Subsequent Event

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Event

17. SUBSEQUENT EVENT  

On July 26, 2019, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) with certain investors as indicated on Exhibit A to the Stock Purchase Agreement (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors, and the Investors agreed to purchase from the Company, an aggregate of 3,382,332 shares (the “Shares”) of Company Stock, at a purchase price of $4.08 per Share (the average closing price for the common stock for the five trading days immediately preceding the date of the Stock Purchase Agreement). The Stock Purchase Agreement contains customary representations and warranties of the parties. The closing of the private placement occurred on July 30, 2019.

The aggregate gross proceeds for the sale of the Shares were $13,799,915. The Company intends to use the net proceeds from the private placement to fund the ongoing development of pepinemab and for working capital and general corporate purposes.

FCMI Parent Co., one of the Investors, is the Company’s majority stockholder and is controlled by Albert D. Friedberg, the Company’s chairman. Vaccinex (Rochester), L.L.C., of which Dr. Maurice Zauderer, the Company’s president and chief executive officer, is the president and a majority owner, is another Investor. Dr. Zauderer exercises voting and investment power over the shares held by Vaccinex (Rochester) L.L.C.  Both before and after the private placement, FCMI Parent Co. and Vaccinex (Rochester), L.L.C. owned approximately 55% and 7%, respectively, of the Company’s outstanding common stock. The Stock Purchase Agreement and the transactions contemplated thereby were approved by the unanimous consent of the board of directors of the Company.

The Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), and were issued and sold in a private placement pursuant to Section 4(a)(2) of the 1933 Act and Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission (the “SEC”) under the 1933 Act. Each of the Investors represented that it is an “accredited investor” within the meaning of Rule 501 of Regulation D, and it acquired the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The Shares were offered without any general solicitation by the Company or its representatives.

Also, on July 26, 2019, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors that affords the Investors certain registration rights with respect to the Shares. Under the Registration Rights Agreement, the Company has agreed, among other things, to use its reasonable best efforts to file with the SEC a registration statement covering the resale of the Shares within 60 days from the closing of the transactions and cause such registration statement to become effective on or prior to 90 calendar days (or, in the event of a substantive review by the SEC, 135 calendar days) from the closing date. In addition, the Company agreed to use commercially reasonable efforts to keep the registration statement effective until the Shares have been sold thereunder or until the Shares can be sold without restriction. If the Company fails to meet the specified deadlines for the effectiveness of the registration statement, the Company will be required to pay liquidated damages to the Investors, subject to maximum aggregate liquidated damages of 8.0% of the aggregate purchase price paid for the Shares. Interest on any unpaid liquidated damages will accrue at a rate of 1% per month. In addition, the Company agreed to provide Investors with certain “piggy-back” registration rights that may require the Company to effect certain registrations to register the Shares for resale in the event that no registration statement registering the Shares is effective and the Company is otherwise filing a registration statement under the 1933 Act.

The Registration Rights Agreement also contains certain indemnification and contribution provisions under which the Company and the Investors have agreed to indemnify each other against certain liabilities.