Item
1.01 Entry Into a Material Definitive Agreement.
Private
Placement
On
May 15, 2022 (the “Agreement Date”), Celcuity Inc., a Delaware corporation (the “Company”), entered into a securities
purchase agreement (the “Securities Purchase Agreement”) with certain purchasers (the “Purchasers”), pursuant
to which the Company agreed to issue and sell to the Purchasers, in a private placement, shares of the Company’s common stock,
par value $0.001 per share (the “Common Stock”), and shares of the Company’s Series A Convertible Preferred Stock,
par value $0.001 per share (the “Series A Preferred”) at a price per share of $5.75 (on an as converted to Common Stock basis).
The closing price of the Common Stock on The Nasdaq Capital Market on Friday, May 13, 2022 (the last trading day before the Agreement
Date) was $5.35 per share. Each share of Series A Preferred is convertible into 10 shares of Common Stock and has the other terms described
in Item 5.03 below, which is incorporated herein by reference. For each share of Common Stock and each 1/10 of a share of Series A Preferred
purchased, Purchasers will receive a warrant (“Warrant”) initially exercisable for Series A Preferred equivalent to 0.40
shares of Common Stock on an as converted basis. The exercise price of the Warrants will be at a 40% premium to the price (on an as converted
to Common Stock basis) paid by Purchasers for the initial shares of Common Stock purchased under the Securities Purchase Agreement.
Pursuant
to the Securities Purchase Agreement, the Company agreed to sell and the Purchasers agreed to purchase (i) 6,182,574 shares (the “Common
Shares”) of Common Stock at a purchase price of $5.75 per share, (ii) 1,120,873 shares (the “Preferred Shares”) of
Series A Preferred at a purchase price of $57.50 per share, and (iii) Warrants to purchase 695,645 shares of Series A Preferred (“Preferred
Warrant Shares”), each Warrant having an exercise price of $80.50 per Preferred Warrant Share (the “Private Placement”).
The
closing of the Private Placement is expected to occur shortly after the first patient enrolled in the Company’s forthcoming Phase
3 clinical study (VIKTORIA-1) receives their first dose of treatment at a clinical site located in the United States, provided that such
date must occur on or before December 31, 2022, subject to the satisfaction of customary closing conditions (the “Closing Date”),
and provided further that each investor may elect to close prior to the first dose of treatment in the Phase 3 clinical study. The Company
expects to activate the VIKTORIA-1 study in mid-2022 and that the first patient receiving their first dose is expected to occur six to
ten weeks later. The Company expects to report results for the first primary analysis of the VIKTORIA-1 clinical study in the second
half of 2024.
Venrock
Healthcare Capital Partners is the lead investor in the Private Placement and Commodore Capital, New Enterprise Associates (NEA), RA
Capital Management, Soleus Capital and Brian Sullivan, the Company’s Chief Executive Officer, are also participating. Except for
Mr. Sullivan, there are no material relationships between the Company and any of the Purchasers other than in respect of the Private
Placement. Jefferies LLC is acting as placement agent for the Private Placement.
The
gross proceeds to the Company from the private placement, before deducting placement agent fees and other estimated offering expenses
payable by the Company, will be approximately $100 million. The Company expects to use the net proceeds to advance clinical development
of gedatolisib, including its planned Phase 3 clinical study (VIKTORIA-1), and for general corporate purposes.
Each
Warrant to be issued on the Closing Date will be exercisable immediately and will remain exercisable until the earlier of (i) five years
from the date of issuance and (ii) seventy-five (75) days after the Company announces (x) whether the progression-free survival (“PFS”)
of gedatolisib in combination with Palbociclib and fulvestrant (Arm A) to fulvestrant (Arm C) in the Phase 3 study met its primary endpoint
target, (y) whether the PFS of gedatolisib in combination with fulvestrant (Arm B) to fulvestrant (Arm C) in the Phase 3 study met its
primary endpoint target, and (z) the associated hazard ratios and median PFS values for each of Arm A, Arm B, and Arm C.
Upon
notice by the Company to the Purchasers that an amendment to the Company’s Certificate of Incorporation has become effective that
increases the aggregate authorized number of shares of capital stock and the number of shares of Common Stock such that the Company has
available, and has reserved, such number of its duly authorized but unissued shares of Common Stock as shall be sufficient to effect
the conversion of all shares of Series A Preferred then outstanding or available for issuance upon the exercise of the Warrants, then
on and following the date specified in such notice, the Warrants will become exercisable for ten (10) shares of Common Stock (“Common
Warrant Shares”) for each share of Series A Preferred that the Warrants would otherwise be exercisable for and with the exercise
price per share adjusted to $8.05 per share. The Company has agreed to use commercially reasonable efforts to obtain the necessary shareholder
approval to effect such amendment to its Certificate of Incorporation (the “Authorized Share Approval”) no later than December
31, 2022, and, no later than thirty (30) days following the last Closing Date under the Securities Purchase Agreement, to call, and deliver
notice of, a special meeting of stockholders in accordance with the Company’s bylaws for the purpose of obtaining the Authorized
Share Approval, and thereafter to use commercially reasonable efforts to promptly obtain and effect the Authorized Share Approval.
Under
the terms of Series A Preferred and the Warrants, the Company may not effect the conversion of Series A Preferred into Common Stock,
or the exercise of any such Warrant, and a holder will not be entitled to request the conversion of shares of Series A Preferred or exercise
any portion of any Warrant, if, upon giving effect to such conversion or exercise, the aggregate number of shares of Common Stock (assuming
the conversion of the Series A Preferred into Common Stock with respect to the Warrants) beneficially owned by the holder (together with
its affiliates, any other persons acting as a group together with the holder or any of the holder’s affiliates, and any other persons
whose beneficial ownership of Common Stock would or could be aggregated with the holder’s for purposes of Section 13(d) or Section
16 of the Securities Exchange Act of 1934, as amended) would exceed 9.99% of the number of shares of Common Stock outstanding immediately
after giving effect to the exercise, as such percentage ownership is calculated in accordance with Section 13(d) of the Exchange Act
and the applicable regulations of the Securities and Exchange Commission (the “Beneficial Ownership Limitation”). A holder
may reset the Beneficial Ownership Limitation percentage to a higher percentage (not to exceed 19.9%), effective 61 days after written
notice to the Company, or a lower percentage, effective immediately upon written notice to the Company. Any such increase or decrease
will apply only to that holder and not to any other holder of Series A Preferred Stock or Warrants.
The
Securities Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations of the Company, other obligations of the parties and termination provisions.
Registration
Rights Agreement
In
connection with the Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”)
with the Purchasers, pursuant to which the Company agrees to register for resale (i) the Common Shares, (ii) the shares of Common Stock
then issued or issuable upon conversion of the Preferred Shares or the Preferred Warrant Shares (assuming on such date the shares of
Preferred Stock are convertible in full without regard to any conversion limitations in the Certificate of Designations and assuming
receipt of the Authorized Share Approval and authorization of such Common Stock to be issued in full), (iii) the Common Warrant Shares
then issued or issuable upon exercise of the Warrants (assuming the Warrants are exercisable for Common Stock and are exercisable in
full without regard to any exercise limitations therein and assuming receipt of the Authorized Share Approval and authorization of such
Common Stock to be issued in full) (collectively, the “Registrable Securities”). Under the Registration Rights Agreement,
the Company has agreed to file a registration statement covering the resale by the Purchasers of the Registrable Securities no later
than 30 days following (i) the Closing Date and (ii) the Authorized Share Approval. The Company has agreed to use commercially reasonable
efforts to cause such registration statement to become effective and to keep such registration statement effective until such time as
there are no longer Registrable Securities held by the Purchasers (the “Effectiveness Period”). The Company has agreed to
be responsible for all fees and expenses incurred in connection with the registration of the Registrable Securities.
In
the event (i) the registration statement is not filed within the time period specified above, (ii) the registration statement has not
been declared effective (A) by the 60th day after the Closing Date (or, in the event of a review by the SEC, the 90th day after the Closing
Date) or (B) within ten business days following the date the Company is notified by the SEC that the registration statement will not
be reviewed or is no longer subject to further review and comments, or (iii) after the registration statement has been declared effective
by the SEC, sales cannot be made pursuant to such registration statement for any reason (including without limitation by reason of a
stop order, or the Company’s failure to update such registration statement), but excluding any Allowed Delay (as defined in the
Registration Rights Agreement) or, if the registration statement is on Form S-1, for a period of twenty (20) days following the date
on which the Company files a post-effective amendment to incorporate the Company’s Annual Report on Form 10-K, then the Company
has agreed to make pro rata payments to each holder as liquidated damages in an amount equal to 1.0% of the aggregate amount invested
by each such holder in the Registrable Securities then held by the holder per 30-day period or pro rata for any portion thereof for each
such month during which such event continues, provided that the maximum aggregate amounts payable as liquidated damages shall not exceed
5.0% of the aggregate amount invested by each such holder in the Registrable Securities then held by the holder.
The
Company has granted the Purchasers customary indemnification rights in connection with the registration statement, including for liabilities
arising under the Securities Act of 1933, as amended (the “Securities Act”). The Purchasers have also granted the Company
customary indemnification rights in connection with the registration statement.
The
representations, warranties and covenants contained in the Warrants, the Securities Purchase Agreement and the Registration Rights Agreement
were made solely for the benefit of the parties thereto and may be subject to limitations agreed upon by the contracting parties. The
foregoing descriptions of the Warrants, the Securities Purchase Agreement and the Registration Rights Agreement do not purport to be
complete and are qualified in their entirety by reference to the full text of the form of Warrant, the Securities Purchase Agreement
and the Registration Rights Agreement, copies of which are filed as Exhibits 4.1, 10.1 and 10.2 hereto, respectively, and incorporated
by reference herein.