Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

Subsequent Events
3 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events

Note 9. Subsequent Events


Executive Change


On October 5, 2023, the Company terminated without cause the employment of Simon Allen, the Company’s Chief Executive Officer. In connection with his termination, Mr. Allen agreed to severance payments equal to nine months of annual base compensation plus reimbursement for COBRA premiums paid by him for a maximum of 12 months.  Mr. Allen resigned from the Company’s Board of Directors on October 5, 2023.


On October 6, 2023, the Board of Directors appointed Richard (Richie) Anthony Cunningham as the Company’s Chief Executive Officer and as a member of the Board of Directors.  Pursuant to his Employment Agreement, on October 6, 2023, the Company granted Mr. Cunningham a stock option under the Company’s 2020 Stock Incentive Plan to purchase up to 600,000 shares of the Company’s common stock at an exercise price equal to the closing price of the common stock on the grant date. This option vests in 16 equal quarterly installments commencing on January 1, 2024. In addition, the Company granted Mr. Cunningham a performance-based stock option to purchase up to 140,000 shares of common stock at an exercise price per share equal to the closing price of the common stock on the date of grant. This option vests in installments upon achievement of certain business development, clinical and corporate milestones.


Loan and Security Agreement


On November 13, 2023, the Company entered into a Loan and Security Agreement (“LSA”) with 22NW, LP (“22NW”) and JFL Capital Management LLC (“JFL” and collectively with 22NW, the “Lenders”) which will allow the Company to draw up to $10 million (the “Facility Amount”) as needed to fund future operations until the third anniversary of the LSA (the “Maturity Date”). Pursuant to the LSA, if the Company elects to draw on the Facility Amount (an “Advance”), JFL has the right, but not the obligation to fund 50% of the Advance at the request of the Company. If JFL elects not to fund 50% of the Advance, then 22NW will fund 100% of the Advance. The outstanding balance will accrue interest at 0.25% per annum and no fee will be assessed on the unused balance. Upon the draw of at least $3 million in the aggregate, the LSA will be collateralized by substantially all of the Company’s assets. All principal drawn and interest accrued under the LSA will be due and payable on the Maturity Date.


The Company issued 300,000 shares of common stock to 22NW upon the signing of the LSA. The Company will also issue 0.03 shares of common stock per dollar loaned in each Advance (rounded up or down to the nearest whole share) up to a maximum aggregate of 300,000 (the “Advance Shares”); provided that a minimum of 50,000 Advance Shares will be issued in connection with the first Advance. The Advance Shares shall be issued to the Lenders on a pro rata basis according to the portion of each Advance such Lender funds.


Joseph F. Lawler, M.D., Ph.D., our founder and a member of our Board of Directors, is the founder and Managing Member of JFL. Aron R. English, the President and Portfolio Manager of 22NW, and Nat Calloway, the lead for 22NW, are each members of our Board of Directors.