Private Placement

On July 26, 2021, the Company entered into a securities purchase agreement in connection with a private placement with the purchaser named on the signature page thereto (“Purchaser”), pursuant to which the Company issued and sold to Purchaser, in a private placement priced at-the-market under Nasdaq rules, (i) 950,000 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), (ii) warrants to purchase an aggregate of 4,629,630 shares of the Company’s common stock, with an exercise price of $3.30 per share (the “Series A Warrants”) which expire three and one half years from the earlier of (a) the six month anniversary of the initial exercise date and (b) the date that the registration statement registering all of the warrant shares underlying the Series A Warrants is declared effective, and (iii) pre-funded warrants to purchase up to 3,679,630 shares of the Company’s common stock, with an exercise price of $0.001 per share (the “Series B Warrants”) with no expiration (the “Private Placement”), at a purchase price of $2.70 per one Share and one Series A Warrant and $2.699 per one Series B Warrant and one Series A Warrant. The Private Placement closed on July 28, 2021 resulting in gross proceeds from the Private Placement of approximately $12.5 million, before deducting placement agent fees and offering expenses, and excluding the exercise of any such warrants. Net proceeds from the Private Placement were $11.5 million.

On July 26, 2021, in connection with the Private Placement, the Company entered into a registration rights agreement with Purchaser, pursuant to which the Company filed a registration statement on Form S-3 to register for resale the Shares, as well as the shares of the Company’s common stock issuable upon exercise of the Series A Warrants and the Series B Warrants, which was declared effective on August 23, 2021.

Warrants

In connection with certain of the Company’s collaboration agreements and consulting arrangements, the Company has issued warrants to purchase shares of common stock as payment for services. As of September 30, 2021 and December 31, 2020, collaboration warrants to purchase 0 and 30,307 shares of common stock were outstanding. No collaboration warrants were granted or exercised in connection with collaboration or consulting services during the three and nine months ended September 30, 2021. Collaboration warrants to purchase 30,307 shares expired during the nine months ended September 30, 2021. No collaboration warrants were granted or exercised and none expired in connection with collaboration or consulting services during the three and nine months ended September 30, 2020, respectively.

The Series B Warrants are immediately exercisable at a price of $0.001 per share of Common Stock. The holders of the Series B Warrants will not have the right to exercise any portion of the Series B Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series B Warrants. The holder, upon notice to the Company, may increase or decrease the beneficial ownership limitation provisions, provided that the beneficial ownership limitation in no event exceeds 9.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of a Warrant held by the holder. Any increase in the beneficial ownership limitation will not be effective until the 61st day after notice is delivered to the Company. The Series B Warrants had an intrinsic value of approximately $9.3 million. During the three and nine months ended September 30, 2021, Series B Warrants to purchase 3,679,630 shares of Common Stock were exercised resulting in $3,679 of net proceeds to the Company. As a result, no Series B Warrants were outstanding as of September 30, 2021.

The Series A Warrants are immediately exercisable at a price of $3.30 per share of Common Stock. The holders of the Series A Warrants will not have the right to exercise any portion of the Series A Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of our Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Series A Warrants. The holder, upon notice to the Company, may increase or decrease the beneficial ownership limitation provisions, provided that the beneficial ownership limitation in no event exceeds 9.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of a Warrant held by the holder. Any increase in the beneficial ownership limitation will not be effective until the 61st day after notice is delivered to the Company. The Company evaluated the terms of the warrants issued and determined that they should be classified as equity instruments. The grant date fair value of these warrants was estimated to be $1.98 per share, for a total of approximately $9.2 million. The fair value of these warrants was estimated using a Black-Scholes model utilizing the following key valuation assumptions: the Company’s stock price, a risk free rate of 0.49%, an expected life of 3.6 years and an expected volatility of 138.76%. No Series A Warrants were exercised during the three and nine months ended September 30, 2021.

In addition, the Company has outstanding warrants to purchase an aggregate of 333,424 and 378,453 shares of common stock in connection with debt and equity financing arrangements as of September 30, 2021 and December 31, 2020, respectively. As of September 30, 2021, these warrants have an average weighted exercise price of $36.14 per share and expiration dates ranging from November 2021 through September 2026. No debt and equity financing warrants were granted during the three and nine months ended September 30, 2021 and 2020 other than the Series A and Series B Warrants issued in connection with the Private Placement. During the three and nine months ended September 30, 2021, debt and equity financing warrants to purchase approximately 2,547 and 4,032 shares of common stock, respectively, were exercised on a cashless one-for-one basis. During the nine months ended September 30, 2020, debt and equity financing warrants to purchase approximately 0.2 million shares of common stock were exercised on a cashless one-for-one basis. No debt and equity financing warrants were exercised during the three months ended September 30, 2020. In addition, approximately 12,000 and 41,000 debt and equity warrants expired during the three and nine months ended September 30, 2021. During the three and nine months ended September 30, 2020, approximately 0.1 million of debt and equity warrants expired.