Annual report pursuant to Section 13 and 15(d)

Equity Offerings

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Equity Offerings
12 Months Ended
Jul. 31, 2017
Equity [Abstract]  
Equity Offerings

Note 6—Equity Offerings

 

October 2017 Offerings

 

In October 2017, the Company entered into securities purchase agreements with several accredited investors in connection with its offering and sale of shares of its common stock and warrants to purchase shares of its common stock. See Note 13 for information about these offerings.

 

ATM Program

 

On July 25, 2017, the Company entered into an equity distribution agreement with Oppenheimer & Co. Inc., Oppenheimer, to commence an “at the market” offering program, or the ATM Program, under which the Company was permitted to offer and sell, from time to time through or to Oppenheimer, acting as sales agent or principal, shares of the Company’s common stock having an aggregate gross sales price of up to $8.4 million. No shares of the Company’s common stock were sold in the ATM Program during the periods covered by the accompanying consolidated financial statements. Subsequent to such periods, effective as of October 22, 2017, the Company terminated the ATM Program. As a result of such termination, no further offers or sales of the Company’s common stock will be made in the ATM Program. As of the date of such termination, the Company had sold an aggregate of 897,311 shares of the Company’s common stock in the ATM Program, for net proceeds to the Company, after deducting Oppenheimer’s commissions and other expenses paid or payable by the Company, of $1.1 million (see Note 13).

 

May 2016 Offering

 

On May 26, 2016, the Company completed an offer and sale to a single healthcare-dedicated institutional fund of 665,049 shares of its common stock, Series A Warrants to purchase up to an aggregate of 5,509,642 shares of its common stock at an exercise price of $1.69 per share with a term of nine years, and Series B Warrants to purchase up to an aggregate of 4,844,593 shares of its common stock at an exercise price of $0.01 and which expire upon their exercise in full. All warrants issued to the investor were immediately exercisable. The investor paid a purchase price of $1.815 per share of common stock and an accompanying Series A Warrant to purchase one share of common stock and $1.805 per Series B Warrant and accompanying Series A warrant to purchase one share of common stock. The gross proceeds of the offering were $9.9 million, and the net proceeds, after deducting the placement agent’s fee, financial advisory fees and other offering expenses paid by the Company, were $9.2 million. At the closing of the offering, the Company also issued warrants to purchase up to an aggregate of 275,482 shares of its common stock to the placement agents for the offering, which have an exercise price of $2.26875, are immediately exercisable and expire on May 24, 2021.

 

The fair value of the Series A Warrants and Series B Warrants issued to the investor in the offering, based on their fair value relative to the common stock issued, was $4.4 million (based on the Black-Scholes option valuation model assuming no dividend yield, a nine year life, volatility of 100.03% and a risk-free interest rate of 1.74%), of which $48,446 of the relative fair market value was ascribed to the Series B Warrants, based on the number of warrants issued at its exercise price of $0.01 per share. The Company completed an evaluation of the Series A Warrants and Series B Warrants issued to the investor in the offering and the warrants issued to the placement agents in the offering, and determined that all such warrants should be classified as equity within the accompanying consolidated balance sheets.

 

November 2015 Offering

 

On November 9, 2015, the Company completed an offer and sale of an aggregate of 2,142,860 shares of its common stock, together with accompanying warrants to purchase an aggregate of 1,071,430 shares of its common stock, at a purchase price of $3.50 per share. The warrants have an exercise price of $4.50 per share, became exercisable on May 9, 2016 and expire on May 9, 2021. The gross proceeds of the offering were $7.5 million, and the net proceeds, after deducting the placement agent’s fee and other offering fees and expenses paid by the Company, were $6.9 million. In connection with the offering, the Company paid the placement agent (i) a cash fee equal to 6% of the gross proceeds of the offering, as well as a non-accountable expense allowance equal to 1% of the gross proceeds of the offering, and (ii) warrants to purchase up to an aggregate of 107,143 shares of its common stock. The warrants issued to the placement agent are exercisable at an exercise price of $4.375 per share, have a term of five years, became exercisable on May 9, 2016, and expire on November 9, 2020.

 

The fair value of the warrants issued to the purchasers in the offering, based on their fair value relative to the common stock issued, was approximately $1.6 million (based on the Black-Scholes option valuation model assuming no dividend yield, a 5.05-year life, volatility of 88.63% and a risk-free interest rate of 1.75%).

 

The fair value of the warrants issued to the placement agent in the offering was $0.2 million (based on the Black-Scholes option valuation model assuming no dividend yield, a five-year life, volatility of 89.08% and a risk-free interest rate of 1.75%). The Company completed an evaluation of these warrants and determined they should be classified as equity within the accompanying consolidated balance sheets.

  

June 2015 Public Offering

 

On June 8, 2015, the Company completed an offer and sale of an aggregate of 2,469,091 shares of its common stock at a purchase price of $5.50 per share. The gross proceeds of the offering were $13.6 million, and the net proceeds, after deducting the placement agents’ fees and other offering fees and expenses paid by the Company, were $12.5 million. In connection with the offering, the Company issued to the placement agents for the offering warrants to purchase up to an aggregate of 123,455 shares of its common stock, which are exercisable at $6.88 per share as of December 8, 2015 and will expire on May 12, 2019. The fair value of the warrants issued to the placement agent in the offering was $0.6 million (based on the Black-Scholes option valuation model assuming no dividend yield, a five-year life, volatility of 88.40% and a risk-free interest rate of 1.72%). The Company completed an evaluation of these warrants and determined the warrants should be classified as equity within the accompanying consolidated balance sheets.

 

Outstanding Warrants

 

At July 31, 2017, the Company had outstanding warrants to purchase 9,044,740 shares of its common stock, with exercise prices ranging from $0.01 to $18.00, all of which were classified as equity instruments. These warrants expire at various dates between September 2017 and May 2025, with the exception of the Series B Warrants issued in the Company’s May 2016 offering, described above, which expire upon their exercise in full. At July 31, 2017, there were 900,000 Series B Warrants outstanding.

 

Dividends

 

The Company has not adopted a formal policy regarding the payment of dividends, and no dividends were paid during the periods presented.