company and its subsidiaries and any “employee benefit plan” (as defined under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ ERISA ”)) established or maintained by the Company, its subsidiaries or, to the knowledge of the Company, its “ERISA Affiliates” (as defined below) are in compliance in all
material respects with ERISA. “ ERISA Affiliate ” means, with respect to the Company or any subsidiary, any member of any group of organizations described in Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder (the “ Code ”) of which the Company or such subsidiary is a member. No “reportable event” (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan” established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). Neither the Company, its subsidiaries nor any of
their ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each employee benefit plan established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so qualified and, to the
Company's knowledge, nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification.
(ee) Company Not an “ Investment Company. ” The Company is not, and will not be, either after receipt of
payment for the Shares or after the application of the proceeds therefrom as described under “Use of Proceeds” in the Registration Statement or the Prospectus, required to register as an “investment company” under the Investment
Company Act of 1940, as amended (the “ Investment Company Act ”).
(ff) No Price Stabilization or Manipulation ;
Compliance with Regulation M . The Company has not taken, directly or indirectly, without giving effect to activities by the Agent, any action designed to or that would reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Shares or of any “reference security” (as defined in Rule 100 of Regulation M under the Exchange Act (“ Regulation M ”)) with respect to the Common Shares, whether to facilitate the sale or resale of
the Shares or otherwise, and has taken no action which would directly or indirectly violate Regulation M, except for the Company Repurchase Program and any repurchases made thereunder. The Company acknowledges and agrees that it will not engage in
or make any repurchases under the Company Repurchase Program during any “restricted period” as such term is defined in Regulation M. The Company acknowledges that the Agent may engage in passive market making transactions in the Shares on
the Principal Market in accordance with Regulation M. The Common Shares are “actively traded securities” (as defined in Regulation M).
(gg) Related-Party Transactions . There are no business relationships or related-party
transactions involving the Company or any of its subsidiaries or any other person required to be described in the Registration Statement or the Prospectus that have not been described as required.
(hh) FINRA Matters . All of the information provided to the Agent or to counsel for the Agent by the Company, its counsel, its officers
and directors and, to the Company's knowledge, the holders of any securities (debt or equity) or options to acquire any securities of the Company in connection with the offering of the Shares is true, complete, correct in all material respects
and compliant with FINRA's rules and any letters, filings or other supplemental information provided to FINRA pursuant to FINRA Rules is true, complete and correct in all material respects.
(ii) Statistical and Market-Related Data . Nothing has come to the attention of the Company that has caused the Company to believe that
the statistical and market-related data included in the Registration Statement and the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects.
(jj) No Unlawful Contributions or Other Payments . Except as otherwise disclosed in the Prospectus, neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any employee or agent of the Company or any subsidiary, has made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law
or of the character required to be disclosed in the Registration Statement or the Prospectus.
(kk) Foreign Corrupt Practices Act .
Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person acting on behalf of the Company or any of its subsidiaries has, in the course of its actions for,
or on behalf of, the Company or any of its subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made or taken any act in furtherance of
an offer, promise, or authorization of any direct or indirect unlawful payment or benefit to any domestic government official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and
regulations thereunder (collectively, the “ FCPA ”)) or employee; (iii) violated or is in violation of any provision of the FCPA or any applicable non-U.S. anti-bribery statute or
regulation; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any domestic government official, such foreign official or employee; and the Company and its subsidiaries and, to the
knowledge of the Company, the Company's affiliates have conducted their respective businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.
(ll) Money Laundering Laws . The operations of the Company and its subsidiaries are,
and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable
jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”) and
no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.
(mm) OFAC . Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, after due
inquiry, any director, officer, agent, employee, affiliate or person acting on behalf of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“ OFAC ” and such sanctions, “ U.S. Sanctions ”); and the Company will not directly or indirectly use the proceeds of this offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, or any joint venture partner or other person or entity, for the purpose of financing the activities of or business with any person, or in any country or territory, that currently is the subject to any U.S. Sanctions or in any other
manner that will result in a violation by any person (including any person participating in the transaction whether as underwriter, advisor, investor or otherwise) of U.S. Sanctions.
(nn) Brokers . Except as otherwise disclosed in the Prospectus, there is no broker, finder or other party that is entitled to receive
from the Company any brokerage or finder's fee or other fee or commission as a result of any transactions contemplated by this Agreement.
(oo) Forward-Looking Statements . Each financial or operational projection or other “forward-looking statement” (as defined by
Section 27A of the Securities Act or Section 21E of the Exchange Act) contained in the Registration Statement or the Prospectus (i) was so included by the Company in good faith and with reasonable basis after due consideration by the
Company of the underlying assumptions, estimates and other applicable facts and circumstances and (ii) is accompanied by meaningful cautionary statements identifying those factors that could cause actual results to differ materially from those
in such forward-looking statement. No such statement was made with the knowledge of an executive officer or director of the Company that is was false or misleading.
(pp) No Outstanding Loans or Other Extensions of Credit . The Company and its subsidiaries do not have any outstanding extension of
credit, in the form of a personal loan, to or for any director or executive officer (or equivalent thereof) of the Company and/or such subsidiary except for such extensions of credit as are expressly permitted by Section 13(k) of the Exchange
Act.
(qq) Emerging Growth Company Status . From the time of the initial filing of the Company's first registration statement
with the Commission through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “ Emerging Growth Company ”).
(rr) Clinical Data and Regulatory Compliance . The preclinical tests and clinical
trials, and other studies (collectively, “ studies ”) that are described in, or the results of which are referred to in, the Registration Statement or the Prospectus were and, if still pending, are being conducted in all material
respects in accordance with the protocols, procedures and controls designed and approved for such studies and with standard medical and scientific research procedures and all applicable laws, including, without limitation, the Federal Food, Drug,
and Cosmetic Act and its implementing regulations at 21 C.F.R. Parts 50, 54, 56, 58, and 312; each description of the results of such studies is accurate and complete in all material respects and fairly presents the data derived from such studies,
and the Company and its subsidiaries have no knowledge of any other studies the results of which are inconsistent with, or otherwise call into question, the results described or referred to in the Registration Statement or the Prospectus; the
Company and its subsidiaries have made all such filings and obtained all such approvals as may be required by the Food and Drug Administration of the U.S. Department of Health and Human Services or any committee thereof or from any other U.S. or
foreign government or drug or medical device regulatory agency, or health care facility Institutional Review Board (collectively, the “ Regulatory Agencies ”); neither the Company nor any of its subsidiaries has received any notice
of, or correspondence from, any Regulatory Agency requiring the termination, suspension or modification of any clinical trials that are described or referred to in the Registration Statement or the Prospectus; and the Company and its subsidiaries
have each operated and currently are in compliance in all material respects with all applicable rules, regulations and policies of the Regulatory Agencies.
(ss) No Rights to Purchase Preferred Stock . The issuance and sale of the Shares as contemplated hereby will not cause any holder of any
shares of capital stock, securities convertible into or exchangeable or exercisable for capital stock or options, warrants or other rights to purchase capital stock or any other securities of the Company to have any right to acquire any shares of
preferred stock of the Company.
(tt) No Contract Terminations . Except as otherwise disclosed in the Prospectus, the Company has not
sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements referred to or described in the Prospectus or any Free Writing Prospectus, or referred to or described in, or filed as an exhibit
to, the Registration Statement, and no such termination or non-renewal has been threatened by the Company or, to the Company's knowledge, any other party to any such contract or agreement, which threat of
termination or non-renewal has not been rescinded as of the date hereof.
(uu) No
Indebtedness . Except as otherwise disclosed in the Registration Statement and the Prospectus, the Company has no outstanding indebtedness.
(vv) Incorporated Documents . The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were filed with the Commission, complied in all material respects with the requirements of the Exchange Act, as applicable, and, when read together with the other information in the Prospectus, do not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(ww) Exchange Act Compliance . The documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they
were or hereafter are filed with the Commission, and any Free Writing Prospectus or amendment or supplement thereto complied and will comply in all material respects with the requirements of the Exchange Act, and, when read together with the other
information in the Prospectus, at the time the Registration Statement and any amendments thereto become effective and at the Time of Sale, as the case may be, will not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(xx) Dividend Restrictions . Except as disclosed in the Prospectus, no subsidiary of
the Company is prohibited or restricted, directly or indirectly, from paying dividends to the Company, or from making any other distribution with respect to such subsidiary's equity securities or from repaying to the Company or any other
subsidiary of the Company any amounts that may from time to time become due under any loans or advances to such subsidiary from the Company or from transferring any property or assets to the Company or to any other subsidiary.
(yy) Sarbanes-Oxley . The Company is in compliance, in all material respects, with all applicable provisions of the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated thereunder.
(zz) Cybersecurity . The Company and its subsidiaries' information
technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “ IT Systems ”) are adequate for, and operate and perform in all material respects as required in
connection with the operation of the business of the Company and its subsidiaries as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. The Company and its
subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous
operation, redundancy and security of all IT Systems and data, including “Personal Data,” used in connection with their businesses. “ Personal Data ” means (i) a natural person's name, street address, telephone
number, e-mail address, photograph, social security number or tax identification number, driver's license number, passport number, credit card number, bank information, or customer or account number;
(ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by GDPR (as defined below); (iv) any information which
would qualify as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively,
“ HIPAA ” ); and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an identified person's
health or sexual orientation. There have been no breaches, violations, outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the duty to notify any other person, nor any
incidents under internal review or investigations relating to the same. The Company and its subsidiaries are presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or
arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use,
access, misappropriation or modification.
(aaa) Compliance with Data Privacy Laws . The Company and its subsidiaries are, and at
all prior times were, in material compliance with all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and the Company and its subsidiaries have taken commercially reasonable actions to
prepare to comply with, and since May 25, 2018, if applicable, have been and currently are in compliance with, the European Union General Data Protection Regulation (“ GDPR ”) (EU 2016/679) (collectively, the “ Privacy
Laws ”). To ensure compliance with the Privacy Laws, the Company and its subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures
relating to data privacy and security and the collection, storage, use, disclosure, handling, and analysis of Personal Data (the “ Policies ”), if applicable. The Company and its subsidiaries have at all times made all disclosures to
users or customers required by applicable laws and regulatory rules or requirements, and none of such disclosures made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable laws and
regulatory rules or requirements in any material respect. The Company further certifies that neither it nor any subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of,
any of the Privacy Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other
corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
Any certificate signed by any officer or representative of the Company or any of its subsidiaries and delivered to the Agent or counsel for
the Agent in connection with an issuance of Shares shall be deemed a representation and warranty by the Company to the Agent as to the matters covered thereby on the date of such certificate.
The Company has a reasonable basis for making each of the representations set forth in this Section 2. The Company acknowledges that the
Agent and, for purposes of the opinions to be delivered pursuant to Section 4(p) hereof, counsel to the Company and counsel to the Agent, will rely upon the accuracy and truthfulness of the foregoing representations and
hereby consents to such reliance.
Section 3. ISSUANCE AND SALE OF COMMON SHARES
(a) Sale of Securities . On the basis of the representations, warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company and the Agent agree that the Company may from time to time seek to sell Shares through the Agent, acting as sales agent, or directly to the Agent, acting as principal, as follows, with an aggregate Sales
Price of up to the Maximum Program Amount, based on and in accordance with Issuance Notices as the Company may deliver, during the Agency Period.
(b) Mechanics of Issuances
(i) Issuance Notice . Upon the terms and subject to the conditions set forth herein, on any Trading Day during the Agency Period on which
the conditions set forth in Section 5(a) and Section 5(b) shall have been satisfied, the Company may exercise its right to request an issuance of Shares by delivering to the Agent an Issuance
Notice; provided, however , that (A) in no event may the Company deliver an Issuance Notice to the extent that (I) the sum of (x) the aggregate
Sales Price of the requested Issuance Amount, plus (y) the aggregate Sales Price of all Shares issued under all previous Issuance Notices effected pursuant to this Agreement, would exceed
the Maximum Program Amount; (B) prior to delivery of any Issuance Notice, the period set forth for any previous Issuance Notice shall have expired or been terminated; and (C) the Company will have made any repurchases pursuant to the
Company Repurchase Program during any “restricted period” (as defined in Regulation M (as defined below)) applicable to such Issuance Notice. An Issuance Notice shall be considered delivered on the Trading Day that it is received by e-mail to the persons set forth in Schedule A hereto and confirmed by the Company by telephone (including a voicemail message to the persons so identified), with the understanding that, with adequate prior written
notice, the Agent may modify the list of such persons from time to time.
(ii) Agent Efforts . Upon the terms and subject to the
conditions set forth in this Agreement, upon the receipt of an Issuance Notice, the Agent will use its commercially reasonable efforts consistent with its normal sales and trading practices to place the Shares with respect to which the Agent has
agreed to act as sales agent, subject to, and in accordance with the information specified in, the Issuance Notice, unless the sale of the Shares described therein has been suspended, cancelled or otherwise terminated in accordance with the terms of
this Agreement. For the avoidance of doubt, the parties to this Agreement may modify an Issuance Notice at any time provided they both agree in writing to any such modification.
(iii) Method of Offer and Sale . The Shares may be offered and sold (A) in privately negotiated transactions with the consent of the
Company; (B) as block transactions; or (C) by any other method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on the Principal Market
or sales made into any other existing trading market of the Common Shares. Nothing in this Agreement shall be deemed to require either party to agree to the method of offer and sale specified in the preceding sentence, and (except as specified in
clauses (A) and (B) above) the method of placement of any Shares by the Agent shall be at the Agent's discretion.
(iv) Confirmation to the Company . If acting as sales agent hereunder, the Agent will provide written confirmation to the Company no later than the opening of the Trading Day next following the Trading Day on which it has placed Shares hereunder
setting forth the number of shares sold on such Trading Day, the corresponding Sales Price and the Issuance Price payable to the Company in respect thereof.
(v) Settlement . Each issuance of Shares will be settled on the applicable Settlement Date for such issuance of Shares and, subject to
the provisions of Section , on or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Shares being sold by crediting the Agent or its designee's account at
The Depository Trust Company through its Deposit/Withdrawal At Custodian (DWAC) System, or by such other means of delivery as may be mutually agreed upon by the parties hereto and, upon receipt of such Shares, which in all cases shall be freely
tradable, transferable, registered shares in good deliverable form, the Agent will deliver, by wire transfer of immediately available funds, the related Issuance Price in same day funds delivered to an account designated by the Company prior to the
Settlement Date. The Company may sell Shares to the Agent as principal at a price agreed upon at each relevant time Shares are sold pursuant to this Agreement (each, a “ Time of Sale ”).
(vi) Suspension or Termination of Sales . Consistent with standard market settlement
practices, the Company or the Agent may, upon notice to the other party hereto in writing or by telephone (confirmed immediately by verifiable email), suspend any sale of Shares, and the period set forth in an Issuance Notice shall immediately
terminate; provided, however , that (A) such suspension and termination shall not affect or impair either party's obligations with respect to any Shares placed or sold hereunder prior to the receipt of such notice; (B) if the
Company suspends or terminates any sale of Shares after the Agent confirms such sale to the Company, the Company shall still be obligated to comply with Section 3(b)(v) with respect to such Shares; and (C) if the
Company defaults in its obligation to deliver Shares on a Settlement Date, the Company agrees that it will hold the Agent harmless against any loss, claim, damage or expense (including, without limitation, penalties, interest and reasonable legal
fees and expenses), as incurred, arising out of or in connection with such default by the Company. The parties hereto acknowledge and agree that, in performing its obligations under this Agreement, the Agent may borrow Common Shares from stock
lenders in the event that the Company has not delivered Shares to settle sales as required by subsection (v) above, and may use the Shares to settle or close out such borrowings. The Company agrees that no such notice shall be effective against
the Agent unless it is made to the persons identified in writing by the Agent pursuant to Section 3(b)(i) . Notwithstanding the foregoing, prior to the Company engaging in any repurchases of shares of its Common Stock
pursuant to the Company Repurchase Program, it shall suspend activities under this Agreement for such number of days so that any repurchases made pursuant to the Company Repurchase Program are not made during any “restricted period” (as
defined in Regulation M) applicable to any offering under this Agreement.
(vii) No Guarantee of Placement, Etc. The Company
acknowledges and agrees that (A) there can be no assurance that the Agent will be successful in placing Shares; (B) the Agent will incur no liability or obligation to the Company or any other Person if it does not sell Shares; and
(C) the Agent shall be under no obligation to purchase Shares on a principal basis pursuant to this Agreement, except as otherwise specifically agreed by the Agent and the Company.
(viii) Material Non-Public Information. Notwithstanding any other provision of this Agreement,
the Company and the Agent agree that the Company shall not deliver any Issuance Notice to the Agent, and the Agent shall not be obligated to place any Shares, during any period in which the Company is in possession of material non-public information.
(c) Fees . As compensation for services rendered, the Company shall pay to
the Agent, on the applicable Settlement Date, the Selling Commission for the applicable Issuance Amount (including with respect to any suspended or terminated sale pursuant to Section 3(b)(vi)) by the Agent deducting the
Selling Commission from the applicable Issuance Amount.
(d) Expenses . The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in connection with the transactions contemplated hereby, including without limitation (i) all expenses incident to the issuance and delivery of the Shares (including
all printing and engraving costs); (ii) all fees and expenses of the registrar and transfer agent of the Shares; (iii) all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares;
(iv) all fees and expenses of the Company's counsel, independent public or certified public accountants and other advisors; (v) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements, exhibits, schedules, consents and certificates of experts), the Prospectus, any Free Writing Prospectus
prepared by or on behalf of, used by, or referred to by the Company, and all amendments and supplements thereto, and this Agreement; (vi) all filing fees, attorneys' fees and expenses
incurred by the Company or the Agent in connection with qualifying or registering (or obtaining exemptions from the qualification or registration of) all or any part of the Shares for offer and sale under the state securities or blue sky laws, and,
if requested by the Agent, preparing and printing a “ Blue Sky Survey ” or memorandum, and any supplements thereto, advising the Agent of such qualifications, registrations, determinations and exemptions; (vii) the reasonable
fees and disbursements of the Agent's counsel, including the reasonable fees and expenses of counsel for the Agent in connection with, FINRA review, if any, and approval of the Agent's participation in the offering and distribution of
the Shares; (viii) the filing fees incident to FINRA review, if any; (ix) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of
the Shares, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged
in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives, employees and officers of the Company and of the Agent and any such consultants, and the cost of any aircraft
chartered in connection with the road show; and (x) the fees and expenses associated with listing the Shares on the Principal Market. The fees and disbursements of Agent's counsel pursuant to subsections (vi) and (vii) above shall not
exceed (A) $75,000 in connection with the execution of this Agreement and (B) $15,000 in connection with each Triggering Event Date (as defined below) on which the Company is required to provide a certificate pursuant to Section 4(o).
Section 4. ADDITIONAL COVENANTS
The
Company covenants and agrees with the Agent as follows, in addition to any other covenants and agreements made elsewhere in this Agreement:
(a) Exchange Act Compliance . During the Agency Period, the Company shall (i) file, on a timely basis, with the Commission all
reports and documents required to be filed under Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act; and (ii) either (A) include in its quarterly reports on Form 10-Q and its annual reports on Form 10-K, a summary detailing, for the relevant reporting period, (1) the number of Shares sold through the Agent pursuant to this
Agreement and (2) the net proceeds received by the Company from such sales or (B), in the Company's sole discretion, prepare a prospectus supplement containing, or include in such other filing permitted by the Securities Act or Exchange
Act (each an “ Interim Prospectus Supplement ”), such summary information and, at least once a quarter and subject to this Section 4, file such Interim Prospectus Supplement pursuant to Rule 424(b) under the Securities Act (and
within the time periods required by Rule 424(b) and Rule 430B under the Securities Act).
(b) Securities Act Compliance . After the
date of this Agreement, the Company shall promptly advise the Agent in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission; (ii) of the time and date of any filing of
any post-effective amendment to the Registration Statement, any Rule 462(b) Registration Statement or any amendment or supplement to the Prospectus, or any Free Writing Prospectus; (iii) of the time and date that any post-effective amendment to
the Registration Statement or any Rule 462(b) Registration Statement becomes effective; and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto, any Rule 462(b) Registration Statement or any amendment or supplement to the Prospectus or of any order preventing or suspending the use of any Free Writing Prospectus or the
Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Shares from any securities exchange upon which they are listed for trading or included or designated for quotation, or of the threatening or
initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its best efforts to obtain the lifting of such order as soon as practicable. Additionally, the Company agrees
that it shall comply with the provisions of Rule 424(b) and Rule 433, as applicable, under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) or Rule 433 were received in a
timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities Act Matters . If any event
shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus so that the Prospectus does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if in the opinion of the Agent or counsel for the Agent it is otherwise necessary to amend or supplement the Prospectus to
comply with applicable law, including the Securities Act, the Company agrees (subject to Section 4(d) and 4(f)) to promptly prepare, file with the Commission and furnish at its own expense to the Agent, amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law including the Securities Act. Neither the Agent's consent to, or delivery of,
any such amendment or supplement shall constitute a waiver of any of the Company's obligations under Sections 4(d) and 4(f). Notwithstanding the foregoing, the Company shall not be required to file such amendment or supplement if there is no
pending Issuance Notice and the Company believes that it is in its best interests not to file such amendment or supplement; provided that the Agent shall not be obligated to accept an Issuance Notice from the Company until such amendment or
supplement is filed.
(d) Agent s Review of Proposed Amendments and Supplements Prior to amending or
supplementing the Registration Statement (including any registration statement filed under Rule 462(b) under the Securities Act) or the Prospectus (excluding any amendment or supplement through incorporation of any report filed under the
Exchange Act), the Company shall furnish to the Agent for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall not file or use any such
proposed amendment or supplement without the Agent's prior consent, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule.
(e) Use of Free Writing Prospectus . Neither the Company nor the Agent has prepared, used, referred to or distributed, or will prepare,
use, refer to or distribute, without the other party's prior written consent, any “written communication” that constitutes a “free writing prospectus” as such terms are defined in Rule 405 under the Securities Act with
respect to the offering contemplated by this Agreement (any such free writing prospectus being referred to herein as a “ Free Writing Prospectus ”).
(f) Free Writing Prospectuses . The Company shall furnish to the Agent for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each proposed free writing prospectus or any amendment or supplement thereto to be prepared by or on behalf of, used by, or referred to by the Company and the
Company shall not file, use or refer to any proposed free writing prospectus or any amendment or supplement thereto without the Agent's consent. The Company shall furnish to the Agent, without charge, as many copies of any free writing
prospectus prepared by or on behalf of, or used by the Company, as the Agent may reasonably request. If at any time when a prospectus is required by the Securities Act (including, without limitation, pursuant to Rule 173(d)) to be delivered in
connection with sales of the Shares (but in any event if at any time through and including the date of this Agreement) there occurred or occurs an event or development as a result of which any free writing prospectus prepared by or on behalf of,
used by, or referred to by the Company conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company shall promptly amend or supplement such free writing prospectus to eliminate or correct such
conflict or so that the statements in such free writing prospectus as so amended or supplemented will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light
of the circumstances prevailing at such subsequent time, not misleading, as the case may be; provided, however , that prior to amending or supplementing any such free writing prospectus, the Company shall furnish to the Agent for review, a
reasonable amount of time prior to the proposed time of filing or use thereof, a copy of such proposed amended or supplemented free writing prospectus and the Company shall not file, use or refer to any such amended or supplemented free writing
prospectus without the Agent's consent.
(g) Filing of Agent Free Writing Prospectuses . The Company shall not take any action
that would result in the Agent or the Company being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Agent that the Agent otherwise would not have been
required to file thereunder.
(h) Copies of Registration Statement and Prospectus . After the date of this Agreement through the last
time that a prospectus is required by the Securities Act (including, without limitation, pursuant to Rule 173(d)) to be delivered in connection with sales of the Shares, the Company agrees to furnish the Agent with copies (which may be
electronic copies) of the Registration Statement and each amendment thereto, and with copies of the Prospectus and each amendment or supplement thereto in the form in which it is filed with the Commission pursuant to the Securities Act or
Rule 424(b) under the Securities Act, both in such quantities as the Agent may reasonably request from time to time; and, if the delivery of a prospectus is required under the Securities Act or under the blue sky or securities laws of any
jurisdiction at any time on or prior to the applicable Settlement Date for any period set forth in an Issuance Notice in connection with the offering or sale of the Shares and if at such time any event has occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it is necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Agent and to request that the Agent suspend offers to
sell Shares (and, if so notified, the Agent shall cease such offers as soon as practicable); and if the Company decides to amend or supplement the Registration Statement or the Prospectus as then amended or supplemented, to advise the Agent promptly
by telephone (with confirmation in writing) and to prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement
or omission or effect such compliance; provided, however, that if during such same period the Agent is required to deliver a prospectus in respect of transactions in the Shares, the Company shall promptly prepare and file with the Commission such an
amendment or supplement.
(i) Blue Sky Compliance . The Company shall cooperate with the Agent and counsel for the Agent to qualify
or register the Shares for sale under (or obtain exemptions from the application of) the state securities or blue sky laws or Canadian provincial securities laws of those jurisdictions designated by the Agent, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Shares. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Agent promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Shares for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof as soon as practicable.
(j) Earnings
Statement . As soon as practicable, the Company will make generally available to its security holders and to the Agent an earnings statement (which need not be audited) covering a period of at least twelve months beginning with the first fiscal
quarter of the Company occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act; provided that the Company will be deemed to have furnished such
statement to its security holders and the Agent to the extent they are filed on EDGAR or any successor system.
(k) Listing; Reservation
of Shares . (a) The Company will maintain the listing of the Shares on the Principal Market; and (b) the Company will reserve and keep available at all times, free of preemptive rights, Shares for the purpose of enabling the Company to
satisfy its obligations under this Agreement.
(l) Transfer Agent . The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Shares.
(m) Due Diligence . During the term of this Agreement, the Company will reasonably
cooperate with any reasonable due diligence review conducted by the Agent in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers,
during normal business hours and at the Company's principal offices, as the Agent may reasonably request from time to time.
(n) Representations and Warranties . The Company acknowledges that each delivery of an
Issuance Notice and each delivery of Shares on a Settlement Date shall be deemed to be (i) an affirmation to the Agent that the representations and warranties of the Company contained in or made pursuant to this Agreement are true and correct
as of the date of such Issuance Notice or of such Settlement Date, as the case may be, as though made at and as of each such date, except as may be disclosed in the Prospectus (including any documents incorporated by reference therein and any
supplements thereto); and (ii) an undertaking that the Company will advise the Agent if any of such representations and warranties will not be true and correct as of the Settlement Date for the Shares relating to such Issuance Notice, as though
made at and as of each such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented relating to such Shares).
(o) Deliverables at Triggering Event Dates; Certificates. The Company agrees that on or prior to the date of the first Issuance Notice
and, during the term of this Agreement after the date of the first Issuance Notice, upon:
(A) the filing of the Prospectus or the
amendment or supplement of any Registration Statement or Prospectus (other than a prospectus supplement relating solely to an offering of securities other than the Shares or a prospectus filed pursuant to Section 4(a)(ii)(B)), by means of a
post-effective amendment, sticker or supplement, but not by means of incorporation of documents by reference into the Registration Statement or Prospectus;
(B) the filing with the Commission of an annual report on Form 10-K (including any Form 10-K/A containing amended financial information or a material amendment to the previously filed annual report on Form 10-K) of the Company;
(C) the filing with the Commission of a quarterly report on Form 10-Q (including any Form 10-Q/A containing amended financial information or a material amendment to the previously filed quarterly report on Form 10-Q) of the Company; or
(D) the filing with the Commission of a current report on Form 8-K of the Company containing amended
financial information (other than information “furnished” pursuant to Item 2.02 or 7.01 of Form 8-K or to provide disclosure pursuant to Item 8.01 of Form 8-K relating to reclassification of certain properties as discontinued operations in accordance with Statement of Financial Accounting Standards No. 144) that is material to the offering of securities of the Company in the Agent's reasonable
discretion;
(any such event, a “ Triggering Event Date ”), the Company shall furnish the Agent (but in the case of clause (C) above
only if the Agent reasonably determines that the information contained in such current report on Form 8-K of the Company is material) with a certificate as of the Triggering Event Date, in the form and
substance satisfactory to the Agent and its counsel, substantially similar to the form previously provided to the Agent and its counsel, modified, as necessary, to relate to the Registration Statement and the Prospectus as amended or supplemented,
(A) confirming that the representations and warranties of the Company contained in this
Agreement are true and correct, (B) that the Company has performed all of its obligations hereunder to be performed on or prior to the date of such certificate and as to the matters set
forth in Section 5(a)(iii) hereof, and (C) containing any other certification that the Agent shall reasonably request. The requirement to provide a certificate under this Section 4(o) shall be
waived for any Triggering Event Date occurring at a time when no Issuance Notice is pending or a suspension is in effect, which waiver shall continue until the earlier to occur of the date the Company delivers instructions for the sale of Shares
hereunder (which for such calendar quarter shall be considered a Triggering Event Date) and the next occurring Triggering Event Date. Notwithstanding the foregoing, if the Company subsequently decides to sell Shares following a Triggering Event Date
when a suspension was in effect and did not provide the Agent with a certificate under this Section 4(o), then before the Company delivers the instructions for the sale of Shares or the Agent sells any Shares pursuant to such instructions, the
Company shall provide the Agent with a certificate in conformity with this Section 4(o) dated as of the date that the instructions for the sale of Shares are issued.
(p) Legal Opinions. On or prior to the date of the first Issuance Notice and on or prior to each Triggering Event Date with respect to
which the Company is obligated to deliver a certificate pursuant to Section 4(o) for which no waiver is applicable and excluding the date of this Agreement, a negative assurance letter and the written legal opinion of Cooley LLP, counsel to the
Company, a negative assurance letter of Latham & Watkins LLP, counsel to the Agent, and a written legal opinion of each of Cooley LLP and Knobbe Martens Olson & Bear, LLP, intellectual property counsels to the Company, shall be
delivered to the Agent, each dated the date of delivery, in form and substance reasonably satisfactory to the Agent and its counsel, substantially similar to the form previously provided to the Agent and its counsel, modified, as necessary, to
relate to the Registration Statement and the Prospectus as then amended or supplemented.
(q) Comfort Letter . On or prior to the
date of the first Issuance Notice and on or prior to each Triggering Event Date with respect to which the Company is obligated to deliver a certificate pursuant to Section 4(o) for which no waiver is applicable and excluding the date of this
Agreement, the Company shall cause KPMG LLP, the independent registered public accounting firm who has audited the financial statements included or incorporated by reference in the Registration Statement, to furnish the Agent a comfort letter, dated
the date of delivery, in form and substance reasonably satisfactory to the Agent and its counsel, substantially similar to the form previously provided to the Agent and its counsel; provided, however, that any such comfort letter will only be
required on the Triggering Event Date specified to the extent that it contains financial statements filed with the Commission under the Exchange Act and incorporated or deemed to be incorporated by reference into a Prospectus. If requested by the
Agent, the Company shall also cause a comfort letter to be furnished to the Agent on the date of occurrence of any material transaction or event requiring the filing of a current report on Form 8-K containing
material amended financial information of the Company, including the restatement of the Company's financial statements. The Company shall be required to furnish no more than one comfort letter hereunder per calendar quarter.
(r) Secretary s Certificate . On or prior to the date of the first
Issuance Notice, the Company shall furnish the Agent a certificate executed by the Secretary of the Company, signing in such capacity, dated the date of delivery (i) certifying that attached thereto are true and complete copies of the
resolutions duly adopted by the Board of Directors of the Company authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including, without limitation, the issuance of the Shares
pursuant to this Agreement), which authorization shall be in full force and effect on and as of the date of such certificate, (ii) certifying and attesting to the office, incumbency, due authority and specimen signatures of each Person who
executed this Agreement for or on behalf of the Company, and (iii) containing any other certification that the Agent shall reasonably request.
(s) Agent's Own Account; Clients' Account . The Company consents to the Agent trading, in compliance with applicable law, in
the Common Shares for the Agent's own account and for the account of its clients at the same time as sales of the Shares occur pursuant to this Agreement.
(t) Investment Limitation . The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the
Shares in such a manner as would require the Company or any of its subsidiaries to register as an investment company under the Investment Company Act.
(u) Market Activities . The Company will not take, directly or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Shares or any other reference security, whether to facilitate the sale or resale of the Shares or otherwise, and the Company will, and shall cause each of its affiliates to, comply
with all applicable provisions of Regulation M, except for repurchases made pursuant to the Company Repurchase Program; provided that the Company shall not engage in or make any repurchases under the Company Repurchase Program during any
“restricted period” as such term is defined in Regulation M. If the limitations of Rule 102 of Regulation M (“ Rule 102 ”) do not apply with respect to the Shares or any other reference security pursuant to any exception set
forth in Section (d) of Rule 102, then promptly upon notice from the Agent (or, if later, at the time stated in the notice), the Company will, and shall cause each of its affiliates to, comply with Rule 102 as though such exception were not
available but the other provisions of Rule 102 (as interpreted by the Commission) did apply. The Company shall promptly notify the Agent if it no longer meets the requirements set forth in Section (d) of Rule 102.
(v) Notice of Other Sale . Without the written consent of the Agent, the Company will not, directly or indirectly, (i) offer to
sell, sell, contract to sell, grant any option to sell or otherwise dispose of any Common Shares or securities convertible into or exchangeable for Common Shares (other than Shares hereunder), warrants or any rights to purchase or acquire Common
Shares, during the period beginning on the third Trading Day immediately prior to the date on which any Issuance Notice is delivered to the Agent hereunder and ending on the third Trading Day immediately following the Settlement Date with respect to
Shares sold pursuant to such Issuance Notice; (ii) effect a reverse stock split, recapitalization, share consolidation, reclassification or similar transaction affecting the outstanding Common Shares (other than any reverse stock split
contemplated by the Company's definitive proxy statement on Schedule 14A filed April 11, 2023); and (iii) will not directly or indirectly enter into any other “at the market” or continuous equity transaction, offer to sell,
sell, contract to sell, grant any option to sell or otherwise dispose of any Common Shares (other than the Shares offered pursuant to this Agreement) or securities convertible into or exchangeable for Common Shares, warrants or any rights to
purchase or acquire, Common Shares prior to the termination of this Agreement; provided, however, that such
restrictions will not be required in connection with the Company's (a) issuance or sale of Common Shares, options to purchase Common Shares or Common Shares issuable upon the exercise
of options or other equity awards pursuant to any employee or director share option, incentive or benefit plan, share purchase or ownership plan, long-term incentive plan, dividend reinvestment plan, inducement award under Nasdaq rules or other
compensation plan of the Company or its subsidiaries, as in effect on the date of this Agreement, (b) issuance or sale of Common Shares issuable upon exchange, conversion or redemption of securities or the exercise or vesting of warrants,
options or other equity awards outstanding at the date of this Agreement, (c) modification of any outstanding options, warrants or any rights to purchase or acquire Common Shares and (d) issuance or sale of Common Shares or securities
convertible into or exchangeable for Common Shares as consideration for mergers, acquisitions, other business combinations, joint ventures or strategic alliances occurring after the date of this Agreement which are not used for capital raising
purposes, provided that the aggregate number of Common Shares issued or underlying such securities convertible into or exchangeable for Common Shares issued in connection with all such acquisitions and other transactions shall not exceed 5% of the
aggregate number of Common Shares outstanding immediately prior to giving effect to such sale or issuance.
(w) Emerging Growth Company
Status . The Company will cease to be an Emerging Growth Company effective December 31, 2023 and will promptly notify the Agent if the Company ceases to be an Emerging Growth Company at any time during the Agency Period prior to
December 31, 2023.
Section 5. CONDITIONS TO DELIVERY OF ISSUANCE NOTICES AND TO SETTLEMENT
(a) Conditions Precedent to the Right of the Company to Deliver an Issuance Notice and the Obligation of the Agent to Sell Shares . The
right of the Company to deliver an Issuance Notice hereunder is subject to the satisfaction, on the date of delivery of such Issuance Notice, and the obligation of the Agent to use its commercially reasonable efforts to place Shares during the
applicable period set forth in the Issuance Notice is subject to the satisfaction, on each Trading Day during the applicable period set forth in the Issuance, of each of the following conditions:
(i)
Accuracy of the Company's Representations and Warranties; Performance by the Company . The Company
shall have delivered the certificate required to be delivered pursuant to Section 4(o) on or before the date on which delivery of such certificate is required pursuant to Section 4(o) . The Company
shall have performed, satisfied and complied with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to such date, including, but not limited to, the covenants
contained in Section 4(m) Section 4(q) and Section 4(r)
(ii)
No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby that prohibits or directly and materially
adversely affects any of the transactions contemplated by this Agreement, and no proceeding shall have been commenced that may have the effect of prohibiting or materially adversely affecting any of the transactions contemplated by this Agreement.
(iii)
Material Adverse Changes . Except as disclosed in the Prospectus and the Time of Sale Information,
(a) in the judgment of the Agent there shall not have occurred any Material Adverse Change; and (b) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the possible change, in the rating accorded any securities of the Company or any of its subsidiaries by any “nationally recognized statistical rating organization” as
such term is defined for purposes of Section 3(a)(62) of the Exchange Act.
(iv)
No Suspension of Trading in or Delisting of Common Shares; Other Events . The trading of the Common
Shares (including without limitation the Shares) shall not have been suspended by the Commission, the Principal Market or FINRA and the Common Shares (including without limitation the Shares) shall have been approved for listing or quotation on and
shall not have been delisted from the Nasdaq Stock Market, the New York Stock Exchange or any of their constituent markets. There shall not have occurred (and be continuing in the case of occurrences under clauses (i) and (ii) below) any of the
following: (i) trading or quotation in any of the Company's securities shall have been suspended or limited by the Commission or by the Principal Market or trading in securities generally on either the Principal Market shall have been
suspended or limited, or minimum or maximum prices shall have been generally established on any of such stock exchanges by the Commission or the FINRA; (ii) a general banking moratorium shall have been declared by any of federal or New York,
authorities; or (iii) there shall have occurred any outbreak or escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or international political, financial or economic conditions, as in the judgment of the Agent is material and adverse and makes it impracticable to market the Shares in
the manner and on the terms described in the Prospectus or to enforce contracts for the sale of securities.
(b) Documents Required to be Delivered on each Issuance Notice Date . The Agent's obligation to use its commercially reasonable efforts to place Shares hereunder shall additionally be conditioned upon the delivery to the Agent on or before
the Issuance Notice Date of a certificate in form and substance reasonably satisfactory to the Agent, executed by the Chief Executive Officer, President or Chief Financial Officer of the Company, to the effect that all conditions to the delivery of
such Issuance Notice shall have been satisfied as at the date of such certificate (which certificate shall not be required if the foregoing representations shall be set forth in the Issuance Notice).
(c) No Misstatement or Material Omission . Agent shall not have advised the Company that the Registration Statement, the Prospectus or
the Times of Sales Information, or any amendment or supplement thereto, contains an untrue statement of fact that in the Agent's reasonable opinion is material, or omits to state a fact that in the Agent's reasonable opinion is material
and is required to be stated therein or is necessary to make the statements therein not misleading.
Section 6. INDEMNIFICATION AND CONTRIBUTION
(a) Indemnification of the Agent . The Company agrees to indemnify and hold harmless the Agent, its officers and employees, and each
person, if any, who controls the Agent within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as incurred, to which the Agent or such officer, employee or controlling person may become
subject, under the Securities Act, the Exchange Act, other federal or state statutory law or regulation, or the laws or regulations of foreign jurisdictions where Shares have been offered or sold or at common law or otherwise (including in
settlement of any litigation), insofar as such loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430B under the Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any Free Writing Prospectus that the Company has used, referred to
or filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading; or (iii) any act or failure to act or any alleged act or failure to act by the Agent in connection with, or relating in any manner to, the Common Shares or
the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) or (ii) above, provided that the Company shall not
be liable under this clause (iii) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by the Agent through its bad faith or willful misconduct, and to reimburse the Agent and each such officer, employee and controlling person for any and all expenses (including the reasonable and documented fees and
disbursements of counsel chosen by the Agent) as such expenses are reasonably incurred by the Agent or such officer, employee or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing indemnity agreement shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the extent, arising out of or based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Agent expressly for use in the Registration Statement, any such Free Writing Prospectus or
the Prospectus (or any amendment or supplement thereto), it being understood and agreed that the only such information furnished by the Agent to the Company consists of the information set forth in the first sentence of the ninth paragraph under the
caption “Plan of Distribution” in the Prospectus. The indemnity agreement set forth in this Section 6(a) shall be in addition to any liabilities that the Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers . The Agent agrees to indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Shares have been offered or
sold or at common law or otherwise (including in settlement of any litigation), arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any information deemed to be a part thereof pursuant to Rule 430B under the Securities Act, or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not misleading; or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Free Writing Prospectus that the Company has used, referred to or
filed, or is required to file, pursuant to Rule 433(d) of the Securities Act or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading; but only to the extent arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished to the Company by the Agent expressly for use in the Registration Statement, any such Free Writing Prospectus or the Prospectus (or any amendment or supplement thereto), it being understood
and agreed that the only such information furnished by the Agent to the Company consists of the information set forth in the first sentence of the ninth paragraph under the caption “Plan of Distribution” in the Prospectus, and to reimburse
the Company and each such director, officer and controlling person for any and all documented expenses (including the reasonable and documented fees and disbursements of counsel chosen by the Company) as such expenses are reasonably incurred by the
Company or such officer, director or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. The indemnity agreement set forth in this
Section 6(b) shall be in addition to any liabilities that the Agent or the Company may otherwise have.
(c) Notifications and
Other Indemnification Procedures . Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section , notify the indemnifying party in writing of the commencement thereof, but the omission to so notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section or to the extent it is not prejudiced as a proximate result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it shall elect, jointly with
all other indemnifying parties similarly notified, by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded based on the advice of counsel that a conflict
may arise between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (together with local counsel), representing the indemnified parties who are parties to such action), which counsel (together with any local counsel)
for the indemnified parties shall be selected by the Agent (in the case of counsel for the indemnified parties referred to in Section 6(a) above), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized in writing the employment of counsel for the indemnified
party at the expense of the indemnifying party, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party and shall be paid as they are incurred.
(d) Settlements . The indemnifying party under this Section shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 6(c) hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than
45 days after receipt by such indemnifying party of the aforesaid request; and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent includes an unconditional release of such indemnified party from all liability on
claims that are the subject matter of such action, suit or proceeding.
(e) Contribution . If the indemnification provided for in
this Section is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the one hand, and the Agent, on the other hand, from the offering of the Shares pursuant to this Agreement; or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Agent, on the other hand, in
connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the
Agent, on the other hand, in connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total gross proceeds from the offering of the Shares (before deducting expenses) received by the Company bear to the total commissions received by the Agent.
The relative fault of the Company, on the one hand, and the Agent, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, on the one hand, or the Agent, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in Section 6(c) , any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The
provisions set forth in Section 6(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 6(e) provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 6(c) for purposes of indemnification.
The Company and the Agent agree that it would not be just and equitable if contribution pursuant to this Section 6(e) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6(e)
Notwithstanding the provisions of this Section 6(e) , the Agent shall not be required to contribute any amount in
excess of the agent fees received by the Agent in connection with the offering contemplated hereby. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6(e) , each officer and employee of the Agent and each person, if any, who controls the Agent within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution as the Agent, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company with
the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as the Company.
Section 7.
TERMINATION & SURVIVAL
(a) Term . Subject to the provisions of this Section , the term of
this Agreement shall continue from the date of this Agreement until the end of the Agency Period, unless earlier terminated by the parties to this Agreement pursuant to this Section
(b) Termination; Survival Following Termination
(i)
Either party may terminate this Agreement prior to the end of the Agency Period, by giving written notice as
required by this Agreement, upon 10 calendar days' notice to the other party; provided that, (A) if the Company terminates this Agreement after the Agent confirms to the Company any sale of Shares, the Company shall remain obligated to
comply with Section 3(b)(v) with respect to such Shares and (B) Section 2 Section 6 Section and Section shall survive termination of this Agreement. If
termination shall occur prior to the Settlement Date for any sale of Shares, such sale shall nevertheless settle in accordance with the terms of this Agreement.
(ii)
In addition to the survival provision of Section 7(b)(i) , the respective indemnities,
agreements, representations, warranties and other statements of the Company, of its officers and of the Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf
of the Agent or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and, anything herein to the contrary notwithstanding, will survive delivery of and payment for the Shares sold
hereunder and any termination of this Agreement.
Section 8. MISCELLANEOUS
(a) Press Releases and Disclosure . The Company may issue a press release describing the material terms of the transactions contemplated
hereby as soon as practicable following the date of this Agreement, and may file with the Commission a Current Report on Form 8-K, with this Agreement attached as an exhibit thereto, describing the
material terms of the transactions contemplated hereby, and the Company shall consult with the Agent prior to making such disclosures, and the parties hereto shall use all commercially reasonable efforts, acting in good faith, to agree upon a text
for such disclosures that is reasonably satisfactory to all parties hereto. No party hereto shall issue thereafter any press release or like public statement (including, without limitation, any disclosure required in reports filed with the
Commission pursuant to the Exchange Act) related to this Agreement or any of the transactions contemplated hereby without the prior written approval of the other party hereto, except as may be necessary or appropriate in the reasonable opinion of
the party seeking to make disclosure to comply with the requirements of applicable law or stock exchange rules. If any such press release or like public statement is so required, the party making such disclosure shall consult with the other party
prior to making such disclosure, and the parties shall use all commercially reasonable efforts, acting in good faith, to agree upon a text for such disclosure that is reasonably satisfactory to all parties hereto.
(b) No Advisory or Fiduciary Relationship The Company acknowledges and agrees that (i) the transactions contemplated by
this Agreement, including the determination of any fees, are arm's-length commercial transactions between the Company and the Agent, (ii) when acting as a principal under this Agreement, the Agent is
and has been acting solely as a principal and is not the agent or fiduciary of the Company, or its stockholders, creditors, employees or any other party, (iii) the Agent has not assumed nor will assume an advisory or fiduciary responsibility in
favor of the Company with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether the Agent has advised or is currently advising the Company on other matters) and the Agent does not have any obligation
to the Company with respect to the transactions contemplated hereby except the obligations expressly set forth in this Agreement, (iv) the Agent and its respective affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Company, and (v) the Agent has not provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated hereby and the Company has consulted its own legal, accounting,
regulatory and tax advisors to the extent it deemed appropriate.
(c) Research Analyst Independence . The Company acknowledges that the Agent's
research analysts and research departments are required to and should be independent from their respective investment banking divisions and are subject to certain regulations and internal policies, and as such the Agent's research analysts may
hold views and make statements or investment recommendations and/or publish research reports with respect to the Company or the offering that differ from the views of their respective investment banking divisions. The Company understands that the
Agent is a full service securities firm and as such from time to time, subject to applicable securities laws, may effect transactions for its own account or the account of its customers and hold long or short positions in debt or equity securities
of the companies that may be the subject of the transactions contemplated by this Agreement.
(d) Notices . All communications
hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the
Agent:
Jefferies LLC
520
Madison Avenue
New York, NY 10022
Facsimile:
Attention: General
Counsel
with a copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San
Diego, CA 92130
Facsimile: (858)
Attention: Cheston J. Larson
If
to the Company:
Equillium, Inc.
2223 Avenida de la Playa, Suite 105
La Jolla, CA 92037
Attention:
Chief Executive Officer
with a copy (which shall not constitute notice) to:
Cooley LLP
10265 Science Center
Drive
San Diego, CA 92121
Facsimile: (858)
Attention: Thomas A. Coll
Any party hereto may change the address for receipt of communications by giving written notice to the others
in accordance with this Section 8(d)
(e) Successors . This Agreement will inure to the benefit of and be
binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section , and in each case their respective successors, and no other person will have any
right or obligation hereunder. The term “successors” shall not include any purchaser of the Shares as such from the Agent merely by reason of such purchase.
(f) Partial Unenforceability . The invalidity or unenforceability of any Article, Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Article, Section, paragraph or provision hereof. If any Article, Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be
deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
(g) Governing Law
Provisions . This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in such state. Any legal suit, action or proceeding arising out of or
based upon this Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States of America located in the Borough of Manhattan in the City of New York or the courts of the State of New York in each case
located in the Borough of Manhattan in the City of New York (collectively, the “ Specified Courts ”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court, as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient
forum.
(h) General Provisions . This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all
prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof, including that certain Open Market Sale Agreement between the Company and the Agent, dated as of July 14,
2020, which the Company and the Agent hereby agree is terminated and superseded by this Agreement as of the date hereof, except for those obligations, rights and provisions that survive termination pursuant to Section 7 thereof. This Agreement
may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and may be delivered by facsimile transmission or by electronic delivery
of a portable document format (PDF) file. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Article and Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
[Signature Page Immediately Follows]
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms
Very truly yours,
EQUILLIUM, INC.
By:
/s/ Jason Keyes
Name:
Jason Keyes
Title:
Chief Financial Officer
The foregoing Agreement is hereby confirmed and accepted by the Agent in New York, New York as of the
date first above written.
JEFFERIES LLC
By:
/s/ Donald Lynaugh
Name:
Donal Lynaugh
Title:
Managing Director
EXHIBIT A
ISSUANCE NOTICE
[Date]
Jefferies LLC
520 Madison Avenue
New York, New York 10022
Attn: []
Reference is made to the Open Market Sale Agreement between Equillium, Inc. (the “ Company ”) and Jefferies LLC (the “ Agent ”)
dated as of October 5, 2023. The Company confirms that all conditions to the delivery of this Issuance Notice are satisfied as of the date hereof.
Date of Delivery of Issuance Notice (determined pursuant to Section 3(b)(i)
Issuance Amount (equal to the total Sales Price for such Shares):
Number of days in selling period:
First date of selling period:
Last date of selling period:
Settlement Date(s) if other than standard T+2 settlement:
Floor Price Limitation (in no event less than $1.00 without the prior written consent of the Agent, which consent may be
withheld in the Agent's sole discretion): $ ____ per share
Comments:
By:
Name:
Title:
A-1
Schedule A
Notice Parties
The Company
Jason A. Keyes
The Agent
Michael Magarro
Donald Lynaugh
Jack Fabbri
AMENDMENT NO. 1 TO THE OPEN MARKET SALE AGREEMENT SM
August 3, 2025
JEFFERIES LLC
520 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
This Amendment No. 1 to the Open Market Sale Agreement SM (this
“ Amendment ”) is entered into as of the date first written above by Equillium, Inc., a Delaware corporation (the “ Company ”), and Jefferies LLC (the “ Prior Agent ”), who are parties to that certain
Open Market Sale Agreement SM , dated October 5, 2023 (the “ Agreement ”) relating to the offering of the Company's Common Shares, and LifeSci Capital LLC (the “ New
Agent ”). The parties wish to amend the Agreement through this Amendment to replace the Prior Agent as Agent with the New Agent, effective as of the date hereof (the “ Effective Date ”).
All capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement.
The parties, intending to be legally bound, hereby amend the Agreement, as of the Effective Date, as follows:
1. On and after the Effective Date, all references to “Agent” shall mean LifeSci Capital LLC.
2. Section 8(d) of the Agreement is hereby deleted in its entirety and replaced with the following:
“(d) Notices . All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to
the parties hereto as follows:
If to the Agent:
LifeSci Capital LLC
1700
Broadway, 40th Floor
New York, NY 10019
Attn: Patrick Marano
with a
copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San
Diego, CA 92130
Facsimile: (858)
Attention: Matthew T. Bush
If
to the Company:
Equillium, Inc.
2223 Avenida de la Playa, Suite 105
La Jolla, CA 92037
Attention:
Chief Executive Officer
with a copy (which shall not constitute notice) to:
Cooley LLP
10265 Science Center
Drive
San Diego, CA 92121
Facsimile: (858)
Attention: Thomas A. Coll
Any party hereto may change the address for receipt of communications by giving written notice to the others
in accordance with this Section 8(d).”
3. All references in the Agreement to the “Agreement” shall mean the Agreement
as amended by this Amendment; provided, however, that all references to the “date of this Agreement” or the “date hereof” in the Agreement shall continue to refer to the date of the Agreement, unless otherwise amended
herein and except with respect to the first paragraph of Section 2, Section 4(f) “Free Writing Prospectuses,” and Section 8(a) “Press Releases and Disclosure,” where references to the “date of this
Agreement” or the “date hereof” in the Agreement shall refer to each of the date of the Agreement and the Effective Date of this Amendment. Notwithstanding anything to the contrary contained herein, this Amendment shall not have any
effect on offerings or sales of Common Shares prior to the Effective Date or on the terms of the Agreement. and the rights and obligations of the parties thereunder, insofar as they relate to such offerings or sales, including, without limitation,
the representations, warranties and agreements (including the indemnification and contribution provisions thereunder), which provisions shall survive this Amendment with respect to the Prior Agent in accordance with the survival provisions of the
Agreement, including the survival of Section 2, Section 6, Section 7 and Section 8 of the Agreement.
The parties, intending to be
legally bound, hereby further agree:
This Amendment has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable in accordance with its terms, except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
The Company shall consult with the Prior Agent and the New Agent prior to making disclosures related to this Amendment, and
the parties hereto shall use all commercially reasonable efforts, acting in good faith, to agree upon a text for such disclosures that is reasonably satisfactory to all parties hereto.
This Amendment and any claim, controversy or dispute arising under or related to this Amendment shall be governed by and construed in accordance with the
internal laws of the State of New York applicable to agreements made and to be performed in such state. Any legal suit, action or proceeding arising out of or based upon this Amendment or the transactions contemplated hereby may be instituted in the
federal courts of the United States of America located in the Borough of Manhattan in the City of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the
“ Specified Courts ”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party's address set forth in the Agreement, as amended by this
Amendment, shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in
the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.
The Agreement, as amended by this Amendment, supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Amendment may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit.
The invalidity or unenforceability of any section, paragraph or provision of this Amendment shall not affect the validity
or enforceability of any other section, paragraph or provision hereof. If any section, paragraph or provision of this Amendment is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and
only such minor changes) as are necessary to make it valid and enforceable.
This Amendment may be executed in counterparts, each of which shall be deemed an original, but all such
respective counterparts shall together constitute one and the same instrument. This Amendment may be delivered by any party by facsimile, email or other electronic transmission.
[Remainder of Page Intentionally Blank]
If the foregoing correctly sets forth the understanding among the Company, the Prior Agent
and the New Agent, please so indicate in the space provided below for that purpose, whereupon this Amendment shall constitute a binding amendment to the Agreement between the Company, the Prior Agent and the Agent.
Very truly yours,
EQUILLIUM, INC.
By:
/s/ Bruce D. Steel
Name:
Bruce D. Steel
Title:
Chief Executive Officer
JEFFERIES LLC
By:
/s/ Michael Brinkman
Name:
Michael Brinkman
Title:
Managing Director
LIFESCI CAPITAL LLC
By:
/s/ Andrew McDonald
Name:
Andrew McDonald, Ph.D.
Title:
Chief Executive Officer
Exhibit 99.1
4 AUGUST 2025
Equillium Announces
Strategic Expansion of Cryptocurrency Treasury Reserve Strategy
Equillium, Inc. (Nasdaq: EQ), a biotechnology innovator developing novel therapies to treat
severe autoimmune and inflammatory disorders, today announced a strategic expansion to integrate a cryptocurrency treasury reserve strategy as part of its broader financial and growth objectives.
“As we are actively evaluating strategic options for the company, I am pleased to announce we have expanded our treasury strategy to include digital currencies
for the diversification, liquidity and long-term capital appreciation potential they represent,” stated Bruce Steel, Chief Executive Officer of Equillium. “Following a thorough review of the sector, the Board and I have concluded that the
addition of this strategy is in the best interests of our stockholders, and we have updated our treasury investment policy accordingly. We look forward to providing additional updates on this strategy during the third quarter of 2025.”
In parallel with the addition of the cryptocurrency treasury strategy, the company will continue to pursue its biotech mission to advance life-changing therapeutics
towards patients with the goal of preparing EQ504, its novel aryl hydrocarbon receptor modulator, for clinical development.
As of June 30, 2025, the company
had cash and cash equivalents totaling approximately $11.5 million. Based on implemented and ongoing operating changes to decrease its expenditures and conserve cash, the company expects that its existing cash and cash equivalents will enable
it to fund operations into the fourth quarter of 2025, based on certain assumptions and estimates that may prove to be inaccurate.
About Preliminary Financial
Results
The preliminary results set forth above are unaudited, are based on management's initial review of the company's results for the quarter
ended June 30, 2025, and are subject to revision based upon the company's quarter-end closing procedures. Actual results may differ from the preliminary unaudited results following the completion of quarter-end closing procedures, final adjustments or other developments arising between now and the time that the company's financial results are finalized. In addition, the preliminary unaudited results are
not a comprehensive statement of the company's financial results for the quarter ended June 30, 2025, should not be viewed as a substitute for full, unaudited financial statements for the quarter ended June 30, 2025, and are not
necessarily indicative of the company's results for any future period.
About EQ504
EQ504 is
an investigational potent and selective aryl hydrocarbon receptor (AhR) modulator designed with a multi-modal, non-immunosuppressive mechanism of action to be complementary to other inflammation and immunology
agents. AhR is critical to barrier organ tissue physiology and immunology, maintaining barrier function and promoting tissue repair and regeneration, while regulating resident immune cells with anti-inflammatory responses. EQ504's preclinical
properties provide the potential for targeted, local delivery such as enteric coating for the treatment of ulcerative colitis or inhaled formulations for the treatment of inflammatory lung diseases.
About Equillium
Equillium is a biotechnology innovator developing novel
therapies to treat severe autoimmune and inflammatory disorders, and is pursuing an integrated cryptocurrency treasury reserve strategy as part of its broader financial and growth objectives.
For more information, visit www.equilliumbio.com
Forward Looking Statements
Statements contained in this
press release regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words
such as “anticipate”, “believe”, “could”, “continue”, “expect”, “estimate”, “may”, “plan”, “outlook”, “future”, “potential” and
“project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters.
These
statements include, but are not limited to, statements regarding the implementation of Equillium's cryptocurrency treasury reserve strategy and the potential value the strategy may create for stockholders; Equillium's plans and timeline
for providing an update on its cryptocurrency treasury reserve strategy; Equillium's expectation that its cash and cash equivalents are sufficient to fund its operations into the fourth quarter of 2025; Equillium's plans and strategies
with respect to EQ504; and EQ504's potential to treat ulcerative colitis or inflammatory lung disease. Because such statements are subject to risks and uncertainties, many of which are outside of Equillium's control, actual results may
differ materially from those expressed or implied by such forward-looking statements. Risks that contribute to the uncertain nature of the forward-looking statements include: Equillium's ability to execute its plans and strategies;
Equillium's ability to continue as a going concern; Equillium will need to raise additional capital, which may not be available on acceptable terms or at all, to give effect to its cryptocurrency treasury reserve strategy, advance the
development of EQ504 or any other product candidate, and to continue as a going concern; risks related to Equillium's new cryptocurrency treasury reserve strategy, including, among others, the volatility of cryptocurrency, Equillium's
ability to hire or engage qualified individuals to assist with implementing its strategy, the risk that Equillium's stock price may be highly correlated to the price of digital assets that it holds, if any, the risks relating to the significant
legal, commercial, regulatory and technical uncertainty regarding digital assets generally, and the risks relating to the treatment of crypto assets for U.S. tax purposes; the risk that Equillium may never acquire crypto assets; the risk that the
reported financial results will differ from the estimates provided in this press release; risks related to performing clinical and pre-clinical studies; whether the results from clinical and pre-clinical studies will validate and support the safety and efficacy of Equillium's
product candidates; changes in the competitive landscape; and potential litigation or other disputes. These and other risks and uncertainties are described more fully under the caption “Risk
Factors” and elsewhere in Equillium's filings and reports, which may be accessed for free by visiting the Securities and Exchange Commission's website and on Equillium's website under the heading “Investors.” Investors
should take such risks into account and should not rely on forward-looking statements when making investment decisions. All forward-looking statements contained in this press release speak only as of the date on which they were made. Equillium
undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Corporate Contact
Investor Relations
ir@equilliumbio.com
——
Exhibit 99.2
Risks Related to Our Financial Position and Need for Additional Capital
Our need for additional capital raises substantial doubt about our ability to continue as a going concern. We will require substantial additional
funding, in the immediate term, to continue operations and to resume and complete the planned or future development and any commercialization of EQ504, EQ302 and any future product candidates. If we are unable to raise this capital when needed, we
may be forced to further delay or eliminate our research and development programs or other operations pursue strategic alternatives, including mergers, or wind up the company's operations entirely.
Although we have implemented operating changes and plan to take further actions as necessary to decrease our expenditures and conserve our cash, we expect our
expenses to potentially increase substantially over the next few years if EQ504 or other product candidates successfully advance through additional stages of development and larger, more expensive clinical studies. The development of biotechnology
product candidates is capital intensive. As we conduct non-clinical research and clinical development of our product candidates, we will need substantial additional funds to maintain and expand our
capabilities in a variety of areas including discovery and non-clinical research, clinical development, regulatory affairs, product development, product quality assurance, and pharmacovigilance. In addition,
if we obtain marketing approval of any of our product candidates, we expect to incur significant commercialization expenses for marketing, sales, manufacturing and distribution. Some of those commercialization investments may be made at-risk in advance of receiving an approval.
Based on our current operating plans, we believe that our cash and cash
equivalents as of June 30, 2025, will be sufficient to fund operations into the fourth quarter of 2025, based on certain assumptions and estimates that may prove to be inaccurate. As a result, there is substantial doubt about our ability to
continue as a going concern. Specifically, management's projected cash runway is based on estimates of reduced expenses related to cash savings initiatives and operational changes that have been made by the Company, including with respect to
the closure of the Phase 3 EQUATOR study, not undertaking further development of EQ302, paused development of EQ504, eliminating certain positions, pausing the prosecution and renewals of patents related to itolizumab and EQ302, and reducing certain
discretionary expenditures.
Our financial statements included in our recent Quarterly Report on Form 10-Q filed
with the SEC on May 14, 2025 were prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. We may be forced to extend payment terms with
suppliers, liquidate assets where possible at a potentially lower amount than as recorded in our financial statements, further curtail planned operations or cease operations entirely and wind up our business. Any of these could materially and
adversely affect our liquidity, financial condition and business prospects and, as a result, our stockholders may not receive full value, or may receive no value, for their investment. In light of our existing cash and cash equivalents and our
current obligations, such a liquidation or disposition process may occur subject to bankruptcy.
Ono Pharmaceuticals Co., Ltd.., or Ono, did not exercise
its option to acquire our rights to itolizumab (EQ001) and as a result, on October 30, 2024, Ono's option and the asset purchase agreement automatically terminated. With the expiration of Ono's option period, we no longer receive
reimbursement from Ono for our itolizumab (EQ001) development expenses incurred after October 30, 2024, which has adversely impacted our net cash used in operations. As a result of Ono's decision to let its option lapse, we have and will
need to continue to significantly reduce our operating burn to be able to fund our operations into the fourth quarter of 2025, as described above. In addition to significantly decreasing our spending, we have and will continue to pursue sources of
additional capital, including pursuant to the Open Market Sales Agreement SM , dated October 8, 2023, as amended August 3, 2025, with LifeSci Capital LLC (the “2023 ATM
Facility”) as well as other financing sources that may be available to us. Our ability to meaningfully access our 2023 ATM Facility or otherwise raise additional capital was adversely impacted by negative FDA feedback on our EQUATOR results. We
have implemented further cost cutting measures including pausing development of our product candidates, such as EQ504, and pausing the prosecution and renewals of patents related to itolizumab and EQ302. Further, we may need to pursue strategic
alternatives, including mergers, or wind up the company's operations entirely.
Changing circumstances or inaccurate estimates by us may cause us to use capital significantly faster than
we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. For example, our planned or future clinical studies of our product candidates may encounter technical, enrollment or
other issues that could cause our development costs to increase more than we expect.
We do not have sufficient funds to continue the clinical development
of EQ504 or any of our product candidates. We will need to raise substantial additional capital to complete the development and commercialization of EQ504 and any other product candidates, which additional capital, if capable of being raised, may be
raised through the sale of our common stock or other securities or through the entering into of alternative strategic transactions, the terms of which may require us to divest one or more of our product candidates, or cause our stockholders to incur
substantial dilution.
Future capital requirements will depend on many factors, including:
•
the initiation, progress, timing, costs and results, if we resume development activities, of our planned or
future non-clinical and clinical studies of EQ504, itolizumab (EQ001), EQ302 and other future product candidates, including as such activities may be adversely impacted by public health epidemics or outbreaks,
the evolving conflict between Russia and Ukraine, the conflict in the Middle East, bank failures, tariffs and inflationary pressures on the economy;
•
our ability to timely implement and realize the benefit of significant expense reductions;
•
the advancement and cost of preclinical research, if we resume development activities, of EQ504, EQ302 and other
novel preclinical drug candidates;
•
the number and scope of indications we decide to pursue for the development of our product candidates;
•
the cost, timing and impact of our new cryptocurrency treasury reserve strategy;
•
the cost, timing and outcome of regulatory review of any Biologics License Application, or BLA, or New Drug
Application, or NDA, we may submit for our product candidates;
•
the costs and timing of manufacturing EQ504, itolizumab (EQ001) and other product candidates;
•
the costs of drug formulation research and device development;
•
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual
property rights and defending intellectual property-related claims;
•
our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel,
including personnel to support the development of our product candidates;
•
the costs associated with being a public company;
•
our ability to enter into partnerships or otherwise monetize our pipeline through strategic transactions on a
timely basis, on terms that are favorable to us, or at all;
•
the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;
•
the extent to which we acquire or in-license other product candidates and
technologies or engage in in-house discovery and preclinical research of new product candidates;
•
the legal and other transactional costs associated with our business development activities; and
•
the cost associated with commercializing EQ504, itolizumab (EQ001) or any of our other product candidates, if
approved for commercial sale.
In August 2025, we amended the 2023 ATM Facility with Jefferies LLC, to replace Jefferies LLC as the
sales agent with LifeSci Capital LLC. Under the 2023 ATM Facility, we may offer and sell shares of our common stock having an aggregate offering price of up to $21.95 million from time to time through LifeSci Capital LLC acting as our sales
agent.
Our commercial revenues, if any, are expected to be primarily derived from sales of products, which is unlikely to happen for at least several
years, if ever. We will need to obtain substantial additional funding to continue our operations. Adequate additional financing may not be available to us on acceptable terms, or at all. Our ability to raise additional capital was adversely impacted
by the FDA's negative feedback on the EQUATOR trial results, and will be adversely impacted by the potential worsening global economic conditions and disruptions to, and volatility in, the credit and financial markets in the United States and
worldwide resulting from public health epidemics or outbreaks, bank failures, potential tariffs, the conflict between Russia and Ukraine, the conflicts in the Middle East,
and monetary policy changes of federal agencies that have increased interest rates to address inflationary pressures on the economy. If such disruptions persist and deepen, we could experience an
inability to access additional capital. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If we are
unable to raise capital when needed or on attractive terms, we would be forced to further delay or eliminate our research and development programs or other operations, potentially entirely, or enter into partnerships or otherwise monetize our
pipeline through strategic transactions on terms that may not be as favorable to us as if we developed or commercialized the product candidates ourselves. Further, we may not be able to access a portion of our existing cash, cash equivalents and
investments due to market conditions.
Risks Related to Our Crypto Treasury Strategy
Cryptocurrencies are highly volatile assets, and fluctuations in the price of cryptocurrencies are likely to influence our financial results and the
market price of our common stock.
Cryptocurrencies are highly volatile assets, and significant fluctuations in the price of cryptocurrencies over
short periods of time are likely to influence our financial results and the market price of our common stock. Our financial results and the market price of our common stock would be adversely affected, and our business and financial condition would
be negatively impacted, if the price of cryptocurrency decreased substantially (as it has in the past, such as during 2022), including as a result of:
•
decreased user and investor confidence in cryptocurrency, including due to the various factors described herein;
•
investment and trading activities such as (i) trading activities of highly active retail and institutional
users, speculators, miners and investors, or of the U.S. or state governments, (ii) actual or expected significant dispositions of cryptocurrency by large holders, and (iii) actual or perceived manipulation of the spot or derivative
markets for cryptocurrency or spot cryptocurrency exchange-traded products (“ETPs”);
•
negative publicity, media or social media coverage, or sentiment due to events in or relating to, or perception
of, cryptocurrency or the broader digital assets industry, for example, (i) public perception that cryptocurrency can be used as a vehicle to circumvent sanctions, including sanctions imposed on Russia or certain regions related to the ongoing
conflict between Russia and Ukraine, or to fund criminal or terrorist activities, such as the purported use of digital assets by Hamas to fund its terrorist attack against Israel in October 2023; (ii) expected or pending civil, criminal, regulatory
enforcement or other high profile actions against major participants in the cryptocurrency ecosystem, including potential future SEC enforcement actions; (iii) additional filings for bankruptcy protection or bankruptcy proceedings of major
digital asset industry participants, such as the bankruptcy proceeding of FTX Trading and its affiliates; and (iv) the actual or perceived environmental impact of cryptocurrency and related activities, including environmental concerns raised by
private individuals, governmental and non-governmental organizations, and other actors related to the energy resources consumed in the cryptocurrency mining process;
•
changes in consumer preferences and the perceived value or prospects of cryptocurrency;
•
competition from other digital assets that exhibit better transaction speed, security, scalability, or energy
efficiency, that feature other more favored characteristics, that are backed or held in large amounts by governments, including the U.S. government, or reserves of fiat currencies, or that represent ownership or security interests in physical
assets;
•
a decrease in the price of other digital assets, including stablecoins, or the crash or unavailability of
stablecoins that are used as a medium of exchange for cryptocurrency purchase and sale transactions, such as the crash of the stablecoin Terra USD in 2022, to the extent the decrease in the price of such other digital assets or the unavailability of
such stablecoins may cause a decrease in the price of cryptocurrency or adversely affect investor confidence in digital assets generally;
•
disruptions, failures, unavailability, or interruptions in service of trading venues for cryptocurrency, such as,
for example, the announcement by the digital asset exchange FTX Trading that it would freeze withdrawals and transfers from its accounts and subsequent filing for bankruptcy protection or an SEC enforcement action brought against an exchange or
other trading venue, which seeks to freeze all of its assets during the pendency of the enforcement action;
•
the filing for bankruptcy protection by, liquidation of, or market concerns about the financial viability of
digital asset custodians, trading venues, lending platforms, investment funds, or other digital asset industry participants, such as the filing for bankruptcy protection by digital asset trading venues FTX Trading and BlockFi and digital asset
lending platforms Celsius Network and Voyager Digital Holdings in 2022, the ordered liquidation of the digital asset investment fund Three Arrows Capital in 2022, the announced liquidation of Silvergate Bank in 2023, the government-mandated closure
and sale of Signature Bank in 2023, the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by the Nevada Department of Business
and Industry in 2023, and the exit of Binance Holdings Ltd. from the U.S. market as part of its settlement with the Department of Justice and other federal regulatory agencies;
•
regulatory, legislative, enforcement and judicial actions that adversely affect the price, ownership,
transferability, trading volumes, legality or public perception of cryptocurrency, or that adversely affect the operations of or otherwise prevent digital asset custodians, trading venues, lending platforms or other digital assets industry
participants from operating in a manner that allows them to continue to deliver services to the digital assets industry;
•
transaction congestion and fees associated with processing transactions on the applicable cryptocurrency network;
•
macroeconomic changes, such as changes in the level of interest rates and inflation, fiscal and monetary policies
of governments, trade restrictions, and fiat currency devaluations;
•
developments in mathematics or technology, including in digital computing, algebraic geometry and quantum
computing, that could result in the cryptography used by the cryptocurrency blockchain becoming insecure or ineffective; and
•
changes in national and international economic and political conditions, including, without limitation, the
adverse impact attributable to the economic and political instability caused by the current conflict between Russia and Ukraine and the economic sanctions adopted in response to the conflict, and the ongoing conflicts in the Middle East, as well as
expectations regarding changes to the regulatory environment, including for the U.S. digital asset industry.
We may use the net
proceeds from any offering by the Company to purchase cryptocurrencies, the price of which has been, and will likely continue to be, highly volatile.
We may use the net proceeds from any offering by the Company, including the Open Market Sale Agreement SM ,
dated October 5, 2023, as amended August 3, 2025 (the “Agreement”), between LifeSci Capital LLC and us, to purchase cryptocurrencies. Cryptocurrencies are highly volatile and do not pay interest or other returns, and, as a
result, our ability to generate a return on any investments into cryptocurrencies from the net proceeds from any offering will depend on whether there is appreciation in the value of the cryptocurrencies we purchase, if any, following our purchases
thereof with the net proceeds from such offering. Future fluctuations in cryptocurrency trading prices may result in our converting cryptocurrencies purchased with the net proceeds from an offering, if any, into cash with a value
substantially below the net proceeds from such offering.
Cryptocurrency and other digital assets are novel assets, and are subject to significant
legal, commercial, regulatory and technical uncertainty.
Cryptocurrency and other digital assets are relatively novel and are subject to
significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects and evolving, and it is possible that regulators
in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of digital assets or results in increased compliance costs, limitations on our business model, or the forced
liquidation of our digital asset holdings, if any. We may also be subject to enforcement actions or penalties if our activities are deemed to violate applicable laws or regulations.
The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and
regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of cryptocurrency or the ability of individuals or institutions such as us to own or transfer cryptocurrency. For example, in
July 2025 the United States enacted the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”), the first federal statute establishing prudential requirements for the issuance, reserve backing and
supervision of U.S.-dollar-pegged stablecoins. In the same week, the House of Representatives passed the Digital Asset Market CLARITY Act of 2025 (“CLARITY Act”), which—if ultimately enacted—would allocate jurisdiction between
the SEC and Commodity Futures Trading Commission and create a market-structure framework for digital commodities; the bill now awaits Senate action. International laws, including the European Union's Markets in Crypto Assets Regulation and the
U.K.'s Financial Services and Markets Act 2023 have also recently taken effect.
It is also not possible to predict the nature of any such additional
authorities, how additional legislation or regulatory oversight—such as the implementing regulations under the GENIUS Act or any Senate amendments to the CLARITY Act—might impact the ability of digital asset markets to function or the
willingness of financial and other institutions to continue to provide services to the digital assets industry, nor how any new regulations or changes to existing regulations might impact the value of digital assets generally and cryptocurrency
specifically. The consequences of increased or different regulation of digital assets and digital asset activities could adversely affect the market price of cryptocurrency and in turn adversely affect the market price of our common stock.
Moreover, the risks of engaging in a cryptocurrency treasury strategy are relatively novel and have created, and could continue to create, complications due
to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
The growth of the digital assets industry in general, and the use and acceptance of cryptocurrency in particular, may also impact the price of
cryptocurrency and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of cryptocurrency may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure
to cryptocurrency, institutional demand for cryptocurrency as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for cryptocurrency as a means of payment, and the availability
and popularity of alternatives to cryptocurrency. Even if growth in cryptocurrency adoption occurs in the near or medium-term, there is no assurance that cryptocurrency usage will continue to grow over the long-term.
Recent actions by U.S. banking regulators have reduced the ability of cryptocurrency-related services providers to gain access to banking services and
liquidity of digital assets may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for cryptocurrency and other digital assets.
In addition, while the current administration has expressed support regarding the development and use of digital assets and the US recently enacted the
GENIUS Act, the specific regulatory frameworks, including the potential adoption of the CLARITY Act, are still to be developed. Expectations around U.S. digital asset policy, including potential sentiments that the U.S. government is not moving
quickly enough or not meeting policy expectations, may adversely affect the price of cryptocurrency.
Cryptocurrency holdings are less liquid than
our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.
Historically, the cryptocurrency markets have been characterized by significant volatility in price over short periods of time, limited liquidity and trading
volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and various other risks
inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our digital assets at favorable prices or at all. For example, a number of cryptocurrency trading venues
temporarily halted deposits and withdrawals in 2022. As a
result, cryptocurrency holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. Further, cryptocurrency we will hold with our custodians
and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the
Securities Investor Protection Corporation. Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered cryptocurrencies or otherwise generate funds using cryptocurrency holdings,
including in particular, during times of market instability or when the price of cryptocurrencies has declined significantly. If we are unable to sell digital assets, enter into additional capital raising transactions using cryptocurrency as
collateral, or otherwise generate funds using cryptocurrency holdings, or if we are forced to sell cryptocurrency at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively
impacted.
We may face risks relating to the custody of our cryptocurrency, if any, including the loss or destruction of private keys required to
access our cryptocurrency and cyberattacks or other data loss relating to our cryptocurrency.
We intend to hold our cryptocurrency with regulated
custodians that will have duties to safeguard our private keys. Custodial services contracts may restrict our ability to reallocate our cryptocurrency among custodians, and our cryptocurrency holdings may be concentrated with a single custodian from
time to time. In light of the significant amount of cryptocurrency we intend to hold, we expect to continually seek to engage additional regulated custodians to achieve a greater degree of diversification in the custody of our cryptocurrency (if
any) as the extent of potential risk of loss is dependent, in part, on the degree of diversification. If there is a decrease in the availability of regulated digital asset custodians that we believe can safely custody our cryptocurrency (if any),
for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than those currently being offered or
take other measures to custody our cryptocurrency (if any), and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected. In addition, holding cryptocurrency with regulated
custodians could affect the availability of receiving digital assets that may result from “forks” of various cryptocurrency blockchains if custodians are unable to support or otherwise provide us with such digital assets, thereby reducing
the amount of digital assets we may hold as a result. While custodians may carry insurance policies designed to cover losses for commercial crimes, cyber and cold storage, the policy limits vary per provider and would be shared among all of their
customers, and subject to various limitations and exclusions (such as if a loss arises due to our failure to protect login credentials and devices), and we cannot be sure that such coverage will continue to be available on terms that are
commercially reasonable to our future custodians or at all. The insurance that covers losses of cryptocurrency holdings may cover only a small fraction of the value of the entirety of cryptocurrency holdings, and there can be no guarantee that such
insurance will be maintained as part of the custodial services we may have or that such coverage will cover losses with respect to our cryptocurrency (if any). Moreover, our intended use of custodians exposes us to the risk that the cryptocurrency
our future custodians may hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such
cryptocurrency. Any loss associated with such insolvency proceedings is unlikely to be covered by any insurance coverage we maintain related to our cryptocurrency.
Cryptocurrency is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which
the cryptocurrency is held. While cryptocurrency blockchain ledgers require a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party
from accessing the cryptocurrency held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able
to access the cryptocurrency held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack or
other source of compromise. The cryptocurrency and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
Regulatory change reclassifying cryptocurrency as a security could lead to our classification as an
“investment company” under the Investment Company Act of 1940 (the “1940 Act”) and could adversely affect the market price of cryptocurrencies and the market price of our common stock.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act
if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing,
reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an
unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in the 1940 Act, and are not registered as an “investment company” under the 1940 Act as of the date of this Current Report on
Form 8-K.
While senior SEC officials have stated their view that cryptocurrency is not a “security” for
purposes of the federal securities laws, a contrary determination by the SEC could lead to our classification as an “investment company” under the 1940 Act, if the portion of our assets consisting of investments in cryptocurrencies exceeds
the 40% safe harbor limits prescribed in the 1940 Act, which would subject us to significant additional regulatory controls that could have a material adverse effect on our business and operations and may also require us to change the manner in
which we conduct our business. We may also be subject to enforcement actions or penalties if our activities are deemed to violate applicable laws or regulations.
We monitor our assets and income for compliance under the 1940 Act and seek to conduct our business activities in a manner such that we do not fall within its
definitions of “investment company” or that we qualify under one of the exemptions or exclusions provided by the 1940 Act and corresponding SEC regulations. If cryptocurrency is determined to constitute a security for purposes of the
federal securities laws, we would take steps to reduce the percentage of digital assets that constitute investment assets under the 1940 Act. These steps may include, among others, selling digital assets that we might otherwise hold for the long
term and deploying our cash in non-investment assets, and we may be forced to sell our digital assets at unattractive prices. We may also seek to acquire additional non-investment assets to maintain compliance with the 1940 Act, and we may need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our
business. Any of these actions could have a material adverse effect on our results of operations and financial condition. Moreover, we can make no assurance that we would successfully be able to take the necessary steps to avoid being deemed to be
an investment company in accordance with the safe harbor. If we were unsuccessful, and if cryptocurrency is determined to constitute a security for purposes of the federal securities laws, then we would have to register as an investment company, and
the additional regulatory restrictions imposed by 1940 Act could adversely affect the market price of cryptocurrency and in turn adversely affect the market price of our common stock.
We do not currently have the expertise to implement our cryptocurrency treasury reserve strategy and may fail to identify qualified individuals or asset
managers to develop and execute successful investment or trading strategies.
We do not currently have the expertise to successfully implement our
cryptocurrency treasury reserve strategy. For our cryptocurrency treasury reserve strategy to be successful it will require us to identify and hire or engage qualified individuals or asset managers to implement and oversee our investment strategy.
For example, many companies that have implemented cryptocurrency treasury strategies enter into asset management agreements pursuant to which the asset manager has broad discretion to invest the company's capital in furtherance of their
applicable cryptocurrency treasury strategy. We may not be able to identify such managers in a timely manner or be able to agree on favorable terms, if at all. If identified and hired or engaged, we will be dependent on such persons to identify
overvalued and undervalued investment opportunities, to exploit price discrepancies and help us navigate the complex and evolving legal and regulatory framework that governs cryptocurrencies and digital assets more broadly. No assurance can be given
that we or our advisors will be able to identify suitable or profitable investment opportunities in which to deploy our capital.
Future
developments regarding the treatment of digital assets for U.S. federal income and applicable state, local and non-U.S. tax purposes could adversely impact our business.
Due to the new and evolving nature of digital assets and the absence of comprehensive legal guidance with respect to digital assets and related transactions,
many significant aspects of the U.S. federal income and applicable state, local and non-U.S. tax treatment of transactions involving digital assets, are uncertain, and it is unclear what guidance may be issued
in the future with respect to the tax treatment of acquiring digital assets and related transactions. Current IRS guidance does not address all significant aspects of the U.S. federal income tax treatment of digital assets and
related transactions and there continues to be uncertainty with respect to the timing and amount of income inclusions for various digital asset transactions. There can be no assurances that the
IRS will not issue future guidance with respect to digital assets or that a court will not interpret existing (or new) guidance in a manner that has negative tax consequences including the imposition of a greater tax burden on investors in digital
assets or imposing a greater cost on the acquisition and disposition of digital assets.
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Equillium (NASDAQ:EQ)
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De Jul 2025 a Ago 2025
Equillium (NASDAQ:EQ)
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De Ago 2024 a Ago 2025 |
