Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-198675
PROSPECTUS SUPPLEMENT
(to the Prospectus dated September 29, 2014)
2,900,000 Shares of Common Stock
We are selling 2,900,000 shares of our common stock.
Our common stock is listed on the NASDAQ Capital Market under the symbol “IMMY.” On March 10, 2016, the last reported sales price of our common stock on the NASDAQ Capital Market was $4.09 per share. Based on 9,770,678 shares of outstanding common stock as of January 28, 2016, of which 7,381,235 were held by non-affiliates as of such date, and a per share price of $5.96 as of January 28, 2016, the last reported sales price of our common stock on the NASDAQ Capital Market on such date, the aggregate market value of our outstanding common stock held by non-affiliates is approximately $43,992,161. The aggregate amount of all securities we have offered and sold pursuant to General Instruction I.B.6 of Form S-3 during the twelve calendar month period that ends on, and includes, the date of this prospectus supplement is $10,965,959, inclusive of the shares offered hereby.
Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully review and consider all of the information set forth in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein, including the risks and uncertainties described under “Risk Factors” beginning on page S-5 of this prospectus supplement and the risk factors incorporated by reference into this prospectus supplement and the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
| Per Share | Total | |||||||
| Public Offering Price | $ | 3.60 | $ | 10,440,000 | ||||
| Underwriting Discount (1)(2) | $ | 0.252 | $ | 730,800 | ||||
| Proceeds to Us (Before Expenses) | $ | 3.348 | $ | 9,709,200 | ||||
| (1) | In addition, we have agreed to reimburse up to $60,000 of the out-of-pocket fees and expenses of the representative of the underwriters in connection with this offering, plus a non-accountable expense allowance in the amount of 50% of any underwriting compensation payable to Sterne Agee CRT in connection with the sale of the shares in this offering. See “Underwriting” for additional information about compensation arrangements. | |
(2) |
Notwithstanding the foregoing, we and the underwriters have agreed that the underwriters will only be entitled to a 3.0% discount (or $0.108 per share) for the participation of two investors with which we have a pre-existing relationship. |
We have granted the underwriters a 45-day option to purchase up to 435,000 additional shares of common stock from us at the public offering price, less the underwriting discount, set forth above to cover over-allotments, if any.
The underwriters expect to deliver the shares against payment through the facilities of the Depository Trust Company on or about March 16, 2016.
Sole Book-Running Manager
National Securities Corporation
Co-Manager
Sterne Agee CRT
The date of this prospectus supplement is March 11, 2016.
TABLE OF CONTENTS
Prospectus Supplement
| Page | |
| ABOUT THIS PROSPECTUS SUPPLEMENT | S-i |
| PROSPECTUS SUPPLEMENT SUMMARY | S-1 |
| RISK FACTORS | S-5 |
| FORWARD-LOOKING STATEMENTS | S-10 |
| USE OF PROCEEDS | S-11 |
| DILUTION | S-12 |
| UNDERWRITING | S-13 |
| LEGAL MATTERS | S-16 |
| EXPERTS | S-16 |
| INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE | S-16 |
| WHERE YOU CAN FIND MORE INFORMATION | S-17 |
Prospectus
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying base prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the ”SEC”) utilizing a “shelf” registration process. Each time we conduct an offering to sell securities under the accompanying base prospectus we will provide a prospectus supplement that will contain specific information about the terms of that offering, including the price, the amount of securities being offered and the plan of distribution. The shelf registration statement was initially filed with the SEC on September 10, 2014, and was declared effective by the SEC on September 29, 2014. This prospectus supplement describes the specific details regarding this offering and may add, update or change information contained in the accompanying base prospectus. The accompanying base prospectus provides general information about us and our securities, some of which, such as the section entitled “Plan of Distribution,” may not apply to this offering. This prospectus supplement and the accompanying base prospectus are an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making offers to sell or solicitations to buy our common stock in any jurisdiction in which an offer or solicitation is not authorized or in which the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer or solicitation.
If information in this prospectus supplement is inconsistent with the accompanying base prospectus or the information incorporated by reference with an earlier date, you should rely on this prospectus supplement. This prospectus supplement, together with the base prospectus, the documents incorporated by reference into this prospectus supplement and the accompanying base prospectus and any free writing prospectus we have authorized for use in connection with this offering include all material information relating to this offering. We have not, and the underwriters have not, authorized anyone to provide you with different or additional information and you must not rely on any unauthorized information or representations. You should assume that the information appearing in this prospectus supplement, the accompanying base prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying base prospectus and any free writing prospectus we have authorized for use in connection with this offering is accurate only as of the respective dates of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates. You should carefully read this prospectus supplement, the accompanying base prospectus and the information and documents incorporated herein by reference herein and therein, as well as any free writing prospectus we have authorized for use in connection with this offering, before making an investment decision. See “Incorporation of Certain Documents by Reference” and “Where You Can Find More Information” in this prospectus supplement and in the accompanying base prospectus.
This prospectus supplement and the accompanying base prospectus contain summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the full text of the actual documents, some of which have been filed or will be filed and incorporated by reference herein. See “Where You Can Find More Information” in this prospectus supplement. 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 into this prospectus supplement or the accompanying base prospectus 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 and the accompanying base prospectus contain and incorporate by reference certain market data and industry statistics and forecasts that are based on Company-sponsored studies, independent industry publications and other publicly available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have not verified any of this data. Further, many of these statements involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk Factors” in this prospectus supplement and the accompanying base prospectus and under similar headings in the documents incorporated by reference herein and therein. Accordingly, investors should not place undue reliance on this information.
Unless otherwise stated or the context requires otherwise, all references in this prospectus supplement to the “Company,” “we,” “us,” “our” and “Imprimis” refer to Imprimis Pharmaceuticals, Inc., a Delaware corporation, and its consolidated subsidiaries. We own the registered trademarks or trademark applications for Imprimis®, ImprimisRx®, Imprimis Pharmaceuticals™, Imprimis Cares!™, SSP Technology™, Go Dropless™, LessDrops®, Dropless™, Dropless Cataract Surgery™, Dropless Cataract Therapy™, Dropless Therapy®, Defeat IC™, HLA Therapy™, Triple Drop™, PPS-DR™, Trimix-LP™, Stericheck™, Trimoxi™, Pred-Moxi™, Pred-Moxi-Ketor™, Pred-Moxi-Brom™, Pred-Ketor™, Dex-Moxi ™, Combination Drop Therapy™, Compounded Alternative™, Compounded Choice™, Custom Compounding Choice™ and ED Free™. All other trademarks, trade names and service marks included or incorporated by reference into this prospectus supplement, the accompanying base prospectus and any applicable free writing prospectus are the property of their respective owners.
Additionally, unless otherwise stated or the context requires otherwise, all information in this prospectus supplement assumes that the option to purchase up to 435,000 additional shares of common stock that we have granted to the underwriters is not exercised.
| S-i |
This prospectus summary highlights information contained elsewhere in this prospectus supplement, the accompanying base prospectus and the documents incorporated by reference herein and therein. This summary 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 base prospectus carefully, including the section entitled “Risk Factors” beginning on page S-5 and our consolidated financial statements and the related notes and the other information incorporated by reference into this prospectus supplement and the accompanying base prospectus, before making an investment decision.
Imprimis Pharmaceuticals, Inc.
Our Company
We are a national leader in the development, production and dispensing of innovative proprietary compounded pharmaceuticals that we aim to make available to physicians and patients at affordable prices. Under our Imprimis Cares™ program, we own, market and dispense a portfolio of lower-cost compounded therapeutic alternatives to higher-priced U.S. Food and Drug Administration (the “FDA”)-approved drugs in several therapeutic areas, including ophthalmology, urology, otolaryngology and infectious diseases. We believe our proprietary formulations may offer competitive advantages and serve unmet needs in the marketplace. Our proprietary ophthalmic compounded formulations, led by our Dropless Therapy® injectable and LessDrops® combination topical eye drops, compete in the multi-billion dollar market for ophthalmic antibiotic and anti-inflammatory drugs. These formulations, which are comprised of FDA-approved active pharmaceutical ingredients, are uniquely designed to address patient compliance issues and provide other medical and economic benefits to physicians and patients. Our urology business, led by our Defeat ICTM campaign, includes a patented compounded formulation for patients suffering from interstitial cystitis and customizable compounded formulations of pentosan polysulfate sodium delayed release (PPS-DR™) as a lower-cost therapeutic alternative to an off-patent oral drug, Elmiron®. Our otolaryngology business includes topical compounded sinus formulations, delivery systems and patented packaging. We have also introduced lower-cost compounded therapeutic alternatives for Daraprim® and Thiola®, which are FDA-approved drugs that have recently experienced price increases. We plan to expand our Imprimis Cares program by introducing additional customizable compounded drug formulations for patient populations that may not have available alternatives to increasingly expensive FDA-approved medications. Our Imprimis Cares program aligns with our corporate mission, vision and values of providing physicians and their patients high-quality individualized compounded medications at accessible prices.
We are also developing our Custom Compounding Choice™ business, which is focused on developing and dispensing a portfolio of non-proprietary compounded drugs for humans and animals in therapeutic areas that may be overlooked by commercial pharmaceutical companies. We also offer customizable compounding products that consist of sterile injectable and non-sterile integrative medicine therapies that are used in various therapeutic areas, including oncology, autoimmunity, chronic infectious diseases and endocrine and metabolic diseases.
We own four compounding pharmacies, based in New Jersey, California, Texas and Pennsylvania, through which we make, dispense and sell our proprietary compounded formulations and other non-proprietary products. In this prospectus supplement, we refer to each of our compounding pharmacies as an “ImprimisRx compounding pharmacy.”
All of our proprietary compounded formulations are born from the clinical experience of a network of inventors, including physician prescribers, clinical researchers and pharmacist formulators, who develop and prescribe customized medicines for individual patient needs. We pursue a development pathway for potential formulation candidates that involves working collaboratively with these inventors to identify and evaluate intellectual property related to the formulation, assess relevant markets for the formulation, and seek to validate the clinical experience relating to the formulation with the objective of investing in commercialization activities. Although our business is focused on a compounding commercialization strategy, we may also consider other commercialization pathways, including pursuing FDA approval to market and sell a drug formulation or technology.
We have incurred recurring operating losses and have had negative operating cash flows since our inception on July 24, 1998. In addition, we have an accumulated deficit of approximately $53 million at September 30, 2015. Beginning on April 1, 2014, when we acquired our first ImprimisRx compounding pharmacy, we began generating revenue from sales by our pharmacies of certain of our proprietary drug formulations and other non-proprietary formulations; however, we expect to incur further losses as we integrate and develop our pharmacy operations, evaluate other programs and continue the development of our formulations.
|
| S-1 |
Recent Developments
Preliminary Financial Results for the Quarter and Year Ended December 31, 2015
We recently completed our 2015 fiscal year. Based on available information as of the date of this prospectus supplement, we estimate that, for the quarter ended December 31, 2015, our revenue will be approximately $3.5 million, our net loss will be between $4.7 million and $5.1 million, and adjusted EBITDA will be a loss between $2.5 million and $2.9 million, and for the year ended December 31, 2015, our revenue will be approximately $9.7 million and our net loss will be between $15.5 million and $15.9 million. All estimated results disclosed herein are preliminary, are subject to the completion of the audit of our December 31, 2015 consolidated financial statements, and are not necessarily indicative of the results to be expected for future periods.
In addition to our results of operations determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), such as revenue and net loss, management also utilizes adjusted EBITDA, an unaudited financial measure that is not calculated in accordance with GAAP, to evaluate our financial results and performance and to plan and forecast future periods. Adjusted EBITDA is considered a “non-GAAP” financial measure within the meaning of Regulation G promulgated by the SEC. Management believes that this non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting its business. Management believes adjusted EBITDA provides meaningful supplemental information regarding our performance because (i) it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making; (ii) it excludes the impact of non-cash or, when specified, non-recurring items that are not directly attributable to our core operating performance and that may obscure trends in our core operating performance; and (iii) it is used by institutional investors and the analyst community to help analyze our results. However, adjusted EBITDA should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Further, non-GAAP financial measures we use and the manner in which we calculate them may differ from the non-GAAP financial measures or the calculations of the same non-GAAP financial measures used by other companies, including our competitors.
We define adjusted EBITDA as net income (loss) excluding the effects of interest, taxes, depreciation, amortization, stock-based compensation, other income (expense) and, if any and when specified, non-recurring income or expense items. We believe that the most directly comparable GAAP financial measure to adjusted EBITDA is net loss. Adjusted EBITDA has limitations and should not be considered as an alternative to gross profit or net loss as a measure of operating performance or to net cash provided by (used in) operating, investing or financing activities as a measure of ability to meet cash needs.
The following is a reconciliation of estimated adjusted EBITDA, a non-GAAP measure, to the most comparable GAAP measure, net loss, for the three months ended December 31, 2015 (in thousands):
|
| Net loss | $ | (4,700) to (5,100) | ||||
| Stock-based compensation | 1,120 | |||||
| Depreciation | 80 | |||||
| Amortization | 90 | |||||
| Interest (income) expense, net | 430 | |||||
| Other (income) expense, net | - | |||||
| Income taxes | - | |||||
| Non-recurring expense(1) | 440 | |||||
| Adjusted EBITDA | $ | (2,540) to (2,940) |
| | ||
| (1) | Non-recurring expense items included certain offering-related expenses, certain expenses related to our acquisition of our Pennsylvania compounding pharmacy, and expenses related to restructuring our sales and marketing departments, including severance expenses. | |
| S-2 |
Introduction of Alternatives to FDA-Approved Thiola® and Daraprim®
As part of our Imprimis Cares initiative, in February 2016 we introduced new patent-pending tiopronin and potassium citrate delayed release compounded formulations that may be prescribed by physicians as a lower-cost therapeutic alternative to FDA-approved Thiola®, which is commonly prescribed for the prevention of cystine kidney stone formation in patients who do not respond to dietary changes and increased fluids. This follows our October 2015 introduction of a customizable compounded formulation of pyrimethamine and leucovorin available for physicians to consider prescribing for their patients as a lower-cost therapeutic alternative to FDA-approved Daraprim®, which is commonly prescribed for toxoplasmosis. We have also introduced customizable compounded formulations of pentosan polysulfate sodium delayed release (PPS-DR™) for physicians to consider prescribing for interstitial cystitis patients as a lower-cost therapeutic alternative to an off-patent oral drug, Elmiron®. |
Development of Outsourcing Facilities
As previously disclosed, we have commenced construction to build our New Jersey-based and our Texas-based ImprimisRx compounding pharmacies into outsourcing facilities under Section 503B of the U.S. Food Drug and Cosmetic Act, which are required to be registered with the FDA. These facilities must comply with certain specified requirements, including adherence to current good manufacturing practices, and are permitted to compound large quantities of certain sterile drug formulations without a prescription and distribute these formulations out-of-state without limitation. From time to time during the construction process, we have experienced temporary and intermittent delays in developing these facilities into outsourcing facilities, and we expect them to be registered as outsourcing facilities near the beginning of the second quarter of 2016 for our Texas-based ImprimisRx compounding pharmacy and near the end of the second quarter of 2016 for our New Jersey-based ImprimisRx compounding pharmacy. Further, we have incurred and expect to continue to incur greater than anticipated expenses developing these facilities into outsourcing facilities. We currently estimate that our capital expenditures to build and equip these outsourcing facilities will be approximately $4 million.
Corporate Information
Our principal executive offices are located at 12264 El Camino Real, Suite 350, San Diego, California 92130 and our telephone number at such offices is (858) 704-4040. Our website address is www.imprimispharma.com. Information contained on our website is not part of this prospectus supplement.
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| S-3 |
| The Offering |
| The following is a brief summary of some of the terms of the offering and is qualified in its entirety by reference to the more detailed information appearing elsewhere in this prospectus supplement and the accompanying base prospectus. For a more complete description of the terms of our common stock, see “Description of Our Capital Stock” in the accompanying base prospectus. |
| Common stock offered by us | 2,900,000 shares of our common stock (3,335,000 shares if the underwriters exercise their over-allotment option in full). | |||
| Offering price | $3.60 per share of common stock. | |||
| Common stock to be outstanding after this offering | 12,670,678 shares (13,105,678 shares if the underwriters exercise their over-allotment option in full). | |||
| Use of proceeds | We estimate that our net proceeds from this offering will be approximately $9,650,000 (or approximately $11,100,000 if the underwriters exercise their over-allotment option in full), after deducting the underwriting discount and the estimated offering expenses payable by us. We expect to use the net proceeds from this offering for working capital and general corporate purposes, which will include, among other things, expenditures associated with our efforts to develop our compounding pharmacies in Texas and New Jersey into outsourcing facilities. See “Use of Proceeds” on page S-11. | |||
| Risk factors | Investing in our common stock involves significant risks. See “Risk Factors” beginning on page S-5 and the other information included or incorporated by reference in this prospectus supplement and the accompanying base prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock. | |||
| NASDAQ Capital Market symbol | “IMMY” | |||
The number of shares of our common stock expected to be outstanding after this offering is based on 9,770,678 shares of common stock outstanding as of February 29, 2016, and excludes the following: |
| ● | 1,542,376 shares of common stock issuable upon exercise of options outstanding as of February 29, 2016, which have a weighted average exercise price of $7.05 per share, of which 700,265 shares were exercisable as of February 29, 2016; | ||
| ● | 1,483,492 shares of common stock issuable upon the vesting of restricted stock units as of February 29, 2016; | ||
| ● | 1,340,029 shares of common stock reserved for issuance and available for future grant under our equity incentive plans as of February 29, 2016; | ||
| ● | 240,688 shares of common stock issuable upon exercise of warrants outstanding as of February 29, 2016, which have a weighted average exercise price of $6.40 per share and all of which were exercisable as of February 29, 2016. Pursuant to certain anti-dilution provisions in an outstanding warrant to purchase up to 125,000 of these shares of common stock, upon the closing of this offering, the exercise price of such warrant will adjust to $3.60 per share, the price per share to the public in this offering; and | ||
| ● | 508,475 shares of common stock issuable upon conversion of a convertible note outstanding as of February 29, 2016, which was convertible into shares of common stock at a conversion price of $5.90 per share as of February 29, 2016. Pursuant to certain anti-dilution provisions in the convertible note, upon the closing of this offering, the conversion price of the convertible note will adjust to $3.60 per share, the price per share to the public in this offering, and 833,333 shares of common stock will be issuable upon conversion of the convertible note. | ||
| S-4 |
Investing in our common stock involves a high degree of risk. Before purchasing our common stock, you should read and consider carefully the following risk factors as well as all other information contained and incorporated by reference in this prospectus supplement and the accompanying base prospectus, including our consolidated financial statements and the related notes. Each of these risk factors, either alone or taken together, could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock. There may be additional risks that we do not presently know of or that we currently believe are immaterial, which could also impair our business and financial position. If any of the events described below were to occur, our financial condition, our ability to access capital resources, our results of operations and/or our future growth prospects could be materially and adversely affected and the market price of our common stock could decline. As a result, you could lose some or all of any investment you may make in our common stock.
Risks Related to This Offering and Our Common Stock
You will experience immediate dilution in the book value per share of the common stock you purchase.
Because the price per share of our common stock being offered is substantially higher than the book value per share of our common stock, you will suffer substantial dilution in the net tangible book value of the common stock you purchase in this offering. If you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution of $3.02 per share in the net tangible book value of the common stock you purchase in this offering. See “Dilution” on page S-12 for a more detailed discussion of the dilution you will incur if you purchase shares of our common stock in this offering.
Our management will have broad discretion over the use of the net proceeds from this offering, and we may not use these proceeds effectively or in a manner with which you agree.
We currently anticipate using the net proceeds from this offering for working capital and general corporate purposes. We have not reserved or allocated amounts for specific purposes, and we cannot specify with certainty how or when we will use any of the net proceeds. Our management will have broad discretion in the application of the net proceeds we receive from this offering, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used effectively or in a manner with which you agree. The net proceeds may be used for corporate purposes that do not increase our operating results or market value. Until the net proceeds are used, they may be placed in investments that do not produce income or that lose value.
A consistently active trading market for shares of our common stock may not be sustained.
Historically, trading in our common stock has been sporadic and volatile and our common stock has in the past been “thinly-traded.” There have been, and may in the future be, extended periods when trading activity in our shares is minimal, as compared to a seasoned issuer with a large and steady volume of trading activity. The market for our common stock is also characterized by significant price volatility compared to seasoned issuers, and we expect that such volatility may continue. As a result, the trading of relatively small quantities of shares may disproportionately influence the market price of our common stock. A consistently active and liquid trading market in our securities may never develop or be sustained.
Our stock price may be volatile.
The market price of our common stock has in the past been, and may in the future be, highly volatile and subject to wide fluctuations in response to various factors, many of which are beyond our control, including the following:
| ● | changes in the pharmacy and pharmaceutical industry and markets; | |
| ● | competitive pricing pressures; | |
| ● | our ability to obtain working capital financing when needed; | |
| ● | new competitors in our market; | |
| ● | additions or departures of key personnel; |
| S-5 |
| ● | limited “public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; | |
| ● | sales of our common stock by us or by stockholders; | |
| ● | our ability to execute our business plan; | |
| ● | operating results that fall below expectations; | |
| ● | loss of any material strategic relationships; | |
| ● | industry or regulatory developments; | |
| ● | economic and other external factors; and | |
| ● | the other risks affecting our business discussed in these risk factors and the other risk factors incorporated herein by reference. |
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on an investment will be limited to any appreciation in the value of our common stock.
We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. Any payment of dividends on our common stock would depend on any contractual restrictions, such as those contained in our May 2015 loan agreement and related January 2016 note purchase agreement and convertible note with IMMY Funding LLC, an affiliate of Life Sciences Alternative Funding LLC, as well as our earnings, financial condition and other business and economic factors as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
The sale of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could cause the market price of our common stock to fall. Such sales could occur upon the expiration of any statutory holding period, such as under Rule 144 under the Securities Act of 1933, as amended (the ”Securities Act”), applicable to outstanding shares, upon expiration of any lock-up periods applicable to outstanding shares, such as those described in this prospectus supplement under “Underwriting—Lock-Up,” upon our issuance of shares upon the exercise of outstanding options or warrants, or upon our issuance of shares pursuant to our Controlled Equity Offering™ sales agreement with Cantor Fitzgerald & Co. or any other offerings of our equity securities that we may elect to pursue, such as this offering. The availability for sale of a substantial number of shares of our common stock, whether or not sales have occurred or are occurring, also could make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future when needed, on acceptable terms or at all.
Because of their significant stock ownership, some of our existing stockholders are able to exert control over us and our significant corporate decisions.
Our executive officers and directors collectively own, or have the right to acquire within 60 days after March 11, 2016, approximately 18% of our common stock that would be outstanding following such issuances. In addition, four individual stockholders collectively own, or have the right to acquire within 60 days after March 11, 2016, an additional approximately 35% of our common stock that would be outstanding following such issuances. These persons, acting together, have the ability to exercise significant influence over or control the outcome of all matters submitted to our stockholders for approval, including the election and removal of directors and any significant transaction involving us, and to control our management and affairs. Additionally, since our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws permit our stockholders to act by written consent, a limited number of stockholders may approve stockholder actions without holding a meeting of stockholders. This concentration of ownership may harm the market price of our common stock by, among other things: delaying, deferring, or preventing a change in control of our Company or changes to our board of directors; impeding a merger, consolidation, takeover or other business combination involving our Company; causing us to enter into transactions or agreements that are not in the best interests of all stockholders; or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of our Company.
| S-6 |
We have the right to issue shares of preferred stock without obtaining stockholder approval. If we issue preferred stock, it may have rights, preferences and privileges superior to those of our common stock.
We are authorized to issue 5,000,000 shares of “blank check” preferred stock, with such rights, preferences and privileges as may be determined from time to time by our board of directors. Although we have no shares of preferred stock issued and outstanding and we have no immediate plans to issue shares of preferred stock, our board of directors is empowered, without stockholder approval, to issue preferred stock at any time in one or more series and to fix the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights and other rights, preferences and privileges for any series of our preferred stock that may be issued. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred stock, could reduce the voting rights and powers of our common stockholders and the portion of our assets allocated for distribution to our common stockholders in a liquidation event, and could also result in dilution to the book value per share of our common stock. The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of our Company.
Risks Related to our Business
Our business is subject to numerous risks.
Our business is subject to numerous risks, all of which you should consider carefully before making a decision to invest in our common stock. These risks include, among others, those listed below, which are more fully described in the reports we periodically file with the SEC and which are incorporated herein by reference. See “Incorporation of Certain Documents by Reference” and “Where You Can Find More Information” in this prospectus supplement for further information.
| ● | We have incurred losses in every year of our operations and we may never become profitable. | |
| ● | We aim to sell certain of our proprietary formulations primarily through a unified network of compounding pharmacies. To pursue this goal, we have acquired our four ImprimisRx compounding pharmacies and we have commenced construction efforts on two of these pharmacies, our Texas- and New Jersey-based facilities, in order for these locations to satisfy the requirements to register with the FDA as outsourcing facilities, although we have experienced delays and increased costs in these construction efforts. In spite of our efforts, we may not be successful in developing these facilities into outsourcing facilities, integrating our compounding pharmacies into our operations, or otherwise establishing a unified network of compounding pharmacies, which could materially harm our business plans and our prospects. | |
| ● | We have limited experience commercializing our formulations or acquiring, building or operating compounding pharmacies or other prescription dispensing facilities. We have only been pursuing our business as a pharmaceutical company since December 2011, and we have only been pursuing our focus on compounded formulations and compounding pharmacies since November 2013. | |
| ● | We are dependent on market acceptance of compounding pharmacies and compounded formulations, which contain FDA-approved ingredients but are not themselves approved by the FDA. As a result, physicians may be unwilling to prescribe, and patients may be unwilling to use, our proprietary customizable compounded formulations. | |
| ● | We may not receive sufficient revenue through our ImprimisRx compounding pharmacies or other compounding pharmacies with which we may partner to fund our operations and recover our development costs. | |
| ● | Our compounding pharmacy business is significantly impacted by state and federal pharmacy, healthcare and other statutes and regulations, which may be costly to comply with and which are subject to change. |
| S-7 |
| ● | If our ImprimisRx compounding pharmacies or any other pharmacy or outsourcing facility with which we partner fails to comply with the Controlled Substances Act, the Food Drug and Cosmetic Act or state statutes and regulations, the pharmacy could be required to cease operations or become subject to restrictions that could adversely affect our business. | |
| ● | The pharmaceutical and pharmacy industries are highly competitive, and as a result there are many competitive risks related to marketing and selling our proprietary formulations and operating our compounding pharmacy business. | |
| ● | If a compounded drug formulation provided through our compounding services leads to patient injury or death or results in a product recall, we may be exposed to significant liabilities and reputational harm. | |
| ● | Our ability to generate revenues will be diminished if we fail to obtain acceptable prices or an adequate level of reimbursement from third-party payors. | |
| ● | If we do not successfully identify and acquire rights to potential formulations and successfully integrate them into our operations, our growth opportunities may be limited. | |
| ● | We may be unable to successfully develop and commercialize our proprietary formulations or any other assets we may acquire. | |
| ● | If we are unable to establish, train and maintain an effective sales and marketing infrastructure, we will not be able to commercialize our proprietary formulations successfully. | |
| ● | We have in the past and may in the future participate in strategic transactions that could impact our liquidity, increase our expenses and distract our management. | |
| ● | We have incurred significant indebtedness, including our $10 million loan agreement with and $3 million convertible note issued to IMMY Funding LLC, which will require substantial cash to service and which subjects us to certain financial requirements and business restrictions. | |
| ● | We may not be able to correctly estimate our future operating expenses or capital expenditures. For example, we have incurred and expect to continue to incur greater than anticipated expenses developing our Texas- and New Jersey-based pharmacy facilities into outsourcing facilities and registering them as such with the FDA. Our inability to correctly estimate our expenses could lead to cash shortfalls. | |
| ● | We may need additional capital in order to continue operating our business, and such additional funds may not be available when needed, on acceptable terms, or at all. | |
| ● | Our business and operations would suffer in the event of cybersecurity or other systems failures. | |
| ● | If we seek FDA approval to market and sell any of our proprietary formulations, we may be unable to demonstrate the necessary safety and efficacy to obtain such FDA approval. | |
| ● | Delays in the completion of, or the termination of, any clinical or non-clinical trials for any product candidates for which we may seek FDA approval could adversely affect our business. | |
| ● | Even if we successfully develop any product candidate into an FDA-approved drug, failure to comply with continuing federal and state regulations could result in the loss of approvals to market the drug. | |
| ● | If we are unable to protect our proprietary rights in the U.S. or abroad, we may not be able to prevent others from using our intellectual property, which may reduce the competitiveness and value of the related assets. | |
| ● | Our proprietary formulations and technologies could potentially conflict with the rights of others, which may result in legal actions or force us to alter our products, cease or limit our operations relating to the affected products, or seek to obtain a license in order to continue manufacturing the affected products, which may not be available on acceptable terms or at all. |
| S-8 |
| ● | If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. | |
| ● | We are dependent on our Chief Executive Officer, Mark L. Baum, for the continued growth and development of our Company. | |
| ● | If we are unable to attract and retain key personnel and outside consultants, we may be unable to maintain or expand our business. We depend upon consultants and other third party service providers for key aspects of our business, which we may be unable to sufficiently manage. |
| S-9 |
This prospectus supplement, the accompanying base prospectus and the documents we have filed with the SEC that are incorporated by reference herein and therein contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the ”Exchange Act”). In addition, from time to time we or our representatives have made or will make forward-looking statements in various other filings that we make with the SEC or in other documents, including press releases or other similar announcements. Forward-looking statements concern our current plans, intentions, beliefs, expectations and statements of future economic performance. Statements containing terms such as “will,” “may,” “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate” and other phrases of similar meaning are considered to be forward-looking statements.
Forward-looking statements are based on our assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those reflected in or implied by these forward-looking statements. Factors that might cause actual results to differ include, among others, those set forth under “Risk Factors” in this prospectus supplement and those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and in our future periodic reports filed with the SEC, all of which are incorporated by reference herein. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this prospectus supplement, the accompanying base prospectus or the documents we have filed with the SEC that are incorporated by reference herein and therein, which reflect management’s views and opinions only as of their respective dates. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements, except to the extent required by applicable securities laws. You are advised, however, to consult any additional disclosures we have made or will make in the filings we make with the SEC, including reports on Forms 10-K, 10-Q and 8-K. All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this prospectus supplement, the accompanying base prospectus or any related issuer free writing prospectus.
| S-10 |
We estimate that our net proceeds from this offering will be approximately $9,650,000 (or approximately $11,100,000 if the underwriters exercise their over-allotment option in full), after deducting the underwriting discount and estimated offering expenses payable by us.
We expect to use the net proceeds from this offering for working capital and general corporate purposes, which may include, among other things, expenditures associated with our efforts to develop our compounding pharmacies in Texas and New Jersey into outsourcing facilities. We may also decide to use a portion of any net proceeds for other purposes, including the potential acquisition of, or investment in, product candidates, technologies, formulations or companies that complement our business, although we have no current understandings, commitments, or agreements to do so. This represents our best estimate of the manner in which we will use the net proceeds we receive from this offering based upon the current status of our business, but we have not reserved or allocated amounts for specific purposes and we cannot specify with certainty how or when we will use any of the net proceeds. Amounts and timing of our actual expenditures will depend on numerous factors, including our pharmacy development and formulation commercialization efforts, as well as the amount of cash we use in our operations. Our management will have broad discretion in applying the net proceeds from this offering.
Until the funds are used, we intend to invest the net proceeds from this offering in interest-bearing money market accounts.
| S-11 |
If you invest in our common stock, you will experience immediate dilution to the extent of the difference between the price per share you pay in this offering and the net tangible book value per share of our common stock after this offering.
Our net tangible book value (deficit) as of September 30, 2015 was approximately $(2,345,000), or approximately $(0.24) per share. Net tangible book value (deficit) is determined by subtracting our total liabilities from our total tangible assets, and net tangible book value (deficit) per share is determined by dividing our net tangible book value (deficit) by the number of outstanding shares of our common stock. After giving effect to the sale of 2,900,000 shares of our common stock in this offering at the public offering price of $3.60 per share, and after deducting the underwriting discount and estimated offering expenses payable by us, our adjusted net tangible book value (deficit) as of September 30, 2015 would have been approximately $7,305,000, or approximately $0.58 per share. This represents an immediate increase in net tangible book value (deficit) of approximately $0.82 per share to our existing stockholders and an immediate dilution in net tangible book value (deficit) of approximately $3.02 per share to investors participating in this offering. The following table illustrates this calculation on a per share basis:
| Public offering price per share of common stock | $ | 3.60 | ||||
| Net tangible book value (deficit) per share as of September 30, 2015 | $ | (0.24 | ) | |||
| Increase per share attributable to investors participating in this offering | $ | 0.82 | ||||
| Adjusted net tangible book value (deficit) per share after giving effect to this offering | $ | 0.58 | ||||
| Dilution per share to investors participating in this offering | $ | 3.02 |
If the underwriters exercise in full their option to purchase an additional 435,000 shares of common stock at the public offering price of $3.60 per share, our adjusted net tangible book value (deficit) as of September 30, 2015, after giving effect to this offering, would have been approximately $0.67 per share, representing an increase in net tangible book value (deficit) of approximately $0.91 per share to existing stockholders and immediate dilution in net tangible book value (deficit) of approximately $2.93 per share to investors participating in this offering.
The above discussion and table are based on 9,681,646 shares of common stock issued and outstanding as of September 30, 2015 and exclude:
| ● | 1,563,213 shares of common stock issuable upon exercise of options outstanding as of September 30, 2015, which have a weighted average exercise price of $7.05 per share, of which 613,121 shares were exercisable as of September 30, 2015; | |
| ● | 1,498,237 shares of common stock issuable upon the vesting of restricted stock units as of September 30, 2015; | |
| ● | 1,334,192 shares of common stock reserved for issuance and available for future grant under our equity incentive plans as of September 30, 2015; and | |
| ● | 240,688 shares of common stock issuable upon exercise of warrants outstanding as of September 30, 2015, which have a weighted average exercise price of $7.41 per share, of which 240,688 shares were exercisable as of September 30, 2015. |
The above illustration of dilution per share to investors participating in this offering assumes no exercise of outstanding options or warrants to purchase our common stock and no vesting of outstanding restricted stock units. The exercise of outstanding options or warrants having an exercise price less than the offering price and the vesting of restricted stock units would increase dilution to investors participating in this offering. In addition, we may choose to raise additional capital depending on market conditions, our capital requirements and 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 our sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
| S-12 |
We have entered into an underwriting agreement with National Securities Corporation, as representative of the underwriters, pursuant to which the underwriters have agreed to purchase from us, severally and not jointly, an aggregate of 2,900,000 shares of our common stock to be sold in this offering, at the public offering price set forth on the cover page of this prospectus supplement, less the underwriting discount.
| Underwriter | Shares
of Common Stock |
|||
| National Securities Corporation | 2,320,000 | |||
| Sterne Agee CRT | 580,000 | |||
| Total | 2,900,000 |
We have agreed to indemnify the underwriters and their officers, directors, principals, employees, affiliates and shareholders against certain liabilities, including civil liabilities under the Securities Act resulting from this offering and to contribute to payments the underwriters may be required to make in respect of such liabilities.
The underwriters are offering the shares subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
The underwriters have advised us that they propose to initially offer the shares of common stock to the public at $3.60 per share. After the initial offering of the shares, the underwriters may from time to time vary the offering price and other selling terms.
Over-allotment Option to Purchase Additional Shares
We have granted to the underwriters an option to purchase up to 435,000 additional shares of common stock from us at the same price to the public, less the same underwriting discount, as set forth in the table on the cover page of this prospectus supplement. The underwriters may exercise this option any time during the 45-day period after the date of this prospectus supplement, but only to cover over-allotments, if any, including as described below.
Lock-Up
Each of our officers and directors have entered into a lock-up agreement with respect to shares of our common stock and other of our securities that they beneficially own, including securities that are convertible into shares of common stock and securities that are exchangeable or exercisable for shares of common stock. This means that, subject to certain exceptions, for a period of 120 days following the date of this prospectus supplement, such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent of National Securities Corporation. In addition, we have agreed, subject to certain exceptions, for a period of 120 days following the date of this prospectus supplement, not to offer, sell, pledge or otherwise dispose of shares of our common stock and other of our securities, including securities that are convertible into shares of common stock and securities that are exchangeable or exercisable for shares of common stock, without the prior written consent of National Securities Corporation.
Underwriters Discount and Expenses
The following table summarizes the per share underwriting discount to the public offering price of the shares offered pursuant to this prospectus supplement. These amounts are shown assuming both no exercise and full exercise of the over-allotment option. We have also agreed to pay up to $60,000 of the out-of-pocket fees and expenses of the underwriters, which include the fees and expenses of counsel to the underwriters, plus a non-accountable expense allowance in the amount of 50% of any underwriting compensation payable to Sterne Agee CRT in connection with the sale of the shares in this offering. The fees and expenses of the underwriters that we have agreed to reimburse are not included in the underwriting discount set forth in the table below. The underwriting discount was determined through arms’ length negotiations between us and the underwriters.
| S-13 |
| Total | ||||||||||||
| Per Share | Without Exercise of Option to Purchase Additional Common Shares | With Exercise of Option to Purchase Additional Common Shares | ||||||||||
| Underwriting discount for common stock to be paid by us | $ | 0.252 | $ | 730,800 | $ | 840,420 | ||||||
Notwithstanding the foregoing, we and the underwriters have agreed that the underwriters will only be entitled to a 3.0% discount (or $0.108 per share) for the participation of two investors with which we have a pre-existing relationship.
We estimate that the total expenses of the offering, excluding the underwriting discount, will be approximately $180,000 without the exercise of the over-allotment option and $190,000 assuming the full exercise of the over-allotment option. This includes $60,000 of the out-of-pocket fees and expenses of the underwriters, plus a non-accountable expense allowance in the amount of 50% of any underwriting compensation payable to Sterne Agee CRT in connection with the sale of the shares in this offering. These expenses are payable by us.
After deducting fees due to the underwriters and our estimated offering expenses, we expect our net proceeds from this offering to be approximately $9,650,000 without the exercise of the over-allotment option and $11,100,000 assuming the full exercise of the over-allotment option.
Stabilization
To facilitate the offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock during and after the offering. Specifically, the underwriters may over-allot or otherwise create a short position in the common stock for their own account by selling more shares of common stock than have been sold to them by us. The underwriters may elect to cover any such short position by purchasing shares of common stock in the open market or by exercising the over-allotment option granted to the underwriters. In addition, the underwriters may stabilize or maintain the price of the common stock by bidding for or purchasing shares of common stock in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to broker-dealers participating in the offering are reclaimed if shares of common stock previously distributed in the offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of the common stock at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of the common stock to the extent that it discourages resales of the common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on the NASDAQ Capital Market, or otherwise and, if commenced, may be discontinued at any time. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our common stock.
Passive Market Making
In connection with this offering, the underwriters (and any dealers that are members of the selling group) may also engage in passive market making transactions in our common stock. Passive market making consists of displaying bids limited by the prices of independent market makers and effecting purchases limited by those prices in response to order flow. Rule 103 of Regulation M promulgated by the SEC limits the amount of net purchases that each passive market maker may make and the displayed size of each bid. Passive market making may stabilize the market price of our common stock at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Electronic Offer, Sale and Distribution of Shares
A prospectus supplement in electronic format may be made available on the websites maintained by the underwriters and the underwriters may distribute prospectuses electronically. In those cases, prospective investors may view offering terms and a prospectus online and place orders online or through their financial advisors. Other than the prospectus in electronic format, the information on these websites is not part of this prospectus supplement, the accompanying prospectus or the registration statement of which this prospectus supplement and the accompanying prospectus form a part, has not been approved or endorsed by us or the underwriters, and should not be relied upon by investors.
| S-14 |
Other Relationships with the Underwriters
From time to time in the ordinary course of business, the underwriters and their respective affiliates may in the future perform various commercial banking, financial advisory, investment banking and other financial services for us for which it will receive customary fees and reimbursement of expenses.
Offer Restrictions Outside the United States
Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus supplement in any jurisdiction where action for that purpose is required. The securities offered by this prospectus supplement may not be offered or sold, directly or indirectly, nor may this prospectus supplement or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus supplement comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus supplement. This prospectus supplement does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus supplement in any jurisdiction in which such an offer or a solicitation is unlawful.
| S-15 |
The validity of the securities offered by this prospectus supplement will be passed upon for us by Golenbock Eiseman Assor Bell & Peskoe LLP, New York, New York. Greenberg Traurig, LLP, Irvine, California, is acting as counsel for the representative of the underwriters in connection with this offering.
The consolidated financial statements of Imprimis Pharmaceuticals, Inc. and its subsidiary included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 have been audited by KMJ Corbin & Company LLP, an independent registered public accounting firm, as stated in their report which is incorporated by reference herein, and has been so incorporated in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with it. This means that we can disclose important information to you in this prospectus by referring you to another document. The information incorporated by reference herein is considered to be a part of this prospectus supplement. We incorporate by reference the documents listed below that we have previously filed with the SEC (excluding any portions of any document that are not deemed “filed” pursuant to the General Instructions of Form 8-K):
| ● | our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC on March 12, 2015 (and any portions of our Definitive Proxy Statement on Schedule 14A filed on April 10, 2015 that are incorporated by reference into such Annual Report on Form 10-K); | |
| ● | our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015, June 30, 2015 and September 30, 2015 filed with the SEC on May 13, 2015, August 12, 2015, and November 12, 2015, respectively; | |
| ● | our Current Reports on Form 8-K filed with the SEC on January 5, 2015, January 6, 2015, February 2, 2015, May 12, 2015, May 15, 2015, July 16, 2015, August 5, 2015, August 12, 2015, September 2, 2015, September 29, 2015, October 20, 2015, November 27, 2015, December 28, 2015, January 25, 2016, and March 11, 2016, and the amendments to our Current Reports on Form 8-K filed with the SEC on March 12, 2015 and August 6, 2015; and | |
| ● | the description of our common stock contained in our Registration Statement on Form 8-A filed with the SEC on February 7, 2013, including any amendments or reports filed for the purpose of updating such description. |
We also incorporate by reference into this prospectus supplement additional documents that we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the completion or termination of the offering, but excluding any information deemed furnished and not filed with the SEC. Any statement contained in a previously filed document is deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or in a subsequently filed document incorporated by reference herein modifies or supersedes the statement.
We will provide without charge to each person, including any beneficial owner, to whom a prospectus supplement is delivered, upon written or oral request of that person, a copy of any or all of the documents we are incorporating by reference into this prospectus supplement, other than exhibits to those documents unless such exhibits are specifically incorporated by reference into those documents. Such written requests should be addressed to:
Imprimis
Pharmaceuticals, Inc.
12264 El Camino Real, Suite 350
San Diego, CA 92130
Attention: Investor Relations.
You may also make such requests by contacting us at (858) 704-4040.
| S-16 |
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the Securities Act (SEC File No. 333-198675) that registers the securities offered hereby. The registration statement, including the exhibits and schedules attached thereto and the information incorporated by reference therein, contains additional relevant information about the securities and our Company, which we are allowed to omit from this prospectus supplement pursuant to the rules and regulations of the SEC. In addition, we file annual, quarterly and current reports and proxy statements and other information with the SEC. You may read and copy any document that we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our SEC filings are also available on the SEC’s website at www.sec.gov. Copies of certain information filed by us with the SEC are also available on our website at www.imprimispharma.com. We have not incorporated by reference into this prospectus supplement the information on our website and it is not a part of this document.
| S-17 |
$75,000,000
IMPRIMIS PHARMACEUTICALS, INC.
By this prospectus, we may offer, from time to time:
| ● Common stock | |
| ● Preferred stock | |
| ● Depositary shares | |
| ● Warrants | |
| ● Debt securities |
All of the securities listed above may be sold separately or as units with other securities.
This prospectus may not be used to sell securities unless accompanied by a prospectus supplement, which will describe the method and the terms of the offering. We will provide you with specific amount, price and terms of the applicable offered securities in one or more supplements to this prospectus. You should read this prospectus and any supplement carefully before you purchase any of our securities.
Our common stock is listed on the Nasdaq Capital Market (“NASDAQCM”) under the symbol “IMMY.” On September 18, 2014, the closing price of our common stock on the NASDAQCM was $8.22 per share.
Investing in our securities involves risk. Please carefully read the information under “Risk Factors” beginning on page 3 for information you should consider before investing in our securities.
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.
We may offer the securities in amounts, at prices and on terms determined at the time of offering. We may sell the securities directly to you, through agents we select, or through underwriters and dealers we select. If we use agents, underwriters or dealers to sell the securities, we will name them and describe their compensation in a prospectus supplement. In addition, the underwriters may overallot a portion of the securities. For additional information regarding the methods of sale of our securities, you should refer to the section entitled “Plan of Distribution” in this prospectus.
This prospectus is dated September 29, 2014
Table of Contents
| i |
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process. Under this shelf process, we may, from time to time, offer or sell any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $75,000,000.
This prospectus provides you with a general description of the securities offered by us. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add to, update or change information contained in the prospectus and, accordingly, to the extent inconsistent, information in this prospectus is superseded by the information in the prospectus supplement.
The prospectus supplement to be attached to the front of this prospectus may describe, as applicable: the terms of the securities offered; the initial public offering price; the price paid for the securities; net proceeds; and the other specific terms related to the offering of the securities.
You should only rely on the information contained or incorporated by reference in this prospectus and any prospectus supplement or issuer free writing prospectus relating to a particular offering. No person has been authorized to give any information or make any representations in connection with this offering other than those contained or incorporated by reference in this prospectus, any accompanying prospectus supplement and any related issuer free writing prospectus in connection with the offering described herein and therein, and, if given or made, such information or representations must not be relied upon as having been authorized by us. Neither this prospectus nor any prospectus supplement nor any related issuer free writing prospectus shall constitute an offer to sell or a solicitation of an offer to buy offered securities in any jurisdiction in which it is unlawful for such person to make such an offering or solicitation. This prospectus does not contain all of the information included in the registration statement. For a more complete understanding of the offering of the securities, you should refer to the registration statement, including its exhibits. You should read the entire prospectus and any prospectus supplement and any related issuer free writing prospectus, as well as the documents incorporated by reference into this prospectus or any prospectus supplement or any related issuer free writing prospectus, before making an investment decision. Neither the delivery of this prospectus or any prospectus supplement or any issuer free writing prospectus nor any sale made hereunder shall under any circumstances imply that the information contained or incorporated by reference herein or in any prospectus supplement or issuer free writing prospectus is correct as of any date subsequent to the date hereof or of such prospectus supplement or issuer free writing prospectus, as applicable.
| ii |
The following summary highlights information contained in this prospectus or incorporated by reference. While we have included what we believe to be the most important information about the company and this offering, the following summary may not contain all the information that may be important to you. You should read this entire prospectus carefully, including the risks of investing discussed under “Risk Factors” beginning on page 3, the information to which we refer you and the information incorporated into this prospectus by reference, for a complete understanding of our business and this offering. References in this prospectus to “our company,” “we,” “our,” “Imprimis” and “us” refer to Imprimis Pharmaceuticals, Inc.
Imprimis Pharmaceuticals, Inc.
Overview
We are a vertically-integrated specialty pharmaceutical company focused on the development and commercialization of innovative proprietary sterile and topical drug formulations. We own proprietary formulations in ophthalmology, urology and wound management that we believe may offer competitive advantages over commercially available formulations or which serve substantially unmet needs in the marketplace. Although we hope to market and sell each of our proprietary drug formulations, we are currently focused on developing our proprietary ophthalmology formulation business. We also sell non-proprietary sterile and topical drug formulations. We fulfill prescription orders for our drug formulations through Pharmacy Creations, our New Jersey-based pharmacy, which is licensed to distribute our drug formulations in 32 states. We are in the process of expanding our prescription fulfillment and distribution capabilities with the goal of owning or otherwise having access to multiple facilities licensed in each of the 50 states in the United States. All of our proprietary drug formulations are born from the clinical experience of a network of inventors, including physician prescribers and pharmacist formulators, who prescribe and make customized medicines for individual patient needs. Working collaboratively with these inventors, we identify and evaluate intellectual property related to these drug formulations, assess relevant markets, and seek to validate the clinical experience of a development candidate outside of the inventor’s medical or pharmacy practice, with the objective of investing in commercialization activities. We believe our model allows us to meet the realities of the current health care economy by offering quality pharmaceutical innovation at accessible prices.
Historically, our business focused on developing, obtaining U.S. Food and Drug Administration (the “FDA”) market approval for, and commercializing our topical pain management product candidate, Impracor™. After considering the totality of circumstances surrounding the development of and clinical trial requirements for Impracor, including certain manufacturing and formulation issues that we previously reported, in November 2013, we announced our discontinuation of the planned Phase 3 clinical trial for Impracor. During our 2013 fiscal year, we began re-focusing our business plan away from the development of Impracor and toward our current formulation and technology development and compounding pharmacy business model.
We have incurred recurring operating losses, and have had negative operating cash flows since July 24, 1998 (inception). In addition, we have an accumulated deficit of approximately $36.7 million at June 30, 2014. Beginning on April 1, 2014 we began generating revenue from certain of our proprietary drug formulations and other pharmacy formulations; however we expect to incur further losses as we integrate and develop our new pharmacy operations, evaluate other programs and continue the development of our formulations.
Corporate Information
We were incorporated in Delaware in January 2006 as Bywater Resources, Inc. in order to conduct mineral exploration activities. We changed our name to Transdel Pharmaceuticals, Inc. on September 11, 2007. On September 17, 2007, Transdel Pharmaceuticals, Inc. entered into an Agreement of Merger and Plan of Reorganization (the “merger agreement”) by and among Transdel Pharmaceuticals, Inc., Transdel Pharmaceuticals Holdings, Inc., a privately held Nevada corporation (“Transdel Holdings”), and Trans-Pharma Acquisition Corp., a newly formed, wholly-owned Delaware subsidiary of Transdel Pharmaceuticals, Inc. (“Acquisition Sub”). Upon closing of the merger contemplated under the merger agreement, Acquisition Sub merged with and into Transdel Holdings. Transdel Holdings, as the surviving corporation, became our wholly-owned subsidiary, and the former owners of Transdel Holdings became our controlling stockholders. Upon completion of the merger, we began our operations as a specialty pharmaceutical company.
| 1 |
On June 26, 2011, we suspended our operations and filed a voluntary petition for reorganization relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of California (the “Bankruptcy Court”), Case No. 11-10497-11 (the “Chapter 11 Case”). On November 21, 2011, in connection with our entry into a line of credit agreement and securities purchase agreement with DermaStar International, LLC, we requested that the Bankruptcy Court dismiss the Chapter 11 Case. On December 8, 2011, the Bankruptcy Court entered an order dismissing the Chapter 11 Case.
On February 28, 2012, we changed our name to Imprimis Pharmaceuticals, Inc. and effected a one-for-eight reverse split of our issued and outstanding common stock, and on February 7, 2013 we effected a one-for-five reverse split of our issued and outstanding common stock.
Our common stock is currently traded on The NASDAQ Capital Market under the symbol IMMY. Our executive offices are located at 12264 El Camino Real, Suite 350, San Diego, CA 92130 and our telephone number at such office is (858) 704-4040. Our website address is www.imprimispharma.com. Information contained on our website is not deemed part of this prospectus.
The Securities We May Offer
We may offer up to $75.0 million of common stock, preferred stock, depositary shares, warrants and debt securities in one or more offerings and in any combination. This prospectus provides you with a general description of the securities we may offer. A prospectus supplement, which we will provide each time we offer securities, will describe the specific amounts, prices and terms of these securities.
We may sell the securities to or through underwriters, dealers or agents or directly to purchasers or as otherwise set forth below under “Plan of Distribution.” We, as well as any agents acting on our behalf, reserve the sole right to accept and to reject in whole or in part any proposed purchase of securities. Each prospectus supplement will set forth the names of any underwriters, dealers, agents or other entities involved in the sale of securities described in that prospectus supplement and any applicable fee, commission or discount arrangements with them.
Common Stock
We may offer shares of our common stock, par value $0.001 per share, either alone or underlying other registered securities convertible into our common stock. Holders of our common stock are entitled to receive dividends declared by our board of directors out of funds legally available for the payment of dividends, subject to rights, if any, of preferred stockholders. Currently, we do not pay a dividend. Each holder of common stock is entitled to one vote per share. The holders of common stock have no preemptive rights.
Preferred Stock and Depositary Shares
We may issue preferred stock in one or more series. Our board of directors or a committee designated by the board will determine the dividend, voting and conversion rights and other provisions at the time of sale. Each series of preferred stock will be more fully described in the particular prospectus supplement that will accompany this prospectus, including redemption provisions, rights in the event of liquidation, dissolution or the winding up of Imprimis Pharmaceuticals, Inc., voting rights and rights to convert into common stock. We may also issue fractional shares of preferred stock that will be represented by depositary shares and depositary receipts. Each particular series of depositary shares will be more fully described in the prospectus supplement that will accompany this prospectus.
Warrants
We may issue warrants for the purchase of common stock, preferred stock or debt securities. We may issue warrants independently or together with other securities.
Debt Securities
We may offer secured or unsecured obligations in the form of one or more series of senior or subordinated debt. The senior debt securities and the subordinated debt securities are together referred to in this prospectus as the “debt securities.” The senior debt securities will have the same rank as all of our other unsubordinated debt. The subordinated debt securities generally will be entitled to payment only after payment of our senior debt. Senior debt generally includes all debt for money borrowed by us, except debt that is stated in the instrument governing the terms of that debt to be not senior to, or to have the same rank in right of payment as, or to be expressly junior to, the subordinated debt securities. We may issue debt securities that are convertible into shares of our common stock.
The senior and subordinated debt securities will be issued under separate indentures between us and a trustee. We have summarized the general features of the debt securities to be governed by the indentures. These indentures have been filed as exhibits to the registration statement of which this prospectus forms a part. We encourage you to read these indentures. Instructions on how you can get copies of these documents are provided under the heading “Where You Can Find More Information.”
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An investment in our securities involves a high degree of risk. The prospectus supplement applicable to each offering of our securities will contain a discussion of the risks applicable to an investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors” in the applicable prospectus supplement, together with all of the other information contained or incorporated by reference in the prospectus supplement or appearing or incorporated by reference in this prospectus. Each of the referenced risks and uncertainties could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our securities.
This prospectus and the registration statement of which it forms a part, any prospectus supplement, any related issuer free writing prospectus and the documents incorporated by reference into these documents contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements deal with our current plans, intentions, beliefs and expectations and statements of future economic performance. Statements containing terms such as “believe,” “do not believe,” “plan,” “expect,” “intend,” “estimate,” “anticipate” and other phrases of similar meaning are considered to contain uncertainty and are forward-looking statements. In addition, from time to time we or our representatives have made or will make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in various filings that we make with the SEC, or press releases or oral statements made by or with the approval of one of our authorized executive officers. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our most recent Annual Report on Form 10-K and in our future filings made with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this prospectus, any prospectus supplement or any related issuer free writing prospectus, which reflect management’s opinions only as of their respective dates. Except as required by law, we undertake no obligation to revise or publicly release the results of any revisions to any forward-looking statements. You are advised, however, to consult any additional disclosures we have made or will make in our reports to the SEC on Forms 10-K, 10-Q and 8-K. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this prospectus, any prospectus supplement or any related issuer free writing prospectus.
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We will set forth in a prospectus supplement the following information regarding any material dilution of the equity interests of investors purchasing securities in an offering under this prospectus:
| ● | the net tangible book value per share of our equity securities before and after the offering; | |
| ● | the amount of the increase in such net tangible book value per share attributable to the cash payments made by purchasers in the offering; and | |
| ● | the amount of the immediate dilution from the public offering price which will be absorbed by such purchasers. |
Unless otherwise indicated in the prospectus supplement, the net proceeds from the sale of securities offered by this prospectus will be used for general corporate purposes and working capital requirements, which may include, among other things, the repayment or repurchase of debt obligations and other capital expenditures. We may also use a portion of the net proceeds for licensing or acquiring intellectual property or technologies to incorporate into our products and product candidates or our research and development programs, capital expenditures, to fund possible investments in and acquisitions of complementary businesses or partnerships. We have not determined the amounts we plan to spend on the areas listed above or the timing of these expenditures, and we have no current plans with respect to acquisitions as of the date of this prospectus. As a result, unless otherwise indicated in the prospectus supplement, our management will have broad discretion to allocate the net proceeds of the offerings. Pending their ultimate use, we intend to invest the net proceeds in a variety of securities, including commercial paper, government and non-government debt securities and/or money market funds that invest in such securities.
We have never paid cash dividends on our common stock. Moreover, we do not anticipate paying periodic cash dividends on our common stock for the foreseeable future. We intend to use all available cash and liquid assets in the operation and growth of our business. Any future determination about the payment of dividends will be made at the discretion of our board of directors and will depend upon our earnings, if any, capital requirements, operating and financial conditions and on such other factors as our board of directors deems relevant.
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The following is a summary of the rights of our common and preferred stock and of certain provisions of our Amended and Restated Certificate of Incorporation and Bylaws. For more detailed information, please see our Amended and Restated Certificate of Incorporation and Bylaws, which are filed as exhibits to the registration statement of which this prospectus forms a part.
Our Amended and Restated Certificate of Incorporation provides for one class of common stock and authorizes the issuance of undesignated preferred stock, the rights, preferences and privileges of which may be designated from time to time by our Board of Directors. Our Board has designated 10 shares of preferred stock as Series A Convertible Preferred Stock.
Reverse Stock Splits
On February 28, 2012, we effected a one-for-eight reverse split of our issued and outstanding common stock, and on February 7, 2013 we amended our Certificate of Incorporation to effect a reverse split of our issued and outstanding common stock at a ratio of one-for-five.
Unless otherwise stated below, all information regarding share amounts of common stock and prices per share of common stock described below reflects the reverse stock splits.
Authorized Capital Stock
On February 28, 2012, we amended our Amended and Restated Certificate of Incorporation to, among other things, (i) increase the number of authorized shares of our capital stock to 400,000,000 and the number of authorized shares of common stock to 395,000,000 and (ii) effect a one for eight reverse stock split of our issued and outstanding common stock. On February 7, 2013, we further amended our Amended and Restated Certificate of Incorporation to effect a one for five reverse stock split of our issued and outstanding common stock. On September 10, 2014, we amended and restated our Certificate of Incorporation to decrease the number of authorized shares of our common stock from 395,000,000 to 90,000,000. Our authorized capital stock now consists of 95,000,000 shares, 90,000,000 of which are designated as common stock, par value $0.001 per share, and 5,000,000 of which are designated as preferred stock, par value $0.001 per share.
Capital Stock Issued and Outstanding
As of September 4, 2014, we had outstanding 9,173,304 shares of common stock held by 142 stockholders of record. In addition, as of June 30, 2014, there are outstanding (i) options to acquire 1,314,467 shares of our common stock with a weighted average exercise price of $5.66 per share, all of which are held by current or former employees, directors and consultants, (ii) warrants to purchase 814,722 shares of common stock with a weighted average exercise price of $5.94 per share, and (iii) 1,289,960 restricted stock units.
Description of Common Stock
We are authorized to issue 90,000,000 shares of common stock, par value $0.001 per share. The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Our Amended and Restated Certificate of Incorporation does not provide for cumulative voting in the election of directors. Subject to any preferential rights of any outstanding series of preferred stock created by our Board of Directors from time to time the holders of our common stock will be entitled to cash dividends as may be declared, if any, by our Board of Directors from funds available. Subject to any preferential rights of any outstanding series of preferred stock that we may issue, upon liquidation, dissolution or winding up of our company, the holders of our common stock will be entitled to receive pro rata all assets available for distribution to the holders. There are no outstanding shares of our common stock that we have agreed to register under the Securities Act for sale by stockholders.
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Description of Preferred Stock
Undesignated Preferred Stock
Our Board of Directors has the authority, without further action by our stockholders, to issue up to 5,000,000 shares of preferred stock, par value $0.001 per share, in one or more series. Our Board of Directors may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms, and number of shares constituting any series and the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidation rights of our common stock, or delaying or preventing a change in control. The ability to issue preferred stock could delay or impede a change in control. As of the date of this prospectus and following the completion of this offering, no shares of preferred stock are outstanding and we currently have no plan to issue any shares of preferred stock.
Series A Convertible Preferred Stock
As of September 4, 2014, 10 shares of preferred stock have been designed as Series A Convertible Preferred Stock, none of which are issued and outstanding.
Anti-Takeover Provisions
We are subject to the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a ‘‘business combination’’ with an ‘‘interested stockholder’’ for a period of three years after the date of the transaction in which such stockholder became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a ‘‘business combination’’ includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an ‘‘interested stockholder’’ is a stockholder who, together with affiliates and associates, owns, or within three years prior, did own, 15% or more of the voting stock.
Liability and Indemnification of Directors and Officers
Section 145 of the DGCL provides, in general, that a corporation incorporated under the laws of the State of Delaware, such as us, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.
Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in the manner permitted by the provisions of the DGCL, as amended from time to time, subject to any permissible expansion or limitation of such indemnification, as may be set forth in any stockholders’ or directors’ resolution or by contract.
We also have director and officer indemnification agreements with each of our executive officers and directors that provide, among other things, for the indemnification to the fullest extent permitted or required by Delaware law, provided that such indemnitee shall not be entitled to indemnification in connection with any proceedings or claims initiated or brought voluntarily by the indemnitee and not by way of defense, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by our Board of Directors, (iii) indemnification is provided by us, in our sole discretion, pursuant to powers vested in us under the DGCL, or (iv) the proceeding is brought to establish or enforce a right to indemnification under the indemnification agreement or any other statute or law or otherwise as required under Section 145 of the DGCL. We are not required to indemnify the indemnitee for any amounts paid in settlement of a proceeding unless we consent to such settlement.
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Any repeal or modification of these provisions approved by our stockholders shall be prospective only, and shall not adversely affect any limitation on the liability of a director or officer existing as of the time of such repeal or modification.
We have purchased and intend to maintain insurance on our behalf and on behalf of any person who is or was a director or officer against any loss arising from any claim asserted against him or her and incurred by him or her in that capacity, subject to certain exclusions and limits of the amount of coverage.
Transfer Agent
The transfer agent and registrar for our common stock is Action Stock Transfer Corporation, 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT 84121.
DESCRIPTION OF THE DEPOSITARY SHARES
General
At our option, we may elect to offer fractional shares of preferred stock, rather than full shares of preferred stock. If we do elect to offer fractional shares of preferred stock, we will issue receipts for depositary shares and each of these depositary shares will represent a fraction of a share of a particular series of preferred stock, as specified in the applicable prospectus supplement. Each owner of a depositary share will be entitled, in proportion to the applicable fractional interest in shares of preferred stock underlying that depositary share, to all rights and preferences of the preferred stock underlying that depositary share. These rights may include dividend, voting, redemption and liquidation rights.
The shares of preferred stock underlying the depositary shares will be deposited with a bank or trust company selected by us to act as depositary, under a deposit agreement by and among us, the depositary and the holders of the depositary receipts. The depositary will be the transfer agent, registrar and dividend disbursing agent for the depositary shares.
The depositary shares will be evidenced by depositary receipts issued pursuant to the depositary agreement. Holders of depositary receipts agree to be bound by the deposit agreement, which requires holders to take certain actions such as filing proof of residence and paying certain charges.
The summary of terms of the depositary shares contained in this prospectus is not complete, and is subject to modification in any prospectus supplement for any issuance of depositary shares. You should refer to the forms of the deposit agreement, our amended and restated certificate of incorporation and the certificate of designation that are, or will be, filed with the SEC for the applicable series of preferred stock.
Dividends
The depositary will distribute cash dividends or other cash distributions, if any, received in respect of the series of preferred stock underlying the depositary shares to the record holders of depositary receipts in proportion to the number of depositary shares owned by those holders on the relevant record date. The relevant record date for depositary shares will be the same date as the record date for the preferred stock.
In the event of a distribution other than in cash, the depositary will distribute property received by it to the record holders of depositary receipts that are entitled to receive the distribution, unless the depositary determines that it is not feasible to make the distribution. If this occurs, the depositary, with our approval, may adopt another method for the distribution, including selling the property and distributing the net proceeds to the holders.
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Liquidation preference
If a series of preferred stock underlying the depositary shares has a liquidation preference, in the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of depositary shares will be entitled to receive the fraction of the liquidation preference accorded each share of the applicable series of preferred stock, as set forth in the applicable prospectus supplement.
Redemption
If a series of preferred stock underlying the depositary shares is subject to redemption, the depositary shares will be redeemed from the proceeds received by the depositary resulting from the redemption, in whole or in part, of the preferred stock held by the depositary. Whenever we redeem any preferred stock held by the depositary, the depositary will redeem, as of the same redemption date, the number of depositary shares representing the preferred stock so redeemed. The depositary will mail the notice of redemption to the record holders of the depositary receipts promptly upon receiving the notice from us and not fewer than 20 or more than 60 days, unless otherwise provided in the applicable prospectus supplement, prior to the date fixed for redemption of the preferred stock.
Voting
Upon receipt of notice of any meeting at which the holders of preferred stock are entitled to vote, the depositary will mail the information contained in the notice of meeting to the record holders of the depositary receipts underlying the preferred stock. Each record holder of those depositary receipts on the record date will be entitled to instruct the depositary as to the exercise of the voting rights pertaining to the amount of preferred stock underlying that holder’s depositary shares. The record date for the depositary will be the same date as the record date for the preferred stock. The depositary will, to the extent practicable, vote the preferred stock underlying the depositary shares in accordance with these instructions. We will agree to take all action that may be deemed necessary by the depositary in order to enable the depositary to vote the preferred stock in accordance with these instructions. The depositary will not vote the preferred stock to the extent that it does not receive specific instructions from the holders of depositary receipts.
Withdrawal of preferred stock
Owners of depositary shares will be entitled to receive upon surrender of depositary receipts at the principal office of the depositary and payment of any unpaid amount due to the depositary, the number of whole shares of preferred stock underlying their depositary shares.
Partial shares of preferred stock will not be issued. Holders of preferred stock will not be entitled to deposit the shares under the deposit agreement or to receive depositary receipts evidencing depositary shares for the preferred stock.
Amendment and termination of the deposit agreement
The form of depositary receipt evidencing the depositary shares and any provision of the deposit agreement may be amended by agreement between the depositary and us. However, any amendment which materially and adversely alters the rights of the holders of depositary shares, other than fee changes, will not be effective unless the amendment has been approved by at least a majority of the outstanding depositary shares. The deposit agreement may be terminated by the depositary or us only if:
| ● | all outstanding depositary shares have been redeemed; or | |
| ● | there has been a final distribution of the preferred stock in connection with our dissolution and such distribution has been made to all the holders of depositary shares. |
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Charges of depositary
We will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangement. We will also pay charges of the depositary in connection with:
| ● | the initial deposit of the preferred stock; | |
| ● | the initial issuance of the depositary shares; | |
| ● | any redemption of the preferred stock; and | |
| ● | all withdrawals of preferred stock by owners of depositary shares. |
Holders of depositary receipts will pay transfer, income and other taxes and governmental charges and other specified charges as provided in the deposit agreement for their accounts. If these charges have not been paid, the depositary may:
| ● | refuse to transfer depositary shares; | |
| ● | withhold dividends and distributions; and | |
| ● | sell the depositary shares evidenced by the depositary receipt. |
Miscellaneous
The depositary will forward to the holders of depositary receipts all reports and communications we deliver to the depositary that we are required to furnish to the holders of the preferred stock. In addition, the depositary will make available for inspection by holders of depositary receipts at the principal office of the depositary, and at such other places as it may from time to time deem advisable, any reports and communications we deliver to the depositary as the holder of preferred stock.
Neither the depositary nor we will be liable if either the depositary or we are prevented or delayed by law or any circumstance beyond the control of either the depositary or us in performing our respective obligations under the deposit agreement. Our obligations and the depositary’s obligations will be limited to the performance in good faith of our or the depositary’s respective duties under the deposit agreement. Neither the depositary nor we will be obligated to prosecute or defend any legal proceeding in respect of any depositary shares or preferred stock unless satisfactory indemnity is furnished. The depositary and we may rely on:
| ● | written advice of counsel or accountants; | |
| ● | information provided by holders of depositary receipts or other persons believed in good faith to be competent to give such information; and | |
| ● | documents believed to be genuine and to have been signed or presented by the proper party or parties. |
Resignation and removal of depositary
The depositary may resign at any time by delivering a notice to us. We may remove the depositary at any time. Any such resignation or removal will take effect upon the appointment of a successor depositary and its acceptance of such appointment. The successor depositary must be appointed within 60 days after delivery of the notice for resignation or removal. The successor depositary must be a bank and trust company having its principal office in the United States of America and having a combined capital and surplus of at least $50,000,000.
Federal income tax consequences
Owners of the depositary shares will be treated for U.S. federal income tax purposes as if they were owners of the preferred stock underlying the depositary shares. As a result, owners will be entitled to take into account for U.S. federal income tax purposes and deductions to which they would be entitled if they were holders of such preferred stock. No gain or loss will be recognized for U.S. federal income tax purposes upon the withdrawal of preferred stock in exchange for depositary shares. The tax basis of each share of preferred stock to an exchanging owner of depositary shares will, upon such exchange, be the same as the aggregate tax basis of the depositary shares exchanged. The holding period for preferred stock in the hands of an exchanging owner of depositary shares will include the period during which such person owned such depositary shares.
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General
We may issue warrants for the purchase of our debt securities, preferred stock or common stock, or any combination thereof. Warrants may be issued independently or together with our debt securities, preferred stock or common stock and may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with the warrants. The warrant agent will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. This summary of certain provisions of the warrants is not complete. For the terms of a particular series of warrants, you should refer to the prospectus supplement for that series of warrants and the warrant agreement for that particular series.
Debt warrants
The prospectus supplement relating to a particular issue of warrants to purchase debt securities will describe the terms of the debt warrants, including the following:
| ● | the title of the debt warrants; | |
| ● | the offering price for the debt warrants, if any; | |
| ● | the aggregate number of the debt warrants; | |
| ● | the designation and terms of the debt securities, including any conversion rights, purchasable upon exercise of the debt warrants; | |
| ● | if applicable, the date from and after which the debt warrants and any debt securities issued with them will be separately transferable; | |
| ● | the principal amount of debt securities that may be purchased upon exercise of a debt warrant and the exercise price for the warrants, which may be payable in cash, securities or other property; | |
| ● | the dates on which the right to exercise the debt warrants will commence and expire; | |
| ● | if applicable, the minimum or maximum amount of the debt warrants that may be exercised at any one time; | |
| ● | whether the debt warrants represented by the debt warrant certificates or debt securities that may be issued upon exercise of the debt warrants will be issued in registered or bearer form; | |
| ● | information with respect to book-entry procedures, if any; the currency or currency units in which the offering price, if any, and the exercise price are payable; | |
| ● | if applicable, a discussion of material U.S. federal income tax considerations; | |
| ● | the antidilution provisions of the debt warrants, if any; | |
| ● | the redemption or call provisions, if any, applicable to the debt warrants; | |
| ● | any provisions with respect to the holder’s right to require us to repurchase the warrants upon a change in control or similar event; and | |
| ● | any additional terms of the debt warrants, including procedures, and limitations relating to the exchange, exercise and settlement of the debt warrants. |
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Debt warrant certificates will be exchangeable for new debt warrant certificates of different denominations. Debt warrants may be exercised at the corporate trust office of the warrant agent or any other office indicated in the prospectus supplement. Prior to the exercise of their debt warrants, holders of debt warrants will not have any of the rights of holders of the debt securities purchasable upon exercise and will not be entitled to payment of principal or any premium, if any, or interest on the debt securities purchasable upon exercise.
Equity warrants
The prospectus supplement relating to a particular series of warrants to purchase our common stock or preferred stock will describe the terms of the warrants, including the following:
| ● | the title of the warrants; | |
| ● | the offering price for the warrants, if any; | |
| ● | the aggregate number of warrants; | |
| ● | the designation and terms of the common stock or preferred stock that may be purchased upon exercise of the warrants; | |
| ● | if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each security; | |
| ● | if applicable, the date from and after which the warrants and any securities issued with the warrants will be separately transferable; | |
| ● | the number of shares of common stock or preferred stock that may be purchased upon exercise of a warrant and the exercise price for the warrants; | |
| ● | the dates on which the right to exercise the warrants shall commence and expire; | |
| ● | if applicable, the minimum or maximum amount of the warrants that may be exercised at any one time; | |
| ● | the currency or currency units in which the offering price, if any, and the exercise price are payable; | |
| ● | if applicable, a discussion of material U.S. federal income tax considerations; | |
| ● | the antidilution provisions of the warrants, if any; | |
| ● | the redemption or call provisions, if any, applicable to the warrants; | |
| ● | any provisions with respect to the holder’s right to require us to repurchase the warrants upon a change in control or similar event; and | |
| ● | any additional terms of the warrants, including procedures, and limitations relating to the exchange, exercise and settlement of the warrants. |
Holders of equity warrants will not be entitled:
| ● | to vote, consent or receive dividends; | |
| ● | receive notice as stockholders with respect to any meeting of stockholders for the election of our directors or any other matter; or | |
| ● | exercise any rights as stockholders of us. |
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DESCRIPTION OF THE DEBT SECURITIES
The debt securities may be either secured or unsecured and will either be our senior debt securities or our subordinated debt securities. The debt securities will be issued under one or more separate indentures between us and a trustee to be specified in an accompanying prospectus supplement. Senior debt securities will be issued under a senior indenture and subordinated debt securities will be issued under a subordinated indenture. Together, the senior indenture and the subordinated indenture are called indentures in this description. This prospectus, together with the applicable prospectus supplement, will describe the terms of a particular series of debt securities.
The following is a summary of selected provisions and definitions of the indentures and debt securities to which any prospectus supplement may relate. The summary of selected provisions of the indentures and the debt securities appearing below is not complete and is subject to, and qualified entirely by reference to, all of the provisions of the applicable indenture and certificates evidencing the applicable debt securities. For additional information, you should look at the applicable indenture and the certificate evidencing the applicable debt security that is filed as an exhibit to the registration statement that includes the prospectus. In this description of the debt securities, the words “Imprimis,” “we,” “us,” or “our” refer only to Imprimis Pharmaceuticals, Inc. and not to any of our subsidiaries, unless we expressly state or the context otherwise requires.
The following description sets forth selected general terms and provisions of the applicable indenture and debt securities to which any prospectus supplement may relate. Other specific terms of the applicable indenture and debt securities will be described in the applicable prospectus supplement. If any particular terms of the indenture or debt securities described in a prospectus supplement differ from any of the terms described below, then the terms described below will be deemed to have been superseded by that prospectus supplement.
General
Debt securities may be issued in separate series without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities of any series.
We are not limited as to the amount of debt securities we may issue under the indentures. Unless otherwise provided in a prospectus supplement, a series of debt securities may be reopened to issue additional debt securities of such series.
The prospectus supplement relating to a particular series of debt securities will set forth:
| ● | whether the debt securities are senior or subordinated; | |
| ● | the offering price; | |
| ● | the title; | |
| ● | any limit on the aggregate principal amount; | |
| ● | the person who shall be entitled to receive interest, if other than the record holder on the record date; | |
| ● | the date or dates the principal will be payable; | |
| ● | the interest rate or rates, which may be fixed or variable, if any, the date from which interest will accrue, the interest payment dates and the regular record dates, or the method for calculating the dates and rates; | |
| ● | the place where payments may be made; | |
| ● | any mandatory or optional redemption provisions or sinking fund provisions and any applicable redemption or purchase prices associated with these provisions; |
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| ● | if issued other than in denominations of U.S. $1,000 or any multiple of U.S. $1,000, the denominations in which the debt securities shall be issuable; | |
| ● | if applicable, the method for determining how the principal, premium, if any, or interest will be calculated by reference to an index or formula; | |
| ● | if other than U.S. currency, the currency or currency units in which principal, premium, if any, or interest will be payable and whether we or a holder may elect payment to be made in a different currency; | |
| ● | the portion of the principal amount that will be payable upon acceleration of maturity, if other than the entire principal amount; | |
| ● | if the principal amount payable at stated maturity will not be determinable as of any date prior to stated maturity, the amount or method for determining the amount which will be deemed to be the principal amount; | |
| ● | if applicable, whether the debt securities shall be subject to the defeasance provisions described below under “Satisfaction and discharge; defeasance” or such other defeasance provisions specified in the applicable prospectus supplement for the debt securities; | |
| ● | any conversion or exchange provisions; | |
| ● | whether the debt securities will be issuable in the form of a global security; | |
| ● | any subordination provisions applicable to the subordinated debt securities if different from those described below under “Subordinated debt securities;” | |
| ● | any paying agents, authenticating agents, security registrars or other agents for the debt securities, if other than the trustee; | |
| ● | any provisions relating to any security provided for the debt securities, including any provisions regarding the circumstances under which collateral may be released or substituted; | |
| ● | any deletions of, or changes or additions to, the events of default, acceleration provisions or covenants; | |
| ● | any provisions relating to guaranties for the securities and any circumstances under which there may be additional obligors; and | |
| ● | any other specific terms of such debt securities. |
Unless otherwise specified in the prospectus supplement, the debt securities will be registered debt securities. Debt securities may be sold at a substantial discount below their stated principal amount, bearing no interest or interest at a rate which at time of issuance is below market rates. The U.S. federal income tax considerations applicable to debt securities sold at a discount will be described in the applicable prospectus supplement.
Exchange and transfer
Debt securities may be transferred or exchanged at the office of the security registrar or at the office of any transfer agent designated by us.
We will not impose a service charge for any transfer or exchange, but we may require holders to pay any tax or other governmental charges associated with any transfer or exchange.
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In the event of any partial redemption of debt securities of any series, we will not be required to:
| ● | issue, register the transfer of, or exchange, any debt security of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption and ending at the close of business on the day of the mailing; or | |
| ● | register the transfer of or exchange any debt security of that series selected for redemption, in whole or in part, except the unredeemed portion being redeemed in part. |
We will appoint the trustee as the initial security registrar. Any transfer agent, in addition to the security registrar initially designated by us, will be named in the prospectus supplement. We may designate additional transfer agents or change transfer agents or change the office of the transfer agent. However, we will be required to maintain a transfer agent in each place of payment for the debt securities of each series.
Global securities
The debt securities of any series may be represented, in whole or in part, by one or more global securities. Each global security will:
| ● | be registered in the name of a depositary, or its nominee, that we will identify in a prospectus supplement; | |
| ● | be deposited with the depositary or nominee or custodian; and | |
| ● | bear any required legends. |
No global security may be exchanged in whole or in part for debt securities registered in the name of any person other than the depositary or any nominee unless:
| ● | the depositary has notified us that it is unwilling or unable to continue as depositary or has ceased to be qualified to act as depositary; | |
| ● | an event of default is continuing with respect to the debt securities of the applicable series; or | |
| ● | any other circumstance described in a prospectus supplement has occurred permitting or requiring the issuance of any such security. |
As long as the depositary, or its nominee, is the registered owner of a global security, the depositary or nominee will be considered the sole owner and holder of the debt securities represented by the global security for all purposes under the indentures. Except in the above limited circumstances, owners of beneficial interests in a global security will not be:
| ● | entitled to have the debt securities registered in their names; | |
| ● | entitled to physical delivery of certificated debt securities; or | |
| ● | considered to be holders of those debt securities under the indenture. |
Payments on a global security will be made to the depositary or its nominee as the holder of the global security. Some jurisdictions have laws that require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial interests in a global security.
Institutions that have accounts with the depositary or its nominee are referred to as “participants.” Ownership of beneficial interests in a global security will be limited to participants and to persons that may hold beneficial interests through participants. The depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of debt securities represented by the global security to the accounts of its participants.
Ownership of beneficial interests in a global security will be shown on and effected through records maintained by the depositary, with respect to participants’ interests, or any participant, with respect to interests of persons held by participants on their behalf.
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Payments, transfers and exchanges relating to beneficial interests in a global security will be subject to policies and procedures of the depositary. The depositary policies and procedures may change from time to time. Neither any trustee nor we will have any responsibility or liability for the depositary’s or any participant’s records with respect to beneficial interests in a global security.
Payment and paying agents
Unless otherwise indicated in a prospectus supplement, the provisions described in this paragraph will apply to the debt securities. Payment of interest on a debt security on any interest payment date will be made to the person in whose name the debt security is registered at the close of business on the regular record date. Payment on debt securities of a particular series will be payable at the office of a paying agent or paying agents designated by us. However, at our option, we may pay interest by mailing a check to the record holder. The trustee will be designated as our initial paying agent.
We may also name any other paying agents in a prospectus supplement. We may designate additional paying agents, change paying agents or change the office of any paying agent. However, we will be required to maintain a paying agent in each place of payment for the debt securities of a particular series.
All moneys paid by us to a paying agent for payment on any debt security that remain unclaimed for a period ending the earlier of:
| ● | 10 business days prior to the date the money would be turned over to the applicable state; or | |
| ● | at the end of two years after such payment was due, will be repaid to us thereafter. The holder may look only to us for such payment. |
No protection in the event of a change of control
Unless otherwise indicated in a prospectus supplement with respect to a particular series of debt securities, the debt securities will not contain any provisions that may afford holders of the debt securities protection in the event we have a change in control or in the event of a highly leveraged transaction, whether or not such transaction results in a change in control.
Covenants
Unless otherwise indicated in a prospectus supplement with respect to a particular series of debt securities, the debt securities will not contain any financial or restrictive covenants.
Consolidation, merger and sale of assets
Unless we indicate otherwise in a prospectus supplement with respect to a particular series of debt securities, we may not consolidate with or merge into any other person (other than a subsidiary of us), in a transaction in which we are not the surviving corporation, or convey, transfer or lease our properties and assets substantially as an entirety to, any person (other than a subsidiary of us), unless:
| ● | the successor entity, if any, is a U.S. corporation, limited liability company, partnership, trust or other business entity; | |
| ● | the successor entity assumes our obligations on the debt securities and under the indentures; | |
| ● | immediately after giving effect to the transaction, no default or event of default shall have occurred and be continuing; and | |
| ● | certain other conditions specified in the indenture are met. |
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Events of default
Unless we indicate otherwise in a prospectus supplement, the following will be events of default for any series of debt securities under the indentures:
| (1) | we fail to pay principal of or any premium on any debt security of that series when due; | |
| (2) | we fail to pay any interest on any debt security of that series for 60 days after it becomes due; | |
| (3) | we fail to deposit any sinking fund payment when due; | |
| (4) | we fail to perform any other covenant in the indenture and such failure continues for 90 days after we are given the notice required in the indentures; and | |
| (5) | certain events involving our bankruptcy, insolvency or reorganization. |
Additional or different events of default applicable to a series of debt securities may be described in a prospectus supplement. An event of default of one series of debt securities is not necessarily an event of default for any other series of debt securities.
The trustee may withhold notice to the holders of any default, except defaults in the payment of principal, premium, if any, interest, any sinking fund installment on, or with respect to any conversion right of, the debt securities of such series. However, the trustee must consider it to be in the interest of the holders of the debt securities of such series to withhold this notice.
Unless we indicate otherwise in a prospectus supplement, if an event of default, other than an event of default described in clause (5) above, shall occur and be continuing with respect to any series of debt securities, either the trustee or the holders of at least a 25 percent in aggregate principal amount of the outstanding securities of that series may declare the principal amount and premium, if any, of the debt securities of that series, or if any debt securities of that series are original issue discount securities, such other amount as may be specified in the applicable prospectus supplement, in each case together with accrued and unpaid interest, if any, thereon, to be due and payable immediately.
Unless we indicate otherwise in a prospectus supplement, if an event of default described in clause (5) above shall occur, the principal amount and premium, if any, of all the debt securities of that series, or if any debt securities of that series are original issue discount securities, such other amount as may be specified in the applicable prospectus supplement, in each case together with accrued and unpaid interest, if any, thereon, will automatically become immediately due and payable. Any payment by us on the subordinated debt securities following any such acceleration will be subject to the subordination provisions described below under “Subordinated debt securities.”
Notwithstanding the foregoing, each indenture will provide that we may, at our option, elect that the sole remedy for an event of default relating to our failure to comply with our obligations described under the section entitled “Reports” below or our failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act will for the first 180 days after the occurrence of such an event of default consist exclusively of the right to receive additional interest on the relevant series of debt securities at an annual rate equal to (i) 0.25% of the principal amount of such series of debt securities for the first 90 days after the occurrence of such event of default and (ii) 0.50% of the principal amount of such series of debt securities from the 91st day to, and including, the 180th day after the occurrence of such event of default, which we call “additional interest.” If we so elect, the additional interest will accrue on all outstanding debt securities from and including the date on which such event of default first occurs until such violation is cured or waived and shall be payable on each relevant interest payment date to holders of record on the regular record date immediately preceding the interest payment date. On the 181st day after such event of default (if such violation is not cured or waived prior to such 181st day), the debt securities will be subject to acceleration as provided above. In the event we do not elect to pay additional interest upon any such event of default in accordance with this paragraph, the debt securities will be subject to acceleration as provided above.
In order to elect to pay the additional interest as the sole remedy during the first 180 days after the occurrence of any event of default relating to the failure to comply with the reporting obligations in accordance with the preceding paragraph, we must notify all holders of debt securities and the trustee and paying agent of such election prior to the close of business on the first business day following the date on which such event of default occurs. Upon our failure to timely give such notice or pay the additional interest, the debt securities will be immediately subject to acceleration as provided above.
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After acceleration, the holders of a majority in aggregate principal amount of the outstanding securities of that series may, under certain circumstances, rescind and annul such acceleration if all events of default, other than the non-payment of accelerated principal, or other specified amounts or interest, have been cured or waived.
Other than the duty to act with the required care during an event of default, the trustee will not be obligated to exercise any of its rights or powers at the request of the holders unless the holders shall have offered to the trustee reasonable indemnity. Generally, the holders of a majority in aggregate principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee.
A holder of debt securities of any series will not have any right to institute any proceeding under the indentures, or for the appointment of a receiver or a trustee, or for any other remedy under the indentures, unless:
| (1) | the holder has previously given to the trustee written notice of a continuing event of default with respect to the debt securities of that series; | |
| (2) | the holders of at least 25 percent in aggregate principal amount of the outstanding debt securities of that series have made a written request and have offered reasonable indemnity to the trustee to institute the proceeding; and | |
| (3) | the trustee has failed to institute the proceeding and has not received direction inconsistent with the original request from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series within 60 days after the original request. |
Holders may, however, sue to enforce the payment of principal, premium or interest on any debt security on or after the due date or to enforce the right, if any, to convert any debt security (if the debt security is convertible) without following the procedures listed in (1) through (3) above.
We will furnish the trustee an annual statement from our officers as to whether or not we are in default in the performance of the conditions and covenants under the indenture and, if so, specifying all known defaults.
Modification and waiver
Unless we indicate otherwise in a prospectus supplement, the applicable trustee and we may make modifications and amendments to an indenture with the consent of the holders of a majority in aggregate principal amount of the outstanding securities of each series affected by the modification or amendment.
We may also make modifications and amendments to the indentures for the benefit of holders without their consent, for certain purposes including, but not limited to:
| ● | providing for our successor to assume the covenants under the indenture; | |
| ● | adding covenants or events of default; | |
| ● | making certain changes to facilitate the issuance of the securities; | |
| ● | securing the securities; | |
| ● | providing for a successor trustee or additional trustees; | |
| ● | curing any ambiguities or inconsistencies; | |
| ● | providing for guaranties of, or additional obligors on, the securities; |
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| ● | permitting or facilitating the defeasance and discharge of the securities; and | |
| ● | other changes specified in the indenture. |
However, neither the trustee nor we may make any modification or amendment without the consent of the holder of each outstanding security of that series affected by the modification or amendment if such modification or amendment would:
| ● | change the stated maturity of any debt security; | |
| ● | reduce the principal, premium, if any, or interest on any debt security or any amount payable upon redemption or repurchase, whether at our option or the option of any holder, or reduce the amount of any sinking fund payments; | |
| ● | reduce the principal of an original issue discount security or any other debt security payable on acceleration of maturity; | |
| ● | change the place of payment or the currency in which any debt security is payable; | |
| ● | impair the right to enforce any payment after the stated maturity or redemption date; | |
| ● | if subordinated debt securities, modify the subordination provisions in a materially adverse manner to the holders; | |
| ● | adversely affect the right to convert any debt security if the debt security is a convertible debt security; or | |
| ● | change the provisions in the indenture that relate to modifying or amending the indenture. |
Satisfaction and discharge; defeasance
We may be discharged from our obligations on the debt securities, subject to limited exceptions, of any series that have matured or will mature or be redeemed within one year if we deposit enough money with the trustee to pay all the principal, interest and any premium due to the stated maturity date or redemption date of the debt securities.
Each indenture contains a provision that permits us to elect either or both of the following:
| ● | we may elect to be discharged from all of our obligations, subject to limited exceptions, with respect to any series of debt securities then outstanding. If we make this election, the holders of the debt securities of the series will not be entitled to the benefits of the indenture, except for the rights of holders to receive payments on debt securities or the registration of transfer and exchange of debt securities and replacement of lost, stolen or mutilated debt securities. | |
| ● | we may elect to be released from our obligations under some or all of any financial or restrictive covenants applicable to the series of debt securities to which the election relates and from the consequences of an event of default resulting from a breach of those covenants. |
To make either of the above elections, we must irrevocably deposit in trust with the trustee enough money to pay in full the principal, interest and premium on the debt securities. This amount may be made in cash and/or U.S. government obligations or, in the case of debt securities denominated in a currency other than U.S. dollars, cash in the currency in which such series of securities is denominated and/or foreign government obligations. As a condition to either of the above elections, for debt securities denominated in U.S. dollars we must deliver to the trustee an opinion of counsel that the holders of the debt securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the action.
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With respect to debt securities of any series that are denominated in a currency other than United States dollars, “foreign government obligations” means:
| ● | direct obligations of the government that issued or caused to be issued the currency in which such securities are denominated and for the payment of which obligations its full faith and credit is pledged, or, with respect to debt securities of any series which are denominated in Euros, direct obligations of certain members of the European Union for the payment of which obligations the full faith and credit of such members is pledged, which in each case are not callable or redeemable at the option of the issuer thereof; or | |
| ● | obligations of a person controlled or supervised by or acting as an agency or instrumentality of a government described in the bullet above the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by such government, which are not callable or redeemable at the option of the issuer thereof. |
Reports
The indentures provide that any reports or documents that we file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act will be filed with the trustee within 15 days after the same is filed with the SEC. Documents filed by us with the SEC via the EDGAR system will be deemed filed with the trustee as of the time such documents are filed with the SEC.
Notices
Notices to holders will be given by mail to the addresses of the holders in the security register.
Governing law
The indentures and the debt securities will be governed by, and construed under, the laws of the State of Delaware, except to the extent that the Trust Indenture Act of 1939 is applicable.
No personal liability of directors, officers, employees and stockholders
No incorporator, stockholder, employee, agent, officer, director or subsidiary of ours will have any liability for any obligations of ours, or because of the creation of any indebtedness under the debt securities, the indentures or supplemental indentures. The indentures provide that all such liability is expressly waived and released as a condition of, and as a consideration for, the execution of such indentures and the issuance of the debt securities.
Regarding the trustee
The indentures limit the right of the trustee, should it become our creditor, to obtain payment of claims or secure its claims.
The trustee will be permitted to engage in certain other transactions with us. However, if the trustee acquires any conflicting interest, and there is a default under the debt securities of any series for which it is trustee, the trustee must eliminate the conflict or resign.
Subordinated debt securities
The following provisions will be applicable with respect to each series of subordinated debt securities, unless otherwise stated in the prospectus supplement relating to that series of subordinated debt securities.
The indebtedness evidenced by the subordinated debt securities of any series is subordinated, to the extent provided in the subordinated indenture and the applicable prospectus supplement, to the prior payment in full, in cash or other payment satisfactory to the holders of senior debt, of all senior debt, including any senior debt securities.
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Upon any distribution of our assets upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary, marshalling of assets, assignment for the benefit of creditors, or in bankruptcy, insolvency, receivership or other similar proceedings, payments on the subordinated debt securities will be subordinated in right of payment to the prior payment in full in cash or other payment satisfactory to holders of senior debt of all senior debt.
In the event of any acceleration of the subordinated debt securities of any series because of an event of default with respect to the subordinated debt securities of that series, holders of any senior debt would be entitled to payment in full in cash or other payment satisfactory to holders of senior debt of all senior debt before the holders of subordinated debt securities are entitled to receive any payment or distribution.
In addition, the subordinated debt securities will be structurally subordinated to all indebtedness and other liabilities of our subsidiaries, including trade payables and lease obligations. This occurs because our right to receive any assets of our subsidiaries upon their liquidation or reorganization, and your right to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors, except to the extent that we are recognized as a creditor of such subsidiary. If we are recognized as a creditor of that subsidiary, our claims would still be subordinate to any security interest in the assets of the subsidiary and any indebtedness of the subsidiary senior to us.
We are required to promptly notify holders of senior debt or their representatives under the subordinated indenture if payment of the subordinated debt securities is accelerated because of an event of default.
Under the subordinated indenture, we may also not make payment on the subordinated debt securities if:
| ● | a default in our obligations to pay principal, premium, if any, interest or other amounts on our senior debt occurs and the default continues beyond any applicable grace period, which we refer to as a payment default; or | |
| ● | any other default occurs and is continuing with respect to designated senior debt that permits holders of designated senior debt to accelerate its maturity, which we refer to as a non-payment default, and the trustee receives a payment blockage notice from us or some other person permitted to give the notice under the subordinated indenture. |
We will resume payments on the subordinated debt securities:
| ● | in case of a payment default, when the default is cured or waived or ceases to exist, and | |
| ● | in case of a nonpayment default, the earlier of when the default is cured or waived or ceases to exist or 179 days after the receipt of the payment blockage notice. |
No new payment blockage period may commence on the basis of a nonpayment default unless 365 days have elapsed from the effectiveness of the immediately prior payment blockage notice. No nonpayment default that existed or was continuing on the date of delivery of any payment blockage notice to the trustee shall be the basis for a subsequent payment blockage notice.
As a result of these subordination provisions, in the event of our bankruptcy, dissolution or reorganization, holders of senior debt may receive more, ratably, and holders of the subordinated debt securities may receive less, ratably, than our other creditors. The subordination provisions will not prevent the occurrence of any event of default under the subordinated indenture.
The subordination provisions will not apply to payments from money or government obligations held in trust by the trustee for the payment of principal, interest and premium, if any, on subordinated debt securities pursuant to the provisions described under the section entitled “Satisfaction and discharge; defeasance,” if the subordination provisions were not violated at the time the money or government obligations were deposited into trust.
If the trustee or any holder receives any payment that should not have been made to them in contravention of subordination provisions before all senior debt is paid in full in cash or other payment satisfactory to holders of senior debt, then such payment will be held in trust for the holders of senior debt.
Senior debt securities will constitute senior debt under the subordinated indenture.
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Additional or different subordination provisions may be described in a prospectus supplement relating to a particular series of debt securities.
Definitions
“Designated senior debt” means our obligations under any particular senior debt in which the instrument creating or evidencing the same or the assumption or guarantee thereof, or related agreements or documents to which we are a party, expressly provides that such indebtedness shall be designated senior debt for purposes of the subordinated indenture. The instrument, agreement or other document evidencing any designated senior debt may place limitations and conditions on the right of such senior debt to exercise the rights of designated senior debt.
“Indebtedness” means the following, whether absolute or contingent, secured or unsecured, due or to become due, outstanding on the date of the indenture for such series of securities or thereafter created, incurred or assumed:
| ● | our indebtedness evidenced by a credit or loan agreement, note, bond, debenture or other written obligation; | |
| ● | all of our obligations for money borrowed; | |
| ● | all of our obligations evidenced by a note or similar instrument given in connection with the acquisition of any businesses, properties or assets of any kind, | |
| ● | our obligations: |
| ● | as lessee under leases required to be capitalized on the balance sheet of the lessee under generally accepted accounting principles, or | |
| ● | as lessee under leases for facilities, capital equipment or related assets, whether or not capitalized, entered into or leased for financing purposes; |
| ● | all of our obligations under interest rate and currency swaps, caps, floors, collars, hedge agreements, forward contracts or similar agreements or arrangements; | |
| ● | all of our obligations with respect to letters of credit, bankers’ acceptances and similar facilities, including reimbursement obligations with respect to the foregoing; | |
| ● | all of our obligations issued or assumed as the deferred purchase price of property or services, but excluding trade accounts payable and accrued liabilities arising in the ordinary course of business; | |
| ● | all obligations of the type referred to in the above clauses of another person, the payment of which, in either case, we have assumed or guaranteed, for which we are responsible or liable, directly or indirectly, jointly or severally, as obligor, guarantor or otherwise, or which are secured by a lien on our property; and | |
| ● | renewals, extensions, modifications, replacements, restatements and refundings of, or any indebtedness or obligation issued in exchange for, any such indebtedness or obligation described in the above clauses of this definition. |
“Senior debt” means the principal of, premium, if any, and interest, including all interest accruing subsequent to the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such proceeding, and rent payable on or in connection with, and all fees and other amounts payable in connection with, our indebtedness. However, senior debt shall not include:
| ● | any debt or obligation if its terms or the terms of the instrument under which or pursuant to which it is issued expressly provide that it shall not be senior in right of payment to the subordinated debt securities or expressly provide that such indebtedness is on the same basis or “junior” to the subordinated debt securities; or | |
| ● | debt to any of our subsidiaries, a majority of the voting stock of which is owned, directly or indirectly, by us. |
“Subsidiary” means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by us or by one or more or our other subsidiaries or by a combination of us and our other subsidiaries. For purposes of this definition, “voting stock” means stock or other similar interests which ordinarily has or have voting power for the election of directors, or persons performing similar functions, whether at all times or only so long as no senior class of stock or other interests has or have such voting power by reason of any contingency.
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We may sell the securities offered through this prospectus (1) to or through underwriters or dealers, (2) directly to purchasers, including our affiliates, (3) through agents, or (4) through a combination of any these methods. The securities may be distributed at a fixed price or prices, which may be changed, market prices prevailing at the time of sale, prices related to the prevailing market prices, or negotiated prices. The prospectus supplement will include the following information:
| ● | the terms of the offering; | |
| ● | the names of any underwriters or agents; | |
| ● | the name or names of any managing underwriter or underwriters; | |
| ● | the purchase price of the securities; | |
| ● | the net proceeds from the sale of the securities; | |
| ● | any delayed delivery arrangements; | |
| ● | any underwriting discounts, commissions and other items constituting underwriters’ compensation; | |
| ● | any initial public offering price; | |
| ● | any discounts or concessions allowed or reallowed or paid to dealers; and | |
| ● | any commissions paid to agents. |
Sale through underwriters or dealers
If underwriters are used in the sale, the underwriters will acquire the securities for their own account, including through underwriting, purchase, security lending or repurchase agreements with us. The underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions. Underwriters may sell the securities in order to facilitate transactions in any of our other securities (described in this prospectus or otherwise), including other public or private transactions and short sales. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless otherwise indicated in the prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions, and the underwriters will be obligated to purchase all the offered securities if they purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
If dealers are used in the sale of securities offered through this prospectus, we will sell the securities to them as principals. They may then resell those securities to the public at varying prices determined by the dealers at the time of resale. The prospectus supplement will include the names of the dealers and the terms of the transaction.
Direct sales and sales through agents
We may sell the securities offered through this prospectus directly. In this case, no underwriters or agents would be involved. Such securities may also be sold through agents designated from time to time. The prospectus supplement will name any agent involved in the offer or sale of the offered securities and will describe any commissions payable to the agent. Unless otherwise indicated in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act with respect to any sale of those securities. The terms of any such sales will be described in the prospectus supplement.
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Underwriter, dealer or agent discounts and commissions
Underwriters, dealers or agents may receive compensation in the form of discounts, concessions or commissions from us or our purchasers as their agents in connection with the sale of securities. These underwriters, dealers or agents may be considered to be underwriters under the Securities Act. As a result, discounts, commissions, or profits on resale received by the underwriters, dealers or agents may be treated as underwriting discounts and commissions. Each prospectus supplement will identify any such underwriter, dealer or agent, and describe any compensation received by them from us. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The maximum commission or discount to be received by any underwriter, dealer or agent will not be greater than eight percent (8%) of the maximum gross proceeds of the securities that may be sold under this prospectus.
Delayed delivery contracts
If the prospectus supplement indicates, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The applicable prospectus supplement will describe the commission payable for solicitation of those contracts.
Market making, stabilization and other transactions
Unless the applicable prospectus supplement states otherwise, each series of offered securities will be a new issue and will have no established trading market. We may elect to list any series of offered securities on an exchange. Any underwriters that we use in the sale of offered securities may make a market in such securities, but may discontinue such market making at any time without notice. Therefore, we cannot assure you that the securities will have a liquid trading market.
Any underwriter may also engage in stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Rule 104 under the Securities Exchange Act. Stabilizing transactions involve bids to purchase the underlying security in the open market for the purpose of pegging, fixing or maintaining the price of the securities. Syndicate covering transactions involve purchases of the securities in the open market after the distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions and penalty bids may cause the price of the securities to be higher than it would be in the absence of the transactions. The underwriters may, if they commence these transactions, discontinue them at any time.
Derivative transactions and hedging
We, the underwriters or other agents may engage in derivative transactions involving the securities. These derivatives may consist of short sale transactions and other hedging activities. The underwriters or agents may acquire a long or short position in the securities, hold or resell securities acquired and purchase options or futures on the securities and other derivative instruments with returns linked to or related to changes in the price of the securities. In order to facilitate these derivative transactions, we may enter into security lending or repurchase agreements with the underwriters or agents. The underwriters or agents may effect the derivative transactions through sales of the securities to the public, including short sales, or by lending the securities in order to facilitate short sale transactions by others. The underwriters or agents may also use the securities purchased or borrowed from us or others (or, in the case of derivatives, securities received from us in settlement of those derivatives) to directly or indirectly settle sales of the securities or close out any related open borrowings of the securities.
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Electronic auctions
We may also make sales through the Internet or through other electronic means. Since we may from time to time elect to offer securities directly to the public, with or without the involvement of agents, underwriters or dealers, utilizing the Internet or other forms of electronic bidding or ordering systems for the pricing and allocation of such securities, you should pay particular attention to the description of that system we will provide in a prospectus supplement.
Such electronic system may allow bidders to directly participate, through electronic access to an auction site, by submitting conditional offers to buy that are subject to acceptance by us, and which may directly affect the price or other terms and conditions at which such securities are sold. These bidding or ordering systems may present to each bidder, on a so-called “real-time” basis, relevant information to assist in making a bid, such as the clearing spread at which the offering would be sold, based on the bids submitted, and whether a bidder’s individual bids would be accepted, prorated or rejected. For example, in the case of a debt security, the clearing spread could be indicated as a number of “basis points” above an index treasury note. Of course, many pricing methods can and may also be used.
Upon completion of such an electronic auction process, securities will be allocated based on prices bid, terms of bid or other factors. The final offering price at which securities would be sold and the allocation of securities among bidders would be based in whole or in part on the results of the Internet or other electronic bidding process or auction.
General information
Agents, underwriters, and dealers may be entitled, under agreements entered into with us, to indemnification by us against certain liabilities, including liabilities under the Securities Act.
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The validity of the securities being offered hereby has been passed upon by Morrison & Foerster, LLP, San Diego, California.
The consolidated financial statements of Imprimis Pharmaceuticals, Inc. appearing in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 28, 2014, as amended by the amendment filed with the SEC on April 30, 2014, have been audited by KMJ Corbin & Company LLP, an independent registered public accounting firm, as stated in its report appearing therein, and are incorporated by reference. Such audited consolidated financial statements are incorporated hereby by reference in reliance upon the report of such firm given upon its authority as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with them. This means that we can disclose important information to you in this prospectus by referring you to those documents. These incorporated documents contain important business and financial information about us that is not included in or delivered with this prospectus. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede this information.
We incorporate by reference the documents listed below as well as any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of the initial registration statement and prior to the effectiveness of this registration statement, and any filings made after the date of this prospectus until we sell all of the securities under this prospectus, except that we do not incorporate any document or portion of a document that is “furnished” to the SEC, but not deemed “filed.” The following documents filed with the SEC are incorporated by reference in this prospectus:
| ● | our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on March 28, 2014 as amended by the amendment filed with the SEC on April 30, 2014; | |
| ● | our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, filed with the SEC on May 15, 2014 and August 13, 2014, respectively; and | |
| ● | our Current Reports on Form 8-K filed with the SEC on February 11, 2014, April 3, 2014 (as amended by the Current Report on Form 8-K/A filed with the SEC on June 13, 2014), September 3, 2014, and September 8, 2014 (as amended by the Current Report on Form 8-K/A filed with the SEC on September 9, 2014). |
We will provide without charge to each person, including any beneficial owner, to whom a prospectus is delivered, on written or oral request of that person, a copy of any or all of the documents we are incorporating by reference into this prospectus, other than exhibits to those documents unless such exhibits are specifically incorporated by reference into those documents. Such written requests should be addressed to:
Imprimis
Pharmaceuticals, Inc.
12264 El Camino Real, Suite 350
San Diego, CA 92130
Attention: Investor Relations.
You may also make such requests by contacting us at (858) 704-4040.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and proxy statements and other information with the SEC. You may read and copy any document that we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our SEC filings are also available on the SEC’s web site at http://www.sec.gov. Copies of certain information filed by us with the SEC are also available on our web site at http://www.imprimispharma.com. We have not incorporated by reference into this prospectus the information on our website, and you should not consider it to be a part of this document.
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2,900,000 Shares of Common Stock
| PROSPECTUS SUPPLEMENT |
National Securities Corporation
Sterne Agee CRT
March 11, 2016