Eloxx Pharma Sells Unregistered Equity, Raising Capital

TL;DR

**Eloxx just sold new shares privately, likely diluting existing investors.**

AI Summary

On January 9, 2024, Eloxx Pharmaceuticals, Inc. entered into a material definitive agreement for an unregistered sale of equity securities. This means the company sold new shares to specific investors without a public offering, likely to raise capital. For existing shareholders, this could lead to dilution, as their ownership stake in the company would decrease due to the increased number of outstanding shares, potentially impacting the stock's value.

Why It Matters

This filing indicates Eloxx Pharmaceuticals is raising capital through private share sales, which can dilute existing shareholders' ownership and potentially impact stock price.

Risk Assessment

Risk Level: medium — Unregistered sales of equity securities can lead to dilution for existing shareholders, which is a moderate risk.

Analyst Insight

An investor should investigate the terms of the unregistered equity sale, including the number of shares sold and the price, to assess the potential dilution and its impact on their investment before making any decisions.

Key Players & Entities

• Eloxx Pharmaceuticals, Inc. (company) — the registrant selling equity securities
• January 9, 2024 (date) — date of the earliest event reported and the material definitive agreement

Forward-Looking Statements

• The stock price of Eloxx Pharmaceuticals, Inc. may experience downward pressure due to potential dilution from the unregistered equity sale. (Eloxx Pharmaceuticals, Inc.) — medium confidence, target: Q1 2024

FAQ

Key Financial Figures

• $0.01 — nge on which registered Common Stock, $0.01 par value per share ELOX The Nasdaq C
• $2.0 million — nche 1B Advance (an aggregate amount of $2.0 million) outstanding under the Amended Loan Agr
• $0.001 — cise price of the Pre-Funded Warrant is $0.001 per underlying share. The exercise pric
• $1.18 — cise price of the Additional Warrant is $1.18 per underlying share. The Company did n

Filing Documents

• tm242562d1_8k.htm (8-K) — 40KB
• 0001104659-24-002631.txt ( ) — 213KB
• elox-20240109.xsd (EX-101.SCH) — 3KB
• elox-20240109_lab.xml (EX-101.LAB) — 33KB
• elox-20240109_pre.xml (EX-101.PRE) — 22KB
• tm242562d1_8k_htm.xml (XML) — 3KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Fifth Amendment to Hercules Loan and Security Agreement On January 9, 2024 (the "Closing Date"), Eloxx Pharmaceuticals, Inc. (the "Company") entered into the Fifth Amendment to the Loan and Security Agreement (the "Fifth Amendment") by and among (i) Hercules Capital, Inc., a Maryland corporation ("Hercules"), in its capacity as administrative agent, and collateral agent, (ii) Hercules Capital IV, L.P., (collectively referred to as the "Lenders"), as a lender, (iii) the Company, as a borrower, (iv) Zikani Therapeutics, Inc., a Delaware corporation and wholly-owned subsidiary of the Company, as a borrower (together with the Company, the "Borrower"), and (v) Eloxx Pharmaceuticals Ltd., an Israeli company and wholly-owned subsidiary of the Company (together with the Lenders and the Borrower, the "Parties"), which amended certain terms of the Loan and Security Agreement, originally dated September 30, 2021, by and among the Parties (as amended prior to the Fifth Amendment, the "Loan Agreement" and, as amended by the Fifth Amendment, the Amended Loan Agreement"). The Amended Loan Agreement bifurcates the remaining outstanding principal of the Tranche 1 Advance under the Loan Agreement into a "Tranche 1A Advance" and a "Tranche 1B Advance." On the Closing Date, the Tranche 1B Advance was assigned to SD MF 4 LLC, a Delaware limited liability company (the "Assignee" and such assignment, the "Assignment Transaction"). The Amended Loan Agreement provides that, following the Assignment Transaction, the Borrower will not be required to comply with the financial covenant to maintain a minimum qualified cash balance under either the Tranche A1 Advance or the Tranche 1B Advance. The Amended Loan Agreement also provides for the ability to pay interest in-kind for the Tranche 1B Advance and, at the option of the Assignee (as defined below), deferral of principal amortization payments under the Tranche 1B Advance. Debt Inves

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. The information contained above in Item 1.01 relating to the Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants is incorporated by reference into this Item 3.02 in its entirety. The sales of the Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants have not been registered under the Securities Act or any state securities laws, and the Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements. The sale of such securities does not involve a public offering and is made without general solicitation or general advertising.

Forward-Looking Statements

Forward-Looking Statements This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Form 8-K, including without limitation, statements regarding the consummation of and terms of the offering are forward-looking "should," "expect," "explore," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," "seeks," or "continue" or the negative of these terms similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on management's current plans, estimates, assumptions and projections based on information currently available to us. Forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, and actual results or outcomes may differ materially from those expressed or implied in the forward-looking statements due to various important factors, including, but not limited to: the amount of and use of net proceeds from the offering may differ from the Company's current expectations; the Company's ability to obtain the capital necessary to fund the Company's operations; the Company's ability to obtain financial in the future through product licensing, public or private equity or debt financing or otherwise; the Company's ability to meet the continued listing requirements of the Nasdaq Capital Market; general business conditions, regulatory environment, competition and market for the Company's products; and business ability and judgment of personnel, and the availability of qualified personnel and other important factors discussed under the caption "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, as any such fa

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 9, 2024 ELOXX PHARMACEUTICALS, INC. By: /s/ Sumit Aggarwal Name: Sumit Aggarwal Title: President and Chief Executive Officer

View Full Filing

View this 8-K filing on SEC EDGAR