Business Context and Reporting Period
This Form 8-K is filed by Histogenics Corporation (the registrant) on July 3, 2019, reporting events occurring on June 28, 2019. The filing concerns the proposed merger between Histogenics Corporation and Ocugen, Inc. (the "Merger"). Histogenics is an emerging growth company listed on The Nasdaq Capital Market under the symbol HSGX.
Key Financial Metrics and Agreements
- Securities Purchase Agreement: On June 13, 2019, Ocugen and Histogenics entered into an agreement with institutional investors for an aggregate purchase price of approximately $25.0 million. Ocugen agreed to issue common stock, and Histogenics agreed to issue warrants.
- Bridge Loan Amendment: On June 28, 2019, Ocugen amended a previously disclosed bridge loan. The amendment allows for the advancement of up to an additional $2.5 million, bringing the total potential obligation under the Amended Bridge Loan to $5.29 million.
- Debt Treatment: If the Merger is completed, the $5.29 million due under the Amended Bridge Loan will be offset against the remaining amount to be received from investors under the Securities Purchase Agreement, and the loan will be deemed repaid and cancelled.
- Contingent Liability: If the Merger is not completed, Ocugen may be required to pay the note holders the full $5.29 million.
Material Changes
The primary material change reported is the amendment to the bridge loan agreement on June 28, 2019, increasing the potential funding available to Ocugen prior to the merger. Additionally, Histogenics and Ocugen entered into Amendment Agreements with investors to make administrative changes to the Securities Purchase Agreement related to the Amended Bridge Loan. Histogenics consented to Ocugen entering into the Amended Bridge Loan as required by the Merger Agreement.
Outlook, Risks, and Management Commentary
Outlook and Status: The Merger remains pending. A registration statement on Form S-4 has been filed but is not yet effective. Upon effectiveness, a definitive proxy statement/prospectus will be mailed to stockholders.
Risks and Contingencies: The filing highlights significant risks, including:
- Failure to obtain stockholder approval or other required governmental approvals.
- Uncertainty regarding the timing of the Merger consummation.
- Potential dilution to stockholders due to the financing contemplated prior to the Merger.
- Risks related to Histogenics' ability to manage operating expenses and regain compliance with Nasdaq listing standards.
- Uncertainties in the clinical development and regulatory approval of Ocugen's product candidates.
- Unanticipated charges related to Histogenics' prior workforce reductions.
Financial Statements: This filing does not contain audited financial statements, revenue, profit, or cash flow data for the reporting period. It focuses solely on the transactional agreements.
Key Facts for Investor Verification
- Verify the status of the Form S-4 registration statement and the expected timeline for the definitive proxy statement.
- Confirm the conditions precedent required to close the Merger and the likelihood of stockholder approval.
- Assess the impact of the $5.29 million bridge loan on Ocugen's balance sheet if the Merger fails to close.
- Review the definitive proxy statement for details on the exchange ratio and potential dilution to existing shareholders.
- Monitor Histogenics' progress in regaining compliance with Nasdaq continuing listing standards.