Filed Pursuant to Rule 424(b)(5)
Registration No. 333-237793
PROSPECTUS SUPPLEMENT
(To the Prospectus dated April 30, 2020)
1,829,269 Shares of Common Stock
We are offering 1,829,269 shares of our common
stock, par value $0.001 per share (the “common stock”) directly to investors pursuant to this prospectus supplement and the
accompanying prospectus.
We will sell to the investors the shares of common
stock at a public offering price of $0.41 per share. We will pay all of the expenses incident to the registration, offering and sale of
such shares of common stock under this prospectus supplement and the accompanying base prospectus.
Our common stock is listed on the Nasdaq Capital
Market under the symbol “ADIL.” Our warrants issued in connection with our initial public offering in July 2018 are currently
listed on the Nasdaq Capital Market under the symbol “ADILW.” On February 22, 2023, the last reported sale price of our common
stock on the Nasdaq Capital Market was $0.44 per share. We are an “emerging growth company” as that term is used in the Jumpstart
Our Business Startups Act of 2012, or the JOBS Act, and, as such, have elected to comply with certain reduced public company reporting
requirements. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”
The sales of the shares of common stock will be
made in accordance with a securities purchase Agreement, dated as of February 23, 2023, by and between us and the investors named therein
(the “Securities Purchase Agreement”).
| | |
Per Share | | |
Total | |
| Public offering price | |
$ | 0.41 | | |
$ | 750,000 | |
| Placement agent fees (1) | |
$ | 0.041 | | |
$ | 75,000 | |
| Proceeds, before expenses, to us | |
$ | 0.369 | | |
$ | 675,000 | |
| (1) | We have agreed to reimburse the placement agent for certain
expenses and to issue the placement agent warrants to purchase shares of our common stock. See “Plan of Distribution” for
a description of compensation payable to the placement agent. |
We have retained Joseph Gunnar & Co., LLC to act
as the placement agent in connection with the shares of common stock offered by this prospectus supplement and the accompanying prospectus.
The placement agent has agreed to use its reasonable best efforts to arrange for the sale of the shares of common stock offered by this
prospectus supplement and the accompanying prospectus. The placement agent has no obligation to purchase any of the securities offered
hereunder or to arrange for the sale of any specific number or dollar amount of the shares of common stock offered hereunder. The placement
agent may engage one or more selected dealers or sub-agents in connection with this offering.
Delivery of our shares of common stock is expected
to be made on or about February 24, 2023.
Investing in our common stock involves a high
degree of risk. Before making an investment decision, please read the information under the heading “Risk Factors” beginning
on page S-4 of this prospectus supplement and in the documents incorporated by reference into this prospectus supplement and the accompanying
base prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus
supplement or the accompanying base prospectus. Any representation to the contrary is a criminal offense.
Placement Agent
Joseph
Gunnar & Co., LLC
The date of this prospectus supplement is February
23, 2023
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PROSPECTUS
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of a registration
statement that we have filed with the Securities and Exchange Commission (the “SEC”), utilizing a “shelf” registration
process. Under the shelf registration process, we may offer securities having an aggregate offering price of up to $50,000,000 under the
accompanying base prospectus. This prospectus supplement may add to, update or change information in the accompanying prospectus and the
documents incorporated by reference into this prospectus supplement or the accompanying prospectus.
We provide information to you about this offering
of shares of our common stock in two separate documents that are bound together: (1) this prospectus supplement, which describes
the specific details regarding this offering of the shares of common stock; and (2) the accompanying base prospectus, which provides
general information, some of which may not apply to this offering. Generally, when we refer to this “prospectus,” we are referring
to both documents combined.
If information in this prospectus supplement is
inconsistent with the accompanying base prospectus or with any document incorporated by reference that was filed with the SEC before the
date of this prospectus supplement, you should rely on this prospectus supplement. Any statement so modified will be deemed to constitute
a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus.
However, if any statement in one of these documents is inconsistent with a statement in another document having a later date—for
example, a document incorporated by reference in this prospectus supplement, the statement in the document having the later date modifies
or supersedes the earlier statement as our business, financial condition, results of operations and prospects may have changed since the
earlier dates.
This prospectus supplement, the accompanying base
prospectus and the documents incorporated into each by reference include important information about us, the securities being offered
and other information you should know before investing in our securities. You should also read and consider information in the documents
we have referred you to in the section of this prospectus supplement and the accompanying base prospectus entitled “Where You Can
Find More Information” and “Incorporation of Certain Documents By Reference.”
You should rely only on the information contained
in or incorporated by reference into this prospectus supplement and the accompanying base prospectus and any free writing prospectus we
may provide to you in connection with this offering and the information incorporated or deemed to be incorporated by reference therein.
We have not, and the placement agent has not, authorized anyone to provide you with information that is in addition to or different from
that contained or incorporated by reference in this prospectus supplement and the accompanying base prospectus. If anyone provides you
with different or inconsistent information, you should not rely on it. We are not, and the placement agent is not, offering to sell these
securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained or incorporated
by reference in this prospectus supplement or the accompanying base prospectus is accurate as of any date other than as of the date of
this prospectus supplement or the accompanying base prospectus, as the case may be, or in the case of the documents incorporated by reference,
the date of such documents regardless of the time of delivery of this prospectus supplement and the accompanying base prospectus or any
sale of our securities. Our business, financial condition, liquidity, results of operations and prospects may have changed since those
dates.
We further note that the representations, warranties
and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference in this prospectus
supplement were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating
risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and
covenants should not be relied on as accurately representing the current state of our affairs.
This prospectus supplement contains and incorporates
by reference market data and industry statistics and forecasts that are based on independent industry publications and other publicly
available information. Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness of this information
and we have not independently verified this information. Although we are not aware of any misstatements regarding the market and industry
data presented in this prospectus and the documents incorporated herein by reference, these estimates involve risks and uncertainties
and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus
supplement and under similar headings in the other documents that are incorporated by reference into this prospectus. Accordingly, investors
should not place undue reliance on this information.
We are offering to sell, and are seeking offers
to buy, the common stock only in jurisdictions where such offers and sales are permitted. No action has been or will be taken in any jurisdiction
by us or the placement agent that would permit a public offering of the common stock or the possession or distribution of this prospectus
supplement and the accompanying base prospectus in any jurisdiction, other than in the United States. Persons outside the United States
who come into possession of this prospectus supplement and the accompanying base prospectus must inform themselves about, and observe
any restrictions relating to, the offering of the common stock and the distribution of this prospectus supplement and the accompanying
base prospectus outside the United States. This prospectus supplement and the accompanying base prospectus do not constitute, and may
not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this prospectus supplement
and the accompanying base prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or
solicitation.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains “forward-looking
statements” that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking
statements. The statements contained in this prospectus supplement that are not purely historical are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are often identified by the
use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,”
“could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,”
“seek,” “should,” “strategy,” “target,” “will,” “would” and similar
expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of
our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties
and other important factors that could cause actual results and the timing of certain events to differ materially from future results
expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not
limited to, those identified below and those discussed in this section of the prospectus supplement titled “Risk Factors.”
Furthermore, such forward-looking statements speak only as of the date of this prospectus supplement. Except as required by law, we undertake
no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Please consider our forward-looking statements
in light of those risks as you read this prospectus supplement and the accompanying base prospectus. It is not possible for our management
to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these
uncertainties, you should not place undue reliance on these forward-looking statements.
You should not assume that the information contained
in this prospectus supplement and the accompanying base prospectus is accurate as of any date other than as of the date of this prospectus
supplement or the accompanying base prospectus, as the case may be, or that any information incorporated by reference into this prospectus
is accurate as of any date other than the date of the document so incorporated by reference. Except as required by law, we assume no obligation
to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated
in these forward-looking statements, even if new information becomes available in the future. Thus, you should not assume that our silence
over time means that actual events are bearing out as expressed or implied in such forward-looking statements.
If one or more of these or other risks or uncertainties
materializes, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we anticipate. All
subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified
in their entirety by this Note. Before purchasing any shares of common stock, you should consider carefully all of the factors set forth
or referred to in this prospectus supplement, the accompanying base prospectus and the documents incorporated by reference that could
cause actual results to differ.
PROSPECTUS SUPPLEMENT SUMMARY
The items in the following summary are described
in more detail elsewhere in this prospectus supplement and in the documents incorporated by reference herein and in the accompanying prospectus.
This summary is not intended to be complete and does not contain all of the information that you should consider before deciding to invest
in our securities. You should read this entire prospectus supplement and the accompanying prospectus carefully, especially the “Risk
Factors” section beginning on page S-4 and other documents or information included or incorporated by reference in this prospectus
supplement before making an investment decision. Except where the context requires otherwise, in this prospectus references to the “Company,”
“Adial,” “we,” “us” and “our” refer to Adial Pharmaceuticals, Inc.
Overview
We are a clinical-stage
biopharmaceutical company focused on the development of therapeutics for the treatment or prevention of addiction and related disorders.
Our lead investigational new drug product, AD04, is being developed as a therapeutic agent for the treatment of alcohol use disorder (“AUD”).
We continue to explore opportunities to expand our portfolio in the field of addiction and related disorders such as pain reduction, both
through internal development and through acquisitions. Our vision is to create the world’s leading addiction focused pharmaceutical
company.
In January 2021, we expanded
our portfolio in the field of addiction with the acquisition of Purnovate, LLC via a merger into our wholly owned subsidiary, Purnovate,
Inc., (“Purnovate”) and in January 2023, we entered into an option agreement with Adenomed LLC (“Buyer”), pursuant
to which we granted to the Buyer an exclusive option for a period of one hundred twenty (120) days from the effective date of the Option
Agreement (the “Option Term”) for Buyer or its designated affiliate to acquire all of the assets of Purnovate. We have been
using Purnovate’s adenosine drug discovery and development platform to invent and develop novel chemical entities as drug candidates
for large unmet medical needs.
We have devoted the vast
majority of our resources to development efforts relating to AD04, including preparation for conducting clinical trials, providing general
and administrative support for these operations and protecting our intellectual property. We currently do not have any products approved
for sale and we have not generated any significant revenue since our inception. From our inception through the date of this prospectus
supplement, we have funded our operations primarily through the private and public placements of debt and equity securities and an equity
line.
We will not generate
revenue from product sales unless and until we successfully complete development and obtain marketing approval for AD04 or one of our
other product candidates, which we expect will take a number of years and is subject to significant uncertainty. We do not believe our
current cash and equivalents will be sufficient to fund our operations for the next twelve months from the filing of this prospectus supplement,
since we expect the reduction in R&D costs driven by the completion of the recent phase 3 trial will be partially offset by continued
development and regulatory activities of AD04, increased research and development costs associated with the advancement of the Purnovate
portfolio of drug candidates, and ongoing general and administrative costs associated with our operations. We do believe that we have
flexibility in the timing of expenditures related to Purnovate projects which would allow us to extend the amount of time our current
cash on hand can fund operations if necessary.
Until such time, if ever,
as we can generate substantial revenue from product sales, we expect to finance our operating activities through a combination of equity
offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements and other
collaborations, strategic alliances and licensing arrangements. However, we may be unable to raise additional funds or enter into such
other arrangements when needed on favorable terms or at all. Our failure to raise capital, receive proceeds from the exercise of the Option
Agreement or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability
to develop AD04 or the Purnovate candidates.
Corporate Information
ADial Pharmaceuticals, L.L.C. was formed as a
Virginia limited liability company in November 2010. ADial Pharmaceuticals, L.L.C. converted from a Virginia limited liability company
into a Virginia corporation on October 3, 2017, and reincorporated in Delaware on October 11, 2017 by merging the Virginia corporation
with and into Adial Pharmaceuticals, Inc., a Delaware corporation that was incorporated on October 5, 2017 and as a wholly owned subsidiary
of the Virginia corporation. We refer to this as the corporate conversion/reincorporation. In connection with the corporate conversion/reincorporation,
each unit of ADial Pharmaceuticals, L.L.C. was first converted into shares of common stock of the Virginia corporation and then converted
into shares of common stock of Adial Pharmaceuticals, Inc., the members of ADial Pharmaceuticals, L.L.C. became stockholders of Adial
Pharmaceuticals, Inc. and Adial Pharmaceuticals, Inc. succeeded to the business of ADial Pharmaceuticals, L.L.C.
Our principal executive offices are located at
1180 Seminole Trail, Suite 495, Charlottesville, VA 22901, and our telephone number is (434) 422-9800. Our website address is www.adialpharma.com.
Information contained in our website does not form part of the prospectus and is intended for informational purposes only.
This prospectus supplement contains references
to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this
prospectus, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such
references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or
the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’
trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
Emerging Growth Company
We are an emerging growth company under the JOBS
ACT, which was enacted in April 2012. We shall continue to be deemed an emerging growth company until the earliest of:
| |
(i) |
the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; |
| |
(ii) |
the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement; |
| |
(iii) |
the date on which we have issued more than $1.0 billion in non-convertible debt, during the previous 3-year period, issued; or. |
| |
(iv) |
the date on which we are deemed to be a large accelerated filer. |
As an emerging growth company, we are subject
to reduced public company reporting requirements and are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires issuers
to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for
financial reporting. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the
assessment on the effectiveness of the internal control structure and procedures for financial reporting.
As an emerging growth company, we are also exempt
from Section 14A (a) and (b) of the Exchange Act, which requires the shareholder approval, on an advisory basis, of executive compensation
and golden parachutes.
We have elected to use the extended transition
period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption
of new or revised accounting standards that have different effective dates for public and private companies until those standards apply
to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public
company effective dates.
THE OFFERING
| Shares of common stock offered by us |
|
1,829,269 shares of our common stock
|
| Offering price per share of common stock |
|
$0.41 per share |
| |
|
|
| Common stock to be outstanding after this offering |
|
28,516,564 shares |
| |
|
|
| Use of proceeds |
|
We currently intend to use the net proceeds from this offering primarily for working capital and other general corporate purposes. See “Use of Proceeds.” |
| |
|
|
| Risk factors |
|
You should read the “Risk Factors” section of this prospectus supplement and in the documents incorporated by reference in this prospectus supplement for a discussion of factors to consider before deciding to purchase shares of our common stock. |
| |
|
|
| Nasdaq Capital Market symbol |
|
“ADIL” |
The number of shares of our common stock that
will be outstanding immediately after this offering as shown above is based on 26,687,295 shares of common stock outstanding as of February
23, 2023, and, unless otherwise indicated excludes:
| |
● |
4,316,977 shares of our common stock issuable
upon the exercise of outstanding stock options with a weighted average exercise price of $2.48 per share; |
| |
● |
3,074,383 additional shares of our common stock reserved for future issuance under our equity incentive plans; and |
| |
● |
12,168,159 shares of our common stock issuable
upon the exercise of outstanding warrants with a weighted average
exercise price of $4.03 per share. |
RISK FACTORS
Investing in our shares of common stock involves
a high degree of risk, and you should be able to bear the complete loss of your investment. You should consider carefully the risks described
below and those described under the section captioned “Risk Factors” contained in our most recent Annual Report on Form 10-K
for the year ended December 31, 2021, any subsequent Annual Reports on Form 10-K, any subsequent Quarterly Reports on Form 10-Q, and all
other information contained or incorporated by reference into this prospectus supplement and the accompanying base prospectus before deciding
whether to purchase any of the common stock being offered under this prospectus supplement. If any of the risks actually occur, our business,
financial condition or results of operations could be adversely affected. In such case, the trading price of our common stock could decline
and you could lose all or part of your investment. Our actual results could differ materially from those anticipated in the forward-looking
statements made throughout this prospectus supplement or the documents incorporated by reference into this prospectus supplement and the
accompanying prospectus as a result of different factors, including the risks we face described below.
Risks Related to this Offering
Our management will have broad discretion
over the use of proceeds from this offering and may not use the proceeds effectively.
Our management will have broad discretion over
the use of proceeds from this offering. We intend to use the net proceeds from this offering, primarily for research, development and
manufacturing of product candidates, and for working capital and other general corporate purposes including, to acquire, license or invest
in complementary businesses, technologies, product candidates or other intellectual property. Our management will have considerable discretion
in the application of the net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether
the proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve our operating results
or enhance the value of our common stock. The failure of our management to use these funds effectively could have a material adverse effect
on our business, cause the market price of our common stock to decline and impair the commercialization of our products and/or delay the
development of our product candidates. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade,
interest-bearing instruments and U.S. government securities. These investments may not yield a favorable return to our stockholders.
If you purchase shares of our common stock
in this offering, you will experience immediate and substantial dilution in the net tangible book value of your shares. In addition, we
may issue additional equity or convertible debt securities in the future, which may result in additional dilution to investors.
The price per share of our common stock
being offered may be higher than the net tangible book value per share of our outstanding common stock prior to this offering. Based
on an aggregate of 1,829,269 shares of our common stock are sold at a price of $0.41 per share for aggregate gross proceeds of
approximately $750,000, and after deducting commissions and estimated offering expenses payable by us, new investors in this
offering will incur immediate dilution of $0.23 per share. For a more detailed discussion of the foregoing, see the section entitled
“Dilution” below. To the extent outstanding stock options or warrants are exercised, there will be further dilution to
new investors.
Our need for future financing may result
in the issuance of additional securities, which will cause investors to experience dilution.
Our cash requirements may vary from those now
planned depending upon numerous factors, including the results of future research and development activities. We expect our expenses to
increase if and when we initiate and conduct additional clinical trials, and seek marketing approval for our product candidates. In addition,
if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to
product sales, marketing, manufacturing and distribution. Accordingly, we will need to obtain substantial additional funding in connection
with our continuing operations. There are no other commitments by any person for future financing. Our securities may be offered to other
investors at a price lower than the price per share offered to current stockholders, or upon terms which may be deemed more favorable
than those offered to current stockholders. In addition, the issuance of securities in any future financing may dilute an investor’s
equity ownership and have the effect of depressing the market price for our securities. Moreover, we may issue derivative securities,
including options and/or warrants, from time to time, to procure qualified personnel or for other business reasons. The issuance of any
such derivative securities, which is at the discretion of our board of directors, may further dilute the equity ownership of our stockholders.
We may sell shares or other securities in any
other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing
shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional
shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower
than the price per share paid by investors in this offering. No assurance can be given as to our ability to procure additional financing,
if required, and on terms deemed favorable to us. To the extent additional capital is required and cannot be raised successfully, we may
then have to limit our then current operations and/or may have to curtail certain, if not all, of our business objectives and plans.
We have additional securities available
for issuance, which, if issued, could adversely affect the rights of the holders of our common stock.
Our Amended and Restated Certificate of Incorporation,
as amended, authorizes the issuance of 50,000,000 shares of our common stock and 5,000,000 shares of preferred stock. In certain circumstances,
the common stock, as well as the awards available for issuance under our equity incentive plans, can be issued by our board of directors,
without stockholder approval. Any future issuances of such stock would further dilute the percentage ownership of us held by holders of
preferred stock and common stock. In addition, the issuance of certain securities, including pursuant to the terms of our stockholder
rights plan, may be used as an “anti-takeover” device without further action on the part of our stockholders, and may adversely
affect the holders of the common stock.
Future sales of our common stock could cause
the market price for our common stock to decline.
We cannot predict the effect, if any, that market
sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common
stock prevailing from time to time. Sales of substantial amounts of shares of our common stock in the public market, or the perception
that those sales will occur, could cause the market price of our common stock to decline or be depressed.
The shares of common stock issued in connection
with this offering will be freely tradable without restriction or further registration under the Securities Act.
Our directors and executive officers have agreed
to a “lock-up,” pursuant to which neither we nor they will sell any shares without the prior consent of the placement agent
for 60 days after the date of this prospectus supplement, subject to certain exceptions and extensions under certain circumstances. Following
the expiration of the applicable lock-up period, all these shares of our common stock will also be eligible for future sale.
Because we will not declare cash dividends
on our common stock in the foreseeable future, stockholders must rely on appreciation of the value of our common stock for any return
on their investment.
We have never declared or paid cash dividends
on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business
and will not declare or pay any cash dividends in the foreseeable future. As a result, only appreciation of the price of our common stock,
if any, will provide a return to investors in this offering.
Our failure to meet the continued listing
requirements of The Nasdaq Capital Market could result in a delisting of our common stock.
Our shares of common
stock are currently listed on The Nasdaq Capital Market. If we fail to satisfy the continued listing requirements of The Nasdaq Capital
Market, such as the corporate governance requirements, minimum bid price requirement or the minimum stockholder’s equity requirement,
The Nasdaq Stock Market LLC may take steps to delist our common stock. Any delisting would likely have a negative effect on the price
of our common stock and would impair stockholders’ ability to sell or purchase their common stock when they wish to do so.
On August 31, 2022, we
received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC notifying us that for the preceding
30 consecutive business days (July 20, 2022 through August 30, 2022), our common stock did not maintain a minimum closing bid price of
$1.00 per share (“Minimum Bid Price Requirement”) as required by Nasdaq Listing Rule 5550(a)(2). The notice has no immediate
effect on the listing or trading of our common stock which will continue to trade on The Nasdaq Capital Market under the symbol “ADIL”.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we initially have a compliance period of 180 calendar days, or until February 27,
2023, to regain compliance with Nasdaq Listing Rules. Compliance can be achieved automatically and without further action if the closing
bid price of our common stock is at or above $1.00 for a minimum of ten consecutive business days at any time during the compliance
period, in which case Nasdaq will notify us of our compliance and the matter will be closed. If, however, we do not achieve compliance
with the Minimum Bid Price Requirement by February 27, 2023, we may be eligible for additional time to comply; however, such additional
time is not guaranteed and is subject to the discretion of Nasdaq. In order to be eligible for such additional time, we will be required
to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq
Capital Market, with the exception of the Minimum Bid Price Requirement, and must notify Nasdaq in writing of our intention to cure the
deficiency during the second compliance period. We have requested that Nasdaq grant us additional compliance time; however, there can
be no assurance that such request will be granted.
We intend to attempt
to take actions to restore our compliance with Nasdaq’s listing requirements, but we can provide no assurance that any action taken
by us would result in our common stock meeting The Nasdaq listing requirements, or that any such action would stabilize the market price
or improve the liquidity of our common stock. Any perception that we may not regain compliance or a delisting of our common stock by Nasdaq
could adversely affect our ability to attract new investors, decrease the liquidity of the outstanding shares of our common stock, reduce
the price at which such shares trade and increase the transaction costs inherent in trading such shares with overall negative effects
for our stockholder. In addition, delisting of our common stock from Nasdaq could deter broker-dealers from making a market in or otherwise
seeking or generating interest in our common stock, and might deter certain institutions and persons from investing in our common stock.
USE OF PROCEEDS
We estimate that the net proceeds from the
sale of the 1,829,269 shares of common stock that we are offering will be approximately $550,000, after deducting the estimated placement
agent commissions and estimated offering expenses payable by us.
We currently intend to use the net proceeds from
this offering primarily for working capital and other general corporate purposes. Pending these uses, we expect to invest the net proceeds
in short-term, interest-bearing securities. We have broad discretion in determining how the proceeds of this offering will be used, and
our discretion is not limited by the aforementioned possible uses. Our board of directors believes the flexibility in application of the
net proceeds is prudent.
As of the date of this prospectus supplement,
we cannot specify with certainty all of the particular uses for the net proceeds to be received from this offering. The amounts and timing
of our actual expenditures will depend on numerous factors including the progress in, and costs of, our clinical trials and other preclinical
development programs and the amount of funding, if any, received from grants. Accordingly, our management will have broad discretion in
the application of the net proceeds, and investors will be relying on the judgment of management regarding the application of the net
proceeds from the offering. We may find it necessary or advisable to reallocate the net proceeds of this offering; however, any such reallocation
would be substantially limited to the categories set forth above as we do not intend to use the net proceeds for other purposes. Pending
such uses set forth above, we plan to invest the net proceeds in government securities and other short-term investment grade, marketable
securities.
CAPITALIZATION
The following table sets forth our cash and cash
equivalents and capitalization as of September 30, 2022:
| |
● |
on an actual basis; and |
| |
● |
an as adjusted basis to reflect the sale by us of 1,829,269 shares of our common stock in this offering at an offering price of $0.41 per share, after deducting estimated placement agent commissions and estimated offering expenses payable by us. |
You should read the data set forth in the table
below in conjunction with our financial statements, including the related notes, and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” from our Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2022, which are incorporated by reference into this prospectus supplement.
| | |
As of September 30, 2022 | |
| | |
Actual | | |
As
Adjusted | |
| | |
(unaudited) | |
| | |
(in thousands, except share and per share data) | |
| Cash and cash equivalents | |
$ | 5,752,665 | | |
$ | 6,302,665 | |
| | |
| | | |
| | |
| Stockholders’ equity: | |
| | | |
| | |
| Common stock, $0.001 par value per share; 50,000,000 shares authorized at September 30, 2022, 26,853,962 shares issued and outstanding, actual; 28,683,231 shares issued and outstanding, as adjusted | |
| 26,854 | | |
| 28,683 | |
| Additional paid-in capital | |
| 66,190,027 | | |
| 66,738,198 | |
| Accumulated deficit | |
| (60,807,836 | ) | |
| (60,807,836 | ) |
| | |
| | | |
| | |
| Total stockholders’ equity | |
| 5,409,045 | | |
| 5,959,045 | |
| | |
| | | |
| | |
| Total capitalization | |
$ | 6,469,693 | | |
$ | 7,019,693 | |
The table and discussion above are based on 26,853,962
shares of common stock issued and outstanding as of September 30, 2022 and excludes as of that date:
| |
● |
4,316,977 shares of our common stock issuable
upon the exercise of outstanding stock options with a weighted
average exercise price of $2.48 per share; |
| |
● |
2,907,716 additional shares of our common stock reserved for future issuance under our equity incentive plans; and |
| |
● |
12,168,159 shares of our common stock issuable
upon the exercise of outstanding warrant with a weighted average
exercise price of $4.03 per share. |
DIVIDEND POLICY
We have never declared or paid any cash dividends
on our common stock and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. We expect
to retain all available funds and future earnings, if any, to fund the development and growth of our business. Any future determination
to pay dividends, if any, on our common stock will be at the discretion of our board of directors and will depend on, among other factors,
our results of operations, financial condition, capital requirements and contractual restrictions.
DILUTION
Our net tangible book value as of September 30,
2022, was approximately $4.7 million, or $0.18 per share. Net tangible book value per share is determined by dividing our total tangible
assets, less total liabilities, by the number of shares of our common stock outstanding as of September 30, 2022. Dilution with respect
to net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock
in this offering and the net tangible book value per share of our common stock immediately after this offering.
After giving effect to the sale of 1,829,269 shares
of our common stock in this offering at an offering price of $0.41 per share and after deducting estimated offering commissions and estimated
offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2022 would have been approximately $5.3 million,
or $0.18 per share. This represents no change in as adjusted net tangible book value per share to existing stockholders
and an immediate dilution of $0.23 per share to new investors purchasing securities in this offering. The following table illustrates
this per share dilution:
| Offering price per share of common stock |
|
|
|
|
|
$ |
0.41 |
|
| Net tangible book value per share as of September 30, 2022 |
|
$ |
0.18 |
|
|
|
|
|
| Increase in net tangible book value per share attributable to this offering |
|
$ |
0.00 |
|
|
|
|
|
| As adjusted net tangible book value per share as of September 30, 2022, after giving effect to this offering |
|
|
|
|
|
$ |
0.18 |
|
| Dilution per share to new investors in this offering |
|
|
|
|
|
$ |
0.23 |
|
The table and discussion above are based on 26,853,962
shares of common stock issued and outstanding as of September 30, 2022 and excludes as of that date:
| |
● |
4,316,977 shares of our common stock issuable
upon the exercise of outstanding stock options with a weighted
average exercise price of $2.48 per share; |
| |
● |
2,907,716 additional shares of our common stock reserved for future issuance under our equity incentive plans; and |
| |
● |
12,168,159 shares of our common stock issuable
upon the exercise of outstanding warrant with a weighted average
exercise price of $4.03 per share. |
To the extent that any outstanding options are
exercised, new options or additional securities are issued under our equity incentive plans, or we otherwise issue additional shares of
common stock in the future, at a price less than the offering price, there will be further dilution to the investors. In addition, we
may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds
for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt
securities, the issuance of these securities could result in further dilution to our stockholders.
DESCRIPTION OF SECURITIES WE ARE OFFERING
Common Stock
See “Description of Capital Stock—Common
Stock” on page 10 of the accompanying prospectus for a description of the material terms of our common stock.
PLAN OF DISTRIBUTION
Pursuant to a placement agent agreement, dated February
23, 2023, we have engaged Joseph Gunnar & Co., LLC which we refer to as the “placement agent” to act as our exclusive
placement agent in connection with this offering of the share of our common stock pursuant to this prospectus supplement and accompanying
prospectus. Under the terms of the placement agent agreement, the placement agent has agreed to be our exclusive placement agent, on a
reasonable best efforts basis, in connection with the issuance and sale by us of 1,829,269 shares of Common Stock pursuant to this prospectus
supplement and accompanying prospectus. The terms of this offering were subject to market conditions and negotiations between us, the
placement agent and prospective investors. The factors considered in determining the price of the shares of common stock included the
recent market price of our shares of common stock, the general condition of the securities market at the time of this offering, the history
of, and the prospects, for the industry in which we compete, our past and present operations, and our prospects for future revenues The
placement agent agreement does not give rise to any commitment by the placement agent to purchase any of our shares of common stock or
other securities and the placement agent will have no authority to bind us by virtue of the placement agent agreement. Further, the placement
agent does not guarantee that they will be able to raise new capital in any prospective offering.
We have entered into the Securities Purchase Agreement
directly with the investor in connection with this offering, and we will only sell to investors that entered into the Securities Purchase
Agreement.
We have agreed to indemnify the investors against
certain losses resulting from our breach of any of our representations, warranties, or covenants under agreements with the investors as
well as under certain other circumstances described in the Securities Purchase Agreement.
We have agreed to pay the placement agent a total
cash fee equal to 10.0% of the gross proceeds received by us from the sale of the shares of common stock at the closing of this offering.
We have also agreed to reimburse the placement agent at closing for expenses incurred by them in connection with the offering of $35,000
and have paid them a retainer deposit of $25,000.
We estimate that the total expenses payable by
us, excluding the placement agent’s fee and including the reimbursement of the placement agent’s legal expenses, will be approximately
$125,000.
The following table shows per share and total
cash placement agent’s fees we will pay to the placement agent in connection with the sale of our shares of common stock pursuant
to this prospectus supplement and the accompanying prospectus assuming the purchase of all of the shares of common stock offered hereby:
| | |
Per Share | | |
Total | |
| Public offering price | |
$ | 0.41 | | |
$ | 750,000 | |
| Placement agent fees (1) | |
$ | 0.41 | | |
$ | 75,000 | |
| Proceeds, before expenses, to us | |
$ | 0.369 | | |
$ | 675,000 | |
| (1) | We
have agreed to reimburse the placement agent at closing for legal expenses incurred by them in connection with the offering of $35,000
minus the $25,000 retainer we paid the placement agent. |
We also agreed to issue to the placement agent
a warrant to purchase up to an aggregate of 182,927 shares of common stock, representing 10% of the aggregate number of shares of common
stock sold in this offering. The placement agent warrants will have an exercise price equal to $0.41 and will be exercisable beginning
on the date which is two months after the closing date and expire five years after the date of issuance. The placement agent warrants
shall have cashless exercise provisions, provide for customary anti-dilution. The form of placement agent warrant is included as an exhibit
to a Current Report on Form 8-K that we filed with the SEC and that is incorporated by reference into the registration statement of which
this prospectus supplement forms a part.
We have agreed to indemnify the placement agent
and specified other persons against some civil liabilities, including, without limitation liabilities caused by or arising out of any
untrue statement of material fact contained in the Registration Statement or this prospectus supplement or accompanying prospectus or
by any omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading.
If within twelve months following the consummation
of this offering, we complete any equity, equity-linked, convertible or debt or other capital-raising activity of the Company for which
the placement agent is not acting as underwriter or placement agent (other than the exercise by any person or entity of any options, warrants
or other convertible securities) with any of the investors that were contacted, introduced or participated in this offering (excluding
any investors that either held securities of the Company prior to the closing of this offering, or that were introduced by us to the placement
agent), then we shall pay to the placement agent a commission as described above and issue a warrant as described above, in each case
only with respect to the portion of such financing received from such investors.
The placement agent may be deemed to be an underwriter
within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any profit realized on the resale
of the securities sold by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities
Act. As an underwriter, the placement agent would be required to comply with the requirements of the Securities Act and the Exchange Act,
including, without limitation, Rule 415(a)(4) under the Securities Act and Rule 10b-5 and Regulation M under the Exchange Act. These rules
and regulations may limit the timing of purchases and sales of shares of common stock and warrants by the placement agent acting as principal.
Under these rules and regulations, the placement agent may not(i) engage in any stabilization activity in connection with our securities;
and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted
under the Exchange Act, until it has completed its participation in the distribution.
The form of securities purchase agreement is included
as an exhibit to a Current Report on Form 8-K that we filed with the SEC and that is incorporated by reference into the registration statement
of which this prospectus supplement forms a part.
No action has been or
will be taken in any jurisdiction (except in the United States) that would permit a public offering of the securities offered by this
prospectus supplement and accompanying prospectus, or the possession, circulation or distribution of this prospectus supplement and accompanying
prospectus or any other material relating to us or the securities offered hereby in any jurisdiction where action for that purpose is
required. Accordingly, the securities offered hereby may not be offered or sold, directly or indirectly, and neither of this prospectus
supplement and accompanying prospectus nor any other offering material or advertisements in connection with the securities offered hereby
may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations
of any such country or jurisdiction. The placement agent may arrange to sell securities offered by this prospectus supplement and accompanying
prospectus in certain jurisdictions outside the United States, either directly or through affiliates, where they are permitted to do so.
Listing
Our common stock is listed on The Nasdaq Capital Market under the symbol
“ADIL.”
LEGAL MATTERS
The validity of the securities offered hereby will
be passed upon for us by Blank Rome LLP, New York, New York. Lucosky Brookman LLP, Woodbridge, NJ
is counsel to the placement agent in connection with this offering.
EXPERTS
The financial statements of Adial Pharmaceuticals,
Inc. as of December 31, 2021 and 2020 and for each of the years in the two year period ended December 31, 2021 incorporated by reference
in this Prospectus Supplement to the Registration Statement have been so included in reliance on the report of Friedman LLP, an independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus supplement is part of a registration
statement we filed with the SEC. This prospectus supplement does not contain all of the information set forth in the registration statement
and the exhibits to the registration statement. For further information with respect to us and the securities we are offering under this
prospectus supplement, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement.
Neither we nor any agent, underwriter or dealer has authorized any person to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus
supplement is accurate as of any date other than the date on the front page of this prospectus supplement, regardless of the time of delivery
of this prospectus supplement or any sale of the securities offered by this prospectus supplement.
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. Our SEC filings are available to the public at the SEC’s website at www.sec.gov.
Additional information about Adial Pharmaceuticals, Inc. is contained at our website, www.adialpharma.com. Information on our website
is not incorporated by reference into this prospectus supplement. We make available on our website our SEC filings as soon as reasonably
practicable after those reports are filed with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference”
the information we file with it which means that we can disclose important information to you by referring you to those documents instead
of having to repeat the information in this prospectus. The information incorporated by reference is considered to be part of this prospectus,
and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC (other than any portions of any such documents that are not deemed
“filed” under the Exchange Act in accordance with the Exchange Act and applicable SEC rules) under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act including those made after the date of this prospectus and before the completion of the offering of the
shares of our common stock included in this prospectus:
| |
● |
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 28, 2022 (File No. 001-38323); |
| |
|
|
| |
● |
Our Quarterly Reports Form 10-Q for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022 filed with the SEC on May 16, 2022, August 15, 2022 and November 14, 2022, respectively (File No. 001-38323); |
| |
|
|
| |
● |
Our Current Reports on Form 8-K filed with the SEC on February 9, 2022 (other than as indicated therein), February 14, 2022, February 28, 2022 (other than as indicated therein), June 27, 2022 (other than as indicated therein), July 20, 2022 (other than as indicated therein), August 23, 2022, September 2, 2022, September 6, 2022 (other than as indicated therein), September 13, 2022, September 14, 2022, September 26, 2022 (other than as indicated therein); October 13, 2022, February 1, 2023 (other than as indicated therein), February 21, 2023 (other than as indicated therein) and February 24, 2023 (File No. 001-38323); and |
| |
|
|
| |
● |
The description of our common stock set forth in (i) our registration statements on Form 8-A12B, filed with the SEC on December 11, 2017 and Form 8-A12B/A filed with the SEC on July 23, 2018 (File No. 001-38323) and (ii) Exhibit 4.17—Description of Securities to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 28, 2022 (File No. 001-38323). |
Any statement contained in this prospectus or
any prospectus supplement, or in a document incorporated or deemed to be incorporated by reference herein or therein, shall be deemed
to be modified or superseded to the extent that a statement contained herein, or in any subsequent prospectus supplement or in any subsequently
filed document that also is incorporated or deemed to be incorporated by reference herein or therein, modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus
or any prospectus supplement.
You may obtain, free of charge, a copy of any
of these documents (other than exhibits to these documents unless the exhibits are specifically incorporated by reference into these documents
or referred to in this prospectus) from our website (www.adialpharma.com) or by writing or calling us at the following address
and telephone number:
1180 Seminole Trail, Suite 495
Charlottesville VA 22901
Telephone (434) 422-9800
Attention: Corporate Secretary
PROSPECTUS
ADIAL
PHARMACEUTICALS, INC.
$50,000,000
Common
Stock
Preferred
Stock
Warrants
Units
We
may offer and sell up to $50,000,000 in the aggregate of the securities identified above from time to time in one or more offerings.
We may also offer securities as may be issuable upon conversion, redemption, repurchase,
exchange or exercise of any securities registered hereunder, including any applicable anti-dilution provisions. This prospectus
provides you with a general description of the securities.
Each
time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the
offering and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained
in this prospectus with respect to that offering. You should carefully read this prospectus and the applicable prospectus supplement
before you invest in any of our securities.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents
are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus
supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution”
for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing
the method and terms of the offering of such securities.
This
prospectus may not be used to offer or sell our securities unless accompanied by a prospectus supplement relating to the offered
securities.
Our
common stock is listed on the Nasdaq Capital Market under the symbol “ADIL.” On April 16, 2020, the last reported
sale price of our common stock on the Nasdaq Capital Market was $1.64 per share. Our warrants issued in connection with our initial
public offering in July 2018 are currently listed on the Nasdaq Capital Market under the symbol “ADILW.” The
applicable prospectus supplement will contain information, where applicable, as to any other listing on the Nasdaq Capital Market
or any securities market or other exchange of the securities, if any, covered by the prospectus supplement.
As
of April 16, 2020, the aggregate market value of our outstanding common stock held by non-affiliates was $12,682,792, based on
10,629,603 shares of outstanding common stock, of which 2,896,193 shares are held by affiliates and 7,733,410 shares were held
by non-affiliates, and a per share price of $1.64 based on the closing sale price of our common stock on April 16, 2020. We have
not offered or sold any securities during the past twelve months pursuant to General Instruction I.B.6 to Form S-3.
We
are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”), and, as such, elect to comply with certain reduced public company reporting requirements for future filings.
Investing
in our securities involves various risks. See “Risk Factors” contained herein for more information on these risks.
Additional risks will be described in the related prospectus supplements under the heading “Risk Factors.” You should
review that section of the related prospectus supplements for a discussion of matters that investors in our securities should
consider.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is April 30, 2020
TABLE
OF CONTENTS
You
should rely only on the information we have provided or incorporated by reference in this prospectus or in any prospectus supplement.
We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this
prospectus or in any prospectus supplement. This prospectus and any prospectus supplement is an offer to sell only the securities
offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information
contained in this prospectus and in any prospectus, supplement is accurate only as of their respective dates and that any information
we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the
time of delivery of this prospectus or any prospective supplement or any sale of securities. The registration statement, including
the exhibits and the documents incorporated herein by reference, can be read on the Securities and Exchange Commission website
or at the Securities and Exchange Commission offices mentioned under the heading “Where You Can Find More Information.”
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “Securities Act”), using a “shelf” registration process.
Under this shelf registration process, we may from time to time sell common stock, preferred stock or warrants to purchase common
stock, preferred stock, or any combination of the foregoing, either individually or as units comprised of one or more of the other
securities, in one or more offerings up to a total dollar amount of $50,000,000. We have provided to you in this prospectus a
general description of the securities we may offer. Each time we sell securities under this shelf registration, we will, to the
extent required by law, provide a prospectus supplement that will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating
to these offerings. The prospectus supplement and any related free writing prospectus that we may authorize to be provided to
you may also add, update or change information contained in this prospectus or in any documents that we have incorporated by reference
into this prospectus. To the extent there is a conflict between the information contained in this prospectus and the prospectus
supplement or any related free writing prospectus, you should rely on the information in the prospectus supplement or the related
free writing prospectus; provided that if any statement in one of these documents is inconsistent with a statement in another
document having a later date — for example, a document incorporated by reference in this prospectus or any prospectus supplement
or any related free writing prospectus — the statement in the document having the later date modifies or supersedes the
earlier statement.
We
have not authorized any dealer, agent or other person to give any information or to make any representation other than those contained
or incorporated by reference in this prospectus, any accompanying prospectus supplement or any related free writing prospectus
that we may authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated
by reference in this prospectus or an accompanying prospectus supplement, or any related free writing prospectus that we may authorize
to be provided to you. This prospectus, any accompanying prospectus supplement and any related free writing prospectus, if any,
do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities
to which they relate, nor does this prospectus, any accompanying prospectus supplement or any related free writing prospectus,
if any, constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person to whom
it is unlawful to make such offer or solicitation in such jurisdiction. You should not assume that the information contained in
this prospectus, any applicable prospectus supplement or any related free writing prospectus is accurate on any date subsequent
to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any
date subsequent to the date of the document incorporated by reference (as our business, financial condition, results of operations
and prospects may have changed since that date), even though this prospectus, any applicable prospectus supplement or any related
free writing prospectus is delivered or securities are sold on a later date.
As
permitted by the rules and regulations of the SEC, the registration statement, of which this prospectus forms a part, includes
additional information not contained in this prospectus. You may read the registration statement and the other reports we file
with the SEC at the SEC’s web site or at the SEC’s offices described below under the heading “Where You Can
Find More Information.”
Company
References
In
this prospectus, “Adial,” “the Company,” “we,” “us,” and “our” refer
to Adial Pharmaceuticals, Inc., a Delaware corporation, unless the context otherwise requires.
PROSPECTUS
SUMMARY
The
items in the following summary are described in more detail elsewhere in this prospectus and in the documents incorporated by
reference herein. This summary provides an overview of selected information and does not contain all the information you should
consider before investing in our common stock. Therefore, you should carefully read the entire prospectus, any prospectus supplement
and any free writing prospectus that we have authorized for use in connection with this offering, including the “Risk Factors”
section and other documents or information included or incorporated by reference in this prospectus and any prospectus supplement
before making any investment decision.
Overview
We
are a clinical-stage biopharmaceutical company currently focused on the development of a therapeutic agent for the treatment of
alcohol use disorder (“AUD”) using our lead investigational new drug product, AD04, a selective serotonin-3 antagonist
(i.e., a “5-HT3 antagonist”). The active ingredient in AD04 is ondansetron, which is also the active ingredient in
Zofran®, an approved drug for treating nausea and emesis. AUD is characterized by an urge to consume alcohol and
an inability to control the levels of consumption. We have commenced a Phase 3 clinical trial using AD04 for the potential treatment
of AUD in subjects with certain target genotypes. We believe our approach is unique in that it targets the serotonin system and
individualizes the treatment of AUD, through the use of genetic screening (i.e., a companion diagnostic genetic biomarker). We
have created an investigational companion diagnostic biomarker test for the genetic screening of patients with certain biomarkers
that, as reported in the American Journal of Psychiatry (Johnson, et. al. 2011 & 2013), we believe will benefit from
treatment with AD04. Our strategy is to integrate the pre-treatment genetic screening into AD04’s label to create a patient-specific
treatment in one integrated therapeutic offering. Our goal is to develop a genetically targeted, effective and safe product candidate
to treat AUD by reducing or eliminating the patients’ consumption of alcohol. We are also exploring expanding or portfolio
in the field of addiction.
We
have a worldwide, exclusive license from the University of Virginia Patent Foundation (d.b.a the Licensing & Venture Group)
(“UVA LVG”), which is the licensing arm of the University of Virginia, to commercialize our investigational drug candidate,
AD04, subject to Food and Drug Administration (“FDA”) approval of the product, based upon three separate patent application
families, with patents issued in over 40 jurisdictions, including three issued patents in the U.S. Our investigational agent has
been used in several investigator-sponsored trials and we possess or have rights to use toxicology, pharmacokinetic and other
preclinical and clinical data that supports our Phase 3 clinical trial. Our therapeutic agent was the product candidate used in
a University of Virginia investigator sponsored Phase 2b clinical trial of 283 patients. In this Phase 2b clinical trial, ultra-low
dose ondansetron, the active pharmaceutical agent in AD04, showed a statistically significant difference between ondansetron and
placebo for both the primary endpoint and secondary endpoint, which were reduction in severity of drinking measured in drinks
per drinking day (1.71 drinks/drinking day; p=0.0042), and reduction in frequency of drinking measured in days of abstinence/no
drinking (11.56%; p=0.0352), respectively. Additionally, and importantly, the Phase 2b results showed a significant decrease in
the percentage of heavy drinking days (11.08%; p=0.0445) with a “heavy drinking day” defined as a day with four (4)
or more alcoholic drinks for women or five (5) or more alcoholic drinks for men consumed in the same day.
The
active pharmaceutical agent in AD04, our lead investigational new drug product, is ondansetron (the active ingredient in Zofran®),
which was granted FDA approval in 1991 for nausea and vomiting post-operatively and after chemotherapy or radiation treatment
and is now commercially available in generic form. In studies of Zofran®, conducted as part of its FDA review process,
ondansetron was given acutely at dosages up to almost 100 times the dosage expected to be formulated in AD04 with the highest
doses of Zofran® given intravenously (“i.v.”), which results in approximately 160% of the exposure
level as oral dosing. Even at high doses given i.v. the studies found that ondansetron is well-tolerated and results in few adverse
side effects at the currently marketed doses, which reach more than 80 times the AD04 dose and are given i.v. The formulation
dosage of ondansetron used in our drug candidate (and expected to be used by us in our Phase 3 clinical trials) has the potential
advantage that it contains a much lower concentration of ondansetron than the generic formulation/dosage that has been used in
prior clinical trials, is dosed orally, and is available with use of a companion diagnostic genetic biomarker. Our development
plan for AD04 is designed to demonstrate both the efficacy of AD04 in the genetically targeted population and the safety of ondansetron
when administered chronically at the AD04 dosage. However, to the best of our knowledge, no comprehensive clinical study has been
performed to date that has evaluated the safety profile of ondansetron at any dosage for long-term use as anticipated in our Phase
3 clinical trial.
According
to the National Institute of Alcohol Abuse and Alcoholism (the “NIAAA”) and the Journal of the American Medical Association
(“JAMA”), in the United States alone, approximately 35 million people each year have AUD (such number is based upon
the 2012 data provided in Grant et. al. the JAMA 2015 publication and has been adjusted to reflect a compound annual growth rate
of 1.13%, which is the growth rate reported by U.S. Census Bureau for the general adult population from 2012-2017), resulting
in significant health, social and financial costs with excessive alcohol use being the third leading cause of preventable death
and is responsible for 31% of driving fatalities in the United States (NIAAA Alcohol Facts & Statistics). AUD contributes
to over 200 different diseases and 10% of children live with a person that has an alcohol problem. According to the American Society
of Clinical Oncologists, 5-6% of new cancers and cancer deaths globally are directly attributable to alcohol. And, The Lancet
published that alcohol is the leading cause of death in people ages 15-49 globally. The Centers for Disease Control (the “CDC”)
has reported that AUD costs the U.S. economy about $250 billion annually, with heavy drinking accounting for greater than 75%
of the social and health related costs. Despite this, according to the article in the JAMA 2015 publication, only 7.7% of patients
(i.e., approximately 2.7 million people) with AUD are estimated to have been treated in any way and only 3.6% by a physician (i.e.,
approximately 1.3 million people). In addition, according to the JAMA 2017 publication, the problem in the United States appears
to be growing with almost a 50% increase in AUD prevalence between 2002 and 2013.
We
have devoted substantially all of our resources to development efforts relating to AD04, including preparation for conducting
clinical trials, providing general and administrative support for these operations and protecting our intellectual property. We
currently do not have any products approved for sale and we have not generated any significant revenue since our inception. From
our inception through the date of this prospectus, we have funded our operations primarily through the private placement of debt
and equity securities and most recently, our initial public offering and follow-on offering.
The
ongoing Covid-19 pandemic risks delay to our development efforts, disruption to our business operations, and other economic injuries.
We may be eligible for a variety of United State Federal government loans, some forgivable, to help support our operations during
the pandemic. We have not, at this time, received any such funding, but may in the future.
Corporate
Information
ADial
Pharmaceuticals, L.L.C. was formed as a Virginia limited liability company in November 2010. ADial Pharmaceuticals, L.L.C. converted
from a Virginia limited liability company into a Virginia corporation on October 3, 2017, and reincorporated in Delaware on October
11, 2017 by merging the Virginia corporation with and into Adial Pharmaceuticals, Inc., a Delaware corporation that was incorporated
on October 5, 2017 and as a wholly owned subsidiary of the Virginia corporation. We refer to this as the corporate conversion/reincorporation.
In connection with the corporate conversion/reincorporation, each unit of ADial Pharmaceuticals, L.L.C. was first converted into
shares of common stock of the Virginia corporation and then converted into shares of common stock of Adial Pharmaceuticals, Inc.,
the members of ADial Pharmaceuticals, L.L.C. became stockholders of Adial Pharmaceuticals, Inc. and Adial Pharmaceuticals, Inc.
succeeded to the business of ADial Pharmaceuticals, L.L.C.
Our
principal executive offices are located at 1001 Research Park Blvd., Suite 100, Charlottesville VA 22911, and our telephone number
is (434) 422-9800. Our website address is www.adialpharma.com. Information contained in our website does not form part
of the prospectus and is intended for informational purposes only.
This
prospectus contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks
and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ®
or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest
extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not
intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or
sponsorship of us by, any other companies.
Emerging
Growth Company
We
are an emerging growth company under the JOBS ACT, which was enacted in April 2012. We shall continue to be deemed an emerging
growth company until the earliest of:
| (i) |
the
last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; |
| |
|
| (ii) |
the
last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities
of the issuer pursuant to an effective registration statement; |
| |
|
| (iii) |
the
date on which we have issued more than $1.0 billion in non-convertible debt, during the previous 3-year period, issued; or. |
| |
|
| (iv) |
the
date on which we are deemed to be a large accelerated filer. |
As
an emerging growth company, we are subject to reduced public company reporting requirements and are exempt from Section 404(b)
of Sarbanes Oxley. Section 404(a) requires issuers to publish information in their annual reports concerning the scope and adequacy
of the internal control structure and procedures for financial reporting. Section 404(b) requires that the registered accounting
firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure
and procedures for financial reporting.
As
an emerging growth company, we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), which requires the shareholder approval, on an advisory basis, of executive compensation and
golden parachutes.
We have elected to use the extended transition period for complying with new or revised accounting standards
under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial
statements may not be comparable to companies that comply with public company effective dates.
Risks
Associated with our Business
Our
business is subject to numerous risks, as described under the heading “Risk Factors” contained in the applicable prospectus
supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar
headings in the documents that are incorporated by reference into this prospectus.
The
Securities We May Offer
We
may offer shares of our common stock and preferred stock, and/or warrants to purchase any of such securities, either individually
or in combination with other securities or as units, with a total value of up to $50,000,000 from time to time under this prospectus,
together with the applicable prospectus supplement and any related free writing prospectus, at prices and on terms to be determined
by market conditions at the time of any offering. This prospectus provides you with a general description of the securities we
may offer. Each time we offer a type or series of securities under this prospectus, we will provide a prospectus supplement that
will describe the specific amounts, prices and other important terms of the securities, including, to the extent applicable:
| ● | designation
or classification; |
| ● | aggregate
offering price; |
| ● | maturity
date, if applicable; |
| ● | rates
and times of payment of dividends, if any; |
| ● | redemption,
conversion, exercise, exchange or sinking fund terms, if any; |
| ● | restrictive
covenants, if any; |
| ● | voting
or other rights, if any; |
| ● | conversion
or exchange prices or rates, if any, and, if applicable, any provisions for changes to
or adjustments in the conversion or exchange prices or rates and in the securities or
other property receivable upon conversion or exchange; and |
| ● | material
or special U.S. federal income tax considerations, if any. |
The
applicable prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also
add, update or change any of the information contained in this prospectus or in the documents we have incorporated by reference.
However, no prospectus supplement or free writing prospectus will offer a security that is not registered and described in this
prospectus at the time of the effectiveness of the registration statement of which this prospectus is a part.
THIS
PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.
We
may offer and sell these securities directly to investors or to or through one or more agents, underwriters, dealers or other
third parties. We or underwriters, reserve the right to accept or reject all or part of any proposed purchase of securities. If
we do offer securities to or through agents or underwriters, we will include in the applicable prospectus supplement:
| ● | the
names of those agents or underwriters; |
| ● | applicable
fees, discounts and commissions to be paid to them; |
| ● | details
regarding over-allotment options, if any; and |
Common
Stock
We
may issue shares of our common stock from time to time.
Voting.
The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders, except
on matters relating solely to terms of preferred stock. Our stockholders do not have cumulative
voting rights.
Dividends.
Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled
to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds legally
available therefor. See “Dividend Policy.”
Rights
upon liquidation. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if
any, then outstanding.
Rights
and Preferences. The holders of our common stock have no preemptive, conversion or subscription rights, and there are no redemption
or sinking fund provisions applicable to our common stock. The rights, preferences and privileges of the holders of our common
stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock
that we may designate and issue in the future.
Fully
Paid and Nonassessable. All of our outstanding shares of common stock are, and the shares of common stock to be issued under
this prospectus will be, fully paid and nonassessable.
In
this prospectus, we have summarized certain general features of our common stock under “Description of Capital Stock—Common
Stock.” We urge you, however, to read the applicable prospectus supplement (and any related free writing prospectus that
we may authorize to be provided to you) related to any common stock being offered.
Preferred
Stock
We
may issue shares of our preferred stock from time to time, in one or more series. Under our Certificate of Incorporation, our
board of directors has the authority, without further action by the stockholders (unless such stockholder action is required by
applicable law or the rules of any stock exchange or market on which our securities are then traded), to designate and issue
up to 5,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included
in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications,
limitations or restrictions thereon and to increase or decrease the number of shares of any such series, but not below the number
of shares of such series then outstanding. No shares of preferred stock are outstanding. Any authorized and undesignated shares
of preferred stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for
such issue duly adopted by our Board of Directors (authority to do so being hereby expressly vested in the board of directors).
If we sell any series of preferred stock under this prospectus, we will fix the designations,
voting powers, preferences and rights of such series of preferred stock, as well as the qualifications, limitations or restrictions
thereof, in the certificate of designation relating to that series. We will file as an exhibit to the registration statement of
which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of any certificate
of designation that describes the terms of the series of preferred stock that we are offering before the issuance of the related
series of preferred stock.
In
this prospectus, we have summarized certain general features of the preferred stock under “Description of Capital Stock—Preferred
Stock.” We urge you, however, to read the applicable prospectus supplement (and any related free writing prospectus that
we may authorize to be provided to you) related to the series of preferred stock being offered, as well as the complete certificate
of designation that contains the terms of the applicable series of preferred stock.
Warrants
We
may issue warrants for the purchase of common stock and/or preferred stock in one or more series. We may issue warrants independently
or in combination with common stock and/or preferred stock. In this prospectus, we have summarized certain general features of
the warrants under “Description of Warrants.”
We
urge you, however, to read the applicable prospectus supplement (and any related free writing prospectus that we may authorize
to be provided to you) related to the particular series of warrants being offered, as well as the form of warrant and/or the warrant
agreement and warrant certificate, as applicable, that contain the terms of the warrants. We will file as exhibits to the registration
statement of which this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form
of warrant and/or the warrant agreement and warrant certificate, as applicable, that contain the terms of the particular series
of warrants we are offering, and any supplemental agreements, before the issuance of such warrants.
Warrants
may be issued under a warrant agreement that we enter into with a warrant agent. We will indicate the name and address of the
warrant agent, if any, in the applicable prospectus supplement relating to a particular series of warrants.
Units
We
may offer units consisting of our common stock or preferred stock, and/or warrants to purchase any of these securities in one
or more series. We may evidence each series of units by unit certificates that we will issue under a separate agreement. We may
enter into unit agreements with a unit agent. Each unit agent will be a bank or trust company that we select. We will indicate
the name and address of the unit agent in the applicable prospectus supplement relating to a particular series of units. This
prospectus contains only a summary of certain general features of the units. The applicable prospectus supplement will describe
the particular features of the units being offered thereby. You should read any prospectus supplement and any free writing prospectus
that we may authorize to be provided to you related to the series of units being offered, as well as the complete unit agreements
that contain the terms of the units. Specific unit agreements will contain additional important terms and provisions and will
be incorporated by reference into the registration statement of which this prospectus is a part from reports we file with the
SEC.
RISK
FACTORS
You
should consider carefully the risks discussed under the section captioned “Risk Factors” contained in our annual report
on Form 10-K for the year ended December 31, 2019 and in our subsequent quarterly reports on Form 10-Q, as updated by our subsequent
filings under Exchange Act, each of which is incorporated by reference in this prospectus in its entirety, together with other
information in this prospectus, and the information and documents incorporated by reference in this prospectus, any prospectus
supplement and any free writing prospectus that we have authorized for use in connection with this offering before you make a
decision to invest in our securities. If any of these events actually occur, our business, operating results, prospects or financial
condition could be materially and adversely affected. This could cause the trading price of our common stock to decline and you
may lose all or part of your investment.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain forward-looking statements that are based on current management
expectations. Statements other than statements of historical fact included in this prospectus, including statements about us and
the future growth and anticipated operating results and cash expenditures, are forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this prospectus the words “anticipate,”
“objective,” “may,” “might,” “should,” “could,” “can,”
“intend,” “expect,” “believe,” “estimate,” “predict,” “potential,”
“plan” or the negative of these and similar expressions identify forward-looking statements. These statements reflect
our current views with respect to uncertain future events and are based on imprecise estimates and assumptions and subject to
risk and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. While
we believe our plans, intentions and expectations reflected in those forward-looking statements are reasonable, these plans, intentions
or expectations may not be achieved. Our actual results, performance or achievements could differ materially from those contemplated,
expressed or implied by the forward-looking statements contained in, or incorporated by reference into, this prospectus for a
variety of reasons. Those risks and uncertainties include, among others:
| |
● |
our
ability to implement our business plan; |
| |
● |
our
ability to raise additional capital to meet our liquidity needs; |
| |
● |
our
ability to generate product revenues; |
| |
● |
our
ability to achieve profitability; |
| |
● |
our
ability to satisfy U.S. (including FDA) and international regulatory requirements; |
| |
● |
our
ability to obtain market acceptance of our technology and products; |
| |
● |
our
ability to compete in the market; |
| |
● |
our
ability to advance our clinical trials; |
| |
● |
our
ability to fund, design and implement clinical trials; |
| |
● |
our
ability to demonstrate that our lead product candidate is safe for human use and effective for indicated uses; |
| |
● |
our
ability to gain acceptance of physicians and patients for use of our lead product; |
| |
● |
our
dependency on third-party researchers, manufacturers and payors; |
| |
● |
our
ability to establish and maintain strategic partnerships, including for the distribution of our lead product and any future
products that we may acquire; |
| |
● |
our
ability to attract and retain a sufficient qualified personnel; |
| |
● |
our
ability our ability to obtain or maintain patents or other appropriate protection for the intellectual property; |
| |
● |
our
dependency on the intellectual property licensed to us or possessed by third parties; |
| |
● |
our
ability to adequately support future growth; |
| |
● |
potential
product liability or intellectual property infringement claims; and |
| |
● |
disruption
or delay of our ongoing clinical trial, disruption of our corporate operations or those of our critical vendors, or general
significant disruption to the global economy as a result of the outbreak of the novel coronavirus (COVID-19) pandemic. |
We
urge investors to review carefully risks contained in the section of this prospectus entitled “Risk Factors” above
as well as other risks and factors identified from time to time in our SEC filings in evaluating the forward-looking statements
contained in this prospectus. We caution investors not to place significant reliance on forward-looking statements contained in
this document; such statements need to be evaluated in light of all the information contained herein.
All
forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the
risk factors and other cautionary statements set forth, or incorporated by reference, in this prospectus. Other than as required
by applicable securities laws, we are under no obligation, and we do not intend, to update any forward-looking statement, whether
as result of new information, future events or otherwise.
INDUSTRY
AND MARKET DATA
This
prospectus contains estimates and other statistical data made by independent parties and by us relating to market size and growth
and other data about our industry. We obtained the industry and market data in this prospectus from our own research as well as
from industry and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions
and limitations and contains projections and estimates of the future performance of the industries in which we operate that are
subject to a high degree of uncertainty. We caution you not to give undue weight to such projections, assumptions and estimates.
Further, industry and general publications, studies and surveys generally state that they have been obtained from sources believed
to be reliable, although they do not guarantee the accuracy or completeness of such information. In addition, while we believe
that the results and estimates from our internal research are reliable, such results and estimates have not been verified by any
independent source.
USE
OF PROCEEDS
Except
as described in any prospectus supplement and any free writing prospectus in connection with a specific offering, we currently
intend to use the net proceeds, if any, from the sales of securities offered by this prospectus to fund our preclinical and clinical
programs and for working capital and general corporate purposes, including, to acquire, license or invest in complementary businesses,
technologies, product candidates or other intellectual property. We have broad discretion in determining how the proceeds of this
offering will be used, and our discretion is not limited by the aforementioned possible uses. Our board of directors believes
the flexibility in application of the net proceeds is prudent.
As
of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to be received
from this offering. The amounts and timing of our actual expenditures will depend on numerous factors including the progress in,
and costs of, our clinical trials and other preclinical development programs and the amount of funding, if any, received from
grants. Accordingly, our management will have broad discretion in the application of the net proceeds, and investors will be relying
on the judgment of management regarding the application of the net proceeds from the offering. We may find it necessary or advisable
to reallocate the net proceeds of this offering; however, any such reallocation would be substantially limited to the categories
set forth above as we do not intend to use the net proceeds for other purposes. Pending such uses set forth above, we plan to
invest the net proceeds in government securities and other short-term investment grade, marketable securities.
Each
time we offer securities under this prospectus, we will describe the intended use of the net proceeds from that offering in the
applicable prospectus supplement. The actual amount of net proceeds we spend on a particular use will depend on many factors,
including, our future capital expenditures, the amount of cash required by our operations, and our future revenue growth, if any.
Therefore, we will retain broad discretion in the use of the net proceeds.
DIVIDEND
POLICY
We
do not anticipate paying dividends on our common stock. We currently intend to retain all of our future earnings, if any, to finance
the growth and development of our business. We are not subject to any legal restrictions respecting the payment of dividends,
except that we may not pay dividends if the payment would render us insolvent. Any future determination as to the payment of cash
dividends on our common stock will be at our board of directors’ discretion and will depend on our financial condition,
operating results, capital requirements and other factors that our board of directors considers to be relevant.
THE
SECURITIES WE MAY OFFER
We
may offer shares of our common stock, preferred stock, warrants to purchase any of such securities, either individually or in
combination, and/or units consisting of some or all of such securities for total gross proceeds of up to $50,000,000, from time
to time under this prospectus, together with the applicable prospectus supplement and any related free writing prospectus, at
prices and on terms to be determined by market conditions at the time of any offering. Each time we offer a type or series of
securities under this prospectus, we will provide a prospectus supplement that will describe the specific amounts, prices and
other important terms of the securities being offered. Below is a summary of the securities we may offer under this prospectus
(together with the applicable prospectus supplement).
We
may sell the securities directly to investors or to or through agents, underwriters or dealers. We, and our agents or underwriters,
reserve the right to accept or reject all or part of any proposed purchase of securities. Each prospectus supplement will set
forth the names of any underwriters, dealers or agents involved in the sale of securities described in that prospectus supplement
and any applicable fee, commission or discount arrangements with them.
DESCRIPTION
OF CAPITAL STOCK
The
following description of our capital stock and the provisions of our certificate of incorporation and our bylaws are summaries
and are qualified by reference to the certificate of incorporation and the bylaws. We have filed copies of these documents with
the SEC as exhibits to our registration statement of which this prospectus forms a part.
General
As
of the date of this prospectus, our authorized capital stock consists of 50,000,000 shares of common stock, par value $0.001 per
share, and 5,000,000 shares of preferred stock, par value $0.001 per share.
Common
Stock
Common
stock outstanding. As of April 22, 2020, there were 10,629,603 shares of our common stock outstanding.
Voting
rights. The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders,
except on matters relating solely to terms of preferred stock. Stockholders do not have
cumulative voting rights.
Dividend
rights. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of funds
legally available therefor. See “Dividend Policy.”
Rights
upon liquidation. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if
any, then outstanding.
Other
rights. The holders of our common stock have no preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to our common stock.
Preferred
Stock
Preferred
stock outstanding. There are no shares of our preferred stock outstanding as of the date of this prospectus.
Our
board of directors has the authority to issue preferred stock in one or more classes or series and to fix the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions thereof, including dividend rights, conversion right,
voting rights, terms of redemption, liquidation preferences and the number of shares constituting any class or series, without
further vote or action by the stockholders. The issuance of shares of preferred stock, or the issuance of rights to purchase such
shares, could decrease the amount of earnings and assets available for distribution to the holders of common stock, could adversely
affect the rights and powers, including voting rights, of the common stock, and could have the effect of delaying, deterring or
preventing a change of control of us or an unsolicited acquisition proposal. To date, no preferred stock has been issued.
The
following summary of terms of our preferred stock is not complete. You should refer to the provisions of our certificate of incorporation
and bylaws and the resolutions containing the terms of each class or series of the preferred stock which have been or will be
filed with the SEC at or prior to the time of issuance of such class or series of preferred stock and described in the applicable
prospectus supplement. The applicable prospectus supplement may also state that any of the terms set forth herein are inapplicable
to such series of preferred stock, provided that the information set forth in such prospectus supplement does not constitute material
changes to the information herein such that it alters the nature of the offering or the securities offered.
We
will fix the designations, voting powers, preferences and rights of the preferred stock of each series we issue under this prospectus,
as well as the qualifications, limitations or restrictions thereof, in the certificate of designation relating to that series.
We will file as an exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference
from reports that we file with the SEC, the form of any certificate of designation that describes the terms of the series of preferred
stock we are offering. We will describe in the applicable prospectus supplement the terms of the series of preferred stock being
offered, including, to the extent applicable:
| |
● |
the
title and stated value; |
| |
|
|
| |
● |
the
number of shares we are offering; |
| |
● |
the
liquidation preference per share; |
| |
● |
the
dividend rate, period and payment date and method of calculation for dividends; |
| |
● |
whether
dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate; |
| |
● |
the
procedures for any auction and remarketing; |
| |
● |
the
provisions for a sinking fund; |
| |
● |
the
provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and
repurchase rights; |
| |
● |
any
listing of the preferred stock on any securities exchange or market; |
| |
● |
whether
the preferred stock will be convertible into our common stock, and, if applicable, the conversion price, or how it will be
calculated, and the conversion period; |
| |
● |
whether
the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated,
and the exchange period; |
| |
● |
voting
rights of the preferred stock; |
| |
● |
restrictions
on transfer, sale or other assignment; |
| |
● |
whether
interests in the preferred stock will be represented by depositary shares; |
| |
● |
a
discussion of material United States federal income tax considerations applicable to the preferred stock; |
| |
● |
the
relative ranking and preferences of the preferred stock as to dividend rights and rights if we liquidate, dissolve or wind
up our affairs; |
| |
● |
any
limitations on the issuance of any class or series of preferred stock ranking senior to or on a parity with the series of
preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and |
| |
● |
any
other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock. |
If
we issue shares of preferred stock under this prospectus, the shares will be fully paid and non-assessable. The issuance of preferred
stock could adversely affect the voting power of holders of common stock and reduce the likelihood that common stockholders will
receive dividend payments and payments upon liquidation. The issuance could have the effect of decreasing the market price of
the common stock. The issuance of preferred stock also could have the effect of delaying, deterring or preventing a change in
control of us.
Options
As
of April 22, 2020, we have issued (i) options
to purchase an aggregate of 2,586,602 shares of common stock, and (ii) issued 614,438 shares of our common stock under the
Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the “2017 equity incentive plan”), leaving an additional 298,960 shares
reserved for future issuance under the 2017 equity incentive plan.
Warrants
As
of April 22, 2020, we had outstanding warrants
to purchase 6,669,274 shares of common stock with exercise prices ranging from $.0054 to $7.63 (with a weighted average exercise
price of $5.38) and expiration dates from July 31, 2023 to December 31, 2031.
Warrants
Issued in our Initial Public Offering
On
July 31, 2018, we consummated our initial public offering (“IPO”) and issued an aggregate of 1,464,000 units, each
unit consisting of one share of our common stock and one warrant to purchase one share of our common stock, at a public offering
price of $5.00 per unit, before underwriting discounts and expenses. The warrants issued in the IPO are exercisable at any time
after their original issuance and at any time up to the date that is five years after their original issuance. The warrants will
be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and, at
any time a registration statement registering the issuance of the shares of common stock underlying the warrants under the Securities
Act is effective and available for the issuance of such shares, or an exemption from registration under the Securities Act is
available for the issuance of such shares, by payment in full in immediately available funds for the number of shares of common
stock purchased upon such exercise. If a registration statement registering the issuance of the shares of common stock underlying
the warrants under the Securities Act is not effective or available and an exemption from registration under the Securities Act
is not available for the issuance of such shares, the holder may, in its sole discretion, elect to exercise the warrant through
a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined
according to the formula set forth in the warrant. No fractional shares of common stock will be issued in connection with the
exercise of a warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal to the fractional amount multiplied
by the exercise price. A holder will not have the right to exercise any portion of the warrant if the holder (together with its
affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after
giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the warrants. However,
any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase
in such percentage shall not be effective until 61 days following notice from the holder to us. The exercise price per whole share
of our common stock purchasable upon exercise of the warrants is $6.25 per share (based on the initial public offering price of
$5.00 per unit) or 125 % of public offering price of the common stock. The exercise price is subject to appropriate adjustment
in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events
affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.
Subject to applicable laws, the warrants may be offered for sale, sold, transferred or assigned without our consent.
The
warrants issued in the IPO are trading on the Nasdaq Capital Market under the symbol “ADILW.” The warrants were issued
in registered form under a warrant agent agreement between VStock Transfer, LLC, as warrant agent, and us. The warrants shall
initially be represented only by one or more global warrants deposited with the warrant agent, as custodian on behalf of The Depository
Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC. In the event
of a fundamental transaction, as described in the warrants and generally including any reorganization, recapitalization or reclassification
of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation
or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group
becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the warrants
will be entitled to receive upon exercise of the warrants the kind and amount of securities, cash or other property that the holders
would have received had they exercised the warrants immediately prior to such fundamental transaction.
Representative’s
Warrants
The
representative of the underwriters in the IPO were issued warrants to purchase up to a total of 58,560 shares of common stock
(4% of the shares of common stock sold in the IPO, excluding the over-allotment). The warrants are exercisable at any time, and
from time to time, in whole or in part, during the four-year period commencing one year from the effective date of the IPO, which
period shall not extend further than five years from the effective date of the IPO in compliance with FINRA Rule 5110(f)(2)(G)(i).
The warrants are exercisable at a per share price equal to $6.25 per share, or 125% of the public offering price per unit in the
IPO (based on the initial offering price of $5.00 per unit). The representative (or permitted assignees under Rule 5110(g)(1))
will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying these warrants, nor will they
engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition
of the warrants or the underlying securities for a period of 180 days from the effective date of the IPO. In addition, the warrants
provide for registration rights upon request, in certain cases. In addition, the warrants provide for registration rights upon
request, in certain cases. The demand registration right provided will not be greater than five years from the effective date
of the offering in compliance with FINRA Rule 5110(f)(2)(G)(iv). The piggyback registration right provided will not be greater
than seven years from the effective date of the offering in compliance with FINRA Rule 5110(f)(2)(G)(v). We will bear all fees
and expenses attendant to registering the securities issuable on exercise of the warrants other than underwriting commissions
incurred and payable by the holders. The exercise price and number of shares issuable upon exercise of the warrants may be adjusted
in certain circumstances including in the event of a stock dividend, extraordinary cash dividend or our recapitalization, reorganization,
merger or consolidation. However, the warrant exercise price or underlying shares will not be adjusted for issuances of shares
of common stock at a price below the warrant exercise price.
As
of April 22, 2020, we had outstanding warrants
to purchase an aggregate of 1,575,112 shares of our common stock, which warrants were issued in the IPO, calculated as follows:
(i) 1,516,552 shares of our common stock issuable upon exercise of warrants issued to investors and (ii) 58,560 shares of our
common stock issuable upon exercise of warrants issued to the representative of the underwriters.
February
2019 Follow-on Offering
On
February 22, 2019, we closed a firm commitment underwritten public offering pursuant to which we issued and sold 2,845,000 shares
of our common stock together with a number of warrants to purchase 2,133,750 shares of our common stock. The combined public offering
price was $3.25 per share of common stock and accompanying warrant. The warrants are exercisable upon issuance at a price of $4.0625
per share of common stock, subject to adjustment in certain circumstances, and will expire on February 26, 2024. The warrants
will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and,
at any time a registration statement registering the issuance of the shares of common stock underlying the warrants under the
Securities Act is effective and available for the issuance of such shares, or an exemption from registration under the Securities
Act is available for the issuance of such shares, by payment in full in immediately available funds for the number of shares of
common stock purchased upon such exercise. If a registration statement registering the issuance of the shares of common stock
underlying the warrants under the Securities Act is not effective or available and an exemption from registration under the Securities
Act is not available for the issuance of such shares, the holder may, in its sole discretion, elect to exercise the warrant through
a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of common stock determined
according to the formula set forth in the warrant. Except as otherwise provided in the warrants or by virtue of such holder’s
ownership of shares of common stock, the holder of a warrant does not have the rights or privileges of a holder of our common
stock, including any voting rights, until the holder exercises the warrant. No fractional shares of common stock will be issued
in connection with the exercise of a warrant. In lieu of fractional shares, at our election, we will pay the holder an amount
in cash equal to the fractional amount multiplied by the fair market value of any such fractional shares or round up to the next
whole share. The warrants also provide that in the event of a fundamental transaction we are required to cause any successor entity
to assume its obligations under the warrants. In addition, the holder of the warrant will be entitled to receive upon exercise
of the warrant the kind and amount of securities, cash or property that the holder would have received had the holder exercised
the warrant immediately prior to such fundamental transaction. A holder will not have the right to exercise any portion of the
warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% (or, upon election of the holder,
9.99%) of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage
ownership is determined in accordance with the terms of the warrants. However, any holder may increase or decrease such percentage,
provided that any increase will not be effective until the 61st day after such election.
Stockholder
Registration Rights
The
warrant that was issued to the holder of a note issued by us in June 2018, provides that upon the written request of such warrant
holder, given no more than once and no earlier than one hundred and eighty (180) days after we become a reporting company under
the Exchange Act, we will prepare and file with the SEC within ninety (90) days of our receipt of such request a registration
statement on Form S-1 covering the resale of the shares of common stock issuable under the warrant, and to use our commercially
reasonable efforts to cause the registration statement to be declared effective by the SEC and remain effective during the exercise
period of the warrant. We received such a request described above and in response we filed with the SEC a registration statement
on Form S-1, which was subsequently declared effective by the SEC on April 1, 2019.
Anti-Takeover
Effects of Delaware Law
The
provisions of Delaware law, our certificate of incorporation and our bylaws described below may have the effect of delaying, deferring
or discouraging another party from acquiring control of us.
Section
203 of the Delaware General Corporation Law
We
are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years after the date that such stockholder became an
interested stockholder, with the following exceptions:
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before
such date, the board of directors of the corporation approved either the business combination or the transaction that resulted
in the stockholder becoming an interested stockholder; |
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upon
completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes
of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares
owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer;
or |
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on
or after such date, the business combination is approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote of at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding voting stock that is not owned by the interested stockholder. |
In
general, Section 203 defines business combination to include the following:
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any
merger or consolidation involving the corporation and the interested stockholder; |
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any
sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; |
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subject
to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation
to the interested stockholder; |
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any
transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class
or series of the corporation beneficially owned by the interested stockholder; or |
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the
receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits
by or through the corporation. |
Certificate
of Incorporation and Bylaws
Our
certificate of incorporation and bylaws provide that:
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our
board of directors is divided into three classes, one class of which is elected each year by our stockholders with the directors
in each class to serve for a three-year term; |
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the
authorized number of directors can be changed only by resolution of our board of directors; |
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directors
may be removed only by the affirmative vote of the holders of at least 60% of our voting stock, whether for cause or without
cause; |
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our
bylaws may be amended or repealed by our board of directors or by the affirmative vote of sixty-six and two-thirds percent
(66 2/3%) of our stockholders; |
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stockholders
may not call special meetings of the stockholders or fill vacancies on the board of directors; |
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our
board of directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be
determined at the discretion of the board of directors and that, if issued, could operate as a “poison pill” to
dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors does not
approve; |
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our
stockholders do not have cumulative voting rights, and therefore our stockholders holding a majority of the shares of common
stock outstanding will be able to elect all of our directors; and |
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our
stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder
meeting. |
Board
Classification
Our
board of directors is divided into three classes, one class of which is elected each year by our stockholders. The directors in
each class will serve for a three-year term. For more information on the classified board, see “Management—Board of
Directors and Executive Officers.” The classification of our board of directors and the limitations on the ability of our
stockholders to remove directors could make it more difficult for a third-party to acquire, or discourage a third-party from seeking
to acquire, control of us.
Potential
Effects of Authorized but Unissued Stock
We
have shares of common stock and preferred stock available for future issuance without stockholder approval. We may utilize these
additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate
corporate acquisitions or payment as a dividend on the capital stock.
The
existence of unissued and unreserved common stock and preferred stock may enable our board of directors to issue shares to persons
friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party
attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity
of our management. In addition, the board of directors has the discretion to determine designations, rights, preferences, privileges
and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences
of each series of preferred stock, all to the fullest extent permissible under the Delaware General Corporation Law and subject
to any limitations set forth in our certificate of incorporation. The purpose of authorizing the board of directors to issue preferred
stock and to determine the rights and preferences applicable to such preferred stock is to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with
possible financings, acquisitions and other corporate purposes, could have the effect of making it more difficult for a third
party to acquire, or could discourage a third party from acquiring, a majority of our outstanding voting stock.
Limitations
of Director Liability and Indemnification of Directors, Officers and Employees
Our
certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors,
except for liability for any:
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breach
of their duty of loyalty to us or our stockholders; |
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act
or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
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unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation
Law; or |
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transaction
from which the directors derived an improper personal benefit. |
These
limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the
availability of equitable remedies such as injunctive relief or rescission.
Our
bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by law, and may indemnify employees
and other agents. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance
of the final disposition of any action or proceeding.
We
have obtained a policy of directors’ and officers’ liability insurance.
We
have entered into separate indemnification agreements with our directors and officers. These agreements, among other things, require
us to indemnify our directors and officers for any and all expenses (including reasonable attorneys’ fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by such
directors or officers or on his or her behalf in connection with any action or proceeding arising out of their services as one
of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services
at our request provided that such person follows the procedures for determining entitlement to indemnification and advancement
of expenses set forth in the indemnification agreement. We believe that these bylaw provisions and indemnification agreements
are necessary to attract and retain qualified persons as directors and officers.
The
limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders
from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative
litigation against directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders.
Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards
against directors and officers pursuant to these indemnification provisions.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
At
present, there is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is
required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
Requirements
for Advance Notification of Stockholder Nominations and Proposals
Our
Bylaws establish advance notice procedures with respect to stockholder proposals and nomination of candidates for election as
directors.
Limits
on Special Meetings
Special
meetings of the stockholders may be called at any time only by the board of directors, Chairman or our Chief Executive Officer,
subject to the rights of the holders of any series of preferred stock.
Election
and Removal of Directors
Directors
are elected by a plurality of the votes of shares present in person or represented by proxy at a meeting and entitled to vote
generally on the election of directors. Our stockholders may remove directors only with the vote of sixty percent (60%) of the
stockholders, whether for cause or without cause. Our board of directors may appoint a director to fill a vacancy, including vacancies
created by the expansion of the board of directors. This system of electing and removing directors may discourage a third party
from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders
to replace a majority of our directors. Our certificate of incorporation and bylaws do not provide for cumulative voting in the
election of directors.
Amendments
to Our Governing Documents
Generally,
the amendment of our certificate of incorporation requires approval by our board of directors and a majority vote of stockholders.
Any amendment to our bylaws requires the approval of either a majority of our board of directors or approval of at least sixty-six
and two-thirds (66 2/3%) of the votes entitled to be cast by the holders of our outstanding capital stock in elections of our
board of directors.
Choice
of Forum
Our
certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for:
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any
derivative action or proceeding brought on our behalf; |
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any
action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General
Corporation Law, our certificate of incorporation or our bylaws; or |
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any
action asserting a claim against us that is governed by the internal affairs doctrine. |
However,
several lawsuits involving other companies have been brought challenging the validity of choice of forum provisions in certificates
of incorporation, and it is possible that a court could note such provision is inapplicable or unenforceable.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is VStock Transfer, LLC. The transfer agent’s address is 18 Lafayette
Place, Woodmere, New York 11598. The transfer agent for any series of preferred stock that we may offer under this prospectus
will be named and described in the prospectus supplement for that series.
Listing
on the Nasdaq Capital Market
Our
common stock is listed on the Nasdaq Capital Market under the symbol “ADIL.” Our warrants issued in connection with
our initial public offering in July 2018 are currently listed on the Nasdaq Capital Market under the symbol “ADILW.”
The applicable prospectus supplement will contain information, where applicable, as to any
other listing on the Nasdaq Capital Market or any securities market or other exchange of the securities, if any, covered by the
prospectus supplement.
DESCRIPTION
OF WARRANTS
Warrants
Previously
Issued Warrants
As
of the date of this prospectus, we have outstanding warrants to purchase 6,669,274 shares of common stock with exercise prices
ranging from $.0054 to $7.63 (with a weighted average exercise price of $5.38) and expiration dates from July 31, 2023 to December
31, 2031. See “Description of Capital Stock—Warrants”
for a description of our warrants currently outstanding.
General
We
may issue warrants for the purchase of common stock or preferred stock or any combination of these securities. We may issue warrants
independently or in combination with common stock or preferred stock. In this prospectus, we have summarized certain general features
of the warrants. We urge you, however, to read the applicable prospectus supplement (and any related free writing prospectus that
we may authorize to be provided to you) related to the particular series of warrants being offered, as well as any warrant agreements
and warrant certificates that contain the terms of the warrants. We will file as exhibits to the registration statement of which
this prospectus is a part, or will incorporate by reference from reports that we file with the SEC, the form of warrant and/or
the warrant agreement and warrant certificate, as applicable, that contain the terms of the particular series of warrants we are
offering, and any supplemental agreements, before the issuance of such warrants.
Any
warrants issued under this prospectus may be evidenced by warrant certificates. Warrants also may be issued under an applicable
warrant agreement that we enter into with a warrant agent. We will indicate the name and address of the warrant agent, if applicable,
in the prospectus supplement relating to the particular series of warrants being offered.
The
following description, together with the additional information that we include in any applicable prospectus supplement and in
any related free writing prospectus that we may authorize to be distributed to you, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus, which may be issued in one or more series. While the terms we have summarized
below will apply generally to any warrants that we may offer under this prospectus, we will describe the particular terms of any
series of warrants in more detail in the applicable prospectus supplement and in any related free writing prospectus that we may
authorize to be distributed to you. The following description of warrants will apply to the warrants offered by this prospectus
unless we provide otherwise in the applicable prospectus supplement. The applicable prospectus supplement for a particular series
of warrants may specify different or additional terms.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
reports that we file with the SEC, the form of warrant and/or the warrant agreement and warrant certificate, as applicable, that
contain the terms of the particular series of warrants we are offering, and any supplemental agreements, before the issuance of
such warrants.
The
summary below and that contained in any prospectus supplement is qualified in its entirety by reference to all of the provisions
of the warrant and/or the warrant agreement and warrant certificate, as applicable. We urge you to read the applicable prospectus
supplements and any related free writing prospectuses related to the warrants that we may offer under this prospectus, as well
as the complete warrant and/or the warrant agreement and warrant certificate, as applicable, that contains the terms of the warrants.
Summary
of Warrants We May Issue
We
will describe in the applicable prospectus supplement the terms of the series of warrants being offered, including:
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the
offering price and aggregate number of warrants offered; |
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the
currency for which the warrants may be purchased; |
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if
applicable, the number of warrants issued with each such security; |
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the
number of shares of common stock and/or preferred stock, as the case may be, purchasable upon the exercise of one warrant
and the price at which these shares may be purchased upon such exercise; |
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the
effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants; |
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the
terms of any rights to redeem or call the warrants; |
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any
provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants; |
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the
dates on which the right to exercise the warrants will commence and expire; |
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the
manner in which the warrant agreements and warrants may be modified; |
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a
discussion of any material or special U.S. federal income tax considerations of holding or exercising the warrants; |
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the
terms of the securities issuable upon exercise of the warrants; and |
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any
other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
Before
exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such
exercise, including the right to receive dividends, if any, or, payments upon our liquidation, dissolution or winding up or to
exercise voting rights, if any:
Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise
price that we describe in the applicable prospectus supplement. The warrants may be exercised as set forth in the prospectus supplement
relating to the warrants offered. Unless we otherwise specify in the applicable prospectus supplement, warrants may be exercised
at any time up to the close of business on the expiration date set forth in the prospectus supplement relating to the warrants
offered thereby. After the close of business on the expiration date, unexercised warrants will become void. Until a holder exercises
the warrants to purchase any securities underlying the warrants, the holder will not have any rights as a holder of the underlying
securities by virtue of ownership of warrants.
Enforceability
of Rights by Holders of Warrants
Each
warrant agent, if any, will act solely as our agent under the applicable warrant agreement and will not assume any obligation
or relationship of agency or trust with any holder of any warrant. A warrant agent may act as warrant agent for more than one
issue of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant
agreement or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand
upon us. Any holder of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce
by appropriate legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
Governing
Law
Unless
we otherwise specify in the applicable prospectus supplement, the warrants and any warrant agreements will be governed by and
construed in accordance with the laws of the State of New York.
DESCRIPTION
OF UNITS
Units
IPO
Units
On July 31, 2018, we closed our IPO whereby we
sold 1,464,000 units, each unit consisting of one share of common stock and one warrant to purchase one share of common stock, at a public
offering price of $5.00 per unit, before underwriting discounts and expenses. In addition, the underwriters partially exercised their
over-allotment option to purchase up to 219,600 warrants granted in connection with the offering by purchasing an additional 170,652 warrants
at the offering price of $0.01 per warrant.
General
We
may issue units consisting of any combination of our common stock, preferred stock and warrants. We will issue each unit so that
the holder of the unit is also the holder of each security included in the unit. As a result, the holder of a unit will have the
rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The
summary below and that contained in any prospectus supplement is qualified in its entirety by reference to all of the provisions
of the unit agreement and/or unit certificate, and depositary arrangements, if applicable. We urge you to read the applicable
prospectus supplements and any related free writing prospectuses related to the units that we may offer under this prospectus,
as well as the complete unit agreement and/or unit certificate, and depositary arrangements, as applicable, that contain the terms
of the units.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from
reports that we file with the SEC, the form of unit agreement and/or unit certificate, and depositary arrangements, as applicable,
that contain the terms of the particular series of units we are offering, and any supplemental agreements, before the issuance
of such units.
The
applicable prospectus supplement, information incorporated by reference or free writing prospectus may describe:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately; |
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any
provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities composing the units; |
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whether
the units will be issued in fully registered or global form; and |
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any
other terms of the units. |
The
applicable provisions described in this section, as well as those described under “Description of Our Capital Stock—Common
Stock,” “Description of Our Capital Stock—Preferred Stock” and “Description of Warrants” above,
will apply to each unit and to each security included in each unit, respectively.
LEGAL
OWNERSHIP OF SECURITIES
We
can issue securities in registered form or in the form of one or more global securities. We describe global securities in greater
detail below. We refer to those persons who have securities registered in their own names on the books that we or any applicable
trustee, depositary or warrant agent maintain for this purpose as the “holders” of those securities. These persons
are the legal holders of the securities. We refer to those persons who, indirectly through others, own beneficial interests in
securities that are not registered in their own names, as “indirect holders” of those securities. As we discuss below,
indirect holders are not legal holders, and investors in securities issued in book-entry form or in street name will be indirect
holders.
Book-Entry
Holders
We
may issue securities in book-entry form only, as we will specify in any applicable prospectus supplement. This means securities
may be represented by one or more global securities registered in the name of a financial institution that holds them as depositary
on behalf of other financial institutions that participate in the depositary’s book-entry system. These participating institutions,
which are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only
the person in whose name a security is registered is recognized as the holder of that security. Securities issued in global form
will be registered in the name of the depositary or its participants. Consequently, for securities issued in global form, we will
recognize only the depositary as the holder of the securities, and we will make all payments on the securities to the depositary.
The depositary passes along the payments it receives to its participants, which in turn pass the payments along to their customers
who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with
their customers; they are not obligated to do so under the terms of the securities.
As
a result, investors in a global security will not own securities directly. Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system
or holds an interest through a participant. As long as the securities are issued in global form, investors will be indirect holders,
and not legal holders, of the securities.
Street
Name Holders
We
may terminate a global security or issue securities in non-global form. In these cases, investors may choose to hold their securities
in their own names or in “street name.” Securities held by an investor in street name would be registered in the name
of a bank, broker or other financial institution that the investor chooses, and the investor would hold only a beneficial interest
in those securities through an account he or she maintains at that institution.
For
securities held in street name, we or any applicable trustee or depositary will recognize only the intermediary banks, brokers
and other financial institutions in whose names the securities are registered as the holders of those securities, and we or any
applicable trustee or depositary will make all payments on those securities to them. These institutions pass along the payments
they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements
or because they are legally required to do so. Investors who hold securities in street name will be indirect holders, not holders,
of those securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable trustee and of any third parties employed by us or a trustee, run only
to the legal holders of the securities. We do not have obligations to investors who hold beneficial interests in global securities,
in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a
security or has no choice because we are issuing the securities only in global form.
For
example, once we make a payment or give a notice to the legal holder, we have no further responsibility for the payment or notice
even if that legal holder is required, under agreements with its participants or customers or by law, to pass it along to the
indirect holders but does not do so. Similarly, we may want to obtain the approval of the legal holders to amend an indenture,
to relieve us of the consequences of a default or of our obligation to comply with a particular provision of the indenture or
for other purposes. In such an event, we would seek approval only from the holders, and not the indirect holders, of the securities.
Whether and how the legal holders contact the indirect holders is up to the legal holders.
Special
Considerations for Indirect Holders
If
you hold securities through a bank, broker or other financial institution, either in book-entry form because the securities are
represented by one or more global securities or in street name, you should check with your own institution to find out:
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how
it handles securities payments and notices; |
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whether
it imposes fees or charges; |
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how
it would handle a request for the holders’ consent, if ever required; |
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whether
and how you can instruct it to send you securities registered in your own name so you can be a holder, if that is permitted
in the future; |
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how
it would exercise rights under the securities if there were a default or other event triggering the need for holders to act
to protect their interests; and |
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if
the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
Global
Securities
A
global security is a security that represents one or any other number of individual securities held by a depositary. Generally,
all securities represented by the same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that we issue to, deposit with and register in the
name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called
the depositary. Unless we specify otherwise in any applicable prospectus supplement, DTC will be the depositary for all securities
issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor
depositary, unless special termination situations arise. We describe those situations below under “Special Situations When
a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole
registered owner and legal holder of all securities represented by a global security, and investors will be permitted to own only
beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor
whose security is represented by a global security will not be a legal holder of the security, but only an indirect holder of
a beneficial interest in the global security.
If
the prospectus supplement for a particular security indicates that the security will be issued in global form only, then the security
will be represented by a global security at all times unless and until the global security is terminated. If termination occurs,
we may issue the securities through another book-entry clearing system or decide that the securities may no longer be held through
any book-entry clearing system.
Special
Considerations for Global Securities
The
rights of an indirect holder relating to a global security will be governed by the account rules of the investor’s financial
institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize an indirect holder
as a holder of securities and instead deal only with the depositary that holds the global security.
If
securities are issued only in the form of a global security, an investor should be aware of the following:
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an
investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his
or her interest in the securities, except in the special situations we describe below; |
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an investor will be an indirect holder and must look to his or her own bank, broker or other financial institution for payments on the securities and protection of his or her legal rights relating to the securities, as we describe above; |
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an investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form; |
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an
investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing
the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective;
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters
relating to an investor’s interest in a global security; |
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we
and any applicable trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership
interests in a global security, nor do we or any applicable trustee supervise the depositary in any way; |
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the
depositary may, and we understand that DTC will, require that those who purchase and sell interests in a global security within
its book-entry system use immediately available funds, and your bank, broker or other financial institution may require you
to do so as well; and |
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financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest
in a global security, may also have their own policies affecting payments, notices and other matters relating to the securities.
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There
may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible
for the actions of any of those intermediaries.
Special
Situations When a Global Security Will Be Terminated
In
a few special situations described below, the global security will terminate and interests in it will be exchanged for physical
certificates representing those interests. After that exchange, the choice of whether to hold securities directly or in street
name will be up to the investor. Investors must consult their own banks, brokers or other financial institutions to find out how
to have their interests in securities transferred to their own name, so that they will be direct holders. We have described the
rights of holders and street name investors above.
Unless
we provide otherwise in any applicable prospectus supplement, the global security will terminate when the following special situations
occur:
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if
the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within 90 days; |
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if
we notify any applicable trustee that we wish to terminate that global security; or |
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if
an event of default has occurred with regard to securities represented by that global security and has not been cured or waived.
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The
prospectus supplement may also list additional situations for terminating a global security that would apply only to the particular
series of securities covered by any applicable prospectus supplement. When a global security terminates, the depositary, and not
we or any applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct holders.
PLAN
OF DISTRIBUTION
We
may sell the securities being offered hereby in one or more of the following ways from time to time:
| ● | through
agents to the public or to investors; |
| ● | to
underwriters or dealers for resale to the public or to investors; |
| ● | in
negotiated transactions; |
| ● | directly
to investors; or |
| ● | through
a combination of any of these methods of sale. |
As
set forth in more detail below, the securities may be distributed from time to time in one or more transactions:
| ● | at
a fixed price or prices, which may be changed; |
| ● | at
market prices prevailing at the time of sale; |
| ● | at
prices related to such prevailing market prices; or |
We
will set forth in a prospectus supplement the terms of that particular offering of securities, including:
| ● | the
name or names of any agents or underwriters; |
| ● | the
purchase price of the securities being offered and the proceeds we will receive from the sale; |
| ● | any
over-allotment options under which underwriters may purchase additional securities from us; |
| ● | any
agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation; |
| ● | any
public offering price; |
| ● | any
discounts or concessions allowed or re-allowed or paid to dealers; and |
| ● | any
securities exchanges or markets on which such securities may be listed. |
Only
underwriters named in the prospectus supplement are underwriters of the securities offered by the prospectus supplement.
If
underwriters are used in an offering, we will execute an underwriting agreement with such underwriters and will specify the name
of each underwriter and the terms of the transaction (including any underwriting discounts and other terms constituting compensation
of the underwriters and any dealers) in a prospectus supplement. The securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more investment banking firms or others, as designated.
If an underwriting syndicate is used, the managing underwriter(s) will be specified on the cover of the prospectus supplement.
If underwriters are used in the sale, the offered securities will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or
at varying prices determined at the time of sale. Any public offering price and any discounts or concessions allowed or re-allowed
or paid to dealers may be changed from time to time. Unless otherwise set forth in the prospectus supplement, the obligations
of the underwriters to purchase the offered securities will be subject to conditions precedent and the underwriters will be obligated
to purchase all of the offered securities if any are purchased.
We
may grant to the underwriters options to purchase additional securities to cover over-allotments, if any, at the public offering
price, with additional underwriting commissions or discounts, as may be set forth in a related prospectus supplement. The terms
of any over-allotment option will be set forth in the prospectus supplement for those securities.
If
we use a dealer in the sale of the securities being offered pursuant to this prospectus or any prospectus supplement, we will
sell the securities to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to
be determined by the dealer at the time of resale. The names of the dealers and the terms of the transaction will be specified
in a prospectus supplement.
We
may sell the securities directly or through agents we designate from time to time. We will name any agent involved in the offering
and sale of securities and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus
supplement states otherwise, any agent will act on a best-efforts basis for the period of its appointment.
We
may authorize agents or underwriters to solicit offers by institutional investors to purchase securities from us at the public
offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery
on a specified date in the future. We will describe the conditions to these contracts and the commissions we must pay for solicitation
of these contracts in the prospectus supplement.
In
connection with the sale of the securities, underwriters, dealers or agents may receive compensation from us or from purchasers
of the common stock for whom they act as agents in the form of discounts, concessions or commissions. Underwriters may sell the
securities to or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions
from the underwriters or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that
participate in the distribution of the securities, and any institutional investors or others that purchase common stock directly
and then resell the securities, may be deemed to be underwriters, and any discounts or commissions received by them from us and
any profit on the resale of the common stock by them may be deemed to be underwriting discounts and commissions under the Securities
Act.
We
may provide agents and underwriters with indemnification against particular civil liabilities, including liabilities under the
Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to such liabilities.
Agents and underwriters may engage in transactions with, or perform services for, us in the ordinary course of business.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415 under the Securities Act. In
addition, we may enter into derivative transactions with third parties (including the writing of options), or sell securities
not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement
indicates, in connection with such a transaction, the third parties may, pursuant to this prospectus and the applicable prospectus
supplement, sell securities covered by this prospectus and the applicable prospectus supplement. If so, the third party may use
securities borrowed from us or others to settle such sales and may use securities received from us to close out any related short
positions. We may also loan or pledge securities covered by this prospectus and the applicable prospectus supplement to third
parties, who may sell the loaned securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant
to this prospectus and the applicable prospectus supplement. The third party in such sale transactions will be an underwriter
and will be identified in the applicable prospectus supplement or in a post-effective amendment.
To
facilitate an offering of a series of securities, persons participating in the offering may engage in transactions that stabilize,
maintain, or otherwise affect the market price of the securities. This may include over-allotments or short sales of the securities,
which involves the sale by persons participating in the offering of more securities than have been sold to them by us. In those
circumstances, such persons would cover such over-allotments or short positions by purchasing in the open market or by exercising
the over-allotment option granted to those persons. In addition, those persons may stabilize or maintain the price of the securities
by bidding for or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to
underwriters or dealers participating in any such offering may be reclaimed if securities sold by them are repurchased in connection
with stabilization transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities
at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at
any time. We make no representation or prediction as to the direction or magnitude of any effect that the transactions described
above, if implemented, may have on the price of our securities.
Unless
otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established
trading market, other than our common stock, which is listed on the Nasdaq Capital Market. We may elect to list any other class
or series of securities on any exchange or market, but we are not obligated to do so. It is possible that one or more underwriters
may make a market in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue
any market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for any of
the securities.
In
order to comply with the securities laws of some states, if applicable, the securities offered pursuant to this prospectus will
be sold in those states only through registered or licensed brokers or dealers. In addition, in some states securities may not
be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or
qualification requirement is available and complied with.
Any
underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Overallotment involves sales in excess of the offering size, which create a short position.
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
maximum. Short covering transactions involve purchases of the securities in the open market after the distribution is completed
to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of these activities
at any time.
Any
underwriters who are qualified market makers on the Nasdaq Capital Market may engage in passive market making transactions in
the securities on the Nasdaq Capital Market in accordance with Rule 103 of Regulation M, during the business day prior to the
pricing of the offering, before the commencement of offers or sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must
display its bid at a price not in excess of the highest independent bid for such security. If all independent bids are lowered
below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase
limits are exceeded.
The
specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business
for which they receive compensation.
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be passed upon for us by Gracin & Marlow, LLP, New York, New
York. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name
in the applicable prospectus supplement.
EXPERTS
The financial statements of Adial Pharmaceuticals, Inc. as of December 31, 2019 and 2018 and for each of the years in the
two year period ended December 31, 2019 incorporated by reference in this Registration Statement have been so included in
reliance on the report of Friedman LLP, an independent registered public accounting firm (such report includes an explanatory
paragraph regarding the Company’s ability to continue as a going concern), given on the authority of said firm as experts
in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and special reports, proxy statements and other information with the SEC. Our public filings are available
to the public at the SEC’s website at www.sec.gov.
Our
website address is www.adialpharma.com.
Through our website, we make available, free of charge, the following documents as soon as reasonably practicable after they are
electronically filed with, or furnished to, the SEC: our Annual Reports on Form 10-K; our proxy statements for our annual and
special stockholder meetings; our Quarterly Reports on Form 10-Q; our Current Reports on Form 8-K; Forms 3, 4 and 5 and Schedules
13G and 13D filed on behalf of our directors and our executive officers; and amendments to those documents. The information contained
on, or that may be accessed through, our website is not part of, and is not incorporated into, this prospectus.
This
prospectus is part of a registration statement on Form S-3 that we have filed with the SEC under the Securities Act. This prospectus
does not contain all of the information in the registration statement. We have omitted certain parts of the registration statement,
as permitted by the rules and regulations of the SEC. You may inspect and copy the registration statement, including exhibits,
at the SEC’s website or our website.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we file with it which means that we can disclose important
information to you by referring you to those documents instead of having to repeat the information in this prospectus. The information
incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically
update and supersede this information. We incorporate by reference the documents listed below and any future filings made with
the SEC (other than any portions of any such documents that are not deemed “filed” under the Exchange Act in accordance
with the Exchange Act and applicable SEC rules) under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act including those made
after (i) the date of the initial filing of the registration statement of which this prospectus is a part and prior to the termination
of this offering and (ii) the date of this prospectus and before the completion of the offerings of the shares of our common stock
included in this prospectus:
| ● | Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 20, 2020 (File No. 001-38323); |
| | | |
| ● | Our
Current Reports on Form 8-K filed with the SEC on February 6, 2020 and March 6, 2020 (File No. 001-38323); and |
| | | |
| ● | The
description of our common stock set forth in our registration statement on Form 8-A12B, filed with the SEC on December 11, 2017
and Form 8-A12B/A filed with the SEC on July 23, 2018 (File No. 001-38323). |
Any statement contained in this prospectus or
any prospectus supplement, or in a document incorporated or deemed to be incorporated by reference herein or therein, shall be deemed
to be modified or superseded to the extent that a statement contained herein, or in any subsequent prospectus supplement or in any subsequently
filed document that also is incorporated or deemed to be incorporated by reference herein or therein, modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus
or any prospectus supplement.
You
may obtain, free of charge, a copy of any of these documents (other than exhibits to these documents unless the exhibits are specifically
incorporated by reference into these documents or referred to in this prospectus) from our website (www.adiapharma.com)
or by writing or calling us at the following address and telephone number:
1180
Seminole Trail, Suite 495
Charlottesville
VA 22901
Telephone
(434) 422-9800
Attention:
Corporate Secretary
1,829,269 Shares of Common Stock
PROSPECTUS
Placement Agent
Joseph
Gunnar & Co., LLC
February 23, 2023
Adial Pharmaceuticals (NASDAQ:ADIL)
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