UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE
TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
CYTODYN
INC.
(Name of Subject Company (Issuer) and Filing Person (Offeror))
WARRANTS TO PURCHASE COMMON STOCK
(Title of Class of Securities)
23283M101
(CUSIP Number of Common Stock Underlying Warrants)
Jacob Lalezari
Chief Executive Officer
CytoDyn Inc.
1111 Main Street, Suite 660
Vancouver, Washington 98660
Telephone: 360-980-8524
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Person)
WITH COPY TO:
Mary Ann Frantz, Esq.
Miller Nash LLP
1140 SW Washington Street, Suite 700
Portland, Oregon 97205
Telephone: (503) 224-5858
¨ Check the box if the filing relates
solely to preliminary communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to
which the statement relates:
¨ third
party tender offer subject to Rule 14d-1.
x issuer
tender offer subject to Rule 13e-4.
¨ going
private transaction subject to Rule 13e-3.
¨ amendment to Schedule 13D
under Rule 13d-2.
Check
the following box if the filing is a final amendment reporting the results of a tender offer: ¨
The alphabetical subsections used in the Item responses below correspond
to the alphabetical subsections of the applicable items of Regulation M-A promulgated under the federal securities laws.
If applicable, check the appropriate box(es) below to designate the
appropriate note provision(s):
¨ Rule 13e-4(i) (Cross-Border
Issuer Tender Offer)
¨ Rule 14d-1(d) (Cross-Border
Third-Party Tender Offer)
TABLE OF CONTENTS
EX-99(a)(1)(A)
EX-99(a)(1)(B)
EX-99(a)(1)(C)
EX-99(a)(1)(D)
EX-99(a)(5)(A)
EX-99(a)(5)(B)
EX-99(a)(5)(C)
EX-99(a)(5)(D)
EX-99(a)(5)(E)
EX-99(a)(5)(F)
EX-FILING FEES Calculation of Filings Fee Table
Item 1. | SUMMARY TERM SHEET |
The information under the heading "Summary of Terms" in the
Offer to Amend and Exercise (the "Exercise Offer") filed as Exhibit (a)(1)(B) to this Schedule TO is incorporated
herein by reference.
Item 2. | SUBJECT COMPANY INFORMATION |
| (a) | The name of the subject company (issuer) and filing person (offeror) is CytoDyn Inc., a Delaware corporation (the "Company").
The address and telephone number of its principal executive offices are 1111 Main Street, Suite 660, Vancouver, Washington 98660,
telephone (360) 980-8524. |
| (b) | As of May 30, 2024, the Company has: (i) outstanding warrants to purchase 87,690,698 shares of the Company's common stock
(the “common stock”) issued to investors with an exercise price of $0.306 per share (the "$0.306 Warrants"); (ii) outstanding
warrants to purchase 3,898,473 shares of common stock issued to investors with an exercise price of $0.45 per share (the "$0.45 Warrants");
(iii) outstanding warrants to purchase 97,491,609 shares of common stock issued to investors with an exercise price of $0.50 per
share (the "$0.50 Warrants"); and (iv) outstanding warrants to purchase 8,341,781 shares of common stock issued to investors
with an exercise price of $1.00 per share (the "$1.00 Warrants" and together with the $0.306 Warrants, the $0.45 Warrants, and
the $0.50 Warrants, collectively, the “Original Warrants”). |
Pursuant to the Exercise Offer, the Original
Warrants will be amended (the “Amended Warrants”) as described in the next two sentences. First, the exercise price of the
Amended Warrants will be equal to the lower of 70% of (1) the intraday VWAP on the Expiration Date (as defined below) and (2) the average
VWAP for the 5 days ending on the Expiration Date, but in no event higher than the closing price on May 31, 2024. Second, the exercise
period of the Amended Warrants will be shortened so that they expire concurrently with the expiration of the Exercise Offer at 5:00 p.m.
(Eastern Time) on June 28, 2024, as we may extend it in our sole discretion (the “Expiration Date”). Other than the foregoing
changes, the terms of the Original Warrants will remain unmodified and in full force and effect.
As of May 30, 2024, the Company had: (i) 1,058,357,432
shares of common stock outstanding; (ii) 190,000 shares of common stock issuable upon conversion of outstanding Series B Preferred
Stock, and 38,997 shares of common stock that would be issuable at our election in lieu of cash as accrued dividends, if declared thereunder;
(iii) 12,670,000 shares of common stock issuable upon conversion of outstanding Series C Preferred Stock, and 6,271,666 shares
of common stock that are issuable at the holder's election in lieu of cash as dividends; (iv) 10,565,000 shares of common stock issuable
upon conversion of outstanding Series D Preferred Stock, and 7,310,104 shares of common stock that are issuable at the holder's election
in lieu of cash as dividends; (v) outstanding warrants to purchase 361,675,427 shares of common stock (including the Original Warrants);
and (vi) outstanding options to purchase 25,849,473 shares of common stock issued pursuant to the Company's 2012 Equity Compensation
Plan (the "Plan"). In addition, the Company has reserved (i) an additional 12,000,000 shares of common stock for issuance
upon the conversion or redemption of outstanding convertible notes, and (ii) an additional 12,700,539 shares of common stock for
issuance pursuant to the Plan.
| (c) | No trading market exists for the Original Warrants or the Amended Warrants offered pursuant to the Exercise Offer. Information about
the trading market and price of the Company's common stock under Section 12: "Trading Market of Original Warrants, Amended Warrants
and Common Stock" of the Exercise Offer is incorporated herein by reference. |
| Item 3. | IDENTITY AND BACKGROUND OF FILING PERSON |
| (a) | The Company is the filing person and the subject company. The address and telephone number of each of the Company's executive officers
and directors is c/o CytoDyn Inc., 1111 Main Street, Suite 660, Vancouver, Washington 98660, telephone (360) 980-8524. |
Pursuant to General Instruction C to Schedule TO promulgated
by the United States Securities and Exchange Commission (the "SEC"), the following persons are executive officers, directors
and/or control persons of the Company:
Name |
Position(s) |
Dr. Jacob Lalezari |
Chief Executive Officer |
Mitchell Cohen |
Interim Chief Financial Officer, and Treasurer |
Tyler Blok |
EVP Legal Affairs, and Corporate Secretary |
Tanya Urbach |
Director, Board Chair |
Lishomwa Ndhlovu, M.D., Ph.D. |
Director |
Karen Brunke, Ph.D. |
Director |
Ryan Dunlap |
Director |
Stephen Simes |
Director |
| Item 4. | TERMS OF THE TRANSACTION |
| (a) | Information about the terms of the transaction under the headings "Summary of Terms" and "Description of Exercise Offer"
of the Exercise Offer is incorporated herein by reference. |
| (b) | See Item 8 below for a description of the executive officers, directors and affiliates who hold Original Warrants and who will have
an opportunity to participate in the Exercise Offer on the same terms and conditions as the other holders of Original Warrants. |
| Item 5. | PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS |
| Item 6. | PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS |
| (a) | The information about the purposes of the transaction under Section 2: "Purposes of the Exercise Offer and Use of Proceeds"
of the Exercise Offer is incorporated herein by reference. |
| (b) | The Company intends to cancel the Original Warrants upon the exercise of the Original Warrants by the holders thereof. Pursuant to
the Exercise Offer, Original Warrants that are not so exercised will remain outstanding pursuant to their original terms. |
| (c) | No plans or proposals described in this Schedule TO or in any materials sent to the holders of the Original Warrants in connection
with this Exercise Offer relate to or would result in the conditions or transactions described in Regulation M-A, Item 1006(c)(1) through
(10). |
| Item 7. | SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION |
| (a) | The information about the source of funds under Section 13: "Source and Amount of Funds" of the Exercise Offer is incorporated
herein by reference. |
| Item 8. | INTEREST IN SECURITIES OF THE SUBJECT COMPANY |
| (a) | As of June 3, 2024, none of the Company's executive officers or directors hold Original Warrants. |
| Item 9. | PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED |
| (a) | The information about the soliciting agent under Section 20: "Fees and Expenses" of the Exercise Offer is incorporated
herein by reference. |
The Company may also use the services of its officers and
employees to solicit holders of the Original Warrants to participate in the Exercise Offer without additional compensation.
| Item 10. | FINANCIAL STATEMENTS |
| (a) | The financial information required by Item 1010(a) is included under Section 15 "Information Regarding CytoDyn
Inc." of the Exercise Offer, and as amended and supplemented, is incorporated by reference. |
| (b) | The pro forma financial information required by Item 1010(b) is included under Section 16 "Accounting Consequences
of the Exercise Offer" of the Exercise Offer, as amended and supplemented, and is incorporated by reference. |
| Item 11. | ADDITIONAL INFORMATION |
| (a) |
(1) There are no present or proposed contracts, arrangements, understandings or relationships between the Company and its executive officers,
directors or affiliates relating, directly or indirectly, to the Exercise Offer. |
| (2) | There are no applicable regulatory requirements or approvals needed for the Exercise Offer. |
| (3) | There are no applicable anti-trust laws. |
| (4) | The margin requirements of Section 7 of the Securities Exchange Act of 1934, as amended, and the applicable regulations are inapplicable. |
The following are attached as exhibits to this Schedule TO:
(FILING FEES) Calculation of Filing Fee Table
| Item 13. | INFORMATION REQUIRED BY SCHEDULE 13E-3 |
Not Applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and correct.
Date: June 3, 2024 |
CYTODYN INC. |
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By: |
/s/ Jacob Lalezari |
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Name: |
Jacob Lalezari |
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Title: |
Chief Executive Officer |
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(Principal Executive Officer) |
EXHIBIT (a)(1)(A)
CYTODYN INC.
1111 Main Street, Suite 660
Vancouver, Washington 98660
(360) 980-8524
June 3, 2024
To the Holders of the Original Warrants,
CytoDyn Inc. (“we” or the “Company”)
is offering you, as a holder of certain warrants to purchase common stock of the Company (the “Original Warrants”),
the opportunity to amend and exercise such Original Warrants at an exercise price equal to the lower of 70% of (1) the intraday volume-weighted
average price (“VWAP”) on the Expiration Date (as defined below), or (2) the average VWAP for the 5 days ending
on the Expiration Date, but in no event higher than the closing price on May 31, 2024 ($0.16), subject to the terms and conditions
set forth in the enclosed “Offer to Amend and Exercise Warrants to Purchase Common Stock of CytoDyn Inc.” dated as of the
date of this letter (the “Offer”). All terms not defined in this letter shall have the meanings set forth in the Offer.
The purposes of the Offer are to (1) encourage the participating
holders to exercise the Original Warrants by significantly reducing both the exercise price and the exercise period of the Original Warrants,
which will help us raise funds to support our operations and (2) reduce the number of outstanding warrants. We plan to use the funds
obtained to fund, in part, a Phase II study of leronlimab in patients with relapsed/refractory microsatellite stable colorectal cancer
operations; and for working capital and other general corporate purposes, which may include the reduction of indebtedness.
The enclosed Offer together with the enclosed Election to Participate
(including the instructions and other forms attached thereto) and Notice of Withdrawal constitute the “Offering Materials.”
The Offering Materials provide important information regarding the Offer and instructions as to how you can participate and amend and
exercise your Original Warrants. You should read all of the Offering Materials carefully before you decide whether to amend and exercise
any of your Original Warrants. Also, please note that there is no minimum participation requirement on your part with respect to this
Offer. Participation in this Offer requires both amendment of your Original Warrants and your exercise of the Amended Warrants, which
will happen simultaneously should you choose to participate.
To amend and exercise an Original Warrant, you must deliver to us prior
to the expiration of the Offer to Amend and Exercise, which is 5:00 p.m. (Eastern time) on June 28, 2024, as may be extended
by us in our sole discretion (the “Expiration Date”): (i) a signed Election to Participate, (ii) a signed
Acknowledgements and Representations and Warranties, (iii) a signed Accredited Investor Questionnaire and (iv) the original
copy of your Original Warrants (or Affidavit of Lost Warrant), along with (v) the aggregate exercise price in cash in the amount
equal to $0.16 (the closing price on May 31, 2024), multiplied by the number of shares of common stock you elect to purchase. The
cash exercise price may be tendered in the form of a check payable to CytoDyn Inc. or by wire transfer to our account as set forth in
the instructions to the Election to Participate. These items must be properly delivered, before the Expiration Date, to us at our corporate
address indicated above or by email at warrants@cytodyn.com. We will return to you the excess, if any, by which the tendered cash exercise
price exceeds the lower of 70% of (1) the VWAP on the Expiration Date, or (2) the average VWAP for the 5 days ending on the
Expiration Date, multiplied by the number of shares of common stock you elect to purchase.
If you send your Election to Participate and subsequently change your
mind and do not want to participate in the Offer, you may submit a Notice of Withdrawal to us at any time prior to the Expiration Date.
The Notice of Withdrawal must be properly completed and must be returned to us on or prior to the Expiration Date. If you properly withdraw
prior to the Expiration Date, we will return promptly your Original Warrants and your aggregate exercise price.
Thank you for your time in reviewing this opportunity.
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Very truly yours, |
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CYTODYN INC. |
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By: |
/s/ Jacob Lalezari |
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Name: |
Jacob Lalezari |
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Title: |
Chief Executive Officer |
EXHIBIT (a)(1)(B)
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE TRANSACTION CONTEMPLATED HEREIN; PASSED UPON THE MERITS OR FAIRNESS
OF THE TRANSACTION; OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
OFFER TO AMEND AND EXERCISE
WARRANTS TO PURCHASE COMMON STOCK
CYTODYN INC.
JUNE 3, 2024
THE OFFER TO AMEND AND EXERCISE (AND ASSOCIATED WITHDRAWAL
RIGHTS) WILL EXPIRE AT 5:00 P.M. (EASTERN TIME) ON JUNE 28, 2024 UNLESS THIS OFFER PERIOD IS EXTENDED.
CytoDyn Inc., a Delaware corporation, is referred
to in this Offer to Amend and Exercise as “we,” “us,” “CytoDyn” or the “Company,” and
eligible holders of outstanding warrants are referred to as “you.”
We are offering to amend, upon the terms and subject
to the conditions set forth herein, outstanding warrants to purchase up to an aggregate of 197,422,561 shares of common stock (the “Exercise
Offer”), including:
| i. | outstanding
warrants to purchase 87,690,698 shares of common stock with an exercise price of $0.306 per
share and expiration dates ranging between February 2027 and September 2028 (the
“$0.306 Warrants”); |
| ii. | outstanding
warrants to purchase 3,898,473 shares of common stock with an exercise price of $0.45 per
share and expiration dates ranging between August 2024 and February 2027 (the “$0.45
Warrants”); |
| iii. | outstanding
warrants to purchase 97,491,609 shares of common stock with an exercise price of $0.50 per
share and expiration dates ranging between August 2024 and September 2028 (the
“$0.50 Warrants”); and |
| iv. | outstanding
warrants to purchase 8,341,781 shares of common stock with an exercise price of $1.00 per
share and expiration dates ranging between January 2025 and January 2027 (the “$1.00
Warrants” and together with the $0.306 Warrants, the $0.45 Warrants, and the $0.50
Warrants, collectively, the “Original Warrants”). |
The Original Warrants represent 55% of our outstanding
warrants.
There is no minimum participation requirement with
respect to this Exercise Offer.
Pursuant to the Exercise Offer, the Original Warrants
will be amended (the “Amended Warrants”) as described in the next two sentences. First, the exercise price of the Amended
Warrants will be equal to the lower of 70% of (1) the intraday VWAP on the Expiration Date (as defined below) and (2) the average
VWAP for the 5 days ending on the Expiration Date, but in no event higher than the closing price on May 31, 2024. Second, the exercise
period of the Amended Warrants will be shortened so that they expire concurrently with the expiration of the Exercise Offer at 5:00 p.m. (Eastern
Time) on June 28, 2024, as we may extend it in our sole discretion (the “Expiration Date”). Other than the foregoing
changes, the terms of the Original Warrants will remain unmodified and in full force and effect.
Holders may elect to amend some or all of their Original
Warrants. If you choose not to participate in the Exercise Offer, your Original Warrants will remain in full force and effect, as originally
issued.
The purpose of the Exercise Offer is to encourage
the amendment and exercise of the Original Warrants to raise funds to support our operations and to reduce the number of outstanding
warrants. We intend to accomplish this by providing the holders of the Original Warrants with the opportunity to obtain and exercise
an Amended Warrant at a significantly reduced exercise price, and to receive significantly more shares of common stock upon exercise,
as compared to the Original Warrants. Please see Section 2 “Purposes of the Exercise Offer and Use of Proceeds” below
for a description of the purposes of the Exercise Offer.
The period during which Original
Warrants may be amended and exercised on the terms described above will commence on June 3, 2024 (the date the materials relating
to the Exercise Offer are first sent to the holders, referred to herein as the “Offer Date”) through the Expiration Date
(the “Offer Period”).
We will agree to amend any or all Original Warrants
held by eligible holders, upon the terms and subject to the conditions of the Exercise Offer and the attached Election to Participate
(the “Election Form”).
THE DATE OF THIS EXERCISE OFFER
IS JUNE 3, 2024.
[THIS PAGE INTENTIONALLY LEFT
BLANK]
IMPORTANT PROCEDURES
This Exercise Offer together with the Election Form (including
the instructions and other forms attached thereto) and Notice of Withdrawal constitute the “Offering Materials.” These Offering
Materials provide important information regarding the Exercise Offer and instructions as to how you can participate and amend and exercise
your Original Warrants. An election to participate in the Exercise Offer will result in both the amendment of your Original Warrant(s) and
your exercise of the Amended Warrant(s). You should read all of the Offering Materials carefully before you decide whether to participate
in the Exercise Offer, exercise an Amended Warrant and receive the number of shares of common stock issuable therefor.
To
participate in the Exercise Offer, and to exercise an Amended Warrant and receive the number of shares of Company common stock
issuable therefor, you must deliver to us, before the Expiration Date, all of the following: (i) a signed Election Form, (ii) a
signed Acknowledgements and Representations and Warranties, (iii) a signed Accredited Investor Questionnaire, (iv) the original copy
of your Original Warrants (or an Affidavit of Lost Warrant) and (v) the aggregate exercise price in cash in the amount equal to the
number of shares of Company common stock issuable upon exercise of the Original Warrants the holder elects to exercise multiplied by
$0.16 per share (collectively, the “Acceptance and Exercise Documents”). The Company will return to you the
excess, if any, by which the tendered cash exercise price exceeds the lower of 70% of (1) the VWAP on the Expiration Date and (2)
the average VWAP for the 5 days ending on the Expiration Date, multiplied by the number of shares of common stock you elect to
purchase. We do not view the representations and warranties to be made by warrant holders tendering
their warrants that they have “review[ed] the current business prospects, financial condition and operating history of the
Company,” “had the opportunity to ask questions and receive answers from the Company regarding the terms and conditions
of the Exercise Offer,” and “received all the information [they] consider[ed] necessary or appropriate for deciding
whether to accept the Exercise Offer” as a waiver of any potential liability that we may have under federal securities laws,
and we agree not to assert that these provisions constitute a waiver of any such liability if a claim is made against us. The
cash may be tendered in the form of a check payable to CytoDyn Inc. or by wire transfer to our account as set forth in the
instructions to the Election Form. Each of these items must be properly delivered, before the Expiration Date, to us at our
corporate address:
CytoDyn Inc.
1111 Main Street,
Suite 660
Vancouver,
Washington 98660
Email: warrants@cytodyn.com
Phone: (360) 980-8524
If you properly tender (and do not validly withdraw)
your Original Warrants and the other Acceptance and Exercise Documents on or prior to 5:00 p.m., Eastern Time on June 28, 2024,
the Expiration Date of the Exercise Offer (or such later date and time if we extend the Exercise Offer), promptly following the Expiration
Date, we intend to notify our transfer agent of our acceptance of your payment of the exercise price and your other Acceptance and Exercise
Documents and issue and deliver to you the number of shares of common stock issuable under the Amended Warrant, as well as a replacement
Original Warrant for any unexercised portion thereof. See Section 8 “Procedure for Participating in Exercise Offer and Exercising
Amended Warrants” below.
If after tendering your Original Warrants and other
Acceptance and Exercise Documents, you change your mind and do not want to participate in the Exercise Offer, you may submit a Notice
of Withdrawal to us at any time prior to the Expiration Date. The Notice of Withdrawal must be properly completed and returned to us
on or prior to the Expiration Date. However, you may change your mind and submit a Notice of Withdrawal to us after July 31, 2024, if
your Original Warrants and other Acceptance and Exercise Documents have not been accepted by us on or prior to July 31, 2024. If you
properly withdraw in a timely manner as set forth above, we will promptly: (i) cancel your signed copy of the Election Form, (ii) return
the original copy of your Original Warrant (which will remain unmodified and in full force and effect), or issue you a new Original Warrant
if you submitted an Affidavit of Lost Warrant, and (iii) provide you with a check equal to the amount of cash you paid to exercise the
Amended Warrant.
If you have any question or need assistance, you should
contact Paulson Investment Company, LLC (the “Soliciting Agent”), the soliciting agent for this Exercise Offer. The Soliciting
Agent may be reached at the following address:
Paulson Investment Company, LLC
8770 W Bryn Mawr suite 1300
Chicago, IL 60631
Attn:
Samantha Kling, Operations Manager
Email: skling@paulsoninvestment.com
Phone: (312) 940-8321
You may request additional copies of this document
and any of the Offering Materials from us directly at our corporate address indicated above.
OUR BOARD OF DIRECTORS MAKES NO RECOMMENDATION AS
TO WHETHER OR NOT YOU SHOULD PARTICIPATE IN THE EXERCISE OFFER. YOU MUST MAKE YOUR OWN DECISION WITH RESPECT TO THE EXERCISE OFFER. FOR
QUESTIONS REGARDING TAX IMPLICATIONS OR OTHER INVESTMENT-RELATED QUESTIONS, YOU SHOULD TALK TO YOUR OWN ATTORNEY, ACCOUNTANT AND/OR FINANCIAL
PLANNER.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION
ON OUR BEHALF AS TO WHETHER OR NOT YOU SHOULD PARTICIPATE IN THE EXERCISE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS DOCUMENT.
THIS EXERCISE OFFER HAS BEEN PREPARED SOLELY FOR THE
BENEFIT OF HOLDERS OF ORIGINAL WARRANTS. DISTRIBUTION OF THIS EXERCISE OFFER TO ANY PERSON OTHER THAN SUCH HOLDERS AND THOSE PERSONS
RETAINED TO ADVISE SUCH HOLDERS IS UNAUTHORIZED, AND ANY REPRODUCTION OF THIS EXERCISE OFFER OR RELATED DOCUMENTS, IN WHOLE OR IN
PART, IS PROHIBITED.
CERTAIN OF THE SECURITIES BEING OFFERED PURSUANT TO
THIS EXERCISE OFFER ARE BEING OFFERED PURSUANT TO EXEMPTIONS PROVIDED BY SECTION 4(a)(2) OF THE SECURITIES ACT OF 1933, AS
AMENDED, REGULATION D THEREUNDER, CERTAIN STATE SECURITIES LAWS AND CERTAIN RULES AND REGULATIONS PROMULGATED THEREUNDER.
TABLE OF CONTENTS
Page
SUMMARY OF TERMS |
1 |
ABOUT THIS EXERCISE OFFER |
9 |
RISK FACTORS |
10 |
DESCRIPTION OF THE EXERCISE
OFFER |
26 |
Section 1. |
FORWARD-LOOKING STATEMENTS |
26 |
Section 2. |
PURPOSES OF THE EXERCISE OFFER AND USE OF PROCEEDS |
27 |
Section 3. |
ELIGIBLE ORIGINAL WARRANTS |
28 |
Section 4. |
EXPIRATION DATE |
28 |
Section 5. |
TERMS OF AMENDED WARRANTS |
28 |
Section 6. |
CONDITIONS TO THE OFFER TO AMEND AND EXERCISE |
28 |
Section 7. |
EXTENSION OF EXERCISE OFFER AND EXERCISE
PERIOD; TERMINATION; AMENDMENTS |
29 |
Section 8. |
PROCEDURE FOR PARTICIPATING IN THE
EXERCISE OFFER, EXERCISING AMENDED WARRANTS |
30 |
Section 9. |
MANNER OF ACCEPTANCE OF PAYMENT AND ISSUANCE OF SHARES |
30 |
Section 10. |
WITHDRAWAL RIGHTS |
30 |
Section 11. |
RESALES OF WARRANT SHARES |
31 |
Section 12. |
TRADING MARKET OF ORIGINAL WARRANTS, AMENDED WARRANTS AND COMMON STOCK |
31 |
Section 13. |
SOURCE AND AMOUNT OF FUNDS |
31 |
Section 14. |
TRANSACTIONS AND AGREEMENTS CONCERNING ORIGINAL WARRANTS |
31 |
Section 15. |
INFORMATION REGARDING CYTODYN INC. |
32 |
Section 16. |
ACCOUNTING CONSEQUENCES OF THE EXERCISE OFFER |
34 |
Section 17. |
INTERESTS OF DIRECTORS AND EXECUTIVE
OFFICERS IN THE EXERCISE OFFER |
34 |
Section 18. |
LEGAL MATTERS AND REGULATORY APPROVALS |
34 |
Section 19. |
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES |
34 |
Section 20. |
FEES AND EXPENSES |
36 |
Section 21. |
TRANSFERS |
37 |
Section 22. |
ADDITIONAL INFORMATION |
37 |
Section 23. |
INFORMATION REQUESTS |
38 |
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BLANK]
SUMMARY OF TERMS
Company: |
CytoDyn Inc., a Delaware corporation, with principal executive offices at CytoDyn Inc., 1111 Main Street,
Suite 660, Vancouver, Washington 98660. |
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Eligible Original Warrants: |
An aggregate of up to 197,422,561 outstanding Original Warrants, representing 55% of our outstanding warrants. |
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Expiration Date: |
5:00 p.m., Eastern Time on June 28, 2024, as may be extended by us in our sole discretion. |
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Terms of Amended Warrants: |
Pursuant to the Exercise Offer, if the offer is accepted, the Original Warrants will be amended as described below: |
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New Exercise Price: The exercise price of the Original Warrants will be amended to be equal to the lower of 70% of (1)
the intraday VWAP on the Expiration Date and (2) the average VWAP for the 5 days ending on the Expiration Date, but in no event higher
than $0.16, the closing price on May 31, 2024. |
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New
Termination Date: The termination date of the Original Warrants will be shortened to terminate concurrently with the Expiration
Date. |
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Other Terms: Except as set forth
above, all other terms of the Amended Warrants will be the same as the terms of the Original Warrants. |
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Partial Participation Permitted: |
If Original Warrant holders choose to participate in the Exercise Offer, they may amend and exercise any or all of their Original
Warrants pursuant to the terms of the Exercise Offer. We will issue a new Original Warrant exercisable for that number of shares
of common stock that a holder elects to exclude from its acceptance of the Exercise Offer. |
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Conditions: |
The Exercise Offer is subject to certain conditions, as described herein: |
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(i) As part of the Election Form, the holders of the Original Warrants must complete an Accredited Investor
Questionnaire. In addition, as part of the Election Form, the holders of the Original Warrants are asked to make certain representations
and warranties upon which the Company will rely in establishing that the transactions contemplated by the Exercise Offer are exempt
from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) and applicable state
securities laws. The holders of the Original Warrants previously made substantially the same representations and warranties to the
Company, including representations that they were “accredited investors,” in connection with the transactions in which
such holders acquired the Original Warrants. |
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If
you wish to participate in the Exercise Offer, but you are not able to make any of the representations set forth on page 2 of the
Acknowledgements and Representations and Warranties, please reach out to us directly at our corporate address indicated in
“Section 23. Information Requests” on page 38 to inform us which ones you are not able to make and why. If you are
unable to establish that you are an accredited investor, you will not be able to participate in the Exercise Offer. |
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In addition, if we determine, after reviewing the representations and warranties
and Accredited Investor Questionnaires of all participating warrant holders, that a valid exemption is not available from the registration
requirements of applicable federal and/or state securities laws, then we may determine that it is necessary to cancel the Exercise
Offer in its entirety, and not to consummate any of the contemplated transactions, in order to comply with the requirements of applicable
securities laws. In that case, all exercise payments previously received would be promptly returned to participating warrant holders,
along with all Original Warrants, unexercised and outstanding pursuant to their original terms. |
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(ii) In addition, we are not making this Exercise Offer to, nor will we accept any Election Form from
or on behalf of, Original Warrant holders in any jurisdiction in which the Exercise Offer or the exercise of the Amended Warrants
would not be in compliance with the laws of such jurisdiction. |
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You may not elect to amend but not exercise your Original Warrants. Participation in this Exercise
Offer requires both amendment of your Original Warrants and your exercise of the Amended Warrants, which will happen simultaneously
should you choose to participate. |
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Original Warrants of holders that elect not to participate and exercise will remain outstanding
pursuant to their original terms. |
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Future Amendments to the Exercise Offer, Extension, or Termination: |
If
we materially change the terms of the Exercise Offer, we will extend the Expiration Date to
the extent required under applicable law, including under the rules of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). We may also extend the Expiration Date in our sole discretion at any time, subject to applicable law. If
we were to extend the Expiration Date for the Exercise Offer, we cannot indicate, at this time, the length of any extension that
we may provide. In any event, if we extend the Expiration Date for the Exercise Offer, we will delay the acceptance of any Original
Warrants that have been tendered, and any Original Warrants that have been previously tendered may be withdrawn up until the
Expiration Date, as so extended. We also may terminate the Exercise Offer in our sole discretion if the closing price of the
common stock is below $0.16 on June 28, 2024.
If the Expiration Date for the Exercise Offer is extended,
we will issue a press release announcing the extension and the new Expiration Date no later than 9:00 a.m., Eastern Time, on the
first business day after the previously scheduled Expiration Date. We will announce any amendment to or termination of the Offer
by issuing a press release announcing the amendment or termination.
In the event of
termination of the Exercise Offer, all exercise payments previously received would be promptly returned to participating warrant holders,
along with all Original Warrants, unexercised and outstanding pursuant to their original terms.
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How to Participate in the Exercise Offer: |
To participate in the Exercise Offer and exercise an Amended Warrant, you must deliver to us, before
the Expiration Date, all of the Acceptance and Exercise Documents. The cash exercise price may be tendered in the form of a check
payable to CytoDyn Inc. or by wire transfer to our account as set forth in the instructions to the Election Form. All of the Acceptance
and Exercise Documents must be properly delivered, before the Expiration Date, to us at our corporate address: |
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CytoDyn Inc. |
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1111 Main Street, Suite 660 |
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Vancouver, Washington 98660
Email: warrants@cytodyn.com
Phone: (360) 980-8524 |
Manner of Acceptance of Payment: |
If you properly tender (and do not validly withdraw) your Original Warrants and the other Acceptance and Exercise
Documents on or prior to 5:00 p.m., Eastern Time on June 28, 2024, the Expiration Date of the Exercise Offer (or such later date
and time if we extend the Exercise Offer), promptly following the Expiration Date, we intend to notify our transfer agent of our
acceptance of your payment of the exercise price and your other Acceptance and Exercise Documents and issue and deliver to you the
number of shares of common stock issuable under the Amended Warrant as well as a replacement Original Warrant for any unexercised
portion thereof. See Section 8 “Procedure for Participating in Exercise Offer and Exercising Amended Warrants” below. |
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Withdrawal Rights: |
If after tendering your Original Warrants and other Acceptance and Exercise Documents you change your mind and do not want to
participate in the Exercise Offer, you may submit the Notice of Withdrawal to us. However, to be effective, the Notice of Withdrawal
must be properly completed and returned to us prior to 5:00 p.m., Eastern Time on June 28, 2024, the Expiration Date of the Exercise
Offer (or such later date and time if we extend the Exercise Offer). Following the Expiration Date, you cannot withdraw your
Election Form. However, if we have not accepted your tendered Original Warrants and other Acceptance and Exercise Documents on or
before July 31, 2024, you may change your mind and submit a Notice of Withdrawal to us after July 31, 2024. |
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If you properly withdraw in a timely manner as set forth above, we will promptly: (i)cancel your signed copy of the Election
Form, (ii)return the original copy of your Original Warrant (which will remain unmodified and in full force and effect), or issue
you a new Original Warrant if you submitted an Affidavit of Lost Warrant, and (iii) provide you with a check equal to the amount
of cash you paid to exercise the Amended Warrant. |
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Purposes of the Exercise Offer and Use of Proceeds: |
The purposes of this Exercise Offer are as follows: |
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Fund Raising: Through the Exercise Offer we can raise funds to support our future operations
and capital requirements by encouraging the participating holders to exercise their Original Warrants by significantly reducing the
exercise price and shortening the exercise period. If all holders participate in the Exercise Offer and exercise an Amended Warrant,
we would raise gross proceeds of approximately $31.6 million. The funds obtained will be used to fund, in part, a Phase II study
of leronlimab in patients with relapsed/refractory microsatellite stable colorectal cancer operations; and for working capital and
other general corporate purposes, which may include the reduction of indebtedness. |
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Reduction of Share Overhang from Outstanding Warrants: In addition, the Exercise Offer can help us
reduce the number of outstanding warrants. As of June 3, 2024, we had total outstanding warrants to purchase an aggregate of 361,675,427
shares of common stock at a weighted average exercise price of $0.34 per share. The sale of substantial amounts of our common stock
upon exercise of outstanding warrants, or the perception that significant sales may occur in the future, could adversely affect the
market price of our common stock and our ability to raise additional capital in the future |
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Resales of Warrant Shares: |
The Original Warrants, the Amended Warrants, and the shares of common stock issuable upon exercise thereof are “restricted
securities.” Restricted securities may not be sold by the holder absent registration, or an exemption from the registration
requirements, under the Securities Act and the applicable securities laws of any other state or jurisdiction. |
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We have previously filed Registration Statements on Form S-1 (File Nos. 333-272815 and 333-276912) (the “Resale Registration
Statements”) to register the resale of certain of the shares of common stock underlying the Original Warrants under the Securities
Act. |
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Promptly following the Expiration Date, we intend to file a Current Report on Form 8-K to reflect the substantive changes from
the information currently set forth in the prospectuses included in such Registration Statements as a result of this Exercise Offer.
In addition, thereafter, holders who are named as selling stockholders in a Resale Registration Statement may sell their shares of
common stock in accordance with the resale provisions set forth in the “Plan of Distribution” section of the Resale Registration
Statement prospectus. Each holder of Original Warrants should read the applicable Registration Statement prospectus carefully before
deciding whether to participate in the Exercise Offer. |
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To the extent that an Original Warrant is not the subject of a resale prospectus
filed under one of the Resale Registration Statements with respect thereto, the holder thereof will not be able to resell the shares
of common stock issuable upon exercise of the related Amended Warrant, unless we file a registration statement (or a post-effective
amendment to a Resale Registration Statement) to include such holder as a selling stockholder thereunder, except to the extent that
such resale qualifies for an exemption from registration requirements under applicable securities laws, which may require a holding
period of at least six months following the consummation of this Exercise Offer. |
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There is no established trading market for the Original Warrants or the Amended Warrants, and we
do not intend to list the Original Warrants or the Amended Warrants for trading on any exchange or market. |
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Taxes: |
We recommend that you consult with
your own tax advisor with
regard to the possibility of any federal, state, local
or other tax consequences of the Exercise Offer. See Section 19 “Material U.S. Federal Income Tax Consequences” below for
a summary of the material U.S. federal income tax consequences of participating in the Exercise Offer. |
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Fees and Expenses: |
We have retained Paulson Investment Company, LLC (the “Soliciting Agent”) to solicit participation by the holders
of the Original Warrants in this Exercise Offer. The Soliciting Agent will receive a fee equal to 13% of the cash exercise prices
paid by qualifying holders of the Original Warrants who participate in the Exercise Offer. Additionally, with respect to any warrants
held by Paulson and its employees that are exercisable at a price per share higher than the Amended Warrants (the “PA Warrants”),
the Company will exchange those warrants for new PA warrants with an exercise price equal to the Amended Warrants.Each new PA warrant
will have a term equal to the remainder of the term of the warrant for which it is exchanged.All other terms of the new PA warrants
will be identical to the terms of the warrants for which they are exchanged. |
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The Soliciting Agent will not be entitled
to receive a fee for the cash exercise prices paid by holders of the PA Warrants. We have agreed to indemnify the Soliciting
Agent against certain liabilities in connection with the Exercise Offer, including certain liabilities under federal securities
laws. |
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As of May 30, 2024, current and former affiliates (including certain holders of membership interests) of the
Soliciting Agent held PA Warrants previously received as consideration for services as placement agent in various previous securities
offerings, which were exercisable for an aggregate of 46,000,822 shares of our common stock, with a weighted average exercise price
of $0.25 per share, representing aggregate beneficial ownership of approximately 4% of our outstanding common stock as of that date.
In addition, as of May 30, 2024, certain holders of membership interests in the Soliciting Agent also held certain Original Warrants
other than PA Warrants. The Soliciting Agent and its affiliates will be entitled to participate in the Exercise Offer on the same
terms and conditions as the other holders of other Original Warrants. |
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Interests of Directors and Executive Officers: |
None of our directors and executive officers hold Original Warrants and will not participate in the Exercise Offer. |
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Historical and Pro Forma Financial Information |
We have included condensed financial information for the fiscal years ended May 31, 2022 and 2023 and for the quarterly periods
ended February 28, 2023, and February 29, 2024 in this Exercise Offer. We have also included pro forma information reflecting the
effect of the Exercise Offer. See Section 15 “Information about CytoDyn Inc.” and Section 16 “Accounting Consequences
of the Exercise Offer” below. |
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Additional Information: |
We have filed with the SEC a Tender Offer Statement on Schedule TO of which this Exercise Offer is a part. This Exercise Offer
does not contain all of the information contained in the Schedule TO and the exhibits to the Schedule TO. We recommend that holders
of the Original Warrants review the Schedule TO, including the exhibits, as well as the other materials that we have filed with the
SEC, which can be accessed electronically on the SEC’s website at www.sec.gov, before making a decision on whether to
participate in the Exercise Offer. |
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Our Board of Directors recognizes that the decision to participate in the Exercise Offer is an individual
one that should be based on a variety of factors. The holders of the Original Warrants should consult with their respective professional
advisors if they have questions about their financial or tax situation. The information about this Exercise Offer from us is limited
to the Offering Materials. |
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We are subject to the information requirements of the Exchange Act and in accordance therewith file
and furnish reports and other information with the SEC. All reports and other documents that we have filed with the SEC, including
the Schedule TO relating to the Exercise Offer, or will file with the SEC in the future, can be accessed electronically on the SEC’s
website at www.sec.gov. |
Information Requests: |
Please direct questions or requests for assistance regarding this Exercise Offer, the Election Form, the Notice
of Withdrawal or the other Offering Materials, in writing, to the Soliciting Agent at the following address: |
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Paulson Investment Company, LLC
8770 W Bryn Mawr suite 1300
Chicago, IL 60631 |
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Attn: Samantha Kling, Operations Manager
Email: skling@paulsoninvestment.com
Phone: (312) 940-8321 |
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Please direct requests for additional copies of this Exercise Offer, the Election Form, the Notice
of Withdrawal or the other Offering Materials, in writing, to us at our corporate address: |
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CytoDyn Inc. |
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1111 Main Street, Suite 660 |
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Vancouver, Washington 98660
Email:warrants@cytodyn.com
Phone: (360) 980-8524 |
ABOUT THIS EXERCISE OFFER
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS EXERCISE OFFER. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED
OR INCORPORATED BY REFERENCE IN THIS EXERCISE OFFER AND, IF PROVIDED, SUCH INFORMATION MUST NOT BE RELIED UPON.
ALTHOUGH OUR BOARD OF DIRECTORS HAS APPROVED THE EXERCISE
OFFER, NEITHER THE COMPANY, ITS DIRECTORS, OFFICERS, ADVISORS OR AGENTS, INCLUDING THE SOLICITING AGENT, MAKES ANY RECOMMENDATION
AS TO WHETHER YOU SHOULD ACCEPT THE EXERCISE OFFER. YOU SHOULD NOT CONSIDER THE BOARD’S APPROVAL TO BE A RECOMMENDATION AS TO WHETHER
YOU SHOULD PARTICIPATE IN THE EXERCISE OFFER. YOU MUST MAKE YOUR OWN DECISION WHETHER TO ACCEPT THE EXERCISE OFFER.
RISK FACTORS
Investment in our common stock involves a substantial
degree of risk and should be regarded as speculative. As a result, the purchase of our common stock should be considered only by persons
who can reasonably afford to lose their entire investment. Before you elect to participate in the Exercise Offer, you should carefully
consider the risks and uncertainties described below in addition to the other information in this Exercise Offer and other information
incorporated herein by reference. You should also consider the risks, uncertainties and assumptions discussed under the heading “Risk
Factors” included in our most recent annual report on Form 10-K, as amended, which is on file with the SEC and is incorporated
herein by reference, and which may be amended, supplemented or superseded from time to time by other reports we file with the SEC in
the future. Please see Section 22: “Additional Information” below for information about where to find such reports.
Additional risks and uncertainties of which we
are unaware or which we currently believe are immaterial could also materially adversely affect our business, financial condition or
results of operations. In any case, the trading price of our common stock could decline, and you could lose all or part of your investment.
Please also read carefully Section 1 “Forward-Looking Statements” below.
Risks related to the Exercise Offer.
Our Board of Directors makes no recommendation
with regard to whether you should accept the Exercise Offer.
Although our Board of Directors has approved the Exercise
Offer, it makes no recommendation as to whether holders of Original Warrants should accept the Exercise Offer. We have not retained and
do not intend to retain any unaffiliated representative to act solely on behalf of the holders of Original Warrants for purposes of negotiating
the terms of the Exercise Offer. We cannot assure you that the value of the shares issued upon exercise of the Amended Warrants will
in the future equal or exceed the exercise price per share of the Amended Warrants. We do not take a position as to whether you ought
to participate in the Exercise Offer.
If you choose to participate
in the Exercise Offer, you will be required to exercise your Amended Warrants for common stock, and you will be subject to all the risks
associated with being a stockholder and give up the time value attributable to your Original Warrant.
The Amended Warrants will terminate if the holders
do not exercise their Amended Warrants prior to the Expiration Date. If you choose to participate in the Exercise Offer, you will be
required to exercise your Amended Warrants prior to the Expiration Date. As a result, you will be subject to all the risks and uncertainties
set forth in these risk factors as a holder of our common stock. In addition, you will be giving up the time value attributable to your
Original Warrant by exercising the Original Warrant, as amended, prior to its original expiration date.
The shares of common stock issuable upon exercise
of the Amended Warrants are“restricted securities.”
The shares of common stock issuable upon exercise
of the Amended Warrants are “restricted securities.” Restricted securities may not be sold by the holder absent registration,
or an exemption from the registration requirements, under the Securities Act and the applicable securities laws of any other state or
jurisdiction. There is no established trading market for the Original Warrants or the Amended Warrants, and we do not intend to list
the Original Warrants or the Amended Warrants for trading on any exchange or market.
We have previously filed two Resale Registration Statements
under the Securities Act to register the resale of certain of the shares of common stock underlying the Original Warrants under the Securities
Act.
Promptly following the Expiration Date, we intend
to file a Current Report on Form 8-K to reflect the substantive changes from the information currently set forth in the prospectus
included in the Resale Registration Statements as a result of this Exercise Offer. Thereafter, holders who are named as selling stockholders
in the Resale Registration Statements may sell their shares of common stock in accordance with the resale provisions set forth in the
“Plan of Distribution” section of the prospectuses filed thereunder. Each holder of Original Warrants should read the applicable
prospectus filed under the Resale Registration Statements carefully before deciding whether to participate in the Exercise Offer.
To the extent that an Original Warrant is not the
subject of a resale prospectus filed under one of the Resale Registration Statements with respect thereto, the holder thereof will not
be able to resell the shares of common stock issuable upon exercise of the related Amended Warrant, unless we file a registration statement
(or a post-effective amendment to a Resale Registration Statement) to include such holder as a selling stockholder thereunder, except
to the extent that such resale qualifies for an exemption from registration requirements under applicable securities laws, which may
require a holding period of at least six months following the consummation of this Exercise Offer.
Because we do not have any formal commitments
from any of our warrant holders to participate in this Exercise Offer, we may not receive substantial proceeds from the exercise of warrants
in this Exercise Offer, and the proceeds we do receive may not be sufficient to fund our business operations.
We do not have any binding commitments from any of
our warrant holders to participate in this Exercise Offer, and we cannot assure you that any of our warrant holders will participate
in the Exercise Offer with respect to any or all of their Original Warrants. Therefore, there is no certainty that any shares will be
purchased upon exercise of Amended Warrants pursuant to this Exercise Offer and, accordingly, we may not receive substantial proceeds
from the exercise of the warrants in this Exercise Offer. What proceeds we do receive may not be sufficient to fund our business operations,
in which case we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials, collaborative development programs
or future commercialization initiatives. In that case, if we fail to raise additional funds on a timely basis, we would need to scale
back our business plans, which would adversely affect our business, financial condition, and stock price, and we may even be forced to
discontinue our operations and liquidate our assets.
Income tax consequences of participation in
the Exercise Offer.
We have not obtained and do not intend to obtain a
ruling from the Internal Revenue Service (“IRS”) regarding the U.S. federal income tax consequences of the Exercise Offer.
You should consult with your own tax advisor with regard to the possibility of any federal, state, local or other tax consequences of
the Exercise Offer. See Section 19 “Material U.S. Federal Income Tax Consequences” under “Description of the Exercise
Offer” below.
We will have substantial discretion over the
use of proceeds we receive from the exercise of Amended Warrants.
Our management will retain broad discretion over the
use of proceeds from the Exercise Offer. See Section 2 “Purposes of the Exercise Offer and Use of Proceeds” below for
a description of our present intentions with respect to the allocation of the proceeds resulting from exercise of the Amended Warrants.
The amounts and timing of the expenditures may vary significantly depending on numerous factors. The occurrence of certain unforeseen
events or changed business conditions, however, could result in the application of the proceeds resulting from the exercise of the Amended
Warrants in a manner other than as described in this Exercise Offer.
The trading price of our common stock has been and could remain
volatile, and the market price of our common stock may decrease.
The market price of our common stock has historically
experienced and may continue to experience significant volatility. From June 1, 2023 through May 30, 2024, the market price
of our common stock has fluctuated from a high of $0.42 per share to a low of $0.13 per share. The volatile nature of our common share
price may cause investment losses for our stockholders. In addition, the market price of stock in small capitalization biotech companies
is often driven by investor sentiment, expectation, and perception, all of which may be independent of fundamental, objective, and intrinsic
valuation metrics or traditional financial performance metrics, thereby exacerbating volatility. In addition, our common stock is quoted
on the OTCQB of the OTC Markets marketplace, which may increase price quotation volatility and could limit liquidity, all of which may
adversely affect the market price of our shares.
A substantial number of shares of our common
stock may be sold in the Exercise Offer, which could cause the price of our common stock to decline.
The sale of securities under this Exercise Offer and
any future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur,
may adversely affect the price of our common stock. We cannot predict the effect, if any, that market sales of those shares of common
stock or the availability of those shares of common stock for sale will have on the market price of our common stock.
Our common stock may never be listed on a national
securities exchange, which could limit investors’ ability to make transactions in our securities and an active trading market for
our common stock may never develop.
Our common stock currently trades on the OTCQB of
the OTC Markets marketplace. If our common stock is not listed for trading on a national securities exchange, we will continue to face
significant material adverse consequences, including:
| · | a
limited availability of market quotations for our securities; |
| · | reduced
liquidity with respect to our securities; |
| · | a
determination that our shares of common stock are “penny stock” which will require
brokers trading in our shares of common stock to adhere to more stringent rules, possibly
resulting in a reduced level of trading activity in the secondary trading market for our
shares of common stock; |
| · | a
limited amount of news and analyst coverage for our company; and |
| · | a
decreased ability to issue additional securities or obtain additional financing in the future. |
Our common stock is classified as “penny stock”
and trading of our shares may be restricted by the SEC’s penny stock regulations.
Rules 15g-1 through 15g-9 promulgated under
the Securities Exchange Act of 1934 (the “Exchange Act”) impose sales practice and disclosure requirements on certain brokers-dealers
who engage in transactions involving a “penny stock.” The SEC has adopted regulations which generally define “penny
stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our common stock is covered by the penny stock rules, which impose additional sales practice requirements
on broker-dealers who sell to persons other than established customers and “accredited investors.” The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the prospective investor with current bid and offer quotations for the penny stock, the compensation
of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny
stock held in the investor’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock
that is not otherwise exempt, the broker-dealer must make a special written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules may
discourage investor interest in and limit the marketability of our common stock.
Risks Related to Our Financial Position and Need for Additional
Capital
Our cash reserves are extremely low, requiring that we raise
substantial additional financing to satisfy our current payment obligations and to fund our operations, which continues to be difficult
in light of the low trading price of our common stock.
As of May 30, 2024, we had an unrestricted
cash balance of approximately $3.2 million and a reserved cash balance of approximately $6.6 million. We must continue to raise substantial
additional funds in the near term to meet our payment obligations and fund our operations. Additional funding may not be available on
acceptable terms or at all. In addition, as of May 30, 2024, we had approximately 242.4 million shares of common stock unreserved
for other purposes and available for issuance in new financing transactions. We will need to use some of the additional authorized shares
(or funds raised through the sale of such shares) to satisfy a portion of our outstanding accounts payable and accrued liabilities, which
totaled approximately $72.6 million on February 29, 2024. If we are not able to raise additional funds on a timely basis, we may
be forced to delay, reduce the scope of, or eliminate one or more of our planned operating activities, including: conducting a Phase
II study of leronlimab in patients with relapsed/refractory microsatellite stable colorectal cancer; conducting a Phase II study evaluating
the effects of leronlimab on chronic immune activation and inflammation; pursuing research and development of longer-acting molecules;
evaluating whether to conduct a combination pre-clinical study or monotherapy Phase 2b/3 clinical trial in MASH; and evaluating other
opportunities for pre-clinical and clinical studies and publishing data from previously conducted studies. Any delay or inability to
pursue our planned activities likely will adversely affect our business, financial condition, and stock price. The continued low trading
price of our common stock (with a closing price of $0.22 per share on May 30, 2024) presents a significant challenge to our ability
to raise additional funds. If we deplete our cash reserves, we may have to discontinue our operations and liquidate our assets.
We are a clinical stage biotechnology company with a history
of significant operating losses; we expect to continue to incur operating losses, and we may never achieve profitability.
We have not generated significant revenue from
product sales, licensing, or other income opportunities to date. Since our inception, we have incurred operating losses in each year
due to costs incurred for research and development activities and general and administrative expenses related to our operations. We expect
to incur losses for the foreseeable future, with no or only minimal revenues as we continue to pursue development of, and seek regulatory
approvals for, leronlimab. If leronlimab fails to gain regulatory approval, or if it or other drug or biologic candidates we may acquire
or license in the future do not achieve approval or market acceptance, we will not be able to generate revenue or explore other opportunities
to enhance stockholder value, such as through a sale. If we fail to generate revenue or if we are unable to fund our continuing operations,
our stockholders could lose a portion or all of their investments.
The amount of financing we require will depend on various factors,
many of which are beyond our control. Our results of operations, financial condition, and stock price are likely to be adversely affected
if we are unable to obtain additional funding on improved terms compared to previous financings.
Our future funding requirements will depend on
many factors, including, but not limited to:
| · | the
costs of preparing required regulatory submissions, as well as any clinical trial programs
and pre-clinical studies we may pursue and other development activities conducted by us directly, |
| · | the
costs involved with our chemistry, manufacturing and controls (“CMC”) activities, |
| · | the
satisfaction of payment obligations we have already incurred, |
| · | the
costs and timing of obtaining regulatory approvals and making related milestone payments
due to third parties with whom we have licensing or similar agreements, |
| · | the
costs of filing, prosecuting, maintaining, and enforcing patents and other intellectual property
rights and defending against potential claims of infringement, |
| · | the
costs associated with hiring and retaining needed scientific and administrative employees,
advisors, and consultants, |
| · | the
cost of legal and other professional advisors needed to support our development efforts,
responsibilities as a public reporting company, regulatory compliance and investigations,
and legal proceedings, |
| · | the
costs of compliance with laws, regulations, or judicial decisions applicable to us, and |
| · | the
costs of general and administrative infrastructure required to manage our business and protect
corporate assets and stockholder interests. |
If any of these factors cause our funding needs
to be greater than expected, our ability to continue operations, financial condition, and stock price may be adversely affected.
Our future cash requirements may differ significantly from our
current estimates.
Our
cash requirements may differ significantly from our estimates from time to time, depending on a number of factors, including:
| · | our
ability to attract strategic partners to pay for or share costs related to our product development
efforts, |
| · | whether
our outstanding convertible notes are converted into equity, |
| · | whether
we receive additional cash upon the exercise of our outstanding warrants and stock options
for common stock, and |
| · | our
ability to obtain funding under future licensing agreements or other collaborative relationships. |
If we deplete our cash reserves and are unable
to obtain additional funding, we may be forced to discontinue our operations and liquidate our assets.
Our auditors have issued a going concern opinion, and we will
not be able to achieve our objectives and will have to cease operations if we cannot find adequate financing.
Our auditors issued an opinion, which includes
a going concern explanatory paragraph, in connection with the audit of our annual consolidated financial statements for the fiscal year
ended May 31, 2023. A going concern paragraph in an audit opinion means that there is substantial doubt that we can continue as
an ongoing business for the 12 months from the date the consolidated financial statements are issued. If we are unable to continue
as an ongoing business, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution
could be significantly lower than the values reflected in our financial statements. In addition, the inclusion of an explanatory paragraph
regarding substantial doubt about our ability to continue as a going concern and our lack of cash resources may materially adversely
affect our share price and our ability to raise new capital or to enter into critical contractual relations with third parties. There
is no assurance that we will be able to adequately fund our operations in the future.
We have written off the value of our pre-launch inventories
of leronlimab and related raw materials, the costs of which were previously capitalized, and may be unable to use all of the remaining
inventories in the development of our product candidate.
Pre-launch inventories consist of costs of raw
materials and work-in-progress related to our product candidate leronlimab. As of May 31, 2023, our inventories had been written
off in full for accounting purposes. Although a portion of the inventories that were written off continue to be physically maintained
and currently may be eligible for use in certain clinical contexts, we may be unable to use all of those inventories in the development
of our product candidate.
Risks Related to Our Ability to Maintain an Effective Operational
and Internal Controls Environment
The recruitment and retention of skilled directors, executives,
employees, and consultants may be difficult and expensive, may result in dilution to our stockholders, and any failure to attract and
retain such individuals may adversely affect our drug development and commercialization activities.
Our business depends on the skills, performance,
and dedication of our officers and key scientific and technical advisors, as well as our directors. All of our current scientific advisors
are independent contractors and are either self-employed or employed by other organizations. As a result, they may have conflicts of
interest or other commitments, such as consulting or advisory contracts with other organizations, that may affect their ability to provide
services to us in a timely manner. We likely will need to recruit additional directors, executive management, employees, and advisors,
particularly scientific and technical personnel. In addition, there is currently intense competition for skilled directors, executives,
and employees with relevant scientific and technical expertise, and this competition is likely to continue. We compete for these qualified
personnel against companies with greater financial resources than ours. These recruitment and retention efforts likely will require additional
financial resources. In order to successfully recruit and retain qualified employees, we will need to offer a combination of salary,
cash incentives, and equity compensation. Future issuances of our equity securities for compensatory purposes will dilute existing stockholders’
ownership interests and reduce the shares available for future funding transactions. If we are unable to attract and retain individuals
with relevant scientific, technical, and managerial experience, we may be forced to limit or delay our product development activities
or may experience difficulties in successfully conducting our business, which would adversely affect our operations and financial condition.
Our current Chief Financial Officer is serving in an interim
role. The loss, temporary loss, or transition of members of our senior management team or any other key employees may adversely affect
our business.
During the past 24 months, we have experienced
significant turnover among our senior executives, and currently have only three executive officers. Mitchell Cohen, the Company’s
current Interim Chief Financial Officer, was appointed effective February 1, 2024. The Company’s Board of Directors intends
to initiate a search for a long-term Chief Financial Officer in the coming months, in collaboration with Mr. Cohen. If we are successful
in recruiting one or more additional individuals to executive positions, the complexity inherent in integrating a new key member of the
senior management team with existing senior management may limit the effectiveness of any such successor or otherwise adversely affect
our business. Leadership transitions and any disruptions that result are inherently difficult to manage and may cause uncertainty or
a disruption to our business or increase the likelihood of turnover of other key officers and employees. Further, we may incur significant
expenses related to any executive transitions. Finding suitable replacements for senior management and other key employees can be difficult,
and there is no assurance we will be successful in attracting or retaining qualified personnel.
Our success depends significantly on the individual
and collective contributions of our senior management team and key employees. The individual and collective efforts of these employees
are important as we continue our efforts to develop leronlimab. The loss of the services of a member of our senior management team or
the inability to hire and retain experienced management personnel likely would have a material adverse effect on our business and operations.
If we are unable to maintain an effective system of internal
control over financial reporting, we may not be able to accurately or timely report our financial results and our stock price could be
adversely affected.
Section 404 of the Sarbanes-Oxley Act of
2002 and related regulations require us to evaluate the effectiveness of our internal control over financial reporting as of the end
of each fiscal year, and to include a management report assessing the effectiveness of our internal control over financial reporting
in our Form 10-K for that fiscal year. Failure to maintain our controls or operation of these controls may harm our operations,
decrease the reliability of our financial reporting, and cause us to fail to meet our financial reporting obligations, which could adversely
affect our business and reduce our stock price.
We are in the process of replacing our independent auditors,
which may result in our inability to timely prepare and file audited annual financial statements for the fiscal year ended May 31,
2024.
On May 6, 2024, at the direction of the Audit Committee
of our Board of Directors, we dismissed BF Borgers CPA PC (“BF Borgers”) as our independent registered public accounting
firm. The Audit Committee promptly took action to dismiss BF Borgers following the entry of an order by the SEC on May 3, 2024,
that permanently bars BF Borgers and its principal from appearing or practicing before the SEC. The Audit Committee has commenced a search
for a replacement independent registered public accounting firm to perform the Company’s audit for the fiscal year ended May 31,
2024. If the Audit Committee is not able to find and engage replacement auditors promptly, we may not be able to timely file our Annual
Report on Form 10-K for the fiscal year ended May 31, 2024, which may create uncertainty among investors and adversely affect
our stock price.
Our information technology systems could fail to perform adequately
or experience data corruption, cyber-based attacks, or network security breaches.
We rely on information technology networks and
systems, including the internet, to process, transmit, and store electronic information. In particular, we depend on our information
technology infrastructure to effectively manage our business data, finance, and other business processes and electronic communications
between our personnel and corporate partners. If we do not allocate and effectively manage the resources necessary to build and sustain
an appropriate technology infrastructure, security breaches or system failures of this infrastructure may result in system disruptions,
shutdowns, or unauthorized disclosure of confidential information, including patient information in violation of HIPAA requirements.
In addition, our employees, contractors, and other corporate partners increasingly are working from remote locations. As a result, we
rely on information technology systems that are outside our direct control. These systems are potentially vulnerable to cyber-based attacks
and security breaches. In addition, cyber criminals are increasing their attacks on individual employees, including scams designed to
trick victims into transferring sensitive data or funds or stealing credentials that compromise information systems. If one of our employees
falls victim to these attacks, or our information technology systems or those of our partners are compromised, our operations could be
disrupted, or we may suffer financial loss, loss or misappropriation of intellectual property or other critical assets, reputational
harm, and regulatory fines and intervention, and our business and financial condition may be adversely affected.
Risks Related to Legal Proceedings
Our business, operating results, and financial condition could
be negatively affected as a result of litigation and other demands made by stockholders.
We are and have been involved in legal proceedings
and other claims brought by stockholders, including class actions alleging securities law violations, derivative actions alleging waste
of corporate assets, unjust enrichment, other breaches of fiduciary duties by former directors and current and former executive officers,
and demands by activist investors. Similar actions may occur in the future. While the Company welcomes opinions of all stockholders,
responding to demands, litigation, proxy contests, or other initiatives by stockholders or activist investors may divert the attention
of our Board, management team, and employees from their regular duties in the pursuit of business opportunities to enhance stockholder
value. Such actions may also cause our existing or potential employees, strategic partners, and stockholders to have questions or doubts
about the future direction of the Company and may provide our competitors with an opportunity to exploit these concerns. Such circumstances
could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do
not necessarily reflect the underlying fundamentals and prospects of our business.
The class-action litigation filed against us could harm our
business, and insurance coverage may not be sufficient to cover all related costs and damages.
The
securities class action lawsuits filed against the Company in March 2021 have exhausted certain coverage allowances under the Company’s
D&O insurance applicable to the relevant time period. This litigation, whether or not successful, may require us to incur substantial
costs, which could harm our business and financial condition. During the course of litigation, negative public announcements regarding
the results of hearings, motions, or other interim proceedings or developments may occur, which could have a further negative effect
on the market price of our common stock.
We are subject to oversight by the SEC, FDA, and other regulatory
agencies. Investigations and proceedings by those agencies may divert management’s focus and have a material adverse effect on
our reputation and financial condition.
We are subject to the regulation and oversight
by the SEC and state regulatory agencies, in addition to the FDA and other federal regulatory agencies. As a result, we may face legal
or administrative proceedings by these agencies. We have received subpoenas from the SEC and the U.S Department of Justice (the “DOJ”)
requesting documents and information concerning, among other matters, leronlimab, our public statements regarding the use of leronlimab
as a potential treatment for COVID19, HIV, and triple-negative breast cancer, related communications with the FDA, investors, and others,
litigation involving former employees, our retention of investor relations consultants, and trading in our securities. On December 20,
2022, the DOJ announced the unsealing of a criminal indictment charging both our former CEO, Nader Z. Pourhassan, and Kazem Kazempour,
CEO of Amarex Clinical Research LLC, our former CRO. That same day, the SEC announced charges against both Mr. Pourhassan and Mr. Kazempour
for alleged violations of federal securities laws. The Company is cooperating fully with the DOJ and SEC investigations. We are unable
to predict the effect of any governmental investigations on our business, financial condition, or reputation. In addition, publicity
surrounding any investigation, even if ultimately resolved in our favor, could have a material adverse effect on our business.
We face risks and uncertainties related to litigation and other
claims.
We are parties to a variety of litigation and
other claims, in addition to the regulatory investigations and related proceedings described above. For example, two putative class action
lawsuits have been filed against us and certain former officers and directors, asserting violations of federal securities laws under
Section 10(b) and Section 20(a) of the Exchange Act and alleging that the Company and certain former officers and
directors made purportedly false or misleading statements and that some of the individual defendants violated Section 20A of the
Exchange Act by selling shares of the Company’s common stock, purportedly while in possession of material nonpublic information.
Separately, three purported stockholder derivative actions have been filed against certain former officers and directors; the Company
was named as a nominal defendant.
In addition, from time to time, we may also be
involved in legal proceedings and investigations arising in the ordinary course of business, including those relating to employment matters,
relationships with partners, intellectual property disputes, and other business matters. Any such claims or investigations may be time-consuming,
costly, divert management resources, or otherwise have a material adverse effect on our business, financial condition, or results of
operations. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to
compete effectively or obtain adequate insurance in the future.
Risks Related to Development and Commercialization of Our Drug
Candidate
Certain agreements and related license agreements require us
to make significant milestone, royalty, and other payments, which will require additional financing and, in the event we do commercialize
leronlimab, decrease the revenues we may ultimately receive on sales. To the extent that such milestone, royalty, and other payments
are not timely made, the counterparties to such agreements in certain cases have repurchase and termination rights thereunder with respect
to leronlimab.
Under agreements we have with Progenics Pharmaceuticals, Inc.
(“Progenics”) and Lonza Sales AG (“Lonza”), as well as a Development and License Agreement (the “PDL License”)
between Protein Design Labs (now AbbVie Inc. (“AbbVie”)) and Progenics, we are required to pay significant milestone
payments, license fees for “system know-how” technology, and royalties related to leronlimab upon the occurrence of specified
events. In order to make these milestone and license payments, we will need to raise additional funds. In addition, our royalty obligations
will reduce the economic benefits to us of future sales, if any. To the extent that such milestone payments and royalties are not timely
made, under their respective agreements, Progenics has certain repurchase rights relating to the assets sold to us, and AbbVie has certain
termination rights relating to our license of leronlimab under the PDL License.
If we are unable to obtain all required regulatory approvals
for leronlimab, we will not be able to commercialize our primary product candidate, which would materially and adversely affect our business,
financial condition, and stock price.
Clinical testing is expensive, difficult to design
and implement, may take many years to complete, and its outcome is uncertain. The research, testing, manufacturing, labeling, packaging,
storage, approval, sale, marketing, advertising and promotion, pricing, export, import, and distribution of drug products are subject
to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, with regulations differing
from country to country. We are not permitted to market a drug candidate as prescription pharmaceutical products in the United States
until we receive approval from the FDA, or in foreign markets until we receive the requisite approval from comparable regulatory authorities
in foreign countries. In the United States, the FDA generally requires the completion of clinical trials of each drug to establish its
safety and efficacy, and extensive pharmaceutical development to ensure its quality before approval. Regulatory authorities in other
jurisdictions impose similar requirements. Of the large number of drugs in development, only a small percentage are approved for
commercialization. Receipt of necessary regulatory approval for the use of leronlimab for one or more indications is subject to a number
of risks which include, among others:
| · | the
FDA or comparable foreign regulatory authorities or institutional review boards (“IRBs”)
may disagree with the future design or implementation of our clinical trials, |
| · | we
may not be able to provide acceptable evidence of the safety and efficacy of our drug candidate, |
| · | the
results of our clinical trials may not be satisfactory or may not meet the level of statistical
or clinical significance required by the FDA or foreign regulatory authorities for marketing
approval, |
| · | patients
in our clinical trials may suffer adverse effects for reasons that may or may not be related
to our drug candidate, |
| · | the
data collected from clinical trials may not be sufficient to support the submission of an
application for marketing approval in the United States or elsewhere, |
| · | the
FDA or foreign regulatory authorities may not approve the manufacturing processes or facilities
of third-party manufacturers with which we contract for clinical and commercial supplies,
and |
| · | the
approval policies or regulations of the FDA or foreign regulatory authorities may significantly
change in a manner rendering our clinical data insufficient for approval. |
We cannot guarantee that regulators will agree
with our assessment of the results of our past or future clinical trials or that such trials will be considered by regulators to have
shown safety or efficacy of our product candidate. The FDA has substantial discretion in the approval process and may refuse to accept
any application or may require additional clinical trials or pre-clinical or other studies. Additionally, we have limited experience
in filing the applications necessary to gain regulatory approvals and expect to continue to rely on consultants and our CROs to assist
us in this process. Securing FDA approval requires the submission of pre-clinical, clinical, and/or pharmacokinetic data, information
about product manufacturing processes and inspection of facilities, and supporting information for each therapeutic indication to establish
a product candidate’s safety and efficacy for each indication. Our drug candidate may prove to have undesirable or unintended side
effects, toxicities, or other characteristics that may preclude us from obtaining regulatory approval or prevent or limit commercial
use with respect to one or all intended indications. Failure to obtain regulatory approval for leronlimab will prevent us from commercializing
it as a prescription product, and our ability to generate revenue will be seriously impaired.
We are substantially dependent on the success of leronlimab.
If we, either alone or with collaborators, are unable to complete the clinical development of, obtain and maintain marketing approval
for, or successfully commercialize leronlimab, including with respect to adequate coverage and reimbursement, or if we continue to experience
significant delays in doing so, our business will be seriously harmed.
We currently have no products approved for sale
and are investing a significant portion of our resources in the development of leronlimab for marketing approval in the United States
and potentially other countries. Our prospects are substantially dependent on our ability to develop, obtain marketing approval for,
and successfully commercialize leronlimab in the United States in one or more disease indications. The success of our Company will depend
on a number of factors, including the following:
| · | a
safety, tolerability, and efficacy profile for leronlimab that is satisfactory to the FDA
and potential foreign regulatory authorities, |
| · | timely
receipt of marketing approvals for leronlimab from applicable regulatory authorities, including
the FDA, |
| · | the
performance of third-party contractors that we engage to manage our clinical studies and
the resulting data, |
| · | obtaining
and maintaining patent, trade secret protection, and regulatory exclusivity, both in the
United States and internationally, including our ability to maintain our license agreement
with AbbVie, as successor to Progenics, |
| · | protection
of our rights in our intellectual property portfolio, including our ability to maintain our
license agreement with AbbVie, |
| · | a
continued acceptable safety profile for leronlimab following marketing approval, if any, |
| · | commercial
acceptance of leronlimab by patients, the medical community, and third-party payors, and |
| · | our
ability to position leronlimab to compete with other therapies. |
Many of these factors are beyond our control.
If we are unable to develop, receive marketing approval for, and successfully provide for commercialization of leronlimab on our own
or through third parties, or if we continue to experience delays as a result of any of these factors or otherwise, our business will
be substantially harmed.
Our competitors may develop drugs that are more effective, safer
and less expensive than ours.
The biopharmaceutical industry is intensely competitive,
and our future success depends on our ability to demonstrate and maintain a competitive advantage with respect to the design, development,
and commercialization of product candidates. For example, new or improved therapies in the oncology and immunology arenas are the subject
of frequent announcements. If approved for marketing by the FDA, depending on the approved clinical indication, leronlimab may be competing
with existing and future treatments. Our competitors may:
| · | develop
drug candidates and market drugs that increase the levels of safety or efficacy that our
product candidate will need to show in order to obtain regulatory approval, |
| · | develop
drug candidates and market drugs that are less expensive or more effective than ours, |
| · | commercialize
competing drugs before we or our partners can launch any products we are working to develop, |
| · | hold
or obtain proprietary rights that could prevent us from commercializing our products, and |
| · | introduce
therapies or market drugs that render our product candidate obsolete. |
We expect to compete against large pharmaceutical
and biotechnology companies and smaller companies that are collaborating with larger pharmaceutical companies, new companies, academic
institutions, government agencies, and other public and private research organizations. These competitors, in nearly all cases, operate
research and development programs that have substantially greater financial resources than we do. Our competitors also have significantly
greater experience in:
| · | developing
drug and other product candidates, |
| · | undertaking
pre-clinical testing and clinical trials, |
| · | building
relationships with key customers and opinion-leading physicians, |
| · | obtaining
and maintaining FDA and other regulatory approvals, |
| · | formulating
and manufacturing drugs, |
| · | launching,
marketing, and selling drugs, and |
| · | providing
management oversight for all of the above-listed operational functions. |
If we fail to achieve superiority over other
existing or newly developed treatments, we may be unable to obtain regulatory approval. If our competitors market drugs that are less
expensive, safer, or more effective than our product candidate, or which gain or maintain greater market acceptance, we may not be able
to compete effectively.
We may not be able to identify, negotiate, and maintain the
strategic alliances necessary to develop and commercialize our products and technologies, and we will be dependent on our corporate partners
if we do.
We may seek to enter into a strategic alliance
with a pharmaceutical company for further development and approval of our product candidate in one or more indications. Strategic alliances
could potentially provide us with additional funds, expertise, access, and other resources in exchange for exclusive or non-exclusive
licenses or other rights to the technologies and products that we are currently developing or may explore in the future. We cannot give
any assurance we will be able to enter into strategic relationships with a pharmaceutical company or other strategic partner in the near
future or at all or maintain our current relationships. In addition, we cannot assure that any agreements we may reach will achieve our
goals or be on terms that prove to be economically beneficial to us. We anticipate that if we were to enter into strategic or contractual
relationships, we may become dependent on the successful performance of our partners or counterparties. If they fail to perform as expected,
such failure could adversely affect our financial condition, lead to increases in our capital needs, or hinder or delay our development
efforts.
Known third-party patent rights could delay or otherwise adversely
affect our planned development and sale of leronlimab. We have identified but not exhaustively analyzed other patents that could relate
to our proposed products.
We are aware of patent rights held by a third
party that may cover certain compositions within our leronlimab candidate. The patent holder has the right to prevent others from making,
using, or selling a drug that incorporates the patented compositions, while the patent remains in force. While we believe that the third
party’s patent rights will not affect our planned development, regulatory clearance, and eventual commercial production, marketing,
and sale of leronlimab, there can be no assurance that this will be the case. We believe the relevant patent expires before we expect
to commercially introduce leronlimab. In addition, the Hatch-Waxman exemption to U.S. patent law permits all uses of compounds in clinical
trials and for other purposes reasonably related to obtaining the FDA clearance of drugs that will be sold only after patent expiration;
we believe our use of leronlimab in those FDA-related activities would not infringe the patent holder’s rights. However, were the
patent holder to assert its rights against us before expiration of the patent for activities unrelated to the FDA clearance, the development
and ultimate sale of a leronlimab product could be significantly delayed, and we could incur expenses for defending a patent infringement
suit and for damages that may relate to periods prior to the patent’s expiration. In connection with our acquisition of rights
to leronlimab, our patent counsel conducted a freedom-to-operate search that identified other patents that could relate to our proposed
leronlimab candidate. Based upon research and analysis to date, we believe leronlimab likely does not infringe those patent rights. If
any of the holders of the identified patents were to assert patent rights against us, the development and sale of leronlimab could be
delayed, we could be required to spend time and money defending patent litigation, and we could incur liability for infringement or be
enjoined from producing our products if the patent holders prevailed in an infringement suit.
Risks Related to Our Dependence on Third Parties
We have a very limited number of internal research and development
personnel, making us dependent on consulting relationships and strategic alliances with industry partners.
We have few employees dedicated to quality control
and CMC activities. We rely and intend to continue to rely on third parties to supplement many of these critical functions. If we commence
additional clinical trials, we will contract with third-party, full-service CROs to manage our trials. As a result, we are likely to
be dependent on consultants and strategic partners in our development activities, and it may be administratively challenging for us to
monitor and coordinate these relationships. If we do not appropriately manage our relationships with third parties, we may not be able
to successfully manage development, testing, and preparation of regulatory filings for our product or commercialize any approved product,
which would have a material and adverse effect on our business, financial condition and stock price.
We may continue to rely on third parties,
such as CROs and third-party manufacturers, to conduct clinical trials for our product candidate, leronlimab, and to produce our pre-clinical
and clinical product candidate supplies. Such third parties are subject to significant regulation. A failure by such third parties to
properly and successfully perform their obligations to us, or failure of manufacturers on which we rely to meet regulatory requirements,
may result in our inability to obtain regulatory approvals for or commercialize our product candidate.
We are dependent on third parties for important
aspects of our product development strategy. We do not have the required financial and human resources to carry out independently the
pre-clinical and clinical development of our current product candidate. We also do not have the capability or resources to manufacture,
store, market or sell our current product candidate. As a result, we contract with and rely on third parties to perform such important
functions. We compete with larger companies for the resources of these third parties. Although we plan to continue to rely on these third
parties to conduct any future clinical trials and manufacturing, we are responsible for ensuring that each of our clinical trials is
conducted in accordance with its general investigational plan and protocol and adheres to the FDA’s regulations regarding Good
Laboratory Practice and that the manufacturing of our product complies with the FDA’s current good manufacturing practices (“cGMP”)
enforced through its facilities inspection program. Moreover, we are required to comply with regulations and standards, including good
clinical practices, for designing, conducting, monitoring, recording, analyzing, and reporting the results of clinical trials to assure
that the data and results are credible and accurate and that the rights, integrity, and confidentiality of trial participants are protected.
Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. The third parties
on whom we rely generally may terminate their engagements with us at any time. If these third parties do not successfully carry out their
duties under their agreements with us, if the quality or accuracy of the data they obtain, process, and analyze is compromised for any
reason, or if they otherwise fail to comply with clinical trial protocols or meet expected deadlines, future clinical trials that we
may undertake may experience delays or may fail to meet regulatory requirements. If our clinical trials do not meet regulatory requirements
or if these third parties need to be replaced, our pre-clinical development activities or clinical trials may be extended, delayed, suspended,
or terminated. If any of these events occur, or if problems develop in our relationships with third parties, or if such parties fail
to perform as expected, we may experience delays or lack of progress, significant cost increases, changes in our strategies, and even
failure of our product initiatives, potentially resulting in our inability to obtain regulatory approval of our product candidate and
harming our reputation.
Risks Related to Our Intellectual Property Rights
Our success depends substantially upon our ability to obtain
and maintain intellectual property protection relating to our product candidate and future product candidates.
Due to evolving legal standards relating to the
patentability, validity, and enforceability of patents covering pharmaceutical inventions and the claim scope of patents, our ability
to enforce our existing patents and to obtain and enforce patents that may issue from any pending or future patent applications is uncertain
and involves complex legal, scientific, and factual questions. To date, no consistent policy has emerged regarding the breadth of claims
allowed in biotechnology and pharmaceutical patents. We have pending patents for certain indications for our core product candidate and
continue to seek patent coverage for various potential therapeutic applications for leronlimab. However, we cannot be sure that any patents
will issue from any pending or future patent applications owned by or licensed to us. Even if patents do issue, we cannot be sure that
the claims of these patents will be held valid or enforceable by a court of law, will provide us with any significant protection against
competing products, or will afford us a commercial advantage over competitive products. If one or more products resulting from our product
candidate is approved for sale by the FDA and we do not have adequate intellectual property protection for those products, competitors
could duplicate them for approval and sale in the United States without repeating the extensive testing required of us or our partners
to obtain FDA approval, once our data exclusivity period has expired.
If we are sued for infringing on third-party intellectual property
rights, it will be costly and time-consuming, and an unfavorable outcome would have a significant adverse effect on our business. We
may also undertake infringement or other legal proceedings against third parties, causing us to spend substantial resources on litigation
and exposing our own intellectual property portfolio to challenge.
Our ability to commercialize our product candidate
depends on our ability to use, manufacture, and sell that product without infringing on the patents or other proprietary rights of third
parties. Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the monoclonal antibody
therapeutic area in which we are developing our product candidate and seeking new potential product candidates. There may be existing
patents, unknown to us, on which our activities with our product candidate could infringe.
If a third party claims our actions or products
or technologies infringe on its patents or other proprietary rights, we could face a number of issues that could seriously harm our competitive
position, including, but not limited to:
| · | infringement
and other intellectual property claims that, even if meritless, can be costly and time-consuming,
delay the regulatory approval process, and divert management’s attention from our core
business operations, |
| · | substantial
damages for infringement if a court determines that our products or technologies infringe
a third party’s patent or other proprietary rights, |
| · | a
court prohibiting us from selling or licensing our products or technologies unless the holder
licenses the patent or other proprietary rights to us, which it is not required to do, and |
| · | even
if a license is available from a holder, we may have to pay substantial royalties or grant
cross-licenses to our patents or other proprietary rights. |
If any of these events occur, it could significantly
harm our operations and financial condition and negatively affect our stock price. Additionally, although no third party asserted a claim
of infringement against us, others may hold proprietary rights that could prevent our product candidate from being marketed. Any patent-related
legal action against us claiming damages and seeking to enjoin commercial activities relating to our product candidate or our processes
could subject us to potential liability for damages and require us to obtain a license to continue to manufacture or market leronlimab
or any other product candidates. We cannot predict whether we would prevail in any such actions or that any license required under any
of these patents would be made available on commercially acceptable terms, if at all. Further, we cannot be sure that we could redesign
leronlimab or any other product candidates or processes to avoid infringement, if necessary. Accordingly, an adverse determination in
a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent us from developing and commercializing
leronlimab or another product candidate, which could harm our business, financial condition, and operating results.
We may come to believe that third parties are
infringing on our patents or other proprietary rights. To prevent infringement or unauthorized use, we may need to file infringement
and/or misappropriation suits, which are very expensive and time-consuming and would distract management’s attention. Also, in
an infringement or misappropriation proceeding, a court may decide that one or more of our patents is invalid, unenforceable, or both,
in which case third parties may be able to use our technology without paying license fees or royalties. Even if the validity of our patents
is upheld, a court may refuse to stop the other party from using the technology at issue on the ground that the other party’s activities
are not covered by our patents.
We may become involved in disputes with our present or future
contract partners over intellectual property ownership or other matters, which could have a significant adverse effect on our business.
Inventions discovered in the course of performance
of contracts with third parties may become jointly owned by our strategic partners and us, in some cases, and the exclusive property
of one of us, in other cases. Under some circumstances, it may be difficult to determine who owns a particular invention or whether it
is jointly owned, and disputes could arise regarding ownership or use of those inventions. Other disputes may also arise relating to
the performance or alleged breach of our agreements with third parties. Any disputes could be costly and time-consuming, and an unfavorable
outcome could have a significant adverse effect on our business.
Risks Related to Ownership of Our Common Stock
Since our inception, we have been insolvent and have required
debt and equity financing to maintain operations. We expect our debt service obligations and our need for additional funding to finance
operations will cause additional substantial dilution to our existing stockholders and could adversely affect the trading price of our
common stock.
Since our inception, we have not achieved cash
flows from revenues sufficient to cover basic operating costs. As a result, we have relied heavily on debt and equity financing. Equity
financing, including securities convertible into equity, in particular has had a dilutive effect on our common stock, which has hampered
our ability to attract reasonable financing terms.
The terms of our convertible note financings
require us to make periodic debt repayments to reduce the outstanding balance of our debt. As a result, we likely will be required to
use a significant portion of our available cash to repay our debt and satisfy other payment obligations, which will reduce the amount
of capital available to finance our operations and other business activities. We expect to continue to seek to exchange all or part of
our outstanding debt for shares of common stock. If the Company enters into any future exchange offers, they will likely be negotiated
at a discount to the market price of our common stock and will cause additional dilution to our existing stockholders. If the convertible
noteholders sell the common stock they receive in exchange for outstanding debt, this could result in a decline in our stock price. In
addition, the exercise of our outstanding warrants and stock options, which are exercisable for or convertible into shares of our common
stock, and the exercise of which we have encouraged through public or private warrant exchange offers from time to time, would dilute
our existing common stockholders.
Issuances of additional equity or convertible
debt securities will continue to reduce the percentage ownership of our then-existing stockholders. We may also be required to grant
potential investors new securities rights, preferences, or privileges senior to those possessed by our then-existing stockholders in
order to induce them to invest in our company. The issuance of these senior securities may adversely affect the holders of our common
stock as a result of preferential dividend and liquidation rights over the common stock and dilution of the voting power of the common
stock.
As the result of these and other factors, the
issuance of additional equity or convertible debt securities may have an adverse impact on the market price of our common stock. For
the foreseeable future, we will be required to continue to rely on debt and equity financing to maintain our operations.
Our certificate of incorporation permits our Board to create
new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of
our common stock.
Our Board has the authority to fix and determine
the relative rights and preferences of preferred stock. Currently, our Board has the authority to designate and issue approximately 4.9
million additional shares of our preferred stock without further stockholder approval. As a result, our Board could authorize the issuance
of another series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive
dividend payments before dividends are distributed to the holders of common stock, and the right to redemption of the shares, together
with a premium, prior to the redemption of our common stock. In addition, our Board could authorize the issuance of a series of preferred
stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative
voting power of our common stock or result in dilution to our existing stockholders.
Anti-takeover provisions of our certificate of incorporation,
our bylaws, and Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult, and may prevent
attempts by our stockholders to replace or remove the current members of our Board and management.
Certain provisions of our amended and restated
certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition, or other change of control that stockholders
may consider favorable, including transactions in which stockholders might otherwise receive a premium for shares of common stock. Furthermore,
these provisions could frustrate attempts by our stockholders to replace or remove members of our Board. These provisions also could
limit the price that investors might be willing to pay in the future for our common stock, thereby depressing the market price of our
common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do so. Among other things, these
provisions:
| · | allow
us to designate and issue shares of preferred stock, without stockholder approval, that could
adversely affect the rights, preferences, and privileges of the holders of our common stock
and could make it more difficult or less economically beneficial to acquire or seek to acquire
us, |
| · | provide
that special meetings of stockholders may be called only by the Board acting pursuant to
a resolution approved by the affirmative majority of the entire Board, and |
| · | do
not include a provision for cumulative voting in the election of directors. Under cumulative
voting, a minority stockholder holding a sufficient number of shares may be able to ensure
the election of one or more directors. The absence of cumulative voting may have the effect
of limiting the ability of minority stockholders to effect changes in the composition of
our Board. |
In addition, we are governed by the provisions
of Section 203 of the Delaware General Corporation Law (the “DGCL”), which may, unless certain criteria are met, prohibit
large stockholders, in particular those owning 15% or more of our voting stock, from merging or combining with us for a prescribed period
of time.
We do not expect to pay cash dividends on our common shares
for the foreseeable future.
We have never declared or paid a cash dividend
on our common shares and we do not anticipate declaring or paying dividends on our common shares for the foreseeable future. We expect
to use future financing proceeds and earnings, if any, to fund operating expenses. Consequently, common stockholders’ only opportunity
to achieve a return on their investment is if the price of our stock appreciates and they sell their shares at a profit. We cannot assure
common stockholders of a positive return on their investment when they sell their shares or that stockholders will not lose the entire
amount of their investment.
DESCRIPTION OF THE EXERCISE
OFFER
We are offering to amend, upon the terms and subject
to the conditions set forth herein, outstanding warrants to purchase up to an aggregate of 197,422,561 shares of common stock (the “Exercise
Offer”), including:
| i. | outstanding warrants to purchase 87,690,698 shares of common stock
with an exercise price of $0.306 per share and expiration dates ranging between February 2027
and September 2028 (the “$0.306 Warrants”); |
| ii. | outstanding warrants to purchase 3,898,473 shares of common stock
with an exercise price of $0.45 per share and expiration dates ranging between August 2024
and February 2027 (the “$0.45 Warrants”); |
| iii. | outstanding warrants to purchase 97,491,609 shares of common stock
with an exercise price of $0.50 per share and expiration dates ranging between August 2024
and September 2028 (the “$0.50 Warrants”); and |
| iv. | outstanding warrants to purchase 8,341,781 shares of common stock
with an exercise price of $1.00 per share and expiration dates ranging between January 2025
and January 2027 (the “$1.00 Warrants” and together with the $0.306 Warrants,
the $0.45 Warrants, and the $0.50 Warrants, collectively, are referred to herein as the “Original
Warrants”). |
The Original Warrants represent 55% of our outstanding
warrants. The balance of our outstanding warrants generally have different, and primarily lower, exercise prices.
There is no minimum participation requirement with
respect to this Exercise Offer.
Pursuant to the Exercise Offer, the Original Warrants
will be amended (the “Amended Warrants”) to: (i) reduce the exercise price of the Original Warrants to the lower of
70% of (1) the intraday VWAP on the Expiration Date and (2) the average VWAP for the 5 days ending on the Expiration Date,
but in no event higher than the closing price on May 31, 2024, and (ii) shorten the exercise period of the Original Warrants
so that they expire on the Expiration Date, which is 5:00 p.m. (Eastern Time) on June 28, 2024, as we may extend it in our
sole discretion. Other than set forth above, the terms of the Original Warrants will remain unmodified and in full force and effect.
SECTION 1. FORWARD-LOOKING STATEMENTS
This Exercise Offer contains certain forward-looking
statements that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism,
satisfaction or disappointment with current prospects, as well as words such as "believes," "hopes," "intends,"
"estimates," "expects," "projects," "plans," "anticipates" and variations thereof,
or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking.
Our forward-looking statements are not guarantees of performance and actual results could differ materially from those contained in or
expressed by such statements. In evaluating all such statements, we urge you to specifically consider the various risk factors identified
in this Exercise Offer, including the statements set forth in the sections titled “Risk Factors” or elsewhere in this Exercise
Offer and in the documents incorporated or deemed incorporated herein by reference, any of which could cause actual results to differ
materially from those indicated by our forward-looking statements.
Our forward-looking statements reflect our current
views with respect to future events and are based on currently available financial, economic, scientific, and competitive data and information
on current business plans.
Forward-looking statements may include, among others,
statements about leronlimab, its ability to provide positive health outcomes, the Company's ability to implement a successful operating
strategy for the development of leronlimab and thereby create shareholder value, the ability to obtain regulatory approval of the Company’s
drug products for commercial sales, and the strength of the Company’s leadership team. The Company's forward-looking statements
are not guarantees of performance, and actual results could vary materially from those contained in or expressed by such statements due
to risks and uncertainties, including: (i) the regulatory determinations of leronlimab’s safety and effectiveness to treat
the diseases and conditions for which we are studying the product by the U.S. Food and Drug Administration (the “FDA”) and
various drug regulatory agencies in other countries; (ii) the Company’s ability to raise additional capital to fund its operations;
(iii) the Company’s ability to meet its debt and other payment obligations; (iv) the Company’s ability to recruit
and retain key employees; (v) the Company’s ability to enter into partnership or licensing arrangements with third parties;
(vi) the timely and sufficient development, through internal resources or third-party consultants, of analyses of the data generated
from the Company’s clinical trials required by the FDA or other regulatory agencies in connection with applications for approval
of the Company’s drug product; (vii) the Company’s ability to achieve approval of a marketable product; (viii) the
design, implementation and conduct of the Company’s clinical trials; (ix) the results of any such clinical trials, including
the possibility of unfavorable clinical trial results; (x) the market for, and marketability of, any product that is approved; (xi) the
existence or development of vaccines, drugs, or other treatments that are viewed by medical professionals or patients as superior to
the Company’s products; (xii) regulatory initiatives, compliance with governmental regulations and the regulatory approval
process; (xiii) legal proceedings, investigations or inquiries affecting the Company or its products; (xiv) general economic
and business conditions; (xv) changes in foreign, political, and social conditions; (xvi) stockholder actions or proposals
with regard to the Company, its management, or its board of directors; and (xvii) various other matters, many of which are beyond
the Company’s control. The Company intends that all forward-looking statements made in this Exercise Offer will be subject to the
safe harbor protection of the federal securities laws pursuant to Section 27A of the Securities Act, to the extent applicable. Except
as required by law, the Company does not undertake any responsibility to update these forward-looking statements to address events or
circumstances that occur after the date of this Exercise Offer. Additionally, the Company does not undertake any responsibility to update
you on the occurrence of any unanticipated events that may cause actual results to differ from those expressed or implied by these forward-looking
statements.
SECTION 2. PURPOSES OF THE EXERCISE OFFER
AND USE OF PROCEEDS
Fund
Raising. Through the Exercise Offer we can raise funds to support our future operations and capital requirements by encouraging
the participating holders to exercise their Original Warrants by significantly reducing the exercise price and shortening the exercise
period. If all holders participate in the Exercise Offer and exercise an Amended Warrant, we would raise gross proceeds of approximately
$31.6 million. The funds obtained will be used to fund, in part, a Phase II study of leronlimab in patients with relapsed/refractory
microsatellite stable colorectal cancer operations; and for working capital and other general corporate purposes, which may include the
reduction of indebtedness.
Reduction of Share Overhang
from Outstanding Warrants. In addition, the Exercise Offer can help us reduce the number of outstanding warrants. As of May 30, 2024,
we had outstanding warrants to purchase an aggregate of 361,675,427 shares of common stock at a weighted average exercise price of $0.34
per share. The sale of substantial amounts of our common stock upon exercise of outstanding warrants, or the perception that significant
sales may occur in the future, could adversely affect the market price of our common stock and our ability to raise additional capital
in the future. This Exercise Offer would not impact “share overhang” from outstanding options, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, or convertible notes. As of May 30, 2024, we had (i) outstanding stock options to
purchase an aggregate of 25,849,473 shares of our common stock at a weighted average exercise price of $0.60 per share, (ii) 190,000
shares of common stock issuable upon conversion of outstanding Series B Preferred Stock, and 38,997 shares of common stock that would
be issuable at our election in lieu of cash as accrued dividends, if declared thereunder, (iii) 12,670,000 shares of common stock issuable
upon conversion of outstanding Series C Preferred Stock, and 6,271,666 shares of common stock that would be issuable at the holders’
election in lieu of cash as accrued dividends, if declared thereunder, (iv) 10,565,000 shares of
common stock issuable upon conversion of outstanding Series D Preferred Stock, and 7,310,104 shares
of common stock that would be issuable at the holders’ election in lieu of cash as accrued dividends, if declared thereunder, and
(v) 12,000,000 shares of common stock reserved for the conversion of convertible notes. The exercise of such outstanding options and
conversion of our Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and convertible notes will result in dilution
of the value of our shares. In addition, we had an additional 12,700,539 shares of common stock available for future awards under our
2012 Equity Compensation Plan.
SECTION 3. ELIGIBLE ORIGINAL WARRANTS
The following Original Warrants are subject to the
Exercise Offer:
| i. | 87,690,698 $0.306 Warrants expiring between February 2027 and
September 2028; |
| ii. | 3,898,473 $0.45 Warrants expiring between August 2024 and February 2027; |
| iii. | 97,491,609 $0.50 Warrants expiring between August 2024 and
September 2028; and |
| iv. | 8,341,781 $1.00 Warrants expiring between January 2025 and January 2027. |
SECTION 4. EXPIRATION DATE
The Exercise Offer will be open through
5:00 p.m., Eastern Time on June 28, 2024, as may be extended by us in our sole discretion.
SECTION 5. TERMS OF AMENDED WARRANTS
Pursuant to the Exercise Offer, the Original Warrants
will be amended as described below:
New
Exercise Price: The exercise price of the Original Warrants will be reduced to the lower of 70% of (i) the intraday VWAP
on the Expiration Date and (ii) the average VWAP for the 5 days ending on the Expiration Date, but in no event higher than the closing
price on May 31, 2024.
New
Termination Date: The termination date of the Original Warrants will be shortened to terminate concurrently with the Expiration
Date.
Other
Terms: Except as set forth above, all other terms of the Amended Warrants will be the same as the terms of the Original Warrants.
SECTION 6. CONDITIONS TO THE EXERCISE OFFER
The Exercise Offer is subject to certain conditions,
as described herein:
(i) As
part of the Election Form, the holders of the Original Warrants must complete an Accredited Investor Questionnaire. In addition, as part
of the Election Form, the holders of the Original Warrants are asked to make certain representations and warranties upon which the Company
will rely in establishing that the transactions contemplated by the Exercise Offer are exempt from the registration requirements of the
Securities Act and applicable state securities laws. The holders of the Original Warrants previously made substantially the same representations
and warranties to the Company, including representations that they were “accredited investors,” in connection with the transactions
in which such holders acquired the Original Warrants.
If you wish to participate in the Exercise Offer,
but you are not able to make any of the representations set forth on page 2 of the Acknowledgements and Representations and
Warranties, please reach out to us directly at our corporate address indicated in “Section 23. Information Requests” on
page 38 to inform us which ones you are not able to make and why. If you are unable to establish that you are an accredited
investor, you will not be able to participate in the Exercise Offer.
In addition, if we determine, after reviewing the
representations and warranties and Accredited Investor Questionnaires of all participating warrant holders, that a valid exemption is
not available from the registration requirements of applicable federal and/or state securities laws, then we may determine that it is
necessary to cancel the Exercise Offer in its entirety, and not to consummate any of the contemplated transactions, in order to comply
with the requirements of applicable securities laws. In that case, all exercise payments previously received would be promptly returned
to participating warrant holders, along with all Original Warrants, unexercised and outstanding pursuant to their original terms.
(ii) In
addition, we are not making this Exercise Offer to, nor will we accept any Election Form from or on behalf of, Original Warrant
holders in any jurisdiction in which the Exercise Offer or the exercise of the Amended Warrants would not be in compliance with the laws
of such jurisdiction.
You may not elect to amend but not exercise your Original
Warrants. Participation in this Exercise Offer requires both amendment of your Original Warrants and your exercise of the Amended Warrants,
which will happen simultaneously should you choose to participate.
Original Warrants of holders that elect not to participate
and exercise will remain outstanding pursuant to their original terms.
SECTION 7. EXTENSION OF EXERCISE OFFER
PERIOD; TERMINATION; AMENDMENTS
If we materially change the terms of the Exercise Offer
or the information concerning the Exercise Offer, we will extend the Exercise Offer to the extent required under applicable law, including
under the rules of the Exchange Act. Material changes to information previously provided to holders of the Original Warrants in this Exercise
Offer or in documents furnished subsequent thereto will be disseminated to holders of Original Warrants. The minimum period during which
an offer must remain open following any material change in the terms of the Exercise Offer or information concerning the Exercise Offer
(other than a change in price, change in dealer’s soliciting fee or change in percentage of securities sought, all of which require
up to ten (10) additional business days) will depend on the facts and circumstances, including the relative materiality of such terms
or information.
We may also extend the Expiration Date in our sole discretion at any
time, subject to applicable law. There can be no assurance, however, that we will exercise our right to extend the Exercise Offer. If
we were to extend the Expiration Date for the Exercise Offer, we cannot indicate, at this time, the length of any extension that we may
provide. In any event, if we extend the Expiration Date for the Exercise Offer, we will delay the acceptance of any Original Warrants
that have been tendered, and any Original Warrants that have been previously tendered may be withdrawn up until the Expiration Date,
as so extended. We also may terminate the Exercise Offer in our sole discretion if the closing price of the common stock is below $0.16
on June 28, 2024.
If the Expiration Date for the Exercise Offer is extended,
we will issue a press release announcing the extension and the new Expiration Date no later than 9:00 a.m., Eastern Time, on the
first business day after the previously scheduled Expiration Date. We will announce any amendment to or termination of the Offer
by issuing a press release announcing the amendment or termination.
In the event of termination of the Exercise Offer, all exercise payments
previously received would be promptly returned to participating warrant holders, along with all Original Warrants, unexercised and outstanding
pursuant to their original terms.
SECTION 8.
PROCEDURE FOR PARTICIPATING IN EXERCISE OFFER, EXERCISING AMENDED WARRANTS
To participate in the Exercise Offer and exercise
an Amended Warrant and receive the number of shares of common stock issuable therefor, you must deliver to us, before the Expiration
Date, all of the following: (i) a signed Election Form, (ii) a signed Acknowledgements and Representations and Warranties, (iii) a signed
Accredited Investor Questionnaire, (iv) the original copy of your Original Warrants (or an Affidavit of Lost Warrant), and (v) the aggregate
exercise price in cash in the amount equal to the closing price of the common stock on May 31, 2024, $0.16, multiplied by the number
of shares of common stock the holder elects to purchase (collectively, the “Acceptance and Exercise Documents”). We do
not view the representations and warranties to be made by warrant holders tendering their warrants that they have “review[ed] the
current business prospects, financial condition and operating history of the Company,” “had the opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the Exercise Offer,” and “received all the information
[they] consider[ed] necessary or appropriate for deciding whether to accept the Exercise Offer” as a waiver of any potential liability
that we may have under federal securities laws, and we agree not to assert that these provisions constitute a waiver of any such liability
if a claim is made against us. The cash exercise price may be tendered in the form of a check payable to CytoDyn Inc. or by wire
transfer to our account as set forth in the instructions to the Election Form. Each of these items must be properly delivered before
the Expiration Date to us at our corporate address:
CytoDyn Inc.
1111 Main Street, Suite 660
Vancouver,
Washington 98660
Email: warrants@cytodyn.com
Phone: (360) 980-8524
SECTION 9. MANNER OF ACCEPTANCE OF PAYMENT
AND ISSUANCE OF SHARES
If you properly tender (and do not validly withdraw)
your Original Warrants and the other Acceptance and Exercise Documents on or prior to 5:00 p.m., Eastern Time on June 28, 2024,
the Expiration Date of the Exercise Offer (or such later date and time if we extend the Exercise Offer), promptly following the Expiration
Date, we intend to notify our transfer agent of our acceptance of your payment of the exercise price and your other Acceptance and Exercise
Documents and issue and deliver to you the number of shares of common stock issuable under the Amended Warrants, as well as a replacement
Original Warrant for any unexercised portion thereof. See Section 8 “Procedure for Participating in Exercise Offer and Exercising
Amended Warrants” below.
SECTION 10. WITHDRAWAL RIGHTS
If after tendering your Original Warrants
and other Acceptance and Exercise Documents you change your mind and do not want to participate in the Exercise Offer, you may submit
the Notice of Withdrawal to us. However, to be effective, the Notice of Withdrawal must be properly completed and must be returned to
us before 5:00 p.m., Eastern Time, on June 28, 2024, the Expiration Date of the Exercise Offer (or such later date and time if we extend
the Exercise Offer). Following the Expiration Date, you cannot withdraw your Election Form. However, if we have not accepted your tendered
Original Warrants and other Acceptance and Exercise Documents on or before July 31, 2024, you may change your mind and submit a Notice
of Withdrawal to us after July 31, 2024.
If you properly withdraw in a timely manner as set forth above, we will promptly: (i) cancel your signed copy of the Election Form, (ii)
return the original copy of your Original Warrant (which will remain unmodified and in full force and effect), or issue you a new Original
Warrant if you submitted an Affidavit of Lost Warrant, and (iii) provide you with a check equal to the amount of cash you paid to exercise
the Amended Warrant.
SECTION 11. RESALES OF WARRANT SHARES
The Original Warrants, the Amended Warrants, and the
shares of common stock issuable upon exercise of the Original Warrants or Amended Warrants are “restricted securities.” Restricted
securities may not be sold by the holder absent registration, or an exemption from the registration requirements, under the Securities
Act and the applicable securities laws of any other state or jurisdiction.
We have previously filed the Resale Registration Statements
to register the resale of certain of the shares of common stock underlying the Original Warrants under the Securities Act.
Promptly following the Expiration Date, we intend
to file a Current Report on Form 8-K to reflect the substantive changes from the information currently set forth in the prospectuses
included in the Resale Registration Statements as a result of this Exercise Offer. Thereafter, holders who are named as selling stockholders
in a Resale Registration Statement may sell their shares of common stock in accordance with the resale provisions set forth in the “Plan
of Distribution” section of the Resale Registration Statement prospectus. Each holder of Original Warrants should read the applicable
Registration Statement prospectus carefully before deciding whether to participate in the Exercise Offer.
To the extent that an Original Warrant is not the
subject of a resale prospectus filed under one of the Resale Registration Statements with respect thereto, the holder thereof will not
be able to resell the shares of common stock issuable upon exercise of the related Amended Warrant, unless we file a registration statement
(or a post-effective amendment to a Resale Registration Statement) to include such holder as a selling stockholder thereunder, except
to the extent that such resale qualifies for an exemption from registration requirements under applicable securities laws, which may
require a holding period of at least six months following the consummation of this Exercise Offer.
There is no established trading market for the Original
Warrants or the Amended Warrants, and we do not intend to list the Original Warrants or the Amended Warrants for trading on any exchange
or market.
SECTION 12. TRADING
MARKET OF ORIGINAL WARRANTS, AMENDED WARRANTS AND COMMON STOCK
There is no established trading market for the Original
Warrants or the Amended Warrants.
Our common stock is presently quoted on the OTCQB
of the OTC Markets marketplace under the trading symbol CYDY. Historically, trading in our stock has been very limited and the trades
that have occurred cannot be characterized as amounting to an established public trading market. As a result, the trading prices of our
common stock may not reflect the price that would result if our stock was actively traded.
SECTION 13. SOURCE
AND AMOUNT OF FUNDS
Because this transaction is solely an offer to holders
to amend their outstanding Original Warrants, there are no funds or other consideration being paid to participants. We will use existing
working capital to pay the fees and expenses associated with this Exercise Offer.
SECTION 14. TRANSACTIONS AND AGREEMENTS
CONCERNING ORIGINAL WARRANTS
Not applicable.
SECTION 15. INFORMATION REGARDING CYTODYN
INC.
The following summary highlights selected information
regarding CytoDyn Inc. Because it is a summary, it does not contain all of the information you should consider before making a decision
to participate in the Exercise Offer or exercise your Amended Warrant. Before making an investment decision, you should read the entire
Exercise Offer carefully, including the “Risk Factors” section above and the other materials incorporated by reference in
Section 22: “Additional Information” below.
Overview
The Company is a clinical stage biotechnology company
focused on the clinical development and potential commercialization of its product candidate, leronlimab, which is being studied for
oncology and other potential indications, including but not limited to human immunodeficiency virus (“HIV”) and metabolic
dysfunction-associated steatohepatitis (“MASH”). The Company’s focus is on implementing a therapeutic development and
commercialization pathway for leronlimab through an approach that is opportunistic and minimizes the amount of Company capital needed
for the creation of value by identifying strategies that are time- and cost-effective and support the creation of non-dilutive financing
opportunities, such as license agreements and co-development or strategic partnerships. Our current focus is on commencing a Phase II
study of leronlimab in patients with relapsed/refractory microsatellite stable colorectal cancer. The Company will also be pursuing a
Phase II study exploring leronlimab’s effects on inflammation; pursuing research and development of longer-acting molecules; evaluating
whether to conduct a combination pre-clinical study or monotherapy Phase 2b/3 clinical trial in MASH; and publishing data from previously
conducted studies.
For additional information regarding CytoDyn Inc.,
you should also review the materials that we have filed with the SEC and have listed in Section 22: “Additional Information”
below.
Corporate Information
CytoDyn
Inc. is a Delaware corporation with its principal business office at 1111 Main Street, Suite 660, Vancouver, Washington 98660. Our
website can be found at www.cytodyn.com. We do not intend to incorporate any contents from our website into this Exercise
Offer.
Financial Information
Our audited financial statements for our fiscal years
ended May 31, 2023 and 2022 included in our Annual Report on Form 10-K filed with the SEC on September 14, 2023, and our unaudited financial
statements for the fiscal quarters ended August 31, 2023, November 30, 2023 and February 29, 2024, included in our Quarterly Reports
on Form 10-Q filed with the SEC on October 23, 2023, January 16, 2024 and April 15, 2024, respectively, are each incorporated by reference
herein. Please see Section 22: “Additional Information” below for instructions on how you can obtain copies of our SEC filings,
including filings that contain our financial statements.
The following table sets forth audited summarized
consolidated historical financial data as of and for the fiscal years ended May 31, 2023 and 2022. The information presented below has
been derived from the consolidated financial statements included in our Annual Report on Form 10-K described above and should be read
together with those consolidated financial statements and the notes related thereto, as well as the sections of such annual reports entitled
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| |
Year Ended May 31, | |
(in thousands, except for per share amounts) | |
| 2023 | | |
| 2022 | |
Statement of Operations Data: | |
| | | |
| | |
Operating expenses | |
$ | (40,576 | ) | |
$ | (145,617 | ) |
Operating loss (before extraordinary items) | |
$ | (40,576 | ) | |
$ | (145,404 | ) |
Net loss | |
$ | (79,824 | ) | |
$ | (210,820 | ) |
Basic and diluted loss per share | |
$ | (0.10 | ) | |
$ | (0.31 | ) |
Basic and diluted weighted average common shares outstanding | |
| 836,528 | | |
| 676,900 | |
Balance Sheet Data: | |
| | | |
| | |
Current assets | |
$ | 10,805 | | |
$ | 10,515 | |
Noncurrent assets | |
$ | 487 | | |
$ | 18,670 | |
Current liabilities | |
$ | 119,796 | | |
$ | 123,161 | |
Noncurrent liabilities | |
$ | 997 | | |
$ | 422 | |
The following table sets forth unaudited summarized
consolidated historical financial data as of and for the quarters ended February 29, 2024 and February 28, 2023. The information presented
below has been derived from the consolidated financial statements included in our Quarterly Report on Form 10-Q described above and should
be read together with those consolidated financial statements and the notes related thereto, as well as the sections of such quarterly
reports entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
| |
Three Months Ended
February 29/28, | |
(in thousands, except for per share amounts) | |
2024 | | |
2023 | |
Statement of Operations Data: | |
| | | |
| | |
Operating expenses | |
$ | (3,414 | ) | |
$ | (3,921 | ) |
Operating loss (before extraordinary items) | |
$ | (3,414 | ) | |
$ | (3,921 | ) |
Net loss | |
$ | (11,920 | ) | |
$ | (13,702 | ) |
Basic and diluted loss per share | |
$ | (0.01 | ) | |
$ | (0.02 | ) |
Basic and diluted weighted average common shares outstanding | |
| 982,209 | | |
| 832,215 | |
Balance Sheet Data: | |
| | | |
| | |
Current assets | |
$ | 9,910 | | |
$ | 14,110 | |
Noncurrent assets | |
$ | 360 | | |
$ | 532 | |
Current liabilities | |
$ | 129,476 | | |
$ | 121,334 | |
Noncurrent liabilities | |
$ | 176 | | |
$ | 318 | |
The book value per share of our common stock as of
May 31, 2023 and February 29, 2024 was negative $(0.13) and negative $(0.12), respectively.
Certain pro forma financial information relating to
this Exercise Offer is presented below in Section 16: “Accounting Consequences of the Offer” below.
SECTION 16. ACCOUNTING CONSEQUENCES OF
THE EXERCISE OFFER
Assuming full participation, this Exercise Offer would
result in gross proceeds to the Company, and corresponding increases to cash and stockholders’ equity, of approximately $31.6 million.
In connection with this Exercise Offer, we will incur
issuance costs related to the modification of the Amended Warrants in the fiscal quarter ended August 31, 2024, equal to the increase
in fair value of the Amended Warrants. The amount of the issuance costs will be determined using the Black-Scholes valuation model and
will be charged against the gross proceeds and a corresponding increase to stockholders’ equity. Assuming full participation in
this Exercise Offer, the amount of issuance costs could range up to approximately $6.6 million, with a net increase to stockholders’
equity of up to approximately $27.5 million, assuming approximate gross proceeds of $31.6 million, issuance costs of up to $6.6 million
and transaction expenses of approximately $4.1 million.
This estimated pro forma non-cash interest expense
and corresponding increase in shareholders’ equity could be higher or lower depending on the level and mix of participating holders
of Original Warrants and our closing stock price on the Expiration Date.
SECTION 17. INTERESTS
OF DIRECTORS AND EXECUTIVE OFFICERS IN THE EXERCISE OFFER
As
of May 30, 2024, there were outstanding Original Warrants to purchase an aggregate of 361,675,427 shares of common stock. None
of our executive officers or directors hold Original Warrants.
SECTION 18. LEGAL MATTERS AND REGULATORY
APPROVALS
We are not aware of any license or regulatory
permit material to our business that might be adversely affected by the Exercise Offer and the issuance of shares of common stock upon
the exercise of the Amended Warrants. Our obligations under the Exercise Offer are subject to the conditions described in Section 6 “Conditions
of the Exercise Offer” above.
SECTION 19. MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES
The following is a summary of the material U.S.
federal income tax consequences that we expect will be applicable to Original Warrant holders who participate in the Exercise Offer.
However, we have not requested a ruling from the Internal Revenue Service (“IRS”) or any opinion of counsel with regard to
the treatment of warrant holders participating in the exchange and there can be no assurance, as discussed below, that the IRS will not
take a position inconsistent with our expectations.
This summary does not address all aspects of U.S.
federal income taxation that may be relevant to you in light of your particular circumstances, or to those Original Warrant holders who
are subject to special rules, such as financial institutions and mutual funds; banks; insurance companies; investment companies; retirement
plans; tax-exempt organizations; dealers or traders in securities; any person that holds their Original Warrants as part of a straddle
or hedge arrangement; partnerships or other pass-through entities; persons who are not citizens or residents of the U.S. or that are
foreign corporations, foreign partnerships or foreign estates or trusts for U.S. federal income tax purposes or whose functional currency
is not the U.S. dollar; or persons who are subject to the alternative minimum tax provisions of the Internal Revenue Code of 1986, as
amended (the “Code”). This summary is based on current provisions of the Code, Treasury Regulations promulgated thereunder,
judicial opinions, administrative rulings, and published positions of the IRS, all of which are subject to change (possibly with retroactive
effect).
This summary assumes that Original Warrant holders
hold the Original Warrants (and will hold their shares of our common stock received in connection with participating in the Exercise
Offer) as capital assets (i.e., generally for investment). In addition, the following summary does not address the tax consequences of
the participation in the Exercise Offer under foreign, state or local tax laws. You are urged to consult your tax advisors as to the
U.S. federal income tax consequences of participating in the Exercise Offer and related reporting obligations, as well as the effects
of state, local and non-U.S. tax laws and U.S. tax laws other than income tax laws.
Tax treatment of Exercise Offer.
Although not free from doubt, we intend to take the
position that the amendment of your Original Warrants followed by an exercise of the Amended Warrants are treated as separate events
for U.S. tax purposes, where an exchange of Original Warrants for Amended Warrants constitutes a recapitalization within the meaning
of Code Section 368(a)(1)(E) for U.S. federal income tax purposes, followed by the subsequent exercise of the Amended Warrants.
Under this treatment, (i) an Original Warrant holder who participates in the Exercise Offer would not recognize any gain or loss
as a result of amending the Original Warrants, (ii) such holder’s tax basis in the shares of our common stock received upon
exercise of the Amended Warrants would be equal to the holder’s tax basis in the Original Warrants, plus the amount of any cash
paid to exercise the Amended Warrants, and (iii) such holder’s holding period of the common stock would begin on the day after
the exercise of the Amended Warrants.
The IRS has not made a determination, nor have we
received any opinion of counsel, on the U.S. federal income tax consequences of the Exercise Offer or of a holder’s participation
in the Exercise Offer, and there is no published guidance directly on point. Because of the lack of authority dealing with transactions
similar to the Exercise Offer, the U.S. federal income tax consequences of the Exercise Offer are unclear, and alternative characterizations
are possible that could require you to immediately recognize income, gain or loss, or may impact your holding period. Therefore, we urge
you to consult your tax advisors regarding the potential tax consequences of the Exercise Offer to you in your particular circumstances,
including the consequences of possible alternative characterizations.
Distributions on Common Stock
Any distributions you receive in respect of our common
stock, including such common stock received in connection with participating in the Exercise Offer, generally will be treated as a dividend,
subject to tax as ordinary income, to the extent payable out of our current or accumulated earnings and profits (as determined for U.S.
federal income tax purposes), then as a tax-free return of capital to the extent of your tax basis in the shares of our common stock,
and thereafter as gain from the sale or exchange of the stock. Dividends received by a non-corporate holder generally qualify for taxation
at a reduced rate if the holder meets certain holding period and other applicable requirements. Dividends received by a corporate holder
will generally be eligible for the dividends-received deduction if the holder meets certain holding period and other applicable requirements.
Sale or Other Taxable Disposition of Common
Stock
You will generally recognize gain or loss upon the
sale, exchange or other taxable disposition of shares of our common stock equal to the difference between (i) the amount of cash
and the fair market value of any property received and (ii) your adjusted tax basis in the shares of our common stock. Any gain
or loss you recognize generally will be treated as a capital gain or loss. The capital gain or loss will be long-term if your holding
period in the common stock is more than one year at the time of sale, exchange or other taxable disposition and will be short-term if
your holding period is one year or less. Long-term capital gains of individuals and other non-corporate taxpayers are generally eligible
for reduced rates of taxation. Capital losses are generally subject to certain deductibility limitations.
Additional Medicare Tax on Net Investment
Income
Certain holders that are individuals, estates or trusts
(other than trusts that are exempt from tax) are subject to a 3.8% tax on “net investment income” (or “undistributed
net investment income” in the case of estates and trusts) for each taxable year, with such tax applying to the lesser of such income
or the excess of such U.S. holder’s adjusted gross income (with certain adjustments) over a specified amount. “Net investment
income” includes, among other things, dividends on and capital gains from the sale or other disposition of stock. You are urged
to consult your tax advisors regarding the applicability of this tax to your income and gains arising from ownership and disposition
of our common stock.
Information Reporting and Backup Withholding
Information reporting requirements generally will
apply to certain holders with respect to dividends paid on, or, under certain circumstances, the proceeds of a sale, exchange or other
disposition of, common stock. Under the Code and applicable Treasury Regulations, a holder of common stock may be subject to backup withholding
(currently at a rate of 24%) with respect to dividends paid on common stock, or the proceeds of a sale, exchange or disposition of common
stock, unless such holder (a) is a corporation or comes within certain other exempt categories and, when required, demonstrates
this fact in the manner required, or (b) within a reasonable period of time, provides a correct taxpayer identification number,
certifies that it is not subject to backup withholding (e.g., on an IRS Form W-9 or similar form) and otherwise complies with applicable
requirements of the backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding
rules will generally be allowed as a credit against a holder’s U.S. federal income tax liability and may entitle such holder
to a refund, provided the required information is timely furnished to the IRS. You should consult your tax advisors regarding the application
of information reporting and backup withholding rules to your particular situation, the availability of an exemption therefrom,
and the procedure for obtaining such an exemption, if applicable.
THE FOREGOING SUMMARY IS NOT A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS
THAT MAY BE RELEVANT TO YOU. YOU ARE URGED TO CONSULT WITH YOUR OWN TAX ADVISORS REGARDING YOUR PARTICULAR SITUATION AS IT RELATES
TO THE TAX CONSEQUENCES OF PARTICIPATING IN THE EXERCISE OFFER AND THE OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.
SECTION 20. FEES AND EXPENSES
We have retained Paulson Investment Company, LLC (the
“Soliciting Agent”) to solicit participation by the holders of the Original Warrants in this Exercise Offer. The Soliciting
Agent will receive a fee equal to 13% of the cash exercise prices paid by qualifying holders of the Original Warrants who participate
in the Exercise Offer.
We have also agreed to indemnify the Soliciting Agent against certain liabilities in connection with the Exercise
Offer, including certain liabilities under the federal securities laws.
As of May 30, 2024, current and former
affiliates (including certain holders of membership interests) of the Soliciting Agent held PA Warrants previously received as consideration
for services as placement agent in various previous securities offerings, which were exercisable for an aggregate of 46,000,822 shares
of our common stock, with a weighted average exercise price of $0.25 per share, representing aggregate beneficial ownership of approximately
4% of our outstanding common stock as of that date. In addition, as of May 30, 2024, certain holders of membership interests in the Soliciting
Agent also held certain Original Warrants other than PA Warrants. The Soliciting Agent and its affiliates will be entitled to participate
in the Exercise Offer on the same terms and conditions as the other holders of Original Warrants.
SECTION 21. TRANSFERS
A holder may transfer the Original Warrants to a third
party only if the transfer qualifies for an exemption from the registration requirements of the Securities Act, and in accordance with
other transfer restrictions set forth in the Original Warrants. Any holder of an Original Warrant who desires to transfer an Original
Warrant should contact us prior to such transfer to ensure that the planned transfer satisfies the transfer restrictions set forth in
the Original Warrants.
The shares of common stock issuable upon exercise
of Amended Warrants will be “restricted securities” that may not be sold by the holder absent registration, or an exemption
from the registration requirements, under the Securities Act and the applicable securities laws of any other state or jurisdiction. See
Section 11: “Resales of Warrant Shares” above.
SECTION 22. ADDITIONAL INFORMATION
We have filed with the SEC a Tender Offer Statement
on Schedule TO of which this Exercise Offer is a part. This Exercise Offer does not contain all of the information contained in the Schedule
TO and the exhibits to the Schedule TO. We recommend that holders of the Original Warrants review the Schedule TO, including the exhibits,
as well as the following materials that we have filed with the SEC, which are incorporated herein by reference, before making a decision
on whether to participate in the Exercise Offer and to exercise the Amended Warrants:
| · | our Annual Report on
Form 10-K for the fiscal year ended May 31, 2023, filed with the SEC on September 14,
2023; |
| · | our Quarterly Report
on Form 10-Q for the fiscal period ended August 31, 2023, filed with the SEC on
October 23, 2023, and our Quarterly Report on Form 10-Q for the quarter ended November 30,
2023, filed with the SEC on January 16, 2024 and our Quarterly Report on Form 10-Q
for the quarter ended February 29, 2024, filed with the SEC on April 15, 2024; |
| · | our Definitive Proxy
Statement on Schedule 14A filed with the SEC on September 25, 2023 and |
| · | our Current Reports
on Form 8-K filed with the SEC on September 25, 2023, October 10, 2023, November 6, 2023
(other than Item 7.01), November 9, 2023, November 21, 2023 (other than Item 7.01), November
28, 2023, December 14, 2023, December 22, 2023, January 29, 2024 (other than Item 7.01),
March 28, 2024, April 8, 2024, and May 6, 2024. |
The
SEC maintains an Internet website that contains reports, proxy statements and other information regarding issuers, including us, who
file electronically with the SEC. The address of that site is www.sec.gov. We will provide without charge to each person to whom
a copy of this Exercise Offer is delivered, upon the written or oral request of any such person, a copy of any or all of the documents
to which we have referred, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to our Executive Vice President of Legal Affairs, Tyler Blok, by telephone at (360) 980-8524,
by e-mail at warrants@cytodyn.com, or by mail or personal delivery service at our corporate address indicated below.
As you read the documents referred to in this section,
you may find some inconsistencies in information from one document to another later dated document. Should you find inconsistencies between
the documents, or between a document and this Offer to Amend and Exercise, you should rely on the statements made in the most recent
document. The information contained in this Offer to Amend and Exercise should be read together with the information contained in the
documents to which we have referred you.
Our Board of Directors recognizes that the decision
to participate in the Exercise Offer and to exercise the Amended Warrants is an individual one that should be based on a variety of factors.
The holders of the Original Warrants should consult with their respective professional advisors if they have questions about their financial
or tax situation. The information about this Exercise Offer from us is limited to the Offering Materials.
SECTION 23. INFORMATION REQUESTS
Please direct questions or requests for assistance
regarding this Exercise Offer, Election Form, and Notice of Withdrawal or other materials, in writing, to the Soliciting Agent at the
following address:
Paulson Investment Company, LLC
8770 W Bryn Mawr suite 1300
Chicago, IL 60631
Attn:
Samantha Kling, Operations Manager
Email:
skling@paulsoninvestment.com
Phone: (312) 940-8321
Please direct requests for additional copies of this
Exercise Offer, Election Form, and Notice of Withdrawal or other materials, in writing, to us at our corporate address:
CytoDyn Inc.
1111 Main Street, Suite 660
Vancouver,
Washington 98660
Email: warrants@cytodyn.com
Phone: (360) 980-8524
EXHIBIT (a)(1)(C)
INSTRUCTIONS FOR ELECTION TO PARTICIPATE
Your
right to participate in the Offer to Amend and Exercise (the “Exercise Offer”) of CytoDyn Inc. (the “Company”)
will automatically expire if you do not properly elect to participate on or before 5:00 p.m. (Eastern Time) on the Expiration Date
of June 28, 2024, as may be extended by the Company in its sole discretion. By execution of this Election to Participate
and Exercise Warrant, you waive any right to receive any notice of the acceptance of the Amended Warrants, except as provided in the
Exercise Offer. To effect your acceptance of the Exercise Offer you must:
| (1) | Complete, sign and return the Election to Participate (attached hereto). |
| (2) | Complete, sign and return the Acknowledgements and Representations and
Warranties (attached hereto). |
| (3) | Complete, sign and return the Accredited Investor Questionnaire (attached
hereto). |
If the shares issuable upon exercise of your Amended Warrant
will be issued in the name of someone other than the record holder of the Original Warrants, the Accredited Investor Questionnaire must
also be completed by that recipient.
| (4) | Return your Original Warrants for each Original Warrant to be exercised. |
If you are unable to locate your Original Warrant, request
an Affidavit of Lost Warrant from the Company, at the address indicated below. Requests via email will receive same day response. Upon
receipt, complete, sign and return the Affidavit of Lost Warrant to the Company, in place of your Original Warrant.
| (5) | Pay the aggregate exercise price applicable to your Amended Warrant ($0.16,
the closing price on May 31, 2024, multiplied by the number of shares of common stock
you elect to purchase) by check or by wire transfer pursuant to the wire transfer instructions
set forth below. (The Company will return to you the excess, if any, by which the tendered
cash exercise price exceeds the lower of 70% of (1) the VWAP on the Expiration Date,
or (2) the average VWAP for the 5 days ending on the Expiration Date, multiplied by
the number of shares of common stock you elect to purchase.) |
| (6) | The Election to Participate, Acknowledgements and Representations and
Warranties, Accredited Investor Questionnaire and Original Warrants (or Affidavit of Lost
Warrant), along with the aggregate exercise price, must be received by the Company at the
address below on or before the Expiration Date of 5:00 pm (Eastern time) on June 28,
2024, as may be extended by the Company in its sole discretion. |
ADDRESS: |
CytoDyn Inc.
1111 Main Street, Suite 660
Vancouver, WA 98660
Email: warrants@cytodyn.com
Phone: (360) 980-8524 |
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EXHIBIT (a)(1)(D)
NOTICE OF WITHDRAWAL
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M. (EDT), ON JUNE 28, 2024,
UNLESS EXTENDED
To: CytoDyn Inc.
1111 Main Street, Suite 660
Vancouver, WA 98660
Email: warrants@cytodyn.com
Phone: 360-980-8524
INSTRUCTIONS TO NOTICE OF WITHDRAWAL
If you have previously elected to accept the Offer to Amend and Exercise
Warrants to Purchase Common Stock (the “Exercise Offer”) by CytoDyn Inc., a Delaware corporation (the “Company”),
subject to the terms and conditions set forth therein, and you would like to change your election and withdraw the tender of your Original
Warrants, you must complete, sign and return this Notice of Withdrawal to the Company so that the Company receives it before 5:00 p.m.,
Eastern Time, on June 28, 2024 (or on a later date, if the Exercise Offer is extended by the Company in its sole discretion) (such
expiration date, the “Expiration Date”). Any Notice of Withdrawal received after that time will not be accepted. Please read
this entire Notice of Withdrawal carefully.
To withdraw your election with respect to all of your outstanding Original
Warrants, check the box titled “I elect to withdraw all of my Original Warrants that I previously chose to exchange pursuant to
the Exercise Offer” below. Any Notice of Withdrawal submitted without the box “I elect to withdraw all of my Original Warrants
that I previously chose to exchange pursuant to the Offer” checked will be rejected. For this Notice of Withdrawal to be valid it
must be signed and dated and the entire Notice of Withdrawal must be returned to the Company at the address listed above before the Expiration
Date.
To withdraw your election with respect to a portion of your outstanding
Original Warrants, check the box titled “I elect to withdraw all of my Original Warrants that I previously chose to exchange pursuant
to the Exercise Offer” below. You must then request and complete, sign and return a new Election to Participate indicating the amount
of Original Warrants you wish to exercise. A new Election to Participate can be requested from the Company at the address listed above.
Please follow the instructions included in the Election to Participate to ensure acceptance of your Election to Participate. Your Election
to Participate must be received by the Company prior to the Expiration Date.
DELIVERY OF THIS NOTICE OF WITHDRAWAL TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
I previously received a copy from the Company of its Exercise Offer,
dated June 3, 2024, and any amendments thereto. I elected to participate in the Exercise Offer and delivered an executed Election
to Participate.
| ¨ | I elect to withdraw all of my Original Warrants that I previously chose to exchange pursuant to the Exercise Offer. Therefore, I
have completed and signed this Notice of Withdrawal. I do not accept the Exercise Offer to amend any of my Original Warrants. |
I understand that by rejecting the Exercise Offer, my Original Warrants
will not be amended or exercised pursuant to the terms of the Exercise Offer. I waive any right to receive any notice of the acceptance
of this Notice of Withdrawal.
All capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Exercise Offer.
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All questions as to the validity, form, eligibility (including time
of receipt) and acceptance of any Notice of Withdrawal will be determined by the Company in its discretion, which determination shall
be final and binding on all parties. The Company reserves the right to reject any or all Notices of Withdrawal that the Company determines
not to be in proper form or the acceptance of which may, in the opinion of the Company’s counsel, be unlawful. The Company also
reserves the right to waive any of the conditions of the Exercise Offer and any defect or irregularity in the Notice of Withdrawal. No
Notice of Withdrawal will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived,
any defects or irregularities in connection with any Notice of Withdrawal must be cured within such time as the Company shall determine.
Neither the Company nor any other person is or will be obligated to give notice of any defects or irregularities in any Notice of Withdrawal
and no person will incur any liability for failure to give any such notice.
IMPORTANT: THIS NOTICE OF WITHDRAWAL MUST BE RECEIVED ON OR PRIOR
TO THE TIME AND DATE OF EXPIRATION OF THE EXERCISE OFFER AT 5:00 P.M. (EASTERN TIME) ON JUNE 28, 2024, AS MAY BE EXTENDED
BY THE COMPANY IN ITS SOLE DISCRETION. HOWEVER, IF THE COMPANY HAS NOT ACCEPTED YOUR TENDERED ORIGINAL WARRANTS AND OTHER ACCEPTANCE
AND EXERCISE DOCUMENTS ON OR PRIOR TO JULY 31, 2024, WHICH IS THE FORTIETH BUSINESS DAY FOLLOWING THE COMMENCEMENT OF THE EXERCISE OFFER,
YOU MAY CHANGE YOUR MIND AND SUBMIT A NOTICE OF WITHDRAWAL TO US AFTER JULY 31, 2024.
Delivery to an address other than as set forth
above will not constitute a valid delivery.
Ex-Filing Fees
Calculation of Filing Fee Table
Schedule TO-I
CytoDyn Inc.
(Exact Name of Registrant as Specified in its Charter)
Transaction Valuation
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Transaction Valuation | | |
Fee Rate | | |
Amount of Filing Fee | |
Fee to Be Paid | |
$ | 31,587,609.76 | | |
| 0.0001476 | | |
$ | 4,662.33 | (2) |
Fees Previously Paid | |
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Total Transaction Valuation | |
$ | 31,587,609.76 | (1) | |
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Total Fees Due for Filing | |
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$ | 4,662.33 | |
Total Fees Previously Paid | |
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Total Fee Offsets | |
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Net Fee Due | |
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$ | 4,662.33 | |
(1) |
Estimated for purposes of calculating the amount of the filing fee only. Calculated as the aggregate maximum exercise price per share, based upon the Company’s closing share price on May 31, 2024. |
(2) |
The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, as modified by Fee Rate Advisory No. 1 for fiscal year 2024, equals $147.60 per million dollars of the value of the transaction. |
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