UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 12, 2023
Commission File Number: 001-41783
CIK Number: 0001987654
PENTERRA PHARMACEUTICALS CORP. (Exact name of registrant as specified in its charter)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
• Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
ITEM 8.01 — OTHER EVENTS
On October 12, 2023, Penterra Pharmaceuticals Corp., a Delaware corporation ("Penterra" or the "Company"), entered into an Underwriting Agreement (the "Underwriting Agreement") with Ridgeline Securities LLC and Broadmark Capital Inc., as representatives of the several underwriters named therein (collectively, the "Underwriters"), and the selling stockholders named therein (the "Selling Stockholders"), in connection with an underwritten public offering (the "Offering") of shares of the Company's common stock, par value $0.001 per share (the "Common Stock").
Description of the Offering
The Offering consists of 6,250,000 shares of Common Stock being sold by the Selling Stockholders at a public offering price of $41.60 per share, for aggregate gross proceeds of approximately $260,000,000 (before deducting underwriting discounts and commissions and estimated offering expenses payable by the Selling Stockholders). The Company will not receive any proceeds from the sale of shares of Common Stock by the Selling Stockholders in the Offering. This is a registered selling-stockholder secondary offering, and all of the shares of Common Stock being offered are being sold by the Selling Stockholders identified below. The Company is not selling any shares of Common Stock in the Offering.
The Offering is being made pursuant to the Company's effective shelf registration statement on Form S-3 (File No. 333-274851), which was originally filed with the Securities and Exchange Commission (the "SEC") on July 28, 2023 and was declared effective by the SEC on August 22, 2023, and a related base prospectus included therein. The terms of the Offering are described in a prospectus supplement dated October 12, 2023, which has been filed with the SEC pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended (the "Securities Act"), together with the accompanying base prospectus forming a part of the registration statement.
Identification of the Selling Stockholders
The Selling Stockholders in the Offering are as follows:
(i) Dr. Elena Castellano, Co-Founder and Chair of the Board of Directors of the Company, is selling 3,000,000 shares of Common Stock in the Offering;
(ii) Dr. Riccardo Castellano, Co-Founder and member of the Board of Directors of the Company, is selling 2,500,000 shares of Common Stock in the Offering;
(iii) Dr. Marco Castellano, Chief Executive Officer of the Company, is selling 500,000 shares of Common Stock in the Offering; and
(iv) Castellano Family Holdings LLC, a Delaware limited liability company controlled by members of the Castellano family, is selling 250,000 shares of Common Stock in the Offering.
The total number of shares of Common Stock being offered in the base Offering is 6,250,000 shares. Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano are each directors and/or officers of the Company, and Castellano Family Holdings LLC is an entity affiliated with the Castellano family.
Underwriters. Ridgeline Securities LLC is acting as lead left book-running manager for the Offering, and Broadmark Capital Inc. is acting as joint book-running manager for the Offering (together, the "Representatives"). Linden Groves & Co. and Harborview Partners LLC are acting as co-managers for the Offering. The Underwriters are severally, and not jointly, obligated to purchase the shares of Common Stock being offered by the Selling Stockholders, subject to the terms and conditions set forth in the Underwriting Agreement.
Underwriting discount and Commissions
Pursuant to the terms of the Underwriting Agreement, the underwriting discount is 2.50% of the public offering price, or $1.04 per share of Common Stock. The total underwriting commissions payable by the Selling Stockholders for the base Offering of 6,250,000 shares are approximately $6,500,000. After deducting the underwriting discount, the net proceeds to the Selling Stockholders from the sale of the 6,250,000 shares in the base Offering (before deducting estimated offering expenses payable by the Selling Stockholders) are approximately $253,500,000, based on the public offering price of $41.60 per share. The Company has agreed to pay the expenses of the Offering, other than the underwriting discounts and commissions and certain expenses of the Selling Stockholders, including fees and disbursements of counsel to the Selling Stockholders.
Over-Allotment Option. In connection with the Offering, the Selling Stockholders have granted the Underwriters a 30-day option to purchase up to an additional 937,500 shares of Common Stock (representing 15% of the shares offered in the base Offering) 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. The over-allotment option is exercisable, in whole or in part, at any time on or before November 11, 2023 (the 30th day following the date of pricing of the Offering).
If the over-allotment option is exercised in full, the total number of shares of Common Stock sold in the Offering would be 7,187,500 shares, and the aggregate gross proceeds from the Offering would be approximately $299.0 million (before deducting underwriting discounts and commissions and estimated offering expenses payable by the Selling Stockholders). The allocation of over-allotment shares among the Selling Stockholders is set forth in the Underwriting Agreement.
Lock-Up Waiver and New Lock-Up Arrangements
The shares of Common Stock being offered in the Offering were previously subject to 180-day lock-up agreements (the "IPO Lock-Up Agreements") entered into by each of the Selling Stockholders in connection with the Company's initial public offering (the "IPO"), which closed on April 17, 2023. Pursuant to the terms of the IPO Lock-Up Agreements, the Selling Stockholders were restricted from offering, selling, contracting to sell, pledging, granting any option to purchase, making any short sale, or otherwise disposing of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, without the prior written consent of the IPO underwriters, for a period of 180 days following the date of the final prospectus for the IPO. The original expiration date of the IPO Lock-Up Agreements was October 14, 2023.
In connection with the Offering, the three lead underwriters from the IPO — Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. — granted waivers of the lock-up restrictions under the IPO Lock-Up Agreements effective as of October 12, 2023, solely with respect to (a) the shares of Common Stock being sold by the Selling Stockholders in the base Offering and (b) the shares of Common Stock subject to the over-allotment option granted to the Underwriters. The waivers do not release the Selling Stockholders from the IPO Lock-Up Agreements with respect to any other shares of Common Stock or securities held by the Selling Stockholders, and the IPO Lock-Up Agreements remain in effect with respect to all other shares held by the Selling Stockholders through the original expiration date of October 14, 2023.
In addition, in connection with the Offering, each of the Selling Stockholders has entered into new 90-day lock-up agreements (the "Offering Lock-Up Agreements") with the Representatives, pursuant to which the Selling Stockholders have agreed not to, without the prior written consent of the Representatives, (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise dispose of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock beneficially owned by such Selling Stockholder (other than the shares being sold in the Offering), (ii) enter into any swap, hedge, or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any shares of Common Stock, or (iii) make any demand for, or exercise any right with respect to, the registration under the Securities Act of any shares of Common Stock, in each case for a period of 90 days from the closing date of the Offering (October 17, 2023), which 90-day period is expected to expire on January 15, 2024. The Offering Lock-Up Agreements contain customary exceptions, including for transfers to affiliates and family members who agree to be bound by the same lock-up restrictions, transfers pursuant to a bona fide gift, transfers by operation of law, and the establishment of trading plans under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), provided that no sales occur during the lock-up period.
Closing and Settlement
The Offering is expected to close on October 17, 2023, subject to the satisfaction of customary closing conditions, including the delivery of customary legal opinions, officers' certificates, comfort letters, and other customary closing deliverables. The trade date for the Offering is October 12, 2023, and settlement is expected to occur on a T+3 basis.
Summary of Underwriting Agreement
The Underwriting Agreement contains customary representations, warranties, and covenants of the Company and the Selling Stockholders, including, among others, representations and warranties regarding the accuracy and completeness of the registration statement and prospectus supplement, the due authorization and valid issuance of the shares being sold, the absence of certain material adverse changes, compliance with applicable laws and regulations, and the accuracy of the Company's financial statements. The Underwriting Agreement also contains customary conditions to closing, including the absence of any material adverse change in the business, financial condition, or results of operations of the Company and its subsidiaries, taken as a whole, and the receipt of customary legal opinions and officers' certificates.
The Underwriting Agreement further provides for customary indemnification and contribution provisions pursuant to which the Company and the Selling Stockholders have agreed, severally and not jointly, to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Underwriters may be required to make in respect of such liabilities.
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Underwriting Agreement, a copy of which is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements regarding the expected closing date of the Offering, the potential exercise of the over-allotment option, the expected net proceeds to the Selling Stockholders, the expiration dates of lock-up agreements, and other statements regarding the terms of the Offering. These statements are based on the Company's current expectations, estimates, forecasts, and projections about the Offering and the industry in which the Company operates and involve known and unknown risks, uncertainties, and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "should," "may," "will," and similar expressions, or the negative thereof, are intended to identify forward-looking statements.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including, without limitation, those described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC, and in the prospectus supplement dated October 12, 2023 filed in connection with the Offering pursuant to Rule 424(b)(5) under the Securities Act, and other filings that the Company makes with the SEC from time to time. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PENTERRA PHARMACEUTICALS CORP.
Date: October 12, 2023
By: ________
Name: David Orenstein
Title: General Counsel & Corporate Secretary
Nasdaq Ticker: PNTR CUSIP: 70831X 10 5
Prepared by Calderwood & Harkness LLP (Jennifer Kwon / Audrey Zhou / Brendan Walsh) for filing by Penterra Pharmaceuticals Corp.
| State or other jurisdiction of incorporation or organization: | Delaware | |
| IRS Employer Identification No.: | 82-4039571 | |
| Address of principal executive offices: | 400 Meridian Parkway, Suite 1200, Princeton, New Jersey 08540 | |
| Registrant's telephone number, including area code: | (609) 457-3100 | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.001 per share | PNTR | The Nasdaq Global Select Market |
| Exhibit No. | Description | |
| 1.1 | Underwriting Agreement, dated October 12, 2023, among Penterra Pharmaceuticals Corp., the Selling Stockholders named therein, and Ridgeline Securities LLC and Broadmark Capital Inc., as representatives of the several underwriters named therein. | |
| 5.1 | Opinion of Calderwood & Harkness LLP (incorporated by reference to Exhibit 5.1 to the Registration Statement on Form S-3 (File No. 333-274851) filed with the SEC on July 28, 2023, as declared effective on August 22, 2023). | |
| 23.1 | Consent of Calderwood & Harkness LLP (included in Exhibit 5.1). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |