UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
____________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
August
20, 2007
Date
of
Report (Date of earliest event reported)
___________________________________________________________
ACURA
PHARMACEUTICALS, INC.
(Exact
Name of Registrant as Specified in Charter)
___________________________________________________________
|
State
of New York
|
1-10113
|
11-0853640
|
|
(State
of Other Jurisdiction
|
(Commission
File Number)
|
(I.R.S.
Employer
|
|
of
Incorporation)
|
|
Identification
Number)
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616
N. North Court, Suite 120
Palatine,
Illinois 60067
(Address
of principal executive offices) (Zip Code)
(847)
705-7709
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17CFR
240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17CFR240.14d-2(b))
|
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement.
Sale
of Equity Securities.
On
August
20, 2007 the Registrant entered into a Securities Purchase Agreement, the
form
of which is attached hereto as Exhibit 10.1 (the “Agreement”), with the
investors named therein (the “Investors”). Pursuant to the Agreement, the
Investors purchased, in the aggregate, 23,605,551 Units (“Units”) of the
Registrant, at a price of $1.08 per Unit (the “Transaction”). Each Unit consists
of four shares of common stock, $0.01 par value (”Common Stock”) and a warrant
to purchase one share of common stock (the “Warrant”).
13,842,590 of the Units issued under the Agreement were issued for cash,
with
the balance of 9,962,961 Units issued in consideration of the conversion
of an
aggregate of $10.544 million in principal amount under the Registrant’s
outstanding bridge loan indebtedness (as described in “Conversion of Bridge
Loans”, below). The Registrant estimates that the net cash proceeds to the
Registrant after expenses of the Transaction are approximately $14.5 million.
The Transaction closed on August 20, 2007.
The
Registrant intends to use the net proceeds of the Transaction for working
capital purposes, including the funding of the Phase III clinical trial for
its
OxyADF Tablet product candidate (Study AP-ADF-105).
The
Warrants are immediately exercisable at a price of $.34 per share, subject
to
earlier expiration as described below, expire August 20, 2014. The Warrants
may
be exercised for cash or on a cashless basis commencing 180 days after the
closing, at any time if a registration statement is not then
effective.
The
following investors purchased the indicated number of Units, in cash and/or
through the conversion of Bridge Loans:
|
Investor
|
Units
|
|
Vivo
Ventures Fund VI, L.P.
|
4,963,636
|
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Vivo
Ventures VI Affiliates Fund, L.P.
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36,364
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GCE
Holdings LLC
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17,864,814
|
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Michael
Weisbrot and Susan Weisbrot
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138,888
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CGM
IRA Custodian f/b/o Michael M. Weisbrot
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185,185
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Dennis
Adams
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138,888
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George
Boudreau
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138,888
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Greg
Wood
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46,296
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Peter
Stieglitz
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46,296
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Ian
Meierdiercks
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46,296
|
|
TOTAL
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23,605,551
|
The
Transaction was completed through a private placement to accredited investors
and is exempt from registration pursuant to Section 4(2) of the Securities
Act
of 1933, as amended and/or Regulation D promulgated under the Securities
Act of
1933. At the time of execution of the Agreement, each Purchaser represented
to
the Registrant that such Purchaser was an accredited investor as defined
in Rule
501(a) of the Securities Act of 1933 and that the Common Stock, the Warrants
and
the Common Stock issuable under the Warrants were being acquired for investment
purposes.
The
Common Stock and shares of Common Stock
underlying the Warrants sold pursuant to the Agreement have not yet been
registered under the Securities Act of 1933 and may not be offered or sold
in
the United States in the absence of an effective registration statement or
exemption from registration requirements. Pursuant to the Agreement, the
Registrant is required to file a registration statement as promptly as
practicable but in no event more than 60 days after the closing of the
Transaction for purposes of registering the resale of the shares of Common
Stock
issued and the shares of Common Stock issuable upon exercise of the Warrants
(the “Registration Statement”). Subject to certain exceptions, the Registrant is
required to cause the Registration Statement to be declared effective by
the
Securities and Exchange Commission (“SEC”) within one hundred and twenty (120)
days after the date the Registration Statement is filed by the Registrant
with
the SEC. The Registrant must exercise best efforts to keep the Registration
Statement effective until
the
earlier of (i) the date that all shares of Common Stock and shares of Common
Stock underlying Warrants covered by such Registration Statement have been
sold,
or (ii) the fifth
anniversary
of the
Registration Statement,
provided that the period during which the Registration Statement must be
kept
effective can be shortened to not less than two years by agreement of holders
of
registrable securities.
Shares
sold under the agreement and eligible for sale under Rule 144(k) of the
Securities Act of 1933, as amended, need not be included in the Registration
Statement. Under certain circumstances, if shares are excluded from the
Registration Statement, the Registrant may be required to file one or more
additional Registration Statements covering the excluded
shares.
Subject
to certain exceptions, for each day that the Registrant misses the foregoing
deadlines or fails to keep the Registration Statement effective, it must
pay
each Investor 0.05% of the purchase price of securities covered by the
Registration Statement and held by the Investor at such time, up to a maximum
of
9.9% of the amount paid by an Investor for the Units. Interest on unpaid
amount
accrues at 1% per month.
Except
as
described below under the caption “Conversion of Bridge Loans”, there are no
material relationships between the Registrant, the Investors and their
respective affiliates.
After
giving effect to the Registrant’s issuance of the Units described above, the
Registrant has 426,571,340 shares issued and outstanding, 39,762,829 shares
underlying warrants, 18,994,995 shares underlying stock options and 29,500,000
shares underlying restricted stock units.
The
Agreement requires the Registrant to use commercially reasonable efforts
to list
its shares of common stock on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or the
Nasdaq Capital Market, which requirement may be waived by holders of the
majority-in-interest of registrable securities under the Agreement.
Triggering
of Piggyback Registration Rights.
The
requirement in the Agreement to file the Registration Statement triggered
the
piggyback registration rights granted to certain holders of approximately
307
million
of the
Registrant’s shares and shares underlying warrants pursuant to an Amended and
Restated Registration Rights Agreement dated as of February 6, 2004, as
amended.
Conversion
of Bridge Loans.
The
Registrant was a party to similar loan agreements (the “Bridge Loan
Agreements”), dated June 22, 2005, September 16, 2005, November 9, 2005 and
January 31, 2006, with each of Essex Woodlands Health Ventures V, L.P.
(“Essex”), Care Capital Investments II, LP, Care Capital Offshore Investments
II, LP (“Care”), Galen Partners III, L.P., Galen Partners International III,
L.P. and Galen Employee Fund III, L.P. (“Galen”) (collectively, the “VC
Lenders”) and certain other shareholders of the Registrant, pursuant to which
the Registrant had borrowed an aggregate principal amount of $10.544 million
to
fund continued operations (the “Bridge Loans”). The VC Lenders own and control
GCE Holdings LLC. Immediately prior to the closing of the Agreement the VC
Lenders assigned their Bridge Loans to GCE Holdings LLC. After giving effect
to
the issuance of the Units pursuant to the Agreement, GCE Holdings LLC, Galen,
Care and Essex will collectively beneficially own approximately 77.8% of
the
Registrant’s outstanding Common Stock. GCE Holdings LLC also has the right to
designate four of the Registrant’s seven directors. The transactions
contemplated by this Agreement triggered the weighed-average anti-dilution
rights in a warrant previously issued to Galen so that the warrant is now
exercisable for 503,162 shares at an exercise price of $0.99 per share (adjusted
from being exercisable for 383,313 shares at an exercise price of $1.21 per
share).
As
part
of the completion of the transactions contemplated in the Agreement, each
of GCE
Holdings LLC (as assignee of the VC Lenders) and the other bridge lenders
converted all of their respective principal amount under the Bridge Loans
into
Units issued
pursuant to the Agreement in full and complete satisfaction of the Registrant’s
obligations under the Bridge Loans (the “Bridge Loan Conversion”). Due to the
Bridge Loan Conversion, and included in the table above, the Registrant issued
9,531,481 Units consisting of 38,125,926 shares of Common
Stock and Warrants to purchase 9,531,481 shares of Common Stock to
GCE
Holdings LLC. As a result of the Bridge Loan Conversion, the Bridge Loan
Agreements and related security agreements and guarantees were terminated.
The
description of the Transaction contained herein is only a summary and is
qualified in its entirety by reference to the transaction documents contained
in
Exhibits 4.1, 10.1 and 10.2, each of which is incorporated herein by reference.
Extension
of Maturity and Reduction of Interest Rate on $5.0 Million
Loan
As
required by the Agreement, on August 20, 2007, the Registrant amended its
Loan
Agreement dated as of March 29, 2000, as previously amended, with Essex
Woodlands Health Venture V, L.P., Care Capital Investments II, L.P., Care
Capital Offshore Investments II, L.P., Galen Partners III, L.P., Galen Partners
International III, L.P. and Galen Employee Fund III, L.P. and others, and
its
$5,000,000 note (the “Note”) held by such lenders, dated as of December 20,
2002, to (i) extend the maturity of the Note to December 31, 2008 from September
30, 2007, (ii) reduce the interest rate to the fixed rate of 10% per annum
from
the prime rate plus four and one-half percent (currently 12.75%), and (iii)
have
interest paid quarterly in cash, instead of stock. In addition, the Note
is
subject to mandatory prepayment in whole or in part, with all proceeds in
excess
of $5 million received by the Registrant from a third party pharmaceutical
company or companies pursuant to which the Registrant, in one or more
transactions, grants such pharmaceutical company or companies rights to any
of
the Registrant’s products or product candidates or rights to the Registrant’s
Aversion® Technology. Such proceeds include, without limitation, up-front fees,
progress payments, milestone payments, license fees, royalties and any similar
payments, but exclude fees for services, reimbursements or advances for costs
and expenses.
In
connection with Agreement, the Registrant granted Vivo Ventures Fund VI,
L.P.,
the right to have an observer at Registrant’s Board of Director meetings so long
as it holds 50% of the securities sold to it under the Agreement.
Item
1.02. Termination of a Material Definitive Agreement.
The
discussion in Item 1.01 under the Caption “Conversion of Bridge Loans” is
incorporated herein by reference.
Item
3.02. Unregistered Sales of Equity Securities.
The
information called for by this item is contained in Item 1.01, which is
incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
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Exhibit
Number
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Description
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| |
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4.1
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Form
of Warrant
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| |
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10.1
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Form
of Securities Purchase Agreement
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10.2
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Fifth
Amendment, Waiver and Consent dated as of August 20, 2007 to
Loan
Agreement dated as of February 6, 2004.
|
| |
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10.3
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Amended
and Restated $5 Million Note
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99.1
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Press
Release dated August 20, 2007 Announcing Sale of Units.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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ACURA
PHARMACEUTICALS, INC. |
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By: |
/s/
Peter A. Clemens |
| |
Peter
A. Clemens |
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Senior
Vice President & Chief Financial
Officer |
Date: August
20, 2007