ContraFect enters warrant exercise transaction for $9.6M in proceeds

ContraFect entered into a warrant exercise agreement with an existing accredited investor to exercise certain outstanding warrants to purchase an aggregate of 7.0 million shares of the company’s common stock. In consideration for the immediate exercise of the existing warrants for cash, the exercising holder received new unregistered warrants to purchase an aggregate of 7.0 million shares of the company’s common stock. In connection with the exercise, the company also agreed to reduce the exercise price of such existing warrants to $1.36, which is equal to the most recent closing price of the company’s common stock on The Nasdaq Capital Market prior to the execution of the warrant exercise agreement. The proceeds to the company from the exercise of the existing warrants are $9.6 million, prior to deducting fees to the financial advisor and estimated expenses. The company intends to use the net proceeds to support ongoing enrollment of patients in the Phase 1b/2 clinical study of intra-articular exebacase for the treatment of chronic prosthetic joint infections of the knee, filing of the Investigational New Drug application and the subsequent conduct of the Phase 1 clinical study of CF-370, the first engineered lysin targeting Gram-negative pathogens, working capital and general corporate purposes. The new warrants each has an exercise price of $1.36 per underlying share and will be exercisable for a period of five years following certain stockholder approval. The company agreed to file a resale registration statement on Form S-3 within 120 days with respect to the shares of common stock issuable upon exercise of the new warrants. The warrant exercise agreement and the new warrants each include a beneficial ownership limitation that prevents any of the investors from owning more than 9.99% of the company’s common stock outstanding immediately after giving effect to such exercise, which percentage may be increased at the warrant holder’s election upon 61 days’ notice to the company subject to the terms of such warrants, provided that such percentage may in no event exceed 19.99%. Maxim Group LLC acted as the exclusive financial advisor for the transaction.