Filed Pursuant to Rule 424(b)(5) Registration Statement No. 333-274851
This prospectus supplement relates to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), but neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying base prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
October 12, 2023
PROSPECTUS SUPPLEMENT (to Prospectus dated August 22, 2023)
Penterra Pharmaceuticals Corp.
6,250,000 Shares of Common Stock (Par Value $0.001 Per Share)
The selling stockholders named in this prospectus supplement are offering 6,250,000 shares of common stock, par value $0.001 per share (the "Common Stock"), of Penterra Pharmaceuticals Corp., a Delaware corporation ("Penterra," the "Company," "we," "us," or "our"). We will not receive any of the proceeds from the sale of shares of Common Stock by the selling stockholders. The selling stockholders will receive all of the net proceeds from the sale of shares offered hereby. See "Use of Proceeds" and "Selling Stockholders."
The selling stockholders have granted the underwriters named below a 30-day option to purchase up to an additional 937,500 shares of Common Stock at the public offering price, less the underwriting discount, solely to cover over-allotments, if any.
Our Common Stock is listed on the Nasdaq Global Select Market under the ticker symbol "PNTR." The last reported sale price of our Common Stock on October 11, 2023 was $41.58 per share.
Investing in our Common Stock involves a high degree of risk. See "Risk Factors" beginning on page S-14 of this prospectus supplement and the risk factors incorporated by reference herein from our filings with the Securities and Exchange Commission.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying base prospectus. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares of Common Stock to purchasers on or about October 17, 2023.
Joint Book-Running Managers
Ridgeline Securities LLC Broadmark Capital Inc.
Co-Managers
Linden Groves & Co. Harborview Partners LLC
The date of this prospectus supplement is October 12, 2023.
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of shares of our Common Stock by the selling stockholders and also adds to and updates information contained in the accompanying base prospectus and the documents incorporated by reference herein and therein. The second part is the accompanying base prospectus, dated August 22, 2023, which forms part of our Registration Statement on Form S-3 (File No. 333-274851), as declared effective by the Securities and Exchange Commission (the "SEC") on August 22, 2023 (the "Registration Statement"), and which provides more general information, some of which may not apply to this offering.
This prospectus supplement and the accompanying base prospectus are part of the Registration Statement that we filed with the SEC utilizing a "shelf" registration process. Under this shelf registration process, the selling stockholders may, from time to time, sell shares of our Common Stock in one or more offerings. This prospectus supplement provides you with specific information about the shares of Common Stock being sold in this offering by the selling stockholders.
If the information set forth in this prospectus supplement differs from the information set forth in the accompanying base prospectus or in any document incorporated by reference herein or therein that was filed before the date of this prospectus supplement, you should rely on the information in this prospectus supplement. To the extent there is a conflict between the information contained in this prospectus supplement and the information contained in the accompanying base prospectus, you should rely on the information in this prospectus supplement, which supersedes the information in the accompanying base prospectus.
You should read both this prospectus supplement and the accompanying base prospectus, together with the additional information described in the sections entitled "Where You Can Find More Information" and "Incorporation of Certain Information by Reference," before making an investment decision. You should rely only on the information contained in or incorporated by reference in this prospectus supplement and the accompanying base prospectus and in any free writing prospectus that we or the selling stockholders may authorize for use in connection with this offering. Neither we, the selling stockholders, nor any of the underwriters have authorized anyone to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it.
Neither we, the selling stockholders, nor any of the underwriters are making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus supplement, the accompanying base prospectus, and the documents incorporated by reference herein and therein is accurate only as of the respective dates of such documents. Our business, financial condition, results of operations, and prospects may have changed since those dates. You should not assume that the information appearing in this prospectus supplement, the accompanying base prospectus, or any document incorporated by reference herein or therein is accurate as of any date other than the date on the front cover of the applicable document. It is important for you to read and consider all information contained in this prospectus supplement and the accompanying base prospectus, including the documents incorporated by reference herein and therein, in making your investment decision.
For investors outside the United States: Neither we, the selling stockholders, nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus supplement or the accompanying base prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus supplement and the accompanying base prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of Common Stock and the distribution of this prospectus supplement and the accompanying base prospectus outside the United States.
Unless the context otherwise requires or as otherwise indicated, as used in this prospectus supplement, the terms "Penterra," "the Company," "we," "us," and "our" refer to Penterra Pharmaceuticals Corp., a Delaware corporation, and its consolidated subsidiaries.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying base prospectus, and the documents incorporated by reference herein and therein contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are based on our current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and our management's beliefs and assumptions. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.
Forward-looking statements include, but are not limited to, statements about:
• our expectations regarding revenues and financial performance, including revenues from NEUVANTA® (tavropitant) and our ability to achieve or sustain profitability;
• the timing, progress, and results of our ongoing and planned clinical trials for our pipeline candidates, including our Phase II and Phase III programs;
• our ability to obtain and maintain regulatory approvals for our product candidates, and the timing and scope of any such approvals;
• the rate and degree of market acceptance and clinical utility of NEUVANTA® (tavropitant) and any future products;
• our commercialization, marketing, and manufacturing capabilities and strategy;
• our expectations regarding the size of the patient populations for NEUVANTA® and our pipeline candidates, and the potential market opportunity for our products;
• our expectations regarding federal, state, and foreign regulatory requirements and developments, including changes in healthcare laws, regulations, and policies;
• our ability to protect our intellectual property position and the duration of our patent protection;
• our competitive position and the success of competing therapies that are or may become available;
• our expectations regarding the impact of general economic and market conditions on our business;
• the adequacy of our existing cash, cash equivalents, and short-term investments to fund our operations and capital expenditure requirements;
• our plans for future capital raising and our ability to obtain additional financing on favorable terms;
• changes in accounting principles and tax laws and regulations; and
• other risks and uncertainties, including those listed in the section entitled "Risk Factors" in this prospectus supplement and the documents incorporated by reference herein.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the "Risk Factors" section of this prospectus supplement and the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, and June 30, 2023, each of which is incorporated by reference in this prospectus supplement. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this prospectus supplement, the accompanying base prospectus, and the documents incorporated by reference herein and therein may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Factors that could cause actual results to differ materially from those expressed or implied by our forward-looking statements include, among other things:
• adverse results or delays in our clinical trials, or the inability to initiate additional clinical trials;
• decisions by the U.S. Food and Drug Administration (the "FDA") or other regulatory agencies regarding the approval or labeling of our product candidates;
• the degree of market acceptance and commercial success of NEUVANTA® (tavropitant);
• our ability to successfully develop and commercialize additional product candidates;
• the impact of competitive products and pricing on our revenue expectations;
• changes in domestic and foreign business, market, financial, political, or legal conditions;
• changes in healthcare laws, including the Affordable Care Act, Medicare, Medicaid, and other government payer programs;
• the impact of consolidation in the healthcare industry;
• general economic conditions, including inflation, interest rates, and the stability of the banking sector; and
• other factors discussed in the "Risk Factors" section of this prospectus supplement and the documents incorporated by reference herein.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus supplement to conform these statements to actual results or to changes in our expectations, except as required by applicable law.
You should read this prospectus supplement, the accompanying base prospectus, and the documents that we reference herein and therein and have filed or will file as exhibits to the Registration Statement of which this prospectus supplement and the accompanying base prospectus form a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus supplement by these cautionary statements.
PROSPECTUS SUPPLEMENT SUMMARY
The following summary highlights selected information from this prospectus supplement and the documents incorporated by reference herein. This summary does not contain all of the information that may be important to you. You should carefully read this entire prospectus supplement and the accompanying base prospectus, including the information set forth under the section entitled "Risk Factors," and the financial statements and the notes thereto, and the other information incorporated by reference in this prospectus supplement, before making an investment decision. This summary is qualified in its entirety by the more detailed information and financial statements included or incorporated by reference in this prospectus supplement.
The Company. Penterra Pharmaceuticals Corp. is a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for rare neurological disorders. We were incorporated in the State of Delaware on March 14, 2018, and are headquartered at 400 Meridian Parkway, Suite 1200, Princeton, New Jersey 08540.
Our lead product is NEUVANTA® (tavropitant), a first-in-class selective neurokinin-1 (NK1) receptor antagonist indicated for the treatment of hereditary spastic paraplegia types 4, 7, and 11 in adult patients. NEUVANTA® received approval from the FDA on February 14, 2023, following a successful pivotal Phase III clinical trial (the NAVIGATE trial) that demonstrated statistically significant improvements in the primary endpoint of the Spastic Paraplegia Rating Scale (SPRS) total score compared to placebo (p<0.001) at 52 weeks. We commenced commercial sales of NEUVANTA® in the United States in March 2023, and we have seen strong initial uptake among neurologists and patients, as reflected in our H1 2023 revenue results.
In addition to NEUVANTA®, we have a robust pipeline of three additional product candidates in Phase II and Phase III clinical development:
• PNT-210 (navuritide): A selective brain-penetrant GluN2B antagonist currently in a Phase III clinical trial (the SUMMIT trial) for the treatment of Friedreich's ataxia. We expect topline data from the SUMMIT trial in the second half of 2024.
• PNT-314 (delmariptan): A novel 5-HT1A partial agonist in Phase II development for the treatment of spinocerebellar ataxia type 3 (SCA3/Machado-Joseph disease). The Phase II ANCHOR trial is currently enrolling patients at approximately 40 sites across the United States and the European Union.
• PNT-418 (cervorapitant): A dual neurokinin-1/neurokinin-3 receptor antagonist in Phase II development for the treatment of primary lateral sclerosis. We initiated dosing of the first patient in our Phase II MERIDIAN trial in July 2023.
We completed our initial public offering ("IPO") on April 17, 2023, in which we sold 24,000,000 shares of our Common Stock at a price to the public of $22.00 per share, raising aggregate gross proceeds of approximately $528 million, before deducting underwriting discounts and offering expenses. Our Common Stock has been listed on the Nasdaq Global Select Market under the ticker symbol "PNTR" since that date.
As of the date of this prospectus supplement, we have approximately 120,000,000 shares of Common Stock outstanding, par value $0.001 per share. Based on approximately 120,000,000 shares outstanding and a closing price of $40.01 per share as of September 1, 2023, our approximate market capitalization was $4.8 billion.
Our principal executive offices are located at 400 Meridian Parkway, Suite 1200, Princeton, New Jersey 08540, and our telephone number is (609) 555-1800. Our corporate website address is www.penterrapharma.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus supplement or the accompanying base prospectus, and you should not consider information on our website to be part of this prospectus supplement or the accompanying base prospectus.
Our CIK number is 0001987654, and our employer identification number (EIN) is 82-4039571. Our registered agent in Delaware is actionaltional Registered Agents Inc., located at 251 Little Falls Drive, Wilmington, Delaware 19808.
Recent Financial Highlights
The following table presents selected financial data for the periods indicated, derived from our audited and unaudited financial statements incorporated by reference in this prospectus supplement:
Our FY 2022 revenue of $387.4 million was primarily attributable to pre-commercial agreements, milestone payments, and collaboration revenues related to our pipeline programs. Our H1 2023 revenue of $312.6 million reflects the strong initial commercial launch of NEUVANTA® (tavropitant), representing an annualized revenue run-rate of approximately $625.2 million. The significant increase in net income in H1 2023 compared to H1 2022 reflects the commencement of NEUVANTA® product sales and improved operating leverage.
These financial results should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our unaudited condensed consolidated financial statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, each of which is incorporated by reference in this prospectus supplement.
The Offering. The following summary contains basic information about this offering. It does not contain all the information that is important to you. For a more complete description of the terms of the Common Stock, see "Description of Capital Stock" in this prospectus supplement.
THE OFFERING
The following is a more detailed description of the offering summarized above.
Common stock offered by selling stockholders: 6,250,000 shares of Common Stock, par value $0.001 per share.
Over-allotment option: The selling stockholders have granted the underwriters a 30-day option, exercisable from the pricing date (October 12, 2023) through November 11, 2023, to purchase up to an additional 937,500 shares of Common Stock at the public offering price of $41.60 per share, less the underwriting discount of $1.04 per share, solely to cover over-allotments, if any. If the underwriters exercise the over-allotment option in full, the total number of shares sold in this offering will be 7,187,500, representing an aggregate public offering price of approximately $299.0 million and aggregate net proceeds to the selling stockholders of approximately $291,506,250, calculated as 7,187,500 shares multiplied by $40.56 per share (the public offering price less the underwriting discount).
Common stock outstanding before and after the offering: 120,000,000 shares. Because this is a secondary offering by the selling stockholders only, the Company is not issuing any new shares of Common Stock and the total number of shares outstanding will not change as a result of this offering.
Public float before offering: Approximately 79,900,000 shares, calculated as 120,000,000 total shares outstanding minus approximately 40,100,000 shares held by the Castellano family (including shares held by Castellano Family Holdings LLC).
Public float after offering (base offering, no exercise of over-allotment option): Approximately 86,150,000 shares, calculated as 79,900,000 shares plus the 6,250,000 shares being sold by the selling stockholders in this offering.
Public float after offering (full exercise of over-allotment option): Approximately 87,087,500 shares, calculated as 79,900,000 shares plus the 7,187,500 shares being sold by the selling stockholders in this offering (including shares subject to the over-allotment option).
Public offering price: $41.60 per share.
Underwriting discount: $1.04 per share, representing 2.50% of the public offering price. The aggregate underwriting discount for the base offering is $6,500,000. If the over-allotment option is exercised in full, the aggregate underwriting discount will be approximately $7,475,000.
Par value: $0.001 per share.
Net proceeds to selling stockholders: The aggregate net proceeds to the selling stockholders from the base offering (before expenses, but after deducting the underwriting discount) will be approximately $253,500,000. The Company will not receive any of the net proceeds from this offering.
Transfer agent and registrar: Pinnacle Trust & Transfer Co., 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, New York 10004.
Listing: Our Common Stock is listed on the Nasdaq Global Select Market under the ticker symbol "PNTR."
CUSIP: 70831X 10 5.
Trade date: October 12, 2023.
Settlement date: October 17, 2023. The shares are expected to be delivered through the facilities of The Depository Trust Company on or about October 17, 2023, the third business day following the trade date (T+3).
Risk factors: Investing in our Common Stock involves a high degree of risk. See "Risk Factors" beginning on page S-14 of this prospectus supplement, as well as the risk factors incorporated by reference herein from our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.
RISK FACTORS
Investing in our Common Stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, and June 30, 2023, each of which is incorporated by reference in this prospectus supplement, together with all of the other information contained in this prospectus supplement, the accompanying base prospectus, and the documents incorporated by reference herein and therein, before investing in our Common Stock. Any of the following risks could materially and adversely affect our business, financial condition, results of operations, and prospects. In such case, the market price of our Common Stock could decline and you could lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our Common Stock.
Risks Related to This Offering and Ownership of Our Common Stock
Sales of substantial amounts of our Common Stock in the public market, or the perception that such sales may occur, could depress our stock price.
The Castellano family (consisting of Dr. Elena Castellano, Dr. Riccardo Castellano, Dr. Marco Castellano, and Castellano Family Holdings LLC) currently beneficially owns approximately 40,100,000 shares of our Common Stock, representing approximately 33.4% of the 120,000,000 shares outstanding as of the date of this prospectus supplement. Following this offering (assuming no exercise of the over-allotment option), the Castellano family will beneficially own approximately 33,850,000 shares, representing approximately 28.2% of the shares outstanding. If the over-allotment option is exercised in full, the Castellano family will beneficially own approximately 32,912,500 shares, representing approximately 27.4% of the shares outstanding.
In connection with this offering, the selling stockholders have agreed to a new 90-day lock-up period that commenced on October 17, 2023 (the closing date of this offering) and expires on January 15, 2024. During the lock-up period, the selling stockholders have agreed not to, directly or indirectly, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, or otherwise transfer or dispose of any shares of our Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, subject to certain customary exceptions. However, after the expiration of the lock-up period on January 15, 2024, all of the shares retained by the selling stockholders will be eligible for sale in the public market, subject to the requirements of Rule 144 under the Securities Act and any other applicable restrictions.
The sale of a substantial number of shares of our Common Stock by the Castellano family, or the perception in the public markets that such sales could occur, could adversely affect the prevailing market price of our Common Stock and could impair our future ability to raise capital through the sale of equity securities at a time and at a price that we deem appropriate. Additionally, the existence of a large number of shares eligible for future sale could depress the market price of our Common Stock, even in the absence of actual sales.
The Company will not receive any proceeds from this offering.
All proceeds from the sale of shares of our Common Stock in this offering will be received by the selling stockholders. The Company will not receive any portion of the net proceeds from this offering. While the Company will bear the expenses of this offering (estimated at approximately $765,000), the lack of proceeds to the Company means that this offering will not provide us with additional capital that could be used to fund our operations, research and development programs, or other corporate purposes. Investors should not expect this offering to improve the Company's balance sheet or enhance its financial position.
Concentration of ownership by the Castellano family may limit your ability to influence corporate matters.
Even after this offering, the Castellano family will continue to beneficially own approximately 28.2% of our outstanding Common Stock (or approximately 27.4% if the over-allotment option is exercised in full). As a result, the Castellano family will have significant influence over all matters requiring stockholder approval, including the election and removal of directors, amendments to our certificate of incorporation and bylaws, and the approval of mergers, acquisitions, and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing, or deterring a change of control of our Company, could deprive our stockholders of an opportunity to receive a premium for their Common Stock as part of a sale of our Company, and might ultimately affect the market price of our Common Stock.
Dr. Elena Castellano currently serves as our Board Chair, Dr. Riccardo Castellano serves as a non-executive member of our Board of Directors, and Dr. Marco Castellano serves as our Chief Executive Officer. The presence of the Castellano family in these leadership positions, combined with their significant equity ownership, means that the interests of the Castellano family may not always be aligned with those of other stockholders. The Castellano family may exercise their influence in a manner that is not in the best interests of other stockholders, and conflicts of interest between the Castellano family and other stockholders may arise from time to time.
Future offerings or issuances of Common Stock could dilute stockholders or adversely affect the market price.
We may issue additional shares of Common Stock or other equity securities in the future in connection with, among other things, future acquisitions, strategic collaborations, financings, or employee equity incentive plans. Any such issuances could result in dilution of the ownership interests of existing stockholders and could adversely affect the market price of our Common Stock. In addition, new investors may negotiate rights, preferences, and privileges that are senior to, or that otherwise adversely affect, the rights of existing stockholders.
Our certificate of incorporation authorizes the issuance of additional shares of Common Stock and preferred stock, which may be issued from time to time by our Board of Directors without stockholder approval, except as may be required by applicable law or the rules of the Nasdaq Global Select Market. The issuance of additional equity securities, or the perception that such issuances could occur, could have a negative impact on the market price of our Common Stock.
Our stock price has been volatile and may continue to be volatile.
Our Common Stock has experienced significant price volatility since our IPO. We completed our IPO on April 17, 2023, at a price of $22.00 per share, and the public offering price for this offering is $41.60 per share, representing an increase of approximately 89% from the IPO price. There can be no assurance that the price of our Common Stock will not decline from the public offering price or that our stock price will not experience significant volatility in the future.
The market price of our Common Stock is influenced by many factors, some of which are beyond our control, including:
• the commercial performance and market acceptance of NEUVANTA® (tavropitant);
• the results of our ongoing and planned clinical trials;
• announcements of regulatory actions by the FDA or other regulatory agencies;
• fluctuations in our quarterly or annual financial results;
• changes in financial estimates or recommendations by securities analysts;
• general market and economic conditions;
• sales of large blocks of our Common Stock by significant stockholders;
• changes in accounting principles; and
• litigation or regulatory proceedings involving us.
In addition, the stock market in general, and the market for pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the companies whose securities are traded in those markets. These broad market fluctuations may adversely affect the trading price of our Common Stock, regardless of our actual operating performance.
Risks Related to Our Business
In addition to the risks described above that relate specifically to this offering and ownership of our Common Stock, investing in our Common Stock is subject to the risks related to our business, our industry, and our operations that are described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, each as filed with the SEC and incorporated by reference in this prospectus supplement. These risks include, but are not limited to, risks related to:
• the continued commercialization of NEUVANTA® (tavropitant), including risks related to market acceptance, pricing, reimbursement, and competition;
• the development of our pipeline product candidates, including risks associated with clinical trials, regulatory approvals, and the timing and cost of our development programs;
• our ability to obtain and maintain regulatory approvals for our products and product candidates, and any limitations or conditions placed on such approvals;
• competition from existing and future therapies, including both branded and generic products, and the potential for new entrants into the rare neurological disease market;
• the protection and enforcement of our intellectual property rights, including our patents, trademarks, and trade secrets;
• our dependence on third-party manufacturers, suppliers, and contract research organizations;
• the impact of healthcare reform and changes in government payer programs on our business;
• our ability to attract and retain key personnel; and
• general pharmaceutical industry risks, including product liability exposure, government investigations, and regulatory compliance obligations.
We urge you to carefully review and consider the risk factors and other information set forth in our SEC filings that are incorporated by reference herein. See "Where You Can Find More Information" and "Incorporation of Certain Information by Reference."
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of shares of Common Stock by the selling stockholders in this offering. All net proceeds from the sale of shares of Common Stock offered hereby will be received by the selling stockholders.
The aggregate net proceeds to the selling stockholders from the base offering, after deducting the underwriting discount of $1.04 per share, will be approximately $253,500,000 (6,250,000 shares multiplied by $40.56 per share). If the underwriters exercise their over-allotment option in full, the aggregate net proceeds to the selling stockholders will be approximately $291,506,250 (7,187,500 shares multiplied by $40.56 per share).
The Company will bear all offering expenses other than the underwriting discount, which is borne by the selling stockholders. The Company estimates that its offering expenses will be approximately $765,000, consisting of the following:
The underwriting discount and the Company's offering expenses described above do not include any fees or expenses of the selling stockholders' legal counsel or other advisors, which will be borne by the selling stockholders.
MARKET PRICE OF COMMON STOCK AND DIVIDENDS
Market Information. Our Common Stock has been listed on the Nasdaq Global Select Market under the ticker symbol "PNTR" since April 17, 2023, the date of our IPO. Prior to that date, there was no public trading market for our Common Stock.
Our IPO was priced at $22.00 per share on April 16, 2023, and our Common Stock commenced trading on April 17, 2023. The following table sets forth the high and low intraday sale prices per share of our Common Stock as reported on the Nasdaq Global Select Market for the periods indicated:
On October 11, 2023, the last trading day before the pricing of this offering, the last reported sale price of our Common Stock on the Nasdaq Global Select Market was $41.58 per share.
Holders. As of October 10, 2023, there were approximately 120,000,000 shares of our Common Stock outstanding held by approximately 847 holders of record. The number of record holders does not include the number of persons whose shares are held in "street name" through brokerage firms, banks, or other financial intermediaries.
Dividends. We have never declared or paid any cash dividends on our Common Stock. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination as to the payment of dividends will be at the discretion of our Board of Directors, subject to applicable law, and will depend upon, among other things, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects, and such other factors as our Board of Directors deems relevant.
SELLING STOCKHOLDERS
Introduction. The shares of Common Stock being offered by the selling stockholders are existing shares that were acquired by the selling stockholders prior to our IPO. The selling stockholders are members of the Castellano family, which co-founded the Company, and a family-controlled entity. We are registering the shares of Common Stock included in this offering to permit the selling stockholders and their pledgees, donees, transferees, and other successors-in-interest that receive their shares from the selling stockholders to resell the shares when they deem appropriate.
The following table sets forth certain information known to us regarding the selling stockholders and the shares of Common Stock being offered by the selling stockholders in this offering, as of the date of this prospectus supplement. The information set forth below regarding the beneficial ownership of shares of our Common Stock has been determined in accordance with Rule 13d-3 under the Exchange Act. Unless otherwise indicated, the selling stockholders have sole voting and investment power with respect to all shares of Common Stock listed as beneficially owned by them.
Except as described in this prospectus supplement or as otherwise indicated in the footnotes to the table below, the selling stockholders have not held any position, office, or other material relationship with the Company or any of its predecessors or affiliates within the past three years, other than as described below.
Selling Stockholder Table
(1) The address of each selling stockholder is c/o Penterra Pharmaceuticals Corp., 400 Meridian Parkway, Suite 1200, Princeton, New Jersey 08540.
(2) Dr. Elena Castellano is a co-founder of the Company and has served as Chair of our Board of Directors since the Company's inception in March 2018. Dr. Elena Castellano is the spouse of Dr. Riccardo Castellano and the mother of Dr. Marco Castellano. The shares reported as beneficially owned by Dr. Elena Castellano do not include shares held by Dr. Riccardo Castellano, Dr. Marco Castellano, or Castellano Family Holdings LLC, over which Dr. Elena Castellano disclaims beneficial ownership, except to the extent of her pecuniary interest therein.
(3) Dr. Riccardo Castellano is a co-founder of the Company and has served as a non-executive member of our Board of Directors since the Company's inception in March 2018. Dr. Riccardo Castellano is the spouse of Dr. Elena Castellano and the father of Dr. Marco Castellano. The shares reported as beneficially owned by Dr. Riccardo Castellano do not include shares held by Dr. Elena Castellano, Dr. Marco Castellano, or Castellano Family Holdings LLC, over which Dr. Riccardo Castellano disclaims beneficial ownership, except to the extent of his pecuniary interest therein.
(4) Dr. Marco Castellano has served as the Chief Executive Officer of the Company since January 2022 and served as President and Chief Operating Officer from March 2018 to December 2021. Dr. Marco Castellano is the son of Dr. Elena Castellano and Dr. Riccardo Castellano.
(5) Castellano Family Holdings LLC is a Delaware limited liability company controlled by members of the Castellano family. The managing member of Castellano Family Holdings LLC is Dr. Elena Castellano. Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano are each members of Castellano Family Holdings LLC and share voting and investment power with respect to the shares held by Castellano Family Holdings LLC. The address of Castellano Family Holdings LLC is c/o Penterra Pharmaceuticals Corp., 400 Meridian Parkway, Suite 1200, Princeton, New Jersey 08540. The employer identification number of Castellano Family Holdings LLC is 87-2165438.
Prior to this offering, the selling stockholders collectively beneficially owned approximately 40,100,000 shares, representing approximately 33.4% of the 120,000,000 shares of Common Stock outstanding. Following the completion of this offering (assuming no exercise of the over-allotment option), the selling stockholders will collectively beneficially own approximately 33,850,000 shares, representing approximately 28.2% of the shares outstanding. If the over-allotment option is exercised in full, the selling stockholders will collectively beneficially own approximately 32,912,500 shares, representing approximately 27.4% of the shares outstanding.
The selling stockholders are represented by Whitfield & Garza LLP, 590 Madison Avenue, 28th Floor, New York, New York 10022 (Patricia Velázquez, Partner).
Lock-Up Waiver. In connection with the Company's IPO on April 17, 2023, each of the selling stockholders entered into lock-up agreements with the lead IPO underwriters — Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. — pursuant to which the selling stockholders agreed not to offer, sell, contract to sell, pledge, grant any option to purchase, or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock for a period of 180 days following the date of the final prospectus for the IPO, without the prior written consent of Ridgeline Securities LLC, as lead left book-running manager for the IPO (the "IPO Lock-Up Agreements").
The 180-day lock-up period under the IPO Lock-Up Agreements was scheduled to expire on October 14, 2023 (180 days from April 17, 2023). In connection with this offering, on September 18, 2023, the Company sent lock-up waiver request letters to each of Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co., requesting the early release of the lock-up restrictions under the IPO Lock-Up Agreements effective October 12, 2023 (two days prior to the natural expiry date of October 14, 2023), solely with respect to the shares of Common Stock being sold by the selling stockholders in this offering, including the shares subject to the over-allotment option.
On September 29, 2023, each of Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. granted the requested waivers of the IPO Lock-Up Agreements, effective as of October 12, 2023. The customary 14-calendar-day advance public notice requirement that would otherwise apply to a lock-up release was waived by consent of all parties given the de minimis two-day gap between the early release date (October 12, 2023) and the natural expiry date of the IPO lock-up period (October 14, 2023). The waivers apply solely to the shares being sold in this offering and do not release any other shares held by the selling stockholders from the terms of the IPO Lock-Up Agreements until the natural expiry of the 180-day lock-up period on October 14, 2023 (or, with respect to the retained shares, until the expiration of the new lock-up described below).
New Lock-Up in Connection with This Offering
In connection with this offering, each of the selling stockholders has agreed to enter into a new lock-up agreement (the "New Lock-Up Agreements") with Ridgeline Securities LLC and Broadmark Capital Inc., as representatives of the underwriters in this offering. Pursuant to the New Lock-Up Agreements, the selling stockholders have agreed that, for a period of 90 days commencing on the closing date of this offering (October 17, 2023) and expiring on January 15, 2024, the selling stockholders will not, without the prior written consent of Ridgeline Securities LLC and Broadmark Capital Inc., directly or indirectly:
(a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, or otherwise transfer or dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock beneficially owned by the selling stockholders; or
(b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of Common Stock beneficially owned by the selling stockholders.
The New Lock-Up Agreements cover all shares of Common Stock retained by the selling stockholders following this offering (i.e., the approximately 33,850,000 shares, or approximately 32,912,500 shares if the over-allotment option is exercised in full). The New Lock-Up Agreements are subject to certain customary exceptions, including transfers (i) as bona fide gifts or charitable contributions, (ii) to immediate family members or trusts for their benefit, (iii) to affiliates or entities controlled by the selling stockholder, (iv) in connection with estate planning, (v) pursuant to a qualified domestic relations order, or (vi) with the prior written consent of the representatives. Any shares transferred pursuant to these exceptions must remain subject to the terms of the New Lock-Up Agreements.
The representatives may, in their sole discretion and at any time without notice, release all or any portion of the shares subject to the New Lock-Up Agreements.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock summarizes certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws, each as currently in effect. This summary is qualified in its entirety by reference to the full text of our amended and restated certificate of incorporation and amended and restated bylaws, copies of which are filed as exhibits to the Registration Statement of which this prospectus supplement forms a part, and by the applicable provisions of Delaware law. For a more complete description of our capital stock, you should read our amended and restated certificate of incorporation, our amended and restated bylaws, and the applicable provisions of Delaware law. This description is also supplemented by the description of our capital stock contained in our base prospectus dated August 22, 2023.
Authorized Capital Stock
Our amended and restated certificate of incorporation authorizes us to issue up to 500,000,000 shares of Common Stock, par value $0.001 per share, and up to 10,000,000 shares of preferred stock, par value $0.001 per share. As of the date of this prospectus supplement, 120,000,000 shares of Common Stock are issued and outstanding, and no shares of preferred stock are issued and outstanding.
Common Stock. Voting Rights. Each holder of Common Stock is entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, including the election of directors. Our amended and restated certificate of incorporation does not provide for cumulative voting.
Dividend Rights. Holders of Common Stock are entitled to receive ratably any dividends that may be declared from time to time by our Board of Directors out of funds legally available for the payment of dividends, subject to the preferential rights of any outstanding preferred stock. We have never declared or paid any cash dividends on our Common Stock and do not currently anticipate paying any cash dividends in the foreseeable future. See "Market Price of Common Stock and Dividends."
Liquidation Rights. In the event of our liquidation, dissolution, or winding up, holders of Common Stock are entitled to share ratably in all assets remaining after payment of all debts and other liabilities and after satisfaction of the liquidation preferences of any outstanding preferred stock.
Preemptive, Conversion, and Redemption Rights. Holders of Common Stock have no preemptive, conversion, subscription, or redemption rights. There are no sinking fund provisions applicable to the Common Stock. The rights, preferences, and privileges of holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.
Fully Paid and Non-Assessable. All issued and outstanding shares of Common Stock are fully paid and non-assessable.
Preferred Stock. Our Board of Directors is authorized, without further stockholder approval, to issue from time to time up to an aggregate of 10,000,000 shares of preferred stock, in one or more series, and to fix the designations, powers, preferences, and relative, participating, optional, and other special rights of each such series and the qualifications, limitations, and restrictions thereof. The authority of the Board of Directors with respect to each series of preferred stock includes the ability to fix the number of shares constituting such series, the dividend rate and dividend rights, the terms and conditions of any voting, conversion, exchange, redemption, and sinking fund provisions, and the rights of such series in the event of our liquidation, dissolution, or winding up.
The issuance of preferred stock could adversely affect the voting power of holders of Common Stock, and the likelihood that holders of preferred stock will receive dividend and liquidation payments could have the effect of delaying, deferring, or preventing a change of control.
As of the date of this prospectus supplement, no shares of preferred stock are outstanding, and we have no present plans to issue any shares of preferred stock.
Anti-Takeover Provisions. Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying, deferring, or preventing a change of control, including:
Delaware General Corporation Law Section 203. We are subject to Section 203 of the Delaware General Corporation Law ("DGCL"), which prohibits a Delaware corporation from engaging in any business combination with any "interested stockholder" for a period of three years following the date that such stockholder became an interested stockholder, unless: (i) the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, prior to the date of such transaction; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding certain shares; or (iii) at or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66⅔% of the outstanding voting stock which is not owned by the interested stockholder. An "interested stockholder" is generally defined as any person who beneficially owns 15% or more of the outstanding voting stock.
Classified Board of Directors. Our amended and restated certificate of incorporation provides for a classified board of directors divided into three classes, with staggered three-year terms. Only one class of directors is elected at each annual meeting of stockholders, which means that at least two annual meetings of stockholders are generally required to replace a majority of the directors.
Advance Notice Requirements. Our amended and restated bylaws establish advance notice procedures for stockholder proposals and director nominations at annual and special meetings of stockholders.
Supermajority Voting Requirements. Certain amendments to our amended and restated certificate of incorporation require the affirmative vote of at least 66⅔% of the outstanding voting stock.
No Stockholder Action by Written Consent. Our amended and restated certificate of incorporation provides that stockholder action may be taken only at a duly called annual or special meeting of stockholders and may not be taken by written consent.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board of Directors or management.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Pinnacle Trust & Transfer Co., located at 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, New York 10004.
Listing. Our Common Stock is listed on the Nasdaq Global Select Market under the ticker symbol "PNTR."
CUSIP. The CUSIP number for our Common Stock is 70831X 10 5.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of shares of our Common Stock acquired in this offering. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service ("IRS"), all as in effect as of the date of this prospectus supplement. These authorities may change or be subject to differing interpretations, possibly with retroactive effect. Any such change or interpretation could alter the tax consequences described below. No ruling has been sought from the IRS with respect to the matters discussed below, and there can be no assurance that the IRS will not take a contrary position regarding the tax consequences of the purchase, ownership, or disposition of our Common Stock, or that any such contrary position would not be sustained by a court.
This discussion is limited to holders who hold our Common Stock as a "capital asset" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a holder's particular circumstances, including the impact of the Medicare contribution tax on net investment income or the alternative minimum tax. In addition, this discussion does not address the tax consequences relevant to holders subject to special rules, including, without limitation:
• U.S. expatriates and former citizens or long-term residents of the United States;
• persons holding our Common Stock as part of a hedge, straddle, or other risk-reduction strategy or as part of a conversion transaction or other integrated investment;
• banks, insurance companies, and other financial institutions;
• brokers, dealers, or traders in securities;
• "controlled foreign corporations," "passive foreign investment companies," and corporations that accumulate earnings to avoid U.S. federal income tax;
• partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);
• tax-exempt organizations or governmental organizations;
• persons deemed to sell our Common Stock under the constructive sale provisions of the Code;
• persons who hold or receive our Common Stock pursuant to the exercise of any employee stock option or otherwise as compensation; and
• tax-qualified retirement plans.
If an entity treated as a partnership for U.S. federal income tax purposes holds our Common Stock, the tax treatment of a partner in such entity will generally depend upon the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, entities treated as partnerships for U.S. federal income tax purposes and the partners in such entities should consult their own tax advisors regarding the U.S. federal income tax consequences to them of the purchase, ownership, and disposition of our Common Stock.