Business Context and Reporting Period
Pharmacyte Biotech, Inc. (PMCB) filed this Form 8-K on November 14, 2023, to report the entry into a Material Definitive Agreement with Femasys Inc. The transaction involves a strategic investment and collaboration, with a closing date expected on November 17, 2023.
Key Financial Metrics and Transaction Terms
This filing details a specific investment structure rather than reporting Pharmacyte's operational financial results (revenue, profit, or cash flow). The key financial terms of the investment in Femasys are:
- Investment Principal: $5,000,000 in senior unsecured convertible notes.
- Note Interest Rate: 6.00% per annum, payable annually in cash or shares at Femasys' option.
- Note Maturity: Two years from issuance.
- Conversion Price: $1.18 per share of Femasys common stock.
- Series A Warrants: 4,237,288 shares exercisable at $1.18 per share; expire in 5 years.
- Series B Warrants: 4,237,288 shares exercisable at $1.475 per share; expire in 1 year.
- Default Redemption: 115% of principal upon an Event of Default.
Material Changes and Governance Rights
The agreement grants Pharmacyte significant governance rights and imposes restrictions on Femasys:
- Board Representation: Pharmacyte has the right to nominate one director to the Femasys Board until ownership falls below 4.99% or notes are repaid.
- Standstill Agreement: Pharmacyte agreed not to acquire additional Femasys securities (outside the Notes/Warrants) for 12 months after the board seat falls away.
- Issuance Restrictions: Femasys is restricted from issuing equity below the $1.18 conversion price for 18 months post-closing.
- Forced Conversion: Femasys may force conversion if the share price exceeds $2.36 for 10 consecutive trading days with sufficient volume, starting six months after issuance.
Outlook, Risks, and Collaboration
Collaboration: The parties entered a Collaboration Agreement to establish a joint research committee (2 Femasys reps, 1 Pharmacyte rep) to evaluate technology for in-licensing or acquisition to enhance Femasys products.
Registration Rights: Femasys must file a resale registration statement within 30 days of closing to register 100% of the conversion and warrant shares.
Risks and Contingencies: The transaction is subject to customary closing conditions. Risks include Femasys' failure to maintain an effective registration statement or failure to pay amounts due, which would trigger an Event of Default.
Investor Verification Checklist
- Verify the closing of the $5,000,000 investment on or around November 17, 2023.
- Confirm the appointment of the Pharmacyte-nominated director to the Femasys Board.
- Monitor Femasys' compliance with the 18-month pricing restriction on new equity issuances.
- Review the effectiveness of the resale registration statement filed by Femasys within 30 days of closing.
- Assess the progress of the joint research committee and any resulting technology in-licensing deals.